The Netflix boogeyman and a 21st-century role for the CRTC

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“Though some intervenors think this proceeding is all about Netflix, it’s not.” –Corie Wright of Netflix

“If the Commission fails to act swiftly after this proceeding, a service such as Netflix will become … one of the largest broadcasters in this country in the near future.” –Pierre Dion, CEO, Quebecor

“Canadian consumers can rest assured that our government will continue to stand up for them. We will not allow any moves to impose new regulations and taxes on Internet video that would create a Netflix and YouTube tax.” –Shelly Glover, Minister of Canadian Heritage

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The thesis: Netflix has handed the CRTC a new lease on life

CRTC ordered Netflix to share its highly sensitive Canadian customer data. Netflix demurred (“stonewalled” by some accounts). The Commission has responded by making Netflix disappear from the history books, expunging its official testimony. Does that mean, as we read recently, that “It’s over, CRTC, Netflix and globalization have won”?

Not for a minute.

On the contrary, this battle – over what should have been a minor procedural matter – tv-set-2presents the Commission with an unprecedented opportunity to move past the outmoded goals of the 1991 Broadcasting Act and into a role far more suited to how Canadians actually experience and use the media. “Television” is today either imbedded deeply into Internet culture – or it’s part of the legal dinosaur we call the single broadcasting system. The one has nothing to do with the other. The battle with Netflix (and Google) has exposed this painful break with our golden cultural past, and shown more clearly than ever that the CRTC needs to get out of the broadcaster content protection business and move seriously into the end-user protection business – online, where people live and need help.

Thus, instead of expending time and end-user money on protection for some vague idea of cultural sovereignty that nobody can quite put their finger on, let’s tackle the real problems Canadian onliners have in their relationships with the pipe-and-content incumbents: slow broadband speeds and high prices; anti-competitive use of caps; price gouging; deceptive advertising; preying on consumer ignorance; lousy service; widespread confusion over the role of the CCTS; and the weak ITMP framework for safeguarding net neutrality, which starts not with the welfare of end-users but the welfare of incumbent network managers. If we don’t, then once again an elusive Platonic idea of “television” will help the interests of the few triumph over the interests of the many.

While we ponder the big-picture questions around TV, let’s keep two things in mind. One, these questions are way too important to be left to a gaggle of lawyers arguing about the jurisdictional dance of angels on the point of a pin. Two, we need to move the debate away from purported “harm” to the broadcasting system and in the direction of what counts in a world of transactional media: harm to consumers.

In the meantime, let me take you back a few decades, to a more innocent time, a golden age… when Canadians were having exactly the same debate about saving our souls from the Yankee imperialists!

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Have we learned nothing from decades of TV industry faux-patriotic flag-waving?

“The issue at hand is not how many Canadian cable subscribers will actually defect or what ‘damage’ Deathstars may bring about in our culture – if any. The issue is how vested interests are using this and other new technologies as weapons in their defence of the market power that has gone hand in hand with protectionism, quotas, subsidies and monopolistic control of distribution. Let’s stop demonizing foreign market power long enough to take stock of what’s happening to market power in our own back yard.” — D.E., Split Screen, chapter 6, Technology: the Ultimate Deregulator? (1992)

A sense of history please. We’ve seen all this before on a massive scale – at least twice. The first time was in the early 1980s when the cable guys were shrieking about US pay-TV services killing us off. As I wrote in Split Screen 22 years ago:

“Wouldn’t you know: we heard it all two decades ago when the country was agonizing over what to do about pay-TV. The pay-TV lobby painted a stark dilemma: either get completely swamped by American pay, with no countervailing benefits; or else give us what we want and the quid pro quo will be work for the Canadian production community.”

Then, about a decade later, the whole damn thing was reprised – from the exact same playbook – over the “threat” to our Canadian souls from the US Deathstars. 

Deathstars? High-power direct-to-home satellite TV birds – American to be sure – that could suddenly become a massive presence in our backyards. Cable’s state-sponsored stranglehold on TV, in its role as the chosen instrument of “cultural” policy, was under threat. The sky is falling! Circle the wagons before we get eaten alive by sitcoms! Especially the cable guys and the TD Bank!

