CRTC’s annual report is here: the good, the bad, the weird (1)

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The Brighton Wheel, August 2013

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It’s always been a challenge to figure out who the CRTC is talking to in its annual Communications Monitoring Report (CMR). This year’s edition, released last week, shows some progress has been made on the goal of putting the consumer first.

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[Sept 30: some minor edits and corrections made]

What does the CMR tell us about its authors?

Blais pic(1)For anyone who cares to tackle well over 200 pages of really dense charts, tables and footnotes, with equally dense explanatory prose, the CMR can serve two very different purposes (this year it’s 262 pp: CRTC’s launch page is here). One is the obvious: use the data to better understand the trends in Canada’s legacy and digital media. The other is less obvious and to my mind a lot more interesting: use the details, the tone, the assumptions in these pages to gauge how the regulator is thinking about its changing role in the marketplace.

Since the arrival of Chairman Blais, the CRTC has had a distinctly more consumer-oriented slant on many issues. Blais arrived amid high hopes of a more progessive agenda and many such hopes have been fulfilled.

Colossus_of_Rhodes-2But federal regulators can’t perform miracles. Regulatory capture is always lurking. And it lurks even more in a market like Canada or the US, where rampant concentration of ownership has made firms with the clout of a BCE or Verizon very difficult to confront or turn down. BCE was eventually going to get Astral, whether that meant more applications, appeals to the Federal Court or petitions to Cabinet. Stateside, concerned commentators have been writing stories recently along the lines of “What if Verizon succeeds in killing the Internet?” (The consensus is that Verizon will at least succeed in killing parts of the FCC’s open Internet code.)

The CRTC is burdened by other factors not necessarily within its control: old habits dying hard; two enabling statutes that are completely out of date in treating broadcasting and telecoms like they are still from different planets; and parliamentarians who lack a sense of how anything works, especially the Internet.

Yet hope springs eternal. And the 2013 CMR suggests Chairman Blais may at last be helping the CRTC find a public voice, even if it is in a 2-steps-forward-1-step-backward kind of way. Some of the change lies in semantic details, like referring to Canada’s communications “system” instead of communications “industry” – and by “semantic” I don’t mean trivial. Some of the new look stems from larger shifts, like more attention to what consumers are doing, then leading with those doings in public pronouncements.

Here’s my lineup of four attributes against which to measure how far the Commission has come in the role it has allocated to the CMR. As we’ll see, the results are mixed:

  • the emphasis on industry vs consumer welfare;
  • the reluctance to report bad news;
  • the failure to conduct real consumer research; and
  • the failure to account truthfully for where Canada stands on international rankings.

cash_register21 – More money for us! Until now the CMR has been written for the Commission’s licensees and not for any wider audience, despite some feeble marketing attempts to suggest otherwise. That in itself might not have been problematic, but for the awkward fact the CRTC has a duty to look after the welfare of consumers and not just the welfare of licensees. The framing was all about more jobs, more revenue, more Cancon. Customers, on the other hand, were reduced to a mere collection of households, disembodied targets to sell more services to. Here to illustrate is the opening passage from the Executive Summary of last year’s CMR (the pdf is uploaded here if you’re into invidious comparisons):

“The Canadian communications industry is growing. Revenues from communications services increased 3.3%, rising from $57.4 billion in 2010 to $59.3 billion in 2011. This growth was driven by a 5.5% increase in broadcasting revenues and a 2.5% increase in telecommunications revenues. The communications industry offers services to virtually all Canadian households, which currently number approximately 13.7 million.”

And where did all that nice money come from? From us hapless customers, stuck in oligopolistic, barely competitive markets, including a wireless sector with the highest ARPU in the developed world; a BDU sector in which the cost of watching TV went up three times faster than the CPI over a multi-year period; a broadband sector which ranks way behind many other countries in its unreasonably high pricing, not to mention data caps. Why has the Commission insisted on putting the industry cheer-leading right up front, while burying the awkward truths about consumer welfare?

Happily, that question now seems to be more rhetorical than substantive, judging by a major change in how the 2013 CMR is framed. In the cover email announcing the launch last week, we get nearly 700 words devoted to what devices Canadians own, how we use them, what services we’re paying for and so on. By contrast, the figures about communication revenues are relegated to a couple of sentences in last place. This shift is also evident in the opening of the Executive Summary of the 2013 CMR:

“The Communications Monitoring Report provides a window to the broadcasting and telecommunications sectors and is intended to foster an open and informed public discussion of broadcasting and telecommunications regulatory policies and issues. The CRTC invites Canadians to use this report to enrich their participation in the regulatory process” (2013, p.i).

This is a good start, but far from the whole story.

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2 – We’re alright, Jack. Next a closely related problem: being critical or negative. I was once told by a senior CRTC staffer that it’s very difficult, if not impossible, for the Commission to publish anything that smacks of criticism of the status quo. Why? Because the incumbents and their lobbyists would come hurtling through the door demanding to know if their version of the status quo was being threatened. Just look at how the three wireless incumbents reacted this summer to changes in the government’s framework for auctioning and allocating spectrum (like “raving lunatics” in Lacavera’s phrase).

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The Commission has been favoring a three-pronged conceptual approach in its policy development, based on the notions of Create, Connect and Protect (see ToC, p.v). Under the “protect” rubric, we might hope for a discussion of, say, price-gouging using data caps, but you’d have to be crazy to be that wishful. Instead, s.2.3 of the CMR is divided into these sub-sections:

  • Programming of high standard
  • Loud television commercials
  • Telecommunications complaints
  • DNCL – Telemarketing

The first two items here, concerning broadcasting, might have deserved pride of place 15 years ago. The notion of “high standard” refers mostly to complaints about abusive language on television, and not, say, programming of great artistic merit. The campaign against loud commercials strikes me as a quaint waste of public monies. Don’t these complainants have a remote with a mute button?

We find a good deal more of substance in the telecom complaints and telemarketing analysis (apart from my continuing suspicion that most Canadians still haven’t heard of the CCTS, let alone understood what it does). This material has been introduced as part of what’s described as “new in this report” – “Consumption statistics, such as pricing, service penetration and complaints are presented for matters that have a direct impact on Canadians” (p.1).

All very well, but other matters having a direct and even more painful effect on Canadians have been left off the table, thanks to the evil union of retail deregulation and concentration of ownership. I hear a steady stream of anecdotal confirmations about this from students. For example, one student reported in class last week that when her mom phoned Rogers to complain about the continuing overage charges triggered by their 60-gig data cap, the rep said she was “watching too much Netflix.” (She finally relented and agreed to pay Rogers more for a higher cap.)

This is the age of transactional media, and end-users are now full-time digital consumers. Eventually the Commission is going to have to catch up and put its priorities on protecting our pocketbooks, not just our eardrums. We’re likely to go through several more editions of the CMR before we see that reflected in print.

(will continue in part 2…)

D.E.