The CRTC’s vertical integration hearing opens today with fifty groups scheduled to appear over the next week and a half.  I’ve written a couple of articles about the issue over the past year. Last September, I noted the Canadian consolidation felt like a last stab at a walled garden approach that has consistently failed and argued:

The key to ensuring a competitive environment therefore rests on maintaining open platforms on all service providers.  That may prove challenging, since the newly vertically-integrated companies will find it tempting to grant preferential treatment to their own assets.  In addition to exclusivity, this could take the form of faster speeds on wireless services for company-controlled broadcasts, allowing users quicker access to the walled garden content.

Alternatively, it might mean excluding walled garden content from the bandwidth caps imposed by most providers.  Under such a scenario, subscribers would find that accessing walled garden content would be “free” in the sense that it would not count against their monthly bandwidth allocation.  By contrast, competing Internet services would effectively face an additional cost, since subscribers would have to factor in their bandwidth consumption.

These scenarios point to the possibility of greater regulatory intervention to ensure a fully competitive converged broadcast and telecom environment.  Indeed, the Canadian Radio-television and Telecommunications Commission expressed concern about this direction in its 2009 New Media decision.

Notwithstanding assurances from the wireless carriers that walled gardens have not proven successful and “the industry is quickly moving toward the open Internet model, whereby mobile users can access content of their choice,” the commission worried that “the ownership structure within Canada’s wireless industry suggests that the potential for unduly preferential treatment needs to be addressed because the industry structure comprises vertically integrated companies with ownership interests in content providers.”

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