In that same passage on the disruptive technologies in play, I also discussed the thread that ran through all the debates about demonizing US culture: however much we may love US films and TV shows, the Media Establishment viewed any consumer flight from our system as unpatriotic and a danger to our culture. Here’s what I said about construing this kind of consumer choice – what we call cord-cutting today – as “damaging”:

“Consider for a moment the moral tone implicit in this position: that Canadian cable subscribers who, next year or in the year 2000 [or in 2015], disconnect from cable in favour of a foreign satellite [or online] service, should be characterized as having done “serious damage” to a national institution. So, it’s good for Canada if few cable subscribers defect and bad if many do. What’s going on here is that Canadians who might opt out of the “system” are being stigmatized and made into video pariahs. Is this what the lofty goals of the Broadcasting Act have come to?”

Plus ça change…

You would think this perverse and self-serving line of patter would have evaporated by now, but no such luck. The alarmist solutions to this alleged problem haven’t changed. Today the industry still wants to be protected from new entrants, like they were for decades before. The Commission’s balancing act between Canadians screaming to be offered the US networks and the entrenched players screaming to be protected resulted in some remarkable compromises, like simultaneous substitution. That has allowed us to devour our favorite US shows, while still putting millions in ad dollars into the pockets of Canadian broadcasters. 

corie-wright-crtc-sept19-2The Commission has already indicated it likes the idea of doing away with some of these protections in broadcast television. That has prompted the usual suspects to shift their debate to the next frontier: the Internet. Just like they’ve always done when a new technology comes along to upset their cash-dispensing applecart. Never mind that the broadband Internet has almost achieved the status of a public utility for most of us. The Broadcasting Act continues to shelter the old media moguls from the disruptive changes that make our personal lives better – like having a terrific 24/7 on-demand video service for 8 bucks a month that we can use without first giving Rogers or Bell 80 bucks a month, and that has friendly support (I’ve used it), a nice user interface, no contractual commitment, opportunities to explore film and TV libraries in other countries, and a sense of having to be responsive to its customers – all of which was explained very eloquently by Corie Wright in the hearing and then completely ignored by the press.

So the usual suspects are making the usual demands. Either “regulate” Netflix or tax the shit out of it. Never mind that the Tory government intends to pursue its policy of consumer opportunism and prevent any such nonsense. You can still divide the Talk TV intervenors into two groups with hostile intentions. On one hand, you have the licensees with a vested interest in their own video services and want Netflix regulated: Bell, Rogers, the CBC, most everyone who broadcasts or distributes TV, or both. This ain’t patriotism on their part, just another ham-fisted attempt to eliminate competition from the market – without all the fuss and bother of actually competing.

On the other hand, taxing the Yankee imperialists by collecting money from the untold millions they “take out of the country” is designed to please groups like the CMPA, which have a never-ending appetite for subsidies intended to treat TV, movie and digital media projects as job creation opportunities.As I argued three years ago, I draw the line at attempts to treat the open Internet as just another delivery platform operating in this country for the benefit of producers and other members of the cultural community. (By the way, Netflix isn’t robbing banks up here. It’s giving subs something every month in a freely arranged transaction – just like hundreds of other US firms do that operate branch plants in Canada.)

Speaking of learning from history, it turns out making Netflix unwelcome herre has its own sordid past. Way back in the spring of 2011, just as Netflix was getting off the ground, the CRTC cooked up a series of secret meetings with the media establishment (and no consumer representation) to discuss, yep, the “threat” of over-the-top video. If you want to read what I really thought about these shenanigans at the time, see my two posts entitled “Get yer grimy paws off my Netflix: Ottawa’s big OTT scam”.

Next: Why did Vice Chair Pentefountas go out of his way at the TV hearing to accuse Netflix of conspiring with Level 3 to disrupt video streams transmitted to their own US customers?

D.E.

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