The CRTC's Vertical Integration Decision: A Step in the Right Direction
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Thursday September 22, 2011
I guess I come from the position that we, the Commission, have already recognized there is a need to create competition, more competition in order to protect Canadians, and facilities-based competition is not yet here. So it's our job to find a vehicle to create that competition and, in the simplest terms, it is to create an environment where broadband would be made available to a third party through a lease arrangement.
The acknowledgement about the state of Canadian competition and the responsibility of the regulator to address the issue was long overdue. While the UBB decision is still forthcoming, Katz's comments provide some reason for optimism. Yesterday's CRTC vertical integration decision contained a similar statement that offered a strong indication that the Commission got the concerns associated with vertically integrated media companies that can use their market power in a manner that harms consumer choice :
Once the Commission reached that conclusion, the only question was how far it was prepared to go to address undue preference concerns and their impact on Canadian consumers. The answer is further than some might have suspected, but still not quite far enough. The key elements include the CRTC deciding to:
the Commission is of the view that the consolidation and vertical integration taking place in the Canadian broadcasting industry could have a considerable negative impact on consumer choice. For example, VI entities might attempt to include many of their own services on the basic service. With respect to the consumption of programming today, Canadians expect to be in control of what they watch, and these expectations are likely to be heightened with the ongoing transition to digital technology. Since VI entities provide online content on a basis of “see what you want, where you want, when you want,” it might be difficult for consumers to accept that BDUs do not offer more choice and flexibility. The Commission is concerned that the lack of choice and flexibility could motivate consumers to leave the regulated broadcasting system.
In response to these concerns, the Commission strongly encourages the distributors to offer more choice and directs them to report by April 2012 "on how they have provided consumers with more choice and flexibility in the services that they can subscribe to, while at the same time providing them with the ability to only pay for the services they want to watch, such as a pick and pay model." The CRTC says that if insufficient progress is made, it will launch a consultation to determine what obligations should be imposed on broadcast distributors. While the Commission could have adopted a more aggressive approach on the consumer concerns (I've argued for a full pick-and-pay model), its willingness to establish much-needed rules for the vertically-integrated Canadian market is a step in the right direction.
Thursday September 22, 2011
We want to enhance competition and investment in this country, and this is why we adopted this policy back in 2008 for the AWS spectrum. Let me say that the price went down by an average of 11% since then, and we will continue this way with the 700 megahertz spectrum. We launched consultation with the industry to make sure that we enhance competition and provide better choice and better rates for our consumers.