Over two weeks of CRTC hearings over the future of television in September, I monitored discussion over Twitter. And I saw a lot of crazy ideas being thrown out about the commission, some of which I might simply disagree with, but much of which is just plain inaccurate or misinformed. Since then, the volume has died down, but the same points keep getting brought up.
So to try to clear things up, here are some things people are saying about the CRTC and how television is regulated in Canada that could use a reality check.
1. Abolishing the CRTC would be the best move for consumer choice
It’s easy to say that the CRTC should just be shut down when you think of it as a protectionist nanny-state nagger trying to force Canadians to watch more Rick Mercer or Heartland and denying them access to U.S. Super Bowl commercials. But the CRTC is also concerned about the interests of consumers, and has become more so under the leadership of chairman Jean-Pierre Blais. The CRTC is the reason why cellphone contracts are limited to two years. It’s the reason why you can keep your phone number when you change cellphone providers. It’s the reason why we have a national telemarketing do-not-call list.
Even if we separate the two areas of regulation and call for dismantling the broadcasting regulatory side only, we would lose a lot of consumer protections. For example, a CRTC rule prevents broadcasters from pulling their signals from providers during carriage disputes. This differs from the U.S., where a company can pull all their channels from a provider if it thinks it’s not getting a good price. And there are lots of examples of U.S. consumers being held hostage in these disputes.
The CRTC also has rules that limit the power of the giant vertically integrated media companies, who have to play nice not only with independents, but with each other. They can’t launch new channels and keep them exclusively to themselves. They can’t demand unreasonable rates from smaller cable companies. And when there are disputes, and one party asks the CRTC to intervene, both parties have to abide by its decision. If anything, the public tends to want more of these regulations, not less.
Not to mention that the idea of pick and pay would never see the light of day if the government didn’t regulate the system.
2. Regulating pick and pay is a bad idea because [insert analogy to any other consumer good or service]
I’ve seen cable TV compared to all sorts of other things, but these analogies all fail for various reasons — two in particular:
One is the uniqueness of content. In a grocery store, if you don’t like their peanut butter brand, you can buy another one. They’ll offer several brands at different prices that mainly taste the same. But you can’t get your local team’s NHL game or a Mad Men episode from some other broadcaster. At least not yet.
The other problem is lack of competition. If you don’t like your grocery store, you can go to a different one. Or you can purchase some food from that store and other food elsewhere. With cable TV, most Canadians don’t have that choice. I can’t subscribe to Rogers or Telus or Cogeco or Eastlink. I can’t realistically get some of my channels from Bell and others from Videotron without paying a fortune. So I have to choose between Videotron, Bell Fibe, the two satellite services (if I live in a place that allows satellite dishes) and a growing number of independent IPTV services that have only a handful of channels in their lineups.
Most Canadians have far less choice than even that. Which means the free market can’t work to balance it all out, and that’s why the government has to step in. At least for now. One of the CRTC’s proposals is to expand exemptions on small TV providers that would encourage them to sprout up and compete with the bigger guys for clients. But despite everyone telling you that the world has changed, the free market is here and regulations are obsolete, we’re still a few years from being able to see proper competition in the TV distribution market.
3. Enforcing pick and pay would mean some channels go bankrupt, and that would be a bad idea
No one argues that pick and pay won’t create winners and losers. But if no one wants to subscribe to a channel, and the CRTC has determined that it’s not important enough to get mandatory distribution to everyone, then why does it exist?
There are channels out there that are completely useless but exist on subscription revenue because they’re part of large packages. Bell’s Book Television is a great example. Bell hasn’t bothered promoting the channel in half a decade, and it has no original programming. It generated less than $30,000 in ad revenue last year. But it had a 70% profit margin. Rogers has done little with the Biography Channel lately (though probably will soon). Many channels by companies big and small are devoted to showing old series and movies, which Netflix and others have rendered largely redundant.
Pick and pay would cause many of these channels to die, would send more consumer subscription dollars toward the channels that they do like, and most importantly would encourage TV services to offer programming that people want to watch.
4. Pick and pay works in Quebec because of the language difference. It wouldn’t work in the rest of Canada.
There’s no real evidence of this. When I asked her about it recently, Videotron’s president said she doesn’t think it’s true either. The Quebec market does make some things different — we pay more for RDS and less for TSN, for example — but we have the same TV channels as the rest of the country.
