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    CRTC Ruling a Small Step Toward Broadcast Overhaul

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    Thursday August 15, 2013
    Appeared in the Toronto Star on August 10, 2013 as CRTC Television Ruling a Small Step Toward Broadcast Overhaul

    Coverage of last week's Canadian Radio-television and Telecommunications Commission ruling on mandatory carriage of a couple of dozen channels may have focused on the future of the Sun News Network (no mandatory carriage that would have guaranteed payment from all cable and satellite subscribers) and the monthly cost of cable and satellite bills (a very small increase since virtually all new proposals were rejected), but the decision really represents a small step toward a complete overhaul of Canadian broadcasting regulation that is likely to unfold over the next ten years.

    The Commission will hold a further hearing on how to treat news channels, telegraphing that it plans to adopt a must-carry approach so that all Canadians can subscribe to the news channels of their choice. Yet the entire process harkened back to a different world, when space on the television dial was scarce, access to Canadian content scarcer still, and consumer choice for broadcast content largely unknown.

    The reality of the current environment is that none of these conditions exist. Cable and satellite providers have virtually unlimited space (my provider currently features a trio of channels that continually display a fireplace, aquarium, and sunset in high definition), Canadian content can be found through a multitude of venues including video-on-demand and Internet-based streaming services, and consumers can access broadcast content from anywhere on any device.

    The upcoming battle will not be about which channels benefit from regulatory handouts, but rather over whether there is a need for any broadcast regulation beyond basic principles of non-discrimination on what consumers can access through conventional broadcast and the Internet. These principles, now found in the Commission's policies on vertical integration and Internet traffic management, will become an increasingly important part of the regulatory process.

    This may take a decade to play itself out, but will ultimately place four foundational issues at stake.

    First, there will be growing pressure to eliminate all must-carry rules, instead adopting a must-offer system in which cable and satellite companies will be required to offer channels to their end users on a pick-and-pay basis. Those channels may prove costly, but the purchasing decisions will lie in the hands of consumers, not regulators or vertically integrated cable and satellite providers.

    Second, the foreign ownership restrictions on broadcast distributors will face the prospect of elimination. The imminent entrance of foreign telecom companies into the Canadian market will place the spotlight on how the restrictions create a significant disadvantage to new entrants that wish to offer bundled telecom and broadcast services.

    Third, rules designed to benefit Canadian content creators and broadcasters, including mandatory contribution requirements and simultaneous substitution policies that allow domestic broadcasters to replace U.S. commercials with their own, will be re-examined as Canadians consider whether an open broadcast market inevitably leads to the elimination of those longstanding policies.

    Fourth, the main event will pit the regulated broadcast framework against the unregulated broadcast market (ie. the Internet). As the unregulated market, which includes Netflix, YouTube, and a myriad of unregulated online broadcasters, captures an increasing share of the viewership market (and consumers “cut the cord” in bigger numbers), the regulated side of the equation will argue that a dual track is unsustainable and that either everyone should be regulated or everyone should be unregulated.

    Faced with a choice of regulating a seemingly unregulatable, growing Internet market or removing most existing broadcast regulations, the need to side with an unregulated space will seem obvious to government, regulators, and a generation of Canadians who will be puzzled that the system once involved debates over whether consumers should be forced to pay for channels they don't want.      

    Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.


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    Verizon Entry to Canada Could Spark Shift Toward Single North American Communications Market

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    Wednesday July 10, 2013
    Reports that U.S. telecom giant Verizon may be preparing to enter the Canadian market has sparked considerable speculation on the likely impact of a company with a market cap greater than Bell, Rogers, and Telus combined. While much of the discussion has centered on wireless pricing, my weekly technology column (Toronto Star version, homepage version) argues that the more significant development may be the shift toward a single North American communications market.

    Canada and the U.S. share much of the same communications infrastructure - the same North American numbering plan (calling codes), closely aligned spectrum policies, and easy access to broadcast signals along the border - yet for decades the two systems have been separated through regulation. Foreign ownership restrictions, Canadian content requirements, and simultaneous substitution policies (which lead to the annual complaints about missing U.S. commercials during the Super Bowl) have all ensured that the two markets remain distinct.

    In recent years, new technologies have slowly chipped away at the communications divide.


