The public hearing announced by the CRTC last week (Broadcasting Notice of Consultation CRTC 2014-190) came with two other newsworthy documents.
One is the Commission’s trial balloon on instituting a pick-and-pay system for TV subscribers, which takes the official form of the CRTC’s Response to Order in Council P.C 2013-1167 (“Maximizing the ability of Canadian consumers to subscribe to discretionary services on a service by service basis” – here). This document contains the seeds of what might be a significant reform to the channel-bundling model. Continue reading
Memo to the CRTC: Even if pick-and-pay were to be implemented, it will never on its own advance consumer welfare by lowering costs or expanding choice, thanks to the market stranglehold enjoyed by Canada’s vertically integrated congomerates (VICs). When Chairman Blais kicks off the so-called “conversation” on TV policy this Thursday (Oct 24), he’ll face a daunting task: having to promise real change in the face of a) legislation that’s two decades out of date (which the Tories are not going to fix); and b) a heavily concentrated industry determined to preserve its bounteous status quo (which the Tories are also never going to fix). The best indicator of a meaningful review won’t be whether TV subscribers can simply pick and pay from among Canadian services at BDU prices not disciplined by either competition or regulation.
The real barometer of any new TV policy and its success or failure will be whether subscribers can choose services freely from outside the regulated broadcasting system – especially non-Canadian services delivered online, like Netflix, and do so without being subject to anti-consumer punishments like price-gouging through data caps. Netflix is a good marker to watch because it has conquered the OTT space and continues to grow in popularity; and because if the big broadcasting groups see any threat from a new policy framework, the first words out of their mouths will be, tax Netflix! If the CRTC continues to allow the VICs to brandish undue preference in our vertically-integrated media universe, then we’ll know the TV policy review has been a failure.
So the Harper government wants to help consumers. As the Speech from the Throne indicated, that help would allegedly embrace TV subscribers, who might some day be allowed to select which television channels they want to pay for, rather than being forced to pay for bundles. As Greg O’Brien at Cartt.ca pointed out, the timing is a little weird: “Who’d a thunk the first submission to the CRTC’s television policy review would come straight from the federal government.” Continue reading
As I’ve noted earlier in this series, the Americans have their own version of Canada’s anti-consumer, mandatory-carriage policy. But with this difference: the US is also seeing the rise of a video revolution that’s opening up new vistas for a more curious, engaged and demanding audience. The old guard, who got rich and complacent on top-down, linear TV, are fighting the upstarts tooth and nail. The courts in both countries have been alive with the sounds of the old guard squawking about their right to keep making gobs of money – up to and including threats to take their over-the-air networks off the air and make them cable-only (says Fox COO Chase Carey, among others).
Must-carry isn’t Ottawa’s only anti-consumer, anti-Internet policy failure
Let’s consider one regulatory development in Canada first of all, in order to put the current must-carry proceeding into context. That context draws from the same old story: the CRTC has never felt bashful about making consumers pay to keep broadcasters thriving. In other words, the must-carry proceeding is not an aberration; it’s business as usual for Ottawa’s costing of “cultural” initiatives. Continue reading
“Canadians have told us they want to see Canadian films on TV so we’re filling a gap that’s been created in recent years.”
— Starlight CEO Norm Bolen, January 23, 2013
The Starlight campaign to be declared a mandatory TV service is nothing if not slick. Just check out their website. It’s clean and beautifully designed, and features model schedules, along with testimonials from members of Canada’s filmic pantheon. They pop up on rotating video clips: Denys Arcand, Atom Egoyan, David Cronenberg, Patricia Rozema and others, making the case for an all-Canadian movie channel. The whole campaign is designed to be music to the ears of the CRTC commissioners who will decide this summer which services get greenlighted.
Industrial policy masquerading as cultural policy
What do the Deciders of Gatineau like? In my previous post, I outlined the official criteria the CRTC will use in assessing the 22 candidates for mandatory carriage. Today let’s look at the process from a slightly different angle. Before I get into the survey research I alluded to last time, consider yesterday’s announcement from the CRTC’s number-crunchers. It concerns the release of its 2012 financial results for specialty, pay, pay-per-view and video-on-demand TV services (Web page here). This is the overview:
Revenues for these television services have climbed by 35.4% over the past five years to reach nearly $4 billion in 2012. During the past year, a significant portion of these revenues, close to $1.4 billion, was invested in the creation of a variety of Canadian programming, resulting in thousands of jobs in the Canadian production sector and new television programs for Canadians. In 2012, Canadian specialty, pay, PPV and VOD television services created 226 new jobs, directly employed 6,176 people and paid $487 million in salaries.
