It’s 2015: Cancon is the aberration, not VPNs or the Internet

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WiTopia is a provider of personal VPN services

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In a Globe and Mail piece last Friday, Kate Taylor starts off by asking the wrong question: Digital content may be cheap, but who will pay to create it? Things go downhill from there.

Ms Taylor’s old-fashioned apology for Cancon, with its predictable sideswipes at “freeriding” Netflix and marauding pirates, is based on ideology rather than evidence. It completely misconstrues the role of security tools like VPNs, at a time when Canadians should be far more concerned about their privacy and security online than about shelf space on the network for domestic TV shows. Most of all, it treats the Internet like a cultural and economic aberration that’s ruining our TV system, when the aberration is Canada’s bizarre and unworkable framework for broadcasting.

Virtual private networks and why you need one

What the article says about VPNs:

“The latest scheme is to use a virtual private network, or VPN, to trick Netflix into believing you are located in the United States and can thus subscribe to the video-streaming service’s American catalogue….

Internet advocates love to preach choice, diversity and freedom – after all, a VPN can also be used by citizens in China to access content censored by their government.”

A VPN is specialized client software that encrypts online messages, and is said metaphorically to “tunnel” through the public Internet. It’s a “virtual” network because there’s no real tunnel or separate physical network. Your data packets are still co-mingling with other people’s packets, but only you and folks with the authentication tools – like a password – can read those packets. The VPN is said to be private for exactly that reason, like an office behind a locked door.

Corporate VPNs were originally created to provide secure connections for employees working offsite – emphasis on “secure,” a term that never appears in the Globe article. Another kind of VPN developed in parallel, the kind Ms Taylor emphasizes because numerous incarnations are listed and evaluated on “pirate” sites, like Torrentfreak. Yes, many of these have been created expressly to gain anonymous access to online content by evading barriers like geo-blocking software, as well as to make filesharing more secure.

On the other hand, Ms Taylor should be aware that piracy concerns today are overblown compared to many other online problems, since filesharing is dying off quickly compared to other forms of IP traffic, as this clip from the Cisco table shows (the drop in filesharing is the direct result of services like iTunes making lots of good content available conveniently and at a fair price).

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More to the point, a third kind of VPN is in the ascendant today: “personal” VPNs, which are sold for their ability to encrypt online transmissions for individual consumers. My VPN provider, WiTopia, provides a service combining military-grade encryption, a highly functional interface and friendly support. It runs on both my Mac and my iPhone, with a choice of different encryption protocols to suit particular circumstances.

It’s not just the NSA and criminal hacker gangs in Ukraine that are eating away at our privacy, and sometimes our money and identities. Even in democratic countries, some politicians and law enforcement officials want to abolish strong encryption for consumers. FBI director Comey and Prime Minister David Cameron, to cite two high-profile examples, argue that encryption on phones and social media apps which they can’t circumvent will interfere with catching kidnappers and terrorists. Last fall, US Deputy Attorney General James Cole expressed outrage that Apple would sell iPhones that cops can’t crack (“a kidnapped child will die”).

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Not to mention marketers, data-miners, search engines and incumbent ISPs

But there are many less dramatic reasons for why mainstreamers should invest in a service like WiTopia for online communications. As you can see from the map above, WiTopia maintains gateways at dozens of locations around the world. I can log into any one of them and, on the fly, the local server will spit out a client IP address that places me in Hong Kong or London or San Francisco. As Ms Taylor is at pains to point out, that functionality allows the subscriber to “trick Netflix into believing you are located in the United States and … thus subscribe to the video-streaming service’s American catalogue.

To which I say: so what?

I’m writing this post in my Starbucks office and I wouldn’t be caught dead doing so without the encrypytion provided by WiTopia. A 12-year-old kid with free software can break into a public WiFi connection like the one I’m on here. But what about all those map pins? Why are those needed?

Lots of reasons, not the least of which is that WiTopia is a global service, and yes, it helps citizens in autocratic regimes like China communicate a little more, and a little more safely, than they could otherwise.

Back here in Toronto, I have my own agenda. Even though I use other tools to protect my privacy, like the DuckDuckGo search engine, which doesn’t record search histories, I try to do everything I can to screw around with data-miners – like changing cities, and numeric IPs, from one day to the next. Anybody who uses one of the incumbent ISPs for Internet access, like Bell or Rogers, would also be wise to remember they have no compunction about snooping into your data packets. They have the motive because they want to sell you their content in addition to access; and they have the opportunity, thanks to a technology called deep packet inspection (that’s one issue I’m spared with TekSavvy, whose policy is not to monitor subscriber transmissions).