What makes Quebec different is Videotron, which has seen so much success with its custom packages that Bell has followed suit (but only in this province). Companies like Cogeco and Eastlink are also moving toward individual channel selection or smaller packages. They’re limited in what they can do by their contracts with content providers, but if pick-and-pay forces changes to those contracts, those barriers get lifted.
And it’s not just in Quebec where pick and pay is a reality. Small packages, custom packages and à la carte selection are growing in popularity. Cogeco, Telus and Eastlink are experimenting with them. Verizon is reportedly preparing to launch a new pick and pay TV service in the U.S.
5. The CRTC wants to ban TV packages
Pick and pay, if approved the way the CRTC has proposed, would be like gay marriage. Available, but not mandatory. The commission has made it clear that providers could offer channels in small or large packages in addition to making them available individually or as custom packages.
Again, Videotron offers an example here. You can buy channels like Space or Showcase individually, or you can get them in the large Anglo package. It’s your choice.
6. Ending simultaneous substitution would make Canadian content better because it would force it to compete better
Simultaneous substitution, the rule that requires cable providers to replace distant stations (usually U.S. networks) with local Canadian stations when the two air the same programming, has a lot of unintended consequences. It’s the reason why regular-season NFL games are on CTV but CFL games — including the Grey Cup — are on TSN. It forces Canadian networks to shuffle their primetime schedules, often moving their Canadian shows to different time slots.
One argument against simsub is that without it, the Canadian networks would lose their incentive to run popular U.S. network shows and might get more creative about original programming.
But that argument doesn’t stand up to scrutiny.
We don’t know exactly how much simsub brings to Canadian networks. We’d have to find a way to count how many people would watch a U.S. show on the U.S. vs. Canadian channels (and U.S. channels aren’t measured in Canadian ratings). But estimates put it in the hundreds of millions of dollars a year, more if you include indirect benefits.
For all the benefits that eliminating simsub would bring, none of them stand up to those hundreds of millions of dollars. Yes, CTV, Global and City might be encouraged to do more original content, but they’d have far less money to do it with, which means their quality would be poor.
Eliminating simsub would make the already precarious business model of English-language private conventional television even more so. And it might result in one or more of these networks simply pulling the plug on local television stations and putting all of their efforts into specialty channels.
— Ed the Sock (@EdtheSock) September 11, 2014
7. Cable companies want to end over-the-air TV so they can force more people to buy cable
If that were true, Bell, Shaw and others would be eager to embrace this idea. But they’re not. Most companies that operate over-the-air television stations say that shutting down their transmitters would cost more in lost ad revenue than they would save in maintenance costs. Cogeco, which owns a TV distributor but no TV stations, is also against the idea.
Bell has proposed a local-specialty-channel model in which local stations would shut down their transmitters and be converted into services that can seek subscription fees in exchange for providing local news. But that’s a different issue, and reflective of the fact that conventional TV is finding it much harder to keep running on a single revenue stream.
8. Ending over-the-air TV is unnecessary because big media companies make billions of dollars
If you look at the quarterly reports of BCE, Rogers Communications or Shaw Communications, they’re clearly very profitable companies. But judging their over-the-air television networks by their parent companies’ bottom lines is like saying Statistics Canada must be wasting money because the federal government as a whole is in deficit.
These big vertically integrated companies are quite financially healthy, but their media divisions aren’t what’s driving it. It’s wireless, Internet, cable TV and other telecommunications services. Profits from media are small contributors, and profits from conventional television are a small fraction of the small media pie, if they even contribute positively at all. (At last report, City was still losing money.)
Some have made the argument that Bell and Shaw should essentially be subsidizing local TV as a public service through the money they’re making as distributors or telecom companies. But that argument only makes sense if you think every telecom company should be subsidizing TV stations. Should Cogeco and Telus and Eastlink and MTS be forced to take over or start local TV stations as a condition of maintaining their phone and Internet networks?
Rogers has been subsidizing losses at City, and Bell has been subsidizing losses at CTV Two, but any sane company isn’t going to keep writing cheques to money-losing divisions forever. Either we have to make local TV profitable or we should expect that private broadcasters will get out of it entirely.
