What remains is the next step for the CRTC. It seems certain that there will be a full scale hearing, but the question is whether the Commission will cave to pressure from some groups for something immediately, or wait until the next new media hearing round in 2014. Given the lack of actual evidence – this has been a fear-finding exercise rather than a fact-finding one – the CRTC should surely label this a watching brief and wait until 2014.
A glance at each of the submission groups:
Submissions embracing more competition include the likely suspects – Google, Netflix, and Apple – along with a couple of surprises. Google’s submission doesn’t pull any punches:
This Consultation is deja-vu all over again. The CRTC tackled this exact issue two years ago. It received submissions. It heard evidence. It made an important – and correct – decision to maintain and expand the exemption for New Media. The key facts on the ground underlying the CRTC’s current don’t-mess-with-a-good-thing policy are the same as the last time around. No new online audio-visual content regulation is warranted.
Google highlights the remarkable growth of YouTube, both as a platform for distributing Canadian content to a global audience and in generating revenue for creators.
Netflix chimes in by noting that its service “effectively expand[s] the pie of viewing choices, and are positive from a consumer welfare standpoint” and “despite much public discussion of so-called ‘cord-cutting’, there is virtually no evidence of viewers abandoning traditional broadcasting to any significant degree in favour of OTT services.” It states that 10 percent of its inventory in Canada is Canadian content. Apple makes similar arguments:
Rather than competing with Canadian broadcasters and reducing their available market, Apple’s services help to grow the size of the overall ‘pie’ in Canada, by providing Canadian creative industries and broadcasters additional outlets for the sale and promotion of their programs that enhance their availability and attractiveness to Canadians.
While the responses from these companies is not surprising, it is good to see some Canadians expressing similar support for embracing OTT competition. For example, the CBC acknowledges that “it is too early to conclude that Netflix or other OTT services will significantly change how Canadians consume TV in the next five years” and notes that the availability of OTT alternatives is consistent with its mandate:
CBC/Radio-Canada’s goal is to ensure that Canadians have access to its programming on whatever platform they choose, thereby increasing the quantity and variety of Canadian content on new platforms. CBC/Radio-Canada must also maximize the value of its content. CBC/Radio-Canada is therefore eager to negotiate the supply of its content with OTT services used by Canadians, including any new Canadian OTT services that may arise.
The National Film Board of Canada, which has been active in streaming its films, is also supportive of OTT services. In fact, the NFB wants to compete with Netflix:
There is room to create an alternative Canadian OTT service that would not compete with the existing commercial sector but provide unique opportunities for the Canadian private production industry and for Canadians. Such a service can be enormously advantageous in promoting the value of Canadian programming at home and abroad.
The NFB describes how it has been developing all the functionality necessary for an OTT service and is looking to work with the Canadian private sector to develop new alternatives. Once established in Canada, the NFB envisions exporting it to other countries in much the same way as Netflix entered into the marketplace.
Regulation
If the NFB represents the vision of Canadian content competing in the online environment, the creator groups such as ACTRA, the Canadian Media Production Association, the Directors Guild of Canada, and the Writers Guild of Canada represent the opposite view. Rather than competing, their submission conjures up all the fears associated with OTT:
As consumers opt for non-contributory OTT services, we can conclude that a significant negative impact will occur on the Canadian content creation industries because of reduced funding for the CMF and independent production funds. Further, we can surmise that the availability of Canadian content to Canadians could be detrimentally impacted as those who opt for OTT services may have less such content available to them.
As a result, the submission seeks new regulations requiring OTT services to contribute financially to the creation of new Canadian content and to meet Cancon requirements. The submission supports this position with an opinion from lawyer Peter Grant, who argues that regulating foreign-based OTT services is legally possible.
Moreover, it includes a study by Paul Gratton that purports to find that Netflix Canadian content is actually 2.3%, not the 10% that Netflix claims. The study appears to have some serious methodological shortcomings, however. For example, working without a master list, it simply counted programs or movies as they appear by genre. The study then removed Canadian duplicates that appear in more than one genre. While the Canadian duplicates were removed, it is not clear that all duplicates were similarly removed, possibly leading to a much lower percentage of Canadian content than is actually the case. Moreover, the study treats all television programs as one title, without regard for the number of episodes. By its count, Canadian television accounts for 7% of the total titles but the actual percentage of episodes may be higher still.
