Bricks and mortar with window, Spitalfields, London E1, August 2013
How can the CRTC do a better job?
As I argued in the previous two posts, the CMR doesn’t have a life of its own; it reflects the CRTC’s larger priorities. The big one here is research and evidence-based policymaking. A close second is the Commission’s still awkward fashion of trying to reach out to the little people – i.e. anybody besides the inner circle. Here are my suggestions for how it can do what it apparently wants to do, only better:
1 – Stop wasting money on online consultations. Redeploy it for real consumer research. Online consultations aren’t just a waste of money; they can also be highly misleading. One reason for their being unrepresentative is that online “surveys” of the public can’t reach Canadians who aren’t online to begin with. Unfortunately, the Commission isn’t going to find any new money for research, not as long as it sticks to the current Expenditure Profile. As shown in the graph below, the Commission’s spending is pretty much flat from 2009 to 2016, especially if these figures were converted to constant dollars…
Last time, I described some of the ways in which the CMR has fallen short. I added that the current incarnation of this document marks a sharp departure by reflecting a greater concern for end-user behaviors and consumer welfare. I’ve been looking at the CMR less as a source of information about particular trends, and more as a window through which to gauge how the Commission is allocating priorities (the CMR page is here).
I grouped the details into four areas, and covered 1 and 2 in the previous post:
1- The emphasis on industry vs consumer welfare. That emphasis has changed quite dramatically in the 2013 edition, which stems from the pro-consumer tilt the Commission has taken under the current Chair.
2 – The reluctance to report bad news. This entrenched timidity is still holding back critical discussion. That’s one great advantage the FCC’s structure has: open and sometimes quite vocifeous partisanship, since appointees must include a balance of Democrats and Republicans.
“It is absurd to suggest that, in today’s highly competitive video marketplace, obtaining some level of exclusivity is anticompetitive.” –Time Warner’s response to recent charges of anticompetitive behavior
“They are not paying for exclusivity. They are saying you can sell to X, to Y and Z, but you are forbidden from selling to this new class, called A.” –Richard Greenfield, market analyst, BTIG Research
In my previous post, from way back on June 8, I tried to explain some features of the Netflix value proposition, along with the battle that’s developed between Netflix and our conglomerates. That battle revolves around two topical points of contention: the Bell-Astral baloney about needing ever more concentration to fight off the American demons; and the outrageous use of data caps by the conglomerates to protect their legacy video businesses. I then said:
In Part 2, I’m going to add a few more comments about why the Netflix value proposition isn’t just about content, and challenge the idea that it’s going to need ”a lot of exclusive shows” (Pete Nowak’s take).
So here goes.
Nope, content isn’t always king I hear people say they’re not interested in subscribing to Netflix because much of its library consists of old movies and TV shows. But Netflix isn’t a poor man’s version of cable. If it were, we wouldn’t be having this conversation. “Old” content does not necessarily make an OTT streaming service any less original or innovative. Continue reading →
Artist’s rendering of pentup demand for 22 more mandatory TV channels
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).
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 →
HighlightsThe 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 →
I’ve been gathering reactions to last week’s CRTC decisions on wholesale rates for Internet access. My takeaway is a lot of people are having trouble understanding what the hell it all means. So in this series of posts I’m going to provide some plain-language context.
Today, I’m covering broadband competition, and the unusual structure of Canada’s wholesale and retail Internet access market. In the next post, I’ll look at how the CRTC arrives at wholesale costs and what that will mean for your residential bill. Finally, I’m going to focus in the third post on the UBB controversy of two years ago and how that relates to the recent rulings.
A pig in a poke
Communications services play an increasingly important role in our lives. Yet the evidence is that awareness among consumers about what they’re getting when they buy broadband is stunningly low. Continue reading →
Last time, I took the Commission to task for trying to build excitement over the level of cellphone penetration in Canada in their consultation video. Why? Because the only metric that really counts in 2012 is the takeup of smartphones: smartphones do data, feature phones don’t. Let’s consider penetration in a more meaningful context.
Penetration. Data released by the OECD in December 2011 says Canada is 24th out of the 34 member countries in terrestrial mobile wireless broadband subscriptions, as indicated in this chart (OECD broadband portal, spreadsheet 1d):
OECD: wireless broadband subscriptions per 100 inhabitants
Notice this dataset covers mobile devices like laptops using a dongle for Internet access. As it has done elsewhere with wireline broadband, the Commission has cherry-picked a more inclusive number (cellphones in general), rather than a more meaningful number (data-capable mobile devices). And that’s not the only way the Commission is glossing over problems… Continue reading →
I think the CRTC’s decision to get the incumbents’ financials out of the closet is very positive – another demonstration of Chairman Blais’s public-spirited philosophy. But even Chairman Blais has a corporate history to live with, and that’s not going to be a cakewalk. So before we start counting our chickens, let me outline four factors working against consumer-friendly broadband in this country:
Canada’s market share failure
misgivings about switching providers
the unfulfilled goals of the Telecommunications Act
the 2006 Direction to the CRTC on market forces.
1 – Market share failure. The long-standing failure of Canada’s broadband competition policy is summed up in the time series above, which I concocted from data in the CRTC’s latest Communications Monitoring Report (pdf uploaded here; see Table 5.3.2, p.150). The graph contrasts total market share for the independent ISPs, in blue, with that of the incumbents, in green (both exclude business services and dialup). For all the pontificating over the years from the von Finckenstein CRTC and Tory politicians about how super-duper competitive everything is in Canadian telecoms, the data tell a very different story. Continue reading →