9. The CRTC is responsible for the fact that Canadians can’t watch video on U.S. network websites or Hulu.
it’s a thing it gets blamed for a lot, but the CRTC has nothing to do with this. The commission doesn’t regulate Internet content in this way. Instead, this is an issue of contracts over copyright.
Usually it’s one of two things: A Canadian broadcaster like Bell or Shaw or Rogers has purchased the Canadian rights to a program online, and in exchange the U.S. and Canadian broadcasters agree not to allow streaming into each other’s countries. Or it’s a U.S. website that has not acquired the Canadian distribution rights from the content producer, and is therefore forced to prevent Canadians from watching the service.
None of this has to do with the CRTC.
10. The CRTC is responsible for hockey blackouts
Again, this is an issue of contractual rights, not regulation. In the case of NHL regional games, it’s the league that requires broadcasters to ensure their broadcasts are blacked out in other regions, to protect the interests of the teams in those regions.
The CRTC has no involvement in these contracts, and does not enforce them. It had no say in the $5.2-billion rights deal with Rogers. Its only involvement in the entire NHL rights saga is a request to Rogers to disclose how it divides its NHL revenues and expenses, and a requirement that Rogers file an application for a network licence so that CBC television can be legally put under its control on Saturday nights. Neither of those have to do with blackouts or involve telling anyone what they can and cannot show on television.
11. The CRTC wants to tax, block, or shut down Netflix
On Aug. 21, the CRTC posted a document to its website which listed 29 proposals about TV regulations. It said the proposals in this “working document” are not done deals, but ways to start a discussion.
Only two of these proposals had to do with online streaming services. One said that licensed broadcasters (of which Netflix is not) would include revenue from online programming services toward their total revenue under the regulated system, and in exchange would be able to count Canadian online-only programming expenses as part of their Canadian content funding quota.
The other proposal had to do with closed captioning, proposing a rule similar to one put in place by the FCC in the United States: That programming that had been produced for television, and therefore included closed captioning, must be available with closed captioning when posted online. This might require some technical upgrades for some broadcasters, but probably wouldn’t be the end of the world.
Of these two proposals, only the second would apply to Netflix. And Netflix has closed captioning, and says that 90% of its catalogue has it.
Other groups, such as the Ontario government and the CBC, have proposed things like taxes on Netflix, which right now doesn’t even pay GST. It’s unclear if such a plan is workable or how it would function. And the CRTC hasn’t indicated any interest in it. Plus, the federal government has already indicated that it wouldn’t support such a tax.
No one I heard made any proposal about preventing Canadians from accessing Netflix.
12. The CRTC wants to impose Canadian content regulations on Netflix
The commission asked for information from Netflix about its Canadian content. Which is a prudent thing to do if your job is to evaluate how Canadians get their television content. But that’s a far cry from assuming that it will impose Canadian content rules on the service. There’s no proposal in their working document, nor has anyone brought forward a reasonable case to require Netflix have a certain percentage of Canadian shows in their library or meet some other Canadian content quota.
13. The CRTC demanded private information about Netflix subscribers
News reports about the CRTC asking for “confidential customer data” or “confidential subscriber information” left many people thinking that the commission wanted information that they considered confidential, such as names, addresses, viewing logs or credit card numbers.
But the CRTC didn’t ask for any of that. Instead, it asked for (or rather ordered Netflix to provide) this:
- The total number of Canadian subscribers to Netflix
- Its total revenues from Canadian subscribers
- The total amount it spends on Canadian programming (as defined by Netflix, which may differ from the CRTC’s definition)
- The total amount it spends on Canadian production (including things like dubbing)
- Information about the popularity of programs Netflix has categorized as Canadian — both within Canada and abroad
- Its total spending on French-language content
- Its total spending on Canadian children’s programming
14. The CRTC cannot be trusted with confidential information
As the chairman explained during the hearing, the CRTC deals with commercially sensitive information on a daily basis. The leak of just a few numbers could be devastating to Bell, Rogers or a bunch of other companies big and small. But the CRTC has a legal obligation to protect that information, as do its employees. And this means that anyone who does put this information out, even if they no longer work for the commission, could face criminal charges. It would be akin to leaking details of a federal budget before it’s tabled.
This is not to say that Netflix was entirely out to lunch about its confidentiality concerns.
