Implications of Pro-Consumer Outcome of the CRTC’s Lets Talk TV Hearings

The Canadian Radio-Television and Telecommunications Commission (CRTC) recently concluded a highly publicized two week consultation on the future of Canadian television. The arms-length telecommunications and broadcasting regulator is facing a considerable challenge in determining how to reform the broadcast sector’s regulatory framework. Media coverage has focused heavily on consumer related issues – allowing customer to pick on the channels they want to subscribe to (pick and pay), the possible elimination of the simultaneous substitution rule that replaces American ads with Canadian ones during programs broadcast simultaneously by U.S. and Canadian broadcasters (sim sub), and concerns over changes to the CRTC’s 1999 New Media Exemption that could result in a levy on services such as Netflix and YouTube (Netflix tax). While these three issues have garnered the most attention, the hearings are far broader looking at 29 different issues, and the Notice of Hearing contains 108 questions.

The Government’s position is clearly aligned with consumers. In a Sept 15 speech, Harper declared his support for pick and pay, and Minister of Canadian Heritage, Shelley Glover, tweeted that any Netflix tax would be rejected.

While consumers would certainly benefit from the broader availability of pick and pay options (Quebecor’s Videotron provides pick and pay options in regions of Quebec), the ending of the sim sub rules (which would allow Canadians to more easily watch the American ads during the Super Bowl), and not having any Netflix tax (that would be a levy not a tax, despite the government’s conflation of the two), the Canadian broadcasting system would certainly suffer. While Canadian’s aren’t fond of the nation’s four large broadcasting firms (Bell, Rogers, Quebecor and Shaw, which are known in CRTC terminology as vertically integrated broadcast distribution undertakings (BDUs)), the whole broadcasting sector is important. It employs nearly 60,000 Canadians according to the CRTC, and generates over $15 billion in revenue, though much of the revenue and employment is captured by those few large BDUs. While there is an economic argument for some of the non-consumer friendly aspects of the broadcast system, the cultural argument – a Canadian broadcast system is needed to tell Canadian stories here and aboard – also has some merit.

However the CRTC reforms the regulatory framework for the broadcast sector, it is bound by Broadcast Policy for Canada (section 3 of the Broadcasting Act). Rather than focus on issues like pick and pay, sim sub and a Netflix tax, there needs to be a serious conversation on whether the aims of the Broadcast Policy should be revised. They currently state:

(d) the Canadian broadcasting system should

(i) serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada,

(ii) encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view,

(iii) through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society, and

(iv) be readily adaptable to scientific and technological change;

Indeed, it would appear that if Canadians and the government want to go with the pro-consumer choice approach they favour market forces instead of CRTC regulation. If this is the case, than perhaps the Government could issue a direction order to the CRTC akin to its 2006 directive on how the CRTC should interpret Canadian Telecommunications Policy. After all, that directive was rather simple:

(a) the Commission should

(i) rely on market forces to the maximum extent feasible as the means of achieving the telecommunications policy objectives, and…

Canadians should decide whether they prefer the current stated purpose of the Broadcasting Policy for Canada, or if market forces tot e maximum extent feasible is a better approach to Canadian broadcasting.