Why Rejecting Mandatory Distribution Fits With the CRTC's Interpretation of the Broadcasting Act
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Thursday April 25, 2013
This week's CRTC mandatory distribution hearing has placed the
spotlight on a fascinating disconnect between the Commission and the
Canadian broadcast community. Despite months of telegraphing its intent
to promote consumer choice over broadcaster revenues, the first two days
of the hearing have featured repeated presentations from groups who
have not gotten the message. CRTC Chair Jean-Pierre Blais could not have
been clearer in a speech last October:
In our decision, we noted that consumers increasingly expect to be
in control of what they watch. It makes sense that consumers and the
distributors who serve them should have more flexibility in packaging
choices. While we acknowledged the value of predictable revenues to the
programming services, we decided that the days of guaranteed wholesale
rates are over. Programming services cannot expect to remain completely
insulated from the growing demand for greater choice by Canadians.
He followed that up in March by telling the production community that it "will need to compete, just like any other sector."
Despite the messaging, many of the groups seeking mandatory distribution evidently don't get it.
yesterday about the parade of failed broadcaster business
models hoping to hit the jackpot with mandatory carriage, but it
was an exchange
between Commissioner Molnar and Sun News that best illustrates the
Molnar: I just want you to tell me right now why you think it
is fair and equitable that every Canadian cable subscriber
should pay for you today.
Teneycke: Well, I think the simplest answer is I think it's
the law in the sense that the Broadcast Act itself which is why
we're here, it's why the CRTC exists, it's why the CBC exists
and sort of the foundational core of all the rules around
broadcasting and to have the privilege to have access to
Canadians' homes and who is going to be distributing and who
Wrong answer. Despite some suggestions that the Broadcasting
Act obligates the CRTC to order mandatory distribution for
some channels, the provision in the law is very general. It merely
states that the Commission may "require any licensee who is
authorized to carry on a distribution undertaking to carry, on
such terms and conditions as the Commission deems appropriate,
programming services specified by the Commission."
It is therefore the CRTC that interprets the law and it falls to the
applicants to demonstrate why their proposals fall within that
interpretation. As Blais emphasized
at the start of the hearing, the CRTC has set a very high
threshold, providing yet another signal that broadcasters
should not be relying on regulatory mandates:
Given its exceptional nature, the CRTC has set the bar very
high for obtaining a mandatory distribution order on digital
basic service pursuant to section 9(1)h). The CRTC’s policy
requires that a service seeking such an order must clearly
demonstrate its exceptional nature and that it achieves
important public policy objectives under the Act.
Each applicant must therefore demonstrate, with supporting
evidence, that its service:
All four of these requirements must be met. Broadcasters have
largely emphasized the fourth criteria, citing their commitment to
Canadian content. Yet the CRTC requires far more. In a
world of almost unlimited choice available through the
broadcasting system and from unregulated Internet-distributed
voices, it is worth asking whether any service can meet the
standard of contributing in an exceptional manner to Canadian
expression. The very definition
of exceptional is to be the exception, uncommon or extraordinary.
Given the ready availability of programming alternatives, few
broadcasters will ever meet this standard.
The Sun News response was reminiscent of Bell's attitude in the Bell-Astral hearing, where the Commission was focused on the public interest and Bell paid scant attention to the issue. The Commission rejected the Bell deal and I suspect it will similarly reject the new proposals it has heard thus far (the big question will be about Starlight, the proposed Canadian movie channel that is better suited as an Internet-based Netflix competitor).
Indeed, the entire process feels dated as if a decade of disruptive technologies from YouTube to Netflix never happened. As I noted yesterday, the CRTC can and should use the high standard it has set within the law to put an end to the steady procession of poorly developed broadcast proposals that depend upon regulatory mandates for their very survival.
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Thursday April 25, 2013