Leaks from the CRTC are extremely rare, especially considering the amount of commercially sensitive information it collects, but it has happened. The last major case was in 2000, when a list of newly approved specialty channels was leaked. The CRTC was forced to publish a list early.
And while it’s pretty well inconceivable that the CRTC would choose to publish information that would have a strong negative impact on Netflix’s business, the commission could not give an absolute guarantee that anything submitted would be granted confidentiality. If the commission feels that the public interest in a piece of information is more important than its commercial sensitivity, it can choose to release it. Its rules of procedure explicitly give it that power.
But the commission isn’t going to release data that has a legitimate reason for being confidential.
Still, without absolute certainty of confidentiality, Netflix was unwilling to turn over the information. And the CRTC is unwilling to pre-approve confidentiality for information it has not seen.
An argument was brought up that access-to-information laws would apply, but for obvious reasons access to information does not apply to documents granted confidentiality.
15. The CRTC does not ask for similar information from Bell, Rogers and Shaw
Are you joking? The CRTC demands a ridiculously large amount of information from these three companies that it hasn’t demanded of Netflix. These companies have entire regulatory departments whose job it is to ensure they meet their regulatory obligations, much of which relates to disclosure of information.
Revenue, programming spending, subscriber numbers — these are all requested of these companies. And large vertically-integrated companies are granted much less confidentiality than small ones on those kinds of numbers.
16. The CRTC’s decision to disregard Netflix’s testimony is an immature act of wilful blindness
The commission was sitting between a rock and a hard place when it came to Netflix and Google. Push hard against their refusal to provide data, and you enter a cross-border legal battle you have no guarantee of winning. Back down, and you’re seen as impotent, leaving others free to similarly ignore your power.
So the commission decided that it would disregard everything Netflix and Google presented. Not out of spite, it said, but because it can’t simply take their “anecdotal information” without data to back it up.
The CRTC is well aware of the opinions of Netflix and Google and plenty of Canadians about the future of technology, but the questions to these companies were about how they operated, and they aren’t much better informed about that than they were before the hearing.
17. The CRTC is going after Netflix to protect Canada’s large vertically-integrated media companies
It’s tempting to think the bad guy must be the largest companies, and that because they have such large businesses with big bottom lines that they must have forced the CRTC to do their bidding, but the loudest voices calling for regulation of Netflix aren’t from them, they’re from organizations like the CBC and the Canadian Media Production Association.
If anything, the large vertically-integrated companies don’t want more rules imposed on Netflix as much as they want fewer rules imposed on themselves so they can start up their own services that compete on a level playing ground with Netflix.
18. The CRTC heard only from large companies and not from ordinary Canadians during its hearings
The CRTC received official comments from 2,550 people and groups for this hearing, on top of the online forum it set up and encouraged Canadians to contribute to. The oral phase of the hearing included more than 100 presentations, from big companies like Bell and Shaw, interest groups like the Directors Guild of Canada and Public Interest Advocacy Centre, and several individuals.
All of these comments are part of the official record and will be considered when making a decision.
19. Canadian television is poor quality and nobody wants to watch it
I find a lot of people who say things like this set double standards as far as quality is concerned. They compare the average Canadian TV series to Breaking Bad. But the average American series also compares very poorly to Breaking Bad. In fact, the average American series probably won’t last more than a season, if that.
Television, particularly scripted series, are hit-and-miss, and that’s no different on either side of the border. What is different is that American TV is a larger industry, and has more money.
Despite that, there are plenty of Canadian TV success stories, even if we set aside news and sports, which are very Canadian and very popular, and discount reality television (The Amazing Race Canada was the most popular program of the summer).
Consider Canadian actress Tatiana Maslany, who was nominated for a Golden Globe for lead actress for her work on the Canadian-U.S. co-production Orphan Black. And the fact that she and the series weren’t also nominated for Emmys was considered a snub by major media in the U.S.
Consider popular Canadian shows past and present like Corner Gas, Murdoch Mysteries, The Rick Mercer Report, Lost Girl, Mayday and Flashpoint.
Yeah, we have far too many cop dramas and medical dramas and other shows that get a lukewarm reaction in the U.S. even when they are picked up by those networks. And allowing co-productions to count as Canadian content leads to stripping away any Canadian character from these shows. But there’s nothing about Canadian television that makes it inherently inferior, other than the quantity of it and the quantity of money that funds it.