Getting spied on by your ISP is not a problem confined to subscribers who indulge in filesharing. As we learned last fall, Bell Canada has unbashful designs on all your data all the time, the better to serve targeted ads. Think about a VPN cloaking your packets as they pass through Bell’s network as you read how Michael Geist characterized the issue in the fall of 2013 (The Great Canadian Personal Data Grab Continues: Bell Expands Its Consumer Monitoring and Profiling):

“The scope of Bell’s intended personal data usage is remarkable. Given that many of its customers will have bundled Internet, wireless, and television services, the company will be tracking everything: which websites they visit, what search terms they enter, what television shows they watch, what applications they use, and what phone calls they make. All of that data will be correlated with their location, age, gender, and more.”

While she does discuss Bell’s risk in investing in TV shows, Ms Taylor doesn’t mention the other side of the coin – the risks it creates for its own customers.

More reasons to feel sorry for Sony?

In a fashion typical of the obsession with bolstering Cancon at any cost, Ms Taylor seems to expect our sympathies to lie with the vertically integrated conglomerates (VICs), both American and Canadian, rather than with end-users. She suggests Sony was right to criticize Netflix for its lack of resolve in not keeping unauthorized customers away from its US content in foreign territories:

“Why does Sony care? Because selling multiple territorial licences is the way producers maximize the revenue from a television show or movie, and Netflix is undercutting that business.”

Besides the sordid tale of Sony’s corporate behavior I covered in my last two posts, I have some difficulty with the idea that dividing up the world into territories to maximize profits should work for everybody. Sony and the other Hollywood majors started this gimmick a long time ago and it’s had numerous consequences that could fairly be described as bad for consumers. Just as Sony decided in 2005 it had the right to control your computer with a malicious rootkit to protect its production investments, so too did it feel that “regionalizing” DVDs was fine, since that was likely to maximize its ROI.

Unless you happened to be one of those people who bought a Sony DVD in Europe or East Asia, then brought it home to Canada to discover you couldn’t use it anymore. Sony’s investment was protected, but what about the 30 bucks I paid for that movie? Up in smoke. It’s hard to see how this arrangement should make anyone feel bad about evading geo-blocking. On top of that we’re supposed to feel sympathy for Sony?

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“[Shomi and CraveTV] certainly make Rogers, Shaw and Bell look like better corporate citizens than Netflix Canada, a free-rider on the Canadian broadcasting system that competes with conventional broadcasters without contributing to the production of Canadian programming.”

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Cancon: making the world a better place for Rogers, Shaw and Bell

In her apparent dislike of VPNs, Ms Taylor is lining up with authority figures like Comey and Cameron, who see no social cost in obliging Apple, Google and other tech firms to create backdoors in all their crypto. The established Cancon position sees anything that might upset our broadcasting system as inherently bad, be it security platforms like VPNs or new services like Netflix.

Here’s the key question: who exactly is getting helped by the suggestion that we should suppress VPNs and tax the shit out of Netflix, as Netflix is a “free-rider” on our system? Well, apart from Sony Pictures, that would be the Canadian middlemen, Bell, Rogers and Shaw. These guys own Canadian content – not to mention the US content they license from Hollywood for services like HBO Canada. As Ms Taylor says:

“The price [Rogers and Shaw] are willing to pay for the rights to these [US] shows must depend greatly on how real their Canadian exclusivity actually is.”

Fine, they’re in business to make money and stealing is bad. But it’s not quite that simple. Let’s not pretend for a minute that the VICs are paying to support the production of Cancon in some great gesture of patriotic self-sacrifice. Most of the subsidy money in the system, notably the Canada Media Fund, comes out of the pockets of end-users, in a combination of tax revenues and levies on cable-TV subscriptions.

Meanwhile, Bell and Rogers (plus Shaw and QMI) have made fabulous amounts of money thanks to the vast protectionist apparatus they’ve enjoyed for decades. Why should I care about their corporate welfare, when on the flip side they are free to extract economic rents not only from their TV services (the fees for which keep rising much faster than inflation: see chart below), but also from the broadband platforms that deliver their services, which – as I’ve noted on this blog ad nauseam – are far more expensive than in most other developed countries.