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    Verizon Entry to Canada Could Spark Shift Toward Single North American Communications Market

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    Wednesday July 10, 2013
    Appeared in the Toronto Star on July 7, 2013 as Verizon in Canada Could Spark Shift To Single North American Communications Market

    Reports that U.S. telecom giant Verizon may be preparing to enter the Canadian market has sparked considerable speculation on the likely impact of a company with a market cap greater than Bell, Rogers, and Telus combined. While much of the discussion has centered on wireless pricing, the more significant development may be the shift toward a single North American communications market.

    Canada and the U.S. share much of the same communications infrastructure - the same North American numbering plan (calling codes), closely aligned spectrum policies, and easy access to broadcast signals along the border - yet for decades the two systems have been separated through regulation. Foreign ownership restrictions, Canadian content requirements, and simultaneous substitution policies (which lead to the annual complaints about missing U.S. commercials during the Super Bowl) have all ensured that the two markets remain distinct.

    In recent years, new technologies have slowly chipped away at the communications divide. For example, there may be modest differences between U.S. and Canadian satellite radio services with several Canadian-specific channels, but the vast majority of available programming and devices are the same.  

    Internet-based video services represent another significant blurring of the Canada - U.S. line. With two million Canadian Netflix subscribers, those hoping for a Canadian competitor to Netflix are missing the reality that the Canadian Netflix is Netflix. There are some differences in available content, but that too is diminishing, particularly as Netflix invests in its own original programming.

    The prospect of a Verizon entry into Canada would put a single communications market into overdrive. On the telecom side, Verizon could use its Canadian network to change the approach to roaming in North America altogether since it would be uniquely positioned to offer a single U.S. and Canadian network.

    The company could move to eliminate roaming fees for U.S. and Canadian customers, while offering cost-competitive U.S. and Canadian roaming together for international providers establishing wholesale roaming agreements. Such a plan would obviously be attractive to the corporate sector as well as regular cross-border travellers, leading to the gradual elimination of roaming and long distance charges for calls throughout North America.

    On the broadcasting side, Verizon holds exclusive U.S. rights to both the National Football League and the National Hockey League.  Those rights are currently held by BCE in Canada, but a Verizon entry into Canada could shake things up. Verizon could presumably complicate the BCE rights by offering free access to NFL and NHL games to Canadian customers when they travel to the U.S.  More interestingly, it could make a play for joint U.S. - Canada rights in the future, moving closer to an elimination of the geographic divide on content rights.

    Verizon could also pursue changes to broadcast distribution regulations, which are viewed as a major hurdle for foreign entrants since non-Canadian companies are unable to offer competitive bundles that feature wireless and television services.  Given the government's obvious support for a strong foreign wireless entrant, Verizon would be well positioned to promote the removal of the current restrictions.

    Later this year, the Canadian Radio-television and Telecommunications Commission will examine the regulatory framework for television services.  CRTC Chair Jean-Pierre Blais has acknowledged that it is time to ask whether the assumptions that lie behind Canadian regulatory policies still hold true.

    With satellite radio and Internet video already close to a single market, regulatory reform to longstanding policies such as simultaneous substitution a possibility, and the geographic lines on telecom, content, and broadcast distribution all increasingly blurred, the big question may be whether Canada is closing in on a common North American communications market.

    Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.


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    Verizon on the Horizon: Could the U.S. Giant Shake Up More than Just Canadian Wireless?

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    Thursday June 27, 2013
    Reports in the Globe yesterday that U.S. telecom giant Verizon has offered $700 million for Wind Mobile as part of an entry into the Canadian wireless market (which could also include buying Mobilicity and bidding in the upcoming spectrum auction) caused significant reverberations throughout the industry. The news sent the stock price of the Canadian incumbents plummeting and analysts - who only days ago were assuring clients such a move would not happen ("highly unlikely" said Scotiabank's Jeff Fan; "what a joke" a telecom executive told Cartt.ca) - scurrying to assess the potential impact of a Verizon entry. Some have argued Verizon would have little interest in a smaller market like Canada, yet the company has actively promoted the elimination of foreign investment restrictions including in a 2008 submission to the Competition Policy Review Panel that detailed how "it had a long-standing presence in the Canadian telecommunications market". 

    There remain many questions about a Verizon entry into the market via Wind Mobile, particularly with respect to the use of different wireless technologies and spectrum, but there is little doubt that the company could use its buying power to offer better deals on devices and North America-wide plans that leverage its U.S. network to offer significantly better roaming services. Moreover, the U.S. footprint could appeal to the corporate sector, offering the chance to steal customers from the current incumbents. 

    Less discussed would be the potential impact on broadcast rights and distribution.


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