20. The CRTC wants to dictate what we can and cannot watch
The CRTC has very few rules that actually block programming, and other than the rules it has in place for Al Jazeera Arabic to prevent hate speech from being distributed in this country, none of them have to do with the actual content. Instead, they’re mainly rules that protect the exclusive rights acquired by Canadian broadcasters for programming.
Even if the commission were to license and directly impose restrictions on Netflix, it wouldn’t be about forcing subscribers to watch a certain amount of Canadian programming. At worst, it would impose a quota of how much Canadian programming should be in its library. But again, the CRTC hasn’t proposed any rule of the sort.
21. CRTC commissioners are career civil servants who know nothing about the industry
I’ve actually seen people allege that CRTC commissioners are both out-of-touch bureaucrats and puppets of the big cable companies.
You can go to the CRTC’s website yourself and read up on the background of each commissioner. The ones on the panel for this hearing are the following:
- Jean-Pierre Blais (chairman): Clearly meets the definition of “career civil servant” having worked for various federal government departments including Canadian Heritage.
- Tom Pentefountas (vice-chairman): A lawyer, part-time radio host and ADQ activist who had little connection to the CRTC or the industry before his appointment.
- Candice Molnar: A former executive at SaskTel, the main telecommunications company in Saskatchewan.
- Stephen Simpson: His background is in advertising and marketing.
- Yves Dupras: A lawyer specializing in media who sat on the CRTC previously in the 1990s.
Perhaps one or more of those biographies don’t sit well with you, or you think there’s a perspective that’s missing, but there’s a diversity of backgrounds here and nothing to suggest that this group is complacent or out-of-touch or improperly connected to players in the industry.
22. The CRTC is too stupid to realize that it can’t protect Canadian culture through regulation anymore
If you actually talk with CRTC commissioners, or its chairman, you realize that they know an awful lot about the broadcasting industry, far more than you or me. And they’re well aware that the powers available to them are not the same as those that were available 10 or 20 years ago.
In many cases, the CRTC wants to deregulate. It wants more direct competition in telecommunications and broadcasting, and where such competition exists, it wants to take its hands off the wheel, and does. It is expanding the number of providers and services that qualify for exemptions from licensing in an effort to encourage more smaller players to get into the system.
But the commission still has a mandate as set by the Broadcasting Act. And it’s the federal government through its legislature that would need to change that to remove the provisions that call for the Canadian broadcasting system to protect Canadian culture and be controlled by Canadians.
23. Netflix is not a broadcaster
“broadcasting” means any transmission of programs, whether or not encrypted, by radio waves or other means of telecommunication for reception by the public by means of broadcasting receiving apparatus, but does not include any such transmission of programs that is made solely for performance or display in a public place;
The act also defines “other means of telecommunication” as “any wire, cable, radio, optical or other electromagnetic system, or any similar technical system” and “broadcasting receiving apparatus” as “a device, or combination of devices, intended for or capable of being used for the reception of broadcasting”
These definitions are purposefully vague and open to interpretation (not to mention a bit circular). Are video-on-demand services like Netflix broadcasting? Netflix says no, but the CRTC says yes. It may eventually end up in court if the government doesn’t amend the act to clarify.
But what is clear is that the definition of broadcasting is not limited to over-the-air AM, FM and TV transmission. Any telecommunication of programs to the public is broadcasting.
That doesn’t mean the CRTC has to treat Netflix and CTV the same way. But it means Netflix is under the umbrella of CRTC regulation, regardless of how realistic such regulations could be in a free and open Internet.
24. Regulating new media would only restrict consumer choice
Actually, some regulations related to new media are designed to improve consumer choice. For example, Bell, Rogers, Shaw and Quebecor can’t restrict the on-demand rights to their programs to their own cable and satellite TV subscribers or wireless subscribers. They have to offer access to their competitors at commercially reasonable rates.
So if you want to watch an NFL game on your cellphone, or get access to Global Go, your provider has the right to buy access to those services for you.
It’s not a perfect system, and the companies still have to negotiate with each other and often give themselves preferential treatment, but I don’t think too many consumers would appreciate the alternative of having to subscribe to Bell Mobility to get CTV shows on your phone, and having to subscribe to Rogers Wireless to get City TV shows.