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The cost of watching TV in Canada, rising much faster than the CPI (source: CRTC)

Netflix as the Cancon whipping boy

Then there’s Netflix. Ms Taylor offers the requisite denunciation that the VICs love to hear: Netflix is screwing Canadians because it’s competing with conventional broadcasters without contributing to the production of Canadian programming.

netflix-logoFirst of all, Netflix isn’t a broadcaster, isn’t a Canadian corporate citizen and doesn’t owe Canadians anything except the service it provides. Second, heaven forbid Canadian broadcasters should have to put up with competition! As Dwayne Winseck has shown in his long-term analysis of media concentration in Canada, the four big middlemen have now bought up most of the Canadian broadcasting system, in addition to their holdings in the other media industries. Canada’s networked media industries have gone through a staggering degree of concentration, as the chart below indicates – although what it doesn’t show is that the extent of this concentration has more than doubled in a mere five years.

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Source: Dwayne Winseck, CMCRP, November 2014

I’m told by my old friend Barri Cohen, a very successful exec producer of TV, that she and her colleagues feel the pain this industry trend has caused. Why? Because with vertical integration and concentration of ownership comes another set of problems: having only three or four program buyers in the country to pitch to. In other words, Bell and Rogers are not Cancon midwives, they’re content gatekeepers whose market power extends to both consumers and producers of content. If careers are “closing down” here, as Ms Taylor puts it, the fault lies not with the American cultural imperialists, the guys we’ve been demonizing since the early 1990s, but with the media moguls holding court in downtown Toronto. And when that happens in a market, what you need is not less competition but a lot more.

As Michael Geist demonstrated back in October, one of the many reasons to scoff at the idea of Netflix not playing ‘fair” lies in the money. Even if Netflix were “taxed” at the going rate, the total value of its contribution to our $2.3 billion TV industry would be a staggering 0.6 of 1%.

cancon-webnottv-2The Internet, not conventional TV, is the Next Big Thing

But the real problem for the old school is not simply the money. The real problem is that the policy superstructure that dates back to at least 1968, and which made TV the putative cornerstone of our national cultural sovereignty, is disintegrating. As I suggested at the top of this post, the creative destruction wrought by the Internet is not an aberration. What is aberrant is the undying efforts by the media incumbents and their unlikely supporters in the content communities to fight back against the Internet and its disruption of our cozy way of life.

Ms Taylor is right about one thing: the big distributors will keep raking in the money from their online ventures, while many content producers will struggle. Unfortunately, she’s dead wrong about four other facets of online life…

  • One, those big distributors in Canada who are raking it in are the same guys who have a stranglehold on what gets produced in Cancon-land. Bell, Rogers, Shaw and QMI would love nothing more than to have any trace of competition killed off, starting with Netflix. And who exactly will that help? Bell, Rogers, Shaw and QMI, and nobody else I can think of.
  • Two, Ms Taylor notes that “Internet advocates love to preach choice, diversity and whatsapp-iconfreedom.” Apart from wondering why she makes that sound like a bad thing, I would add two other highly desirable end-goals for a healthy online life: privacy and security. No security system or encryption protocol will ever do the job it’s intended for without spillage. Most any kind of tool can be put to nefarious uses. Is that a reason to do away with them? Do we want Stephen Harper undermining our online privacy even more by outlawing VPNs that don’t have built-in back doors? If you think that’s crazy, keep in mind David Cameron said on Monday he wants to ban WhatsApp in the UK.
  • Three, the Internet did not suddenly create an underclass of starving artists who can no longer make a living thanks to Amazon and Spotify – unless your sense of history stops at 2008. ‘Twas always thus. Poets, painters, actors, writers and other content creators have always struggled to make a living, because in our society, artists and creators aren’t valued nearly as much as lawyers and bond traders. To suggest the Internet is responsible for such social values is like saying there was no porn before the Internet.
  • Finally, in the Cancon school of thought, the Internet is a nuisance that barged into our broadcasting system and made a mess that needs to be cleaned up by ensuring it becomes just another delivery platform for TV – where the highest goal is shelf space for domestic content and end-user issues like privacy don’t matter. That Canadians are still debating how to rescue conventional television from TCP/IP goes a long way to explaining why we’ve got the broadband we deserve. As then-Commissioner Denton wrote in his concurring opinion to the CRTC’s 2009 new media decision:

“The rights of Canadians to talk and communicate across the Internet are vastly too important to be subjected to a scheme of government licensing. If more Canadians were aware how close their [online] communications have come to being regulated by this Commission, not by our will but because we administer an obsolete statute, they would be rightly concerned. … Thus the call for a government review of a digital transition strategy is both wise and opportune. Let us fix this problem.”

All we need now is a government in Ottawa that sees the Internet as a hotbed of innovation and free expression, rather than as a hotbed of US cultural imperialism.

D.E.