By contrast with its abject inattention to the consumer perspective, the Commission tends to wax enthusiastic about two kinds of reporting results: new programs getting made “for Canadians” and economic prosperity in the sectors it regulates. The first of these has become self-justifying. We can never have enough Cancon, no matter who’s footing the bill. Occasionally we hear the rationale that Canadian programs are good for us because they allow us to “tell our own stories.” Apart from their citizenship, I fail to see how a Cronenberg or an Egoyan is telling “our” stories and not their own, but let’s not quibble. Continue reading
Update (Apr 11). In citing Michael Geist’s post below, I neglected to point out the suggestion he makes to replace must-carry in the service of viewer interests. A must-offer policy would require “broadcast distributors to offer all licensed channels to their subscribers in a pick-and-pay format.” That idea seems sensible, although it’s difficult to see how it could be implemented across the board without a) confronting capacity and delivery issues, especially for smaller BDUs; and b) having the Commission set demand thresholds for very marginal broadcast services. What happens if 50 people request a service on a system with 5,000 subscribers? Whatever the merits, the big distributors are not exactly enthusiastic about pick-and-pay, if only because of the money they would have to leave on the table. But these are all yesterday’s battles and they demonstrate clearly what’s wrong with Canada’s broadcasting system: it’s 20 years out of date, based on outmoded assumptions about infrastructure scarcity, the need to “protect” our sovereignty and the passive role of the TV audience. If only we had a technology that offered a more economic, personal and interactive way to communicate. Wait. We do. It’s called the Internet.
In my previous post, I concentrated on channel-bundling in the US and how the market has been reacting to the pros and cons. Today I want to talk about the CRTC’s must-carry proceeding, an event that has triggered a lot of debate (see Broadcasting Notice of Consultation CRTC 2013-19).
Right after it was announced in January, Michael Geist tore into the CRTC, referring to the announcement as bad news for Canadians frustrated by ever-increasing cable and satellite bills (CRTC Should Put Consumers First and Drop ‘Must Carry’ Requirements):
Rather than convincing millions of Canadian consumers that their services are worth buying, the broadcasters need only convince a handful of CRTC commissioners that their service meets criteria such as making “an exceptional contribution to Canadian expression.” That is supposedly a high bar, yet it is surely far easier than convincing millions of people to pay for your service each month. Continue reading
Highlights The CRTC is moving ahead with its must-carry decisions for 22 niche TV channels on the basis of whether they are of “exceptional” importance to Canadian culture (public hearing begins April 23). Canadian TV subscribers will be forced to pay for all of the services that succeed, without any regard for their viewing preferences. This approach suits the old media guard perfectly, because it guarantees a revenue stream even for channels few people are watching. While American consumers are being subjected to the same abuse, their TV world is being revolutionized from two directions.
First, OVD upstarts like Netflix are demolishing the idea that broadcasters should control viewing. Netflix is enhancing viewer choice by e.g. posting an entire season’s episodes all at once, in some cases of shows it has financed. Second, a backlash is under way in the US against the market power that limits choice and picks consumers’ pockets. Even US pay-TV distributors are fighting program providers that bundle their popular fare with channels nobody wants. Meanwhile, Canada is clinging to an outmoded cultural ideology that will bring about exactly the opposite of the intended effect, by chasing viewers out of the regulated broadcasting system and into the waiting arms of Netflix, YouTube and the Pirate Bay.
The absurdity of force-fed bundling: follow the money
Before I get to the CRTC’s must-carry proceeding, I want to touch on the debate raging in the US over whether TV subscribers have a right to “à la carte” service – the ability to choose only the channels they want from their service provider, as opposed to being obliged to take bundles of channels they don’t want but have to pay for anyway. Channel bundling is the subject of an article that appeared in the Wall Street Journal in late February, entitled “New Attack on TV Bundles” (here, pay wall). Continue reading