Joining the creator groups in seeking more regulation is Bell, now the owner of CTV. Bell calls for a further proceeding, leading to a new regulatory framework that would require regulation of a company’s “principal broadcast business.” The approach would mean Netflix would face new regulation. The Bell submission coins a new acronym for OTT services – FOBs or Foreign Owned Broadcasters. While the question of whether services like Netflix are broadcasters is open to debate, the choice of acronym is unquestionably a bad one.
Allarco, which owns SuperChannel, a leading pay TV service, is also squarely behind greater regulation for OTT services. The submission makes a compelling case for why pay TV is most threatened by OTT services, as it offerings such as Netflix are far more price competitive and flexible.
De-Regulation
The third group of submission involves major cable companies who view the OTT exercise as the opportunity to remove regulations from their businesses. Rogers argues that it is premature to regulate Netflix, but that the CRTC should use the opportunity to remove regulations from its video-on-demand products. Shaw joins the call for deregulation, arguing that the current “walled garden” regulatory environment is unsustainable. Instead, it says:
Three key principles should form the cornerstone of any new regulatory model: (i) no new regulatory requirements or entitlements should be introduced into the Canadian broadcasting system, (ii) steps must be taken to decrease the regulatory burden of licensed undertakings; and (iii) a plan for deregulation must be based on re-evaluating and prioritizing broadcasting policy objectives and regulations, with the goal of implementing a new framework that supports the satisfaction of consumer expectations and the competitiveness of Canadian broadcasters and BDUs.
The Shaw position is particularly notable since represents a shift from what it told a House of Commons committee last year when it called for a reconsideration of the new media decision.
Am I the only person who sees how clever yet offensive Bell is being by calling OTT services FOBs? Am I looking too deeply into it?
Hah, guess I missed the line where even Geist points out how bad it is.
Definitely fine with less regulation and more competition. Canadian content needs to survive on it’s own.
Well FOB me!
FOB brought to you by the BettER catchline makER… am I the only one that feels that Bell loves to write bad catch phrases and use its tremendous financial wealth to try and make them stick in the public consciousness?
@Ki
Canadian content can’t really survive on it’s own, and that just plain old mathematics… unlike other countries where most movies make their money back at home and is then exported Canadian movies need a little more financial support in order to make it to the international market.
That being said, I don’t think our domestic market needs any protection from foreign players, nor should any restriction be placed on Netflix and its successors that set up shop in Canada.
The Canadian industry lacks support, and that should naturally lead to more support, but not closing off foreign content.
Sore losers
I just read the first few pages of the Superchannel submission and it really just sounds like they’re upset that someone else is offering better service for the fraction of the cost. I don’t know.
To me, the CRTC is going to require a more convincing argument than “they offer it cheaper and that’s not fair”. No one other than Superchannel is going to find that to be a very compelling argument.
I don’t think that in this age of tech we need to continue sheltering large Canadian companies who are unwilling to change their business model to compete with th emore flexible and customer choice oriented services that are being mamde available.
The answer shouldn’t be, make it more difficult and expensive for Canadians to get Netflix. In that scenario, Canadians suffer for the benefit of Superchannels bottom line. Better they modernize and compete so that both the company and the consumer can win.
I know it’s easy to say that from here but the logic is flawless so long as we take for granted that the interest of the consumer is an important part of the equation.
…
Unfortunately over the last few years, time and time again, the CRTC has proven they’re in support of the big corporations and have little regard for the consumers they’re supposed to stand for. So, I hold little hope for any real progress to come out of this.
Ultimately, consumer pressure is what will force changes, not useless regulatory bodies such as the CRTC. They can regulate and mandate all they want, but if it’s not in the interest of the consumer, or even blatantly anti-consumer, such as UBB, consumers will complain or find ways to get what they feel they should have. Piracy to get content which is extremely expensive in Canada, but everyone knows is cheap as dirt in the US and geo-unblocking to access services like Hulu and Pandora are prime examples. Lack of choice will force many consumers to turn to more illicit means. More choice, more competition, at lower cost is really the ONLY proven deterrent against such practices.
Regulate this
Until the CRTC come on side with theneeds of consumers and stops pandering to the Telcos, I’ll just continue to download whatever I want for the cost of ZERO dollars. The vast majority is more than will to pay for content, myself included, but it won’t be on Bell, Rogers, or Shaw’s terms. Compete or perish should be the only answer they get from the CRTC.
Hooray!!
I cannot be more pleased with the forward looking attitude of the Canadian Film Board. Finally, a group promoting Canadian content and production is cluing in to the opportunities rather than the threat that innovation will bring.
