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The CRTC's Simultaneous Substitution Problem

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Tuesday January 28, 2014
The Canadian Radio-Television and Telecommunications has spent the past year-and-a-half trying to reinvent itself a pro-consumer regulator. On the broadcast front, the most obvious manifestation of that approach is the gradual move toward pick-and-pay channels, which seems likely to emerge as a policy option later this year. Establishing mandated pick-and-pay would  be a political and consumer winner, but there are still reasons for Canadians to vent against the regulator. The retention of simultaneous substitution policies is one of them.

I made the case for gradually eliminating the simultaneous substitution policy late last year, arguing that the policy hurts Canadian broadcasters (by ceding control over their schedules to U.S. networks) and Canadian content (which suffers from promotion). Moreover, simultaneous substitution will become less important over time as consumers shift toward on-demand availability of programs. There are still supporters of simultaneous substitution, but few come from the consumer community.  Indeed, even the CRTC is hard-pressed to identify consumer benefits in its FAQ on the policy. In fact, its Super Bowl commercial FAQ claims viewers benefit from signal substitution during the broadcast, but the Commission can't seem to identify any benefits.


Given the lack of consumer interest in, and occasional hostility toward, simultaneous substitution, the policy represents a problem for the CRTC's pro-consumer orientation. With that background in mind, last week CRTC Chair Jean-Pierre Blais wrote to Rogers to complain about the company's Twitter response to a customer complaint about simultaneous substitution. When a customer complained about the CTV substitution of the Fox feed of the NFC Championship (Go Hawks), the company noted that "it's due to the CRTC rules so no way to watch the Fox feed sorry."

After stating that he was dismayed to read the Rogers response, Blais stated:

There is an important distinction to be made between authorizing broadcasters to substitute signals and forcing them to do so. As I said at the 2013 Prime Time in Ottawa conference, the time has come for broadcasters and distributors to start speaking up on simultaneous substitution rather than simply passing blame onto the CRTC.

There are several problems with Blais' letter.  First, the Rogers response isn't inaccurate. The viewer is unable to view the Fox feed due to the Canadian broadcaster (CTV) using the simultaneous substitution regulations created by the CRTC. The broadcast distributor (Rogers) is required by licence to abide by the simultaneous substitution request. The entire simultaneous substitution system is a regulatory creation of the CRTC and attempts to distance itself from it are misleading. Second, Blais' prepared remarks at the 2013 Prime Time conference did not say that it was time for broadcasters and distributors to speak up on simultaneous substitution (perhaps remarks after the speech did). The speech contained one reference to simultaneous substitution, but there was no urging of broadcasters and distributors to speak out on the issue. [Update: the CRTC Twitter feed points out the Blais went off script to urge broadcasters and broadcast distributors to stop blaming the CRTC for simultaneous substitution].

Third, it is odd to see the CRTC Chair exhorting broadcasters and broadcast distributors to speak out in favour of simultaneous substitution. According to Blais, the Commission's "Let's Talk TV" consultation is "open to any suggestion, question or idea you want to bring forward." Is the Commission open to removing the simultaneous substitution rules?  Or is it merely looking for cover from broadcasters and broadcast distributors on a policy that is not well-liked by many consumers and which ultimately provides less choice by creating Canadian networks that mirror their U.S. counterparts during prime time? If the CRTC wants to retain the unpopular policy, it should own it, not try to pass the responsibility for public support to broadcasters and broadcast distributors.
Comments (4)add comment

Dana said:

...
I've thought for a long time that a broadcaster's right to simultaneously substitute ad time that profits them should be tied to the money invested and quality of their Canadian content. Never fly of course. The CRTC is a wholly owned subsidiary of...well, all the Canadian broadcasters.
January 28, 2014

Adventures in Canadian Cord Cutting said:

...
What makes the problem especially tilted in favour of buying US programming is that the loophole-laden regulations.

The CRTC requires networks to use Canadian content for 50% of their "prime time" programming. I think if you asked most people what they consider "prime time" hours to be, they'd say 8PM-11PM give or take a half hour.

You would think the 50% rule would encourage quality CanCon, but the problem is that the definition of "prime time" is 6PM to midnight, so 6PM and 11PM newscasts count toward the total. Furthermore, the CRTC expanded the rules a few years ago so that newsmagazine shows like ET Canada count toward the total, so most Cdn networks now have 6PM-8PM news + entertainment news, and 11PM-midnight national + local news.

Dramatic/scripted programming is typically in the 8-11PM time slots and is virtually all American and simsubbed.

The requirement for 50% CanCon makes it look like the rules support Canadian dramatic programming, but the built-in loopholes have resulted in the opposite.

If the CRTC defined prime time to be 8-11PM and kept the 50% rule, the networks would be forced to invest in original Canadian programming. As is, the CanCon rules mostly benefit shows that fit in the 7-8PM time slot, which for the big networks is entertainment news these days.
January 28, 2014

Truth in Advertising said:

@Dana
Actually Dana, if you read the address by Blais at 2013 Prime Time event, you will see that broadcasters contribute $200M toward Canadian Content production that was tied to the benefits of Simultaneous Substitution.

The question of how to make up such a large content subsidy is one of the biggest issues in changing the regime.
January 29, 2014

David said:

Sim Sub is a symptom, not the problem...
Simultaneous substitution is a symptom, not the problem.

The real problem is the CRTC's permissive pro-American TV distribution policy. The CRTC has consistently relied on the importation of US TV signals to promote the growth of Canada's cable, satellite, DTH and digital services. This is openly acknowledged by industry executives and the CRTC alike.

Although the distribution policy was recognized as harmful and damaging for Canadian broadcasters, the Commission continued to increase the number and sets of U.S. signals authorized for retransmission to Canadian TV subscribers. U.S. signals available to Canadian TV subscribers has exponentially grown from 2 to up to 20 now.

Simultaneous substitution was implemented to limit damages, and not meant as a revenue generator. If the CRTC wants to full cost the benefits of simultaneous substitution for the Canadian industry and economy, they would have to factor the full costs in the form of damages of allowing the wholesale importation of U.S. signals on the Canadian broadcasting sector. Do they have such numbers?

Vertical integration is the outcome. Cable and satellite companies have taken over the broadcasters. The true cost of this is not yet fully known. One thing is certain, however, Canada has lost a meaningful private independent broadcasting sector. Chump change from simultaneous substitution does not even begin to cover the price.

January 29, 2014

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