Rebooting basic telecom services: hope for policy reform?

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The recent Rebooting conference in Ottawa was a terrific experience. Lots of people with lots of good ideas and the opportunity to debate them at length.

cbc_logo_1940_1958Oversimplifying a little, I would divide the conference participants into two general groups. The first and larger of the two was reform-minded, with many calling for serious changes, especially to the CRTC. The second group, while smaller, was just as eloquent in defending what I’d call the status quo. By that I mean maintaining or expanding subsidies for program production; a bigger role for the CBC; and measures explicitly designed to protect broadcasters with a view, among other things, to protecting jobs in the broadcast sector. This perspective tended to cast the socio-cultural objectives of the Broadcasting Act in a favorable light.

My six minutes of fame featured a half dozen reasons as to why there’s an urgent need to reboot the Broadcasting Act, and in particular to redraw the policy goals in section 3 from the ground up.

Why we need reform

1 – The 1991 Act is older than the Web. One simple argument for reform is chronological. The 1991 Act predates the Web by six months: the first publicly available Web page was posted on the Internet in August 1991. Worse still, most of section 3 is based on what became law in 1968 – 47 years ago! The main difference is that the current version is over three times longer and now refers to “programs” and “programming” 31 times.

2 – The cultural policy for broadcasting is an industrial policy. Any benefits accruing thanks to our broadcasting policy flow to the industry not to the public, at least not in any measurable way (the sheer availability of Canadian programming cannot be construed as a net benefit). By no coincidence, the term “public interest” does not appear anywhere in the Act, which may help explain why the CRTC pays little attention in its reporting to socio-cultural issues, confining itself to company financials, job creation and production output.

3 – The CRTC needs to research more, consult less. The Commission’s administration of both the Broadcasting Act and Telecommunications Act has been undermined by its reluctance to commit to evidence-based policymaking, as well as to putting adequate resources into empirical research. It has instead become devoted to online consultations that make the public feel involved, a good thing in itself but not nearly enough.

4 – TV audiences, especially millennials, are leaving the system. Younger viewers are watching less and less linear TV. They do watch programs, but have little interest in subscribing to cableTV. Moreover, the shrinkage in the 18-34 demo appears to be permanent, not just generational. If this is a solid trend, and the broadcasting policy framework is not redrawn, it will become even more irrelevant to younger Canadians.

5 – The party’s over for conventional broadcasting. Revenues and profits have been dropping in Canadian TV since 2012. Pay and specialty are faring better, but not by much. The Local Programming Improvement Fund (LPIF) has ended, probably throwing good money after bad. The long-term problem is that the market is dismantling the broadcasters’ fundamental deal with government: reselling US programs at high margins to fund Canadian content. US producers have more and more buyers, and reliance on the ad model is giving way to direct transactions like SVOD.

6 – The Open Internet and broadband aren’t getting priority attention. The socio-cultural objectives for broadcasting aren’t just outmoded. They’re also taking attention and probably both public and private investment away from what really counts now: fast, affordable access to an open Internet. The effects of this choice are reflected in Canada’s mediocre performance on all the important measures of broadband performance. The prospects for an open Internet have also been narrowed because of the unusual carve-out for broadcasting in sections 4 and 28 of the Telecommunications Act – an unacceptable compromise of the common carriage principle.

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Others at the conference agreed on the general need for reform, citing for example more effective limits on the incumbents’ market power; getting out of the Internet content regulation business; dispensing with what one participant called the “ATM model” of subsidizing Canadian content; and more generally moving away from the old-fashioned telephone-centric telecom model to a perspective that embraces the highly personal and disruptive nature of the Internet.

Despite wide consensus on the need for reform, however, few were sanguine about how to get progressive reform moving. I’ll discuss some of the barriers to reform in the next post, along with a look at a timely CRTC proceeding. In its Review of basic telecommunications services (Telecom Notice of Consultation CRTC 2015-134), the Commission promises to undertake a sweeping examination of what we mean – and should mean – by basic or essential services.

The most important single question to be addressed in this proceeding is whether the time has come to start treating a broadband connection to the Internet as an essential service to be provided to all our citizens, just as we have done for decades in the provision of basic telephone service. This question in turn points to urgent issues about affordability; digital literacy; what we mean by Canadians having “access” to the Internet; why our broadband options are so slow and expensive; and how policymakers will grapple with the intensely personal nature of the Internet.

D.E.