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The Mandatory Distribution Hearing: The CRTC As Last Hope for Failed Broadcast Business Models

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Tuesday April 23, 2013

The CRTC kicked off its two week broadcast hearing on mandatory distribution yesterday with a steady stream of proposals hoping to hit the jackpot by winning mandatory distribution (and guaranteed millions) from cable and satellite distributors. I've written (here and here) about why mandatory distribution should be dropped altogether, but yesterday's hearing provided the best evidence yet. CRTC Chair Jean-Pierre Blais started the hearing by making it clear that the Commission would establish a very high threshold - consistent with the Act - before forcing any Canadians to pay for channels they may not want. Over the course of the day, no one came close to meeting even a low threshold.

As the hearing veered from proposals backed by studies suggesting consumers weren't interested in their product to claims that broadcaster costs were "totally retarded", it became apparent that the mandatory distribution process is a last gasp for many failed, failing or never started broadcast proposals. The Commission heard from channels that broadcast distributors won't carry, that advertisers won't support, that few subscribers pay for, and that don't have any content (user generated content was the answer for two such proposals leading one Commissioner to ask why people wouldn't just watch YouTube). Even the Sun News Network, the headliner of the day, acknowledged that its complaints about undue preference by other distributors would not meet the legal standard, that it is already available to 70% of cable subscribers, and that Videotron, which shares the same parent company, has not placed the channel on basic service, even though it is seeking an order from the CRTC requiring everyone else to do so.  

No one wanted to acknowledge they could try competing in the marketplace for subscribers or could launch an unregulated over-the-top Internet-based service. Instead, the preferred model is to have the CRTC require millions of Canadians to pay for their service through mandatory distribution. All of this leads to a broadcast catch-22.  If consumers want your service, there is seemingly no need for mandatory distribution since there is the prospect for marketplace success.  If consumers don't want your service, forcing them to pay for it is rightly viewed as unfair (no matter what the Broadcasting Act might say about encouraging Canadian content).

The CRTC should use this hearing to put an end to this bad version of Regulatory Dragon's Den (with consumers' money at stake). For the new proposals, it should affirm that broadcasters need to convince consumers, not commissioners, that they have something worth buying. For broadcasters seeking renewal of mandatory carriage, it should send a message that the gravy train is over by rejecting price increases and limiting any renewal to three more years with notice that no further extensions will be granted. If the service is a necessary public service, the government should support it. If not, the market should decide. Either way, by the time Blais' term concludes in 2017, the CRTC should be out of the business of being the last hope for uncompetitive broadcast business models.

Comments (10)add comment

Eeeek said:

Is the CRTC actually acting in the best interest of Canadians again?
Or have the cable companies pushed some hidden agenda we don't yet understand?
April 24, 2013

Mandatory Carriage vs Forced Distribution said:

...
It is interesting that mandatory carriage is viewed as a last hope for Canadian broadcasters, but when the CRTC forces the distribution of U.S. stations in Canada without the stations consent, this should be viewed equally as the last hope for a failed Canadian distribution undertaking model. While broadcasters seek subsidies with mandatory carriage orders, distributors seek subsidies with compulsory distribution orders. The CRTC requires Canadian consumers to foot the bill for both, with little value added.
April 24, 2013

end user said:

...
They can have their cable. I've been cable free for three months and miss nothing. My cable connection from one of the local ISP's is unlimited so Netflix, Hulu and others provide all I need.
April 24, 2013

maebnoom said:

...
Just give me a la carte, already. sheesh.
April 24, 2013

Crockett said:

...
@maebnoom "Just give me a la carte, already. sheesh."

Well, there is 'a la catre' available already ... its called BitTorrent. Unfortunately, the shortsightedness of the industry will just drive more into it's unprofitable arms.
April 24, 2013

Helen S. said:

@enduser
I applaud you for cancelling cable - I would love to. Alas, I love my shows, unfortunately, your solution does not work for me. I don't have the option of an affordable unlimited option, and Hulu is geoblocked where I live. Sigh.
April 25, 2013

Paul O said:

...
Without any mention of fair competition this article reveals bias and disregard for fair comment.

When regulators, not the marketplace, chooses winners and losers we all lose. That regulators have given some competitors mandatory carriage and mocked other competitors for even asking for a level playing field is biased beyond belief.

If mandatory carriage is to be denied, so be it: let it be denied fairly to current players on equal terms.
April 25, 2013

Joel said:

Time for a new ISP
I too cut the cable about 4 - 5 years ago when I moved into this house. Well, no so much cut as refused to get it installed. I do nothing but streaming. Netflix, CTV.ca CBC.ca tou.tv . There are excellent legal streaming choices out there and I have never maxed out my 300gb cap Teksavvy. I highly recommend that if you're with any big ISP with a small cap, to look in the yellow pages and shop around. My personal favorites are Acanac and Teksavvy. I think you'll be surprised to see the difference in bandwith. Unless you're on explorenet, there should be plenty of options available.
April 27, 2013

I said said:

Ignorance is evident
It is quite obvious you know nothing about the industry, the costs involved, nor the entry barriers. You then complain about the quasi-monopoly of the handful of players that control what you and I watch while lining their coffers with our money.

A television channel takes years to build. Do you think advertisers will flock to your door on the very first day, or first year, or second, maybe third? And if you're an independant service do you think it will be easy to get subscribers? The cost of soliciting subscribers will outweigh by far the revenues you'll generate, and as such you'll need very deep pockets for several years.

Why don't independants simply go home and leave our televsion industry to imported American channels or to services belonging to our BDUs? And then you complain about "concentration of the media". Brilliant !!!

Why don't you
April 27, 2013

Tijan said:

“Mandatory Carriage” is an Outdated Policy
US TV consumers have access to FREE, linear digital broadcast programming through a service such as Dyle Mobile, launched by US broadcasters, including the like of NBC, FOX.
There is also the AEREO service, a new technology which, for $8 a month, users can view local TV stations over the Internet.
Would these services ever make it to Canada? The convergence of TV, cable, Internet and mobile is a major impediment. However, sooner or later, these would come to Canada through the black market or other means.
Like it or not, “mandatory carriage” is outdated.
April 29, 2013

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