As for Bell, and those in it’s camp, I can only say when you’re protecting your backside you are looking in the wrong direction.
One of things I have always pointed out, is that the internet transforms industries and businesses. It isn’t simply an “extension” of the current models, it is a complete transformation. If a business or industry doesn’t recognize this and transform themselves, someone/something else will come along that makes them irrelevant.
This doesn’t just apply to business models. It applies to cultural identities, international commerce, government policies and bureaucracy, and even government forms.
The OTT suppliers are a brand new model. Trying to stuff this square peg into the round hole of the broadcast model simply won’t fit. There are way too many differentiating points.
– Increased customer range of choices
– On demand (unscheduled) with pause resume
– Volume pricing at all levels
The broadcast industry was regulated, and that regulation made sense when the customer was required to schedule their limited choices they had around the selections the broadcaster made available. Even PPV was simply a high priced broadcast version that offered a limited extension of the capabilities we see from the OTT suppliers. When the broadcasters were effectively in control of what was being offered to customers, regulation made sense. CanCon was simply a extension to enforce Canadian “cultural identity content” into the choices offered to Canadian customers.
Why are we even considering regulating a brand new business model that offers effectively unlimited choice and freedom to the customer? I would think any and all “Canadian identity” content providers would be itching to bring their wares into a global market. Just as there are a variety of Canadians that like to view BBC or Australian content, I know there are citizens in various countries that enjoy Canadian content.
The broadcast industry isn’t “dead” – yet. There is still livecast content that is more efficient in that model (news, sports, etc). But the new business model presaged by the OTT suppliers has made most, if not all, of the prerecorded content irrelevant.
It a brand new game, with new rules. And the sooner the old gamers recognize this, the easier things will become. We can only hope the CRTC and our regulation policies recognize this too.
A quote from Kevin Crull, President of Bell Media, says it all.
Paraphrasing from something read on another blog, Kevin Crull (President of Bell Media) while presenting a speech in June at the Banff world media festival 2011, said something to the effect of “OTT services are replacing a television toonie with a digital dime.”
This folks just sums everything up nicely, from dropping usenet access to the introduction of traffic management, and applying ridiculous usage caps and usurious overage charges. It is all an attempt to maintain their ARPU and to keep the shareholders happy.
Rather than change with the advances in technology, and attempt to compete head on with the new age of “the internet can do it all”, the big boys are using an outdated telecomunications and broadcasting act to attempt to stifle innovation, and keep gouging the Canadian consumer.
Leveraging their control as the network provider with traffic management proceedures, low caps and high overage fees, to protect their traditional cash cow delivery system, broadcast television, is a pure monopolistic action which is set up to prevent folks from replacing traditional television with OTT services.
Updating the Telecomunications and Broadcasting acts to bring them into the 21st century digital age, and include a structural separation clause of the nework vis-a-vis the services provided over the said network is the only answer to all of the problems we presently have in the Telecom, Broadcast and Media consolidation known as vertical intergration.
Sheesh, whats with everyone crying to the government with their troubles lately? Since when is the governments job to help out particular businesses?
“Canadian content needs to survive on it’s own. “
You hit the nail on the head, Ki!
Let it swim or let it sink without support or interferance.
Too many productions are crappy because they know they’ll be propped up. Why spend $10,000 required to take it to a whole new level when you can spend $10 and go “BAWWWW! BAWWWW!” to the government.
I’ve listened to many award winning producers/writers on CBC radio-1 interviews who say the same thing.
If our content cannot survive, it never deserved to.
“Memo of understanding” between RIAA, MPAA, & which ISP’s?
Ray Beckerman writes:
http://recordingindustryvspeople.blogspot.com/2011/07/memo-of-understanding-between-riaa-mpaa.html
It appears that the RIAA and the MPAA have gotten together and created a collusive “Memorandum of understanding” for ISP’s to sign, which calls for the signing ISP’s to assist the Big 4 record companies and the Big 6 motion picture companies in enforcing their copyrights, in ways never contemplated by the Digital Millenium Copyright Act
I haven’t had time to analyze it yet (it’s 36 pages), but at first glance it made me kind of ill…
@Crockett
“when you’re protecting your backside you are looking in the wrong direction”
This, love it!
I’m not sure why the big ISPs are complaining – the more people watch Netflix the more money they make via UBB.
Step 1 to level the playing field: Ban UBB.