One day before the deadline set by Heritage Minister Mélanie Joly, the CRTC on Thursday released a report into the broadcasting system that proposes major, fundamental changes to how broadcasting is regulated in this country. (The condensed backgrounder is here.)
Unfortunately, that report is also quite vague, even on the parts that should be specific.
It’s not the CRTC’s fault, really, because that’s not really its purpose. The original order issued back in September by Joly is just as vague, seeking a report on “the distribution model or models of programming that are likely to exist in the future; how and through whom Canadians will access that programming; the extent to which these models will ensure a vibrant domestic market that is capable of supporting the continued creation, production and distribution of Canadian programming, in both official languages, including original entertainment and information programming.”
In terms of assessing programming distribution models, the report is pretty clear, but is also repeating a lot of stuff we already know: conventional television and radio are mature industries and have no way to go but down, online audio and video streaming services are catching on with the population, and Internet delivery of content means more Canadians are getting that content directly from foreign sources who don’t have to contribute to Canadian content or answer to the CRTC.
What’s new is what the commission proposes to do about it, but that’s where the data and charts go out the window and we’re left with vague, obvious suggestions and what often sounds like one unnamed person’s opinion.
But let’s go through them and look at the issues in a bit more detail:
Service agreements: The report proposes to replace prescriptive licensing with “binding service agreements” and “incorporate” unlicensed players like online video providers. But what those service agreements would look like, how they would be enforced, and what providers would be incorporated and how isn’t dealt with.
It’s clear the licensing system needs to change. It’s largely split between two types of licensees now: large or medium-sized owners of multiple broadcasting assets who have regulatory affairs departments and an ever-growing list of licence conditions, and the smaller players, community stations, independents and others who often have difficulty with all the paperwork the CRTC requires, leading to seemingly endless short-term licence renewals and bureaucratic scolding. Even blatant violations of licence conditions take years to reach the point where the commission will threaten a station’s licence. This system is not conducive to good broadcasting.
One detail the CRTC seems to suggest would be to treat large and small players differently. Companies like Bell, Corus, Rogers and Quebecor would reach agreements covering all their broadcasting outlets and that would be, if not identical, at least equitable in terms of what is expected of them. For the smaller players, there would be standard conditions. Whether the small players’ regulatory burdens would decrease as a result is unclear.
As part of such a new system, the CRTC wants to have the power to impose fines, something it can’t do directly right now (but does do in a de facto way by requiring increased contributions to Canadian content as a condition of renewing licenses).
A good idea detailed a bit in the conclusions of the report is to offer incentives for regulated services, like allowing only regulated services to have access to production funds, or allow advertisers to get tax deductions only for ads placed with regulated services. But at the same time the report says everyone should be regulated under new legislation, including services like Netflix. So it’s unclear if this would really be optional.
Funding reform: The headline-inducing recommendation is that mandatory financial contributions to Canadian content be spread out, with Internet providers and previously unlicensed video providers being asked to chip in (this is being billed as an Internet and/or Netflix tax, though the CRTC says without evidence that it believes there would not be an impact on consumers). And how to spend the money collected under a new fund “should be the subject of future public discussion.”
This is actually a good idea. At least it is if you believe that the government should directly subsidize the Canadian broadcasting system, and if you believe that this subsidy should be funded by a direct tax on subscribers. Once the television industry reaches the point where the unregulated Internet-based system is more profitable than the regulated system, the latter is going to collapse, and hundreds of millions of dollars a year in support for Canadian content will disappear. Taxing Internet service will future-proof this and ensure a more sustainable funding. But as has been pointed out, video and audio content isn’t the only thing passed around online. Should journalism, books and video games also be eligible for subsidies if the use of the Internet to access them is taxed?
How this all works is something the commission has left to future people to figure out.
Oh, and the commission also thinks we should take a chunk out of wireless spectrum auction revenue to boost this fund. Because, in its logic, much of the drive for new bandwidth is video consumption.
Well duh. The report talks about a national strategy to “enable the export of Canadian French and English-language audio and video content”, as if there was some law prohibiting the export of Canadian content, or the industry wasn’t already headed in that direction.
It fills paragraphs with buzzwords like a high school student trying to pad a book report: “Place Canadians at the forefront of new technological developments, such as in artificial intelligence, search, algorithms, digital advertising and the use of blockchain technologies, through the development and funding of academic or research programs and investment in these new technologies.”
Blockchain! Let’s study blockchain! The kids are all talking about it these days!
Examine! Consider! Even under “short to medium term steps”, the proposals are vague:
- “Re-examine the regulatory approach to radio” through unspecified changes to policies like common ownership and French-language music quotas (a file that has been sitting on the CRTC’s desk for years, I might add).
- “Examine ways to support television news production through increased access to subscription revenues” (no further detail is provided).
- “Consider the introduction of group-based approaches to the licensing of radio stations and (TV providers)” — it’s unclear what purpose this would serve or how it would work.
- “Update definitions of Canadian programming expenditures in light of the digital environment” — presumably this means making online-only productions eligible to count toward CanCon expenditure quotas, but again no details are provided.
Reviewing policies is something the CRTC does. Albeit very slowly. And it’s unclear how any of the above is going to fix the problems caused by the Netflixes of the world. Examining the common ownership policy in radio is a very good idea — Bell and Cogeco own 11 commercial radio stations in Montreal, leaving 15 for all other owners (of which seven are ethnic stations and five others are on AM). But this won’t change the fundamental issue that the commission has been asked to look at here.
In short, it’s a pretty big disappointment for an unnecessary report requested by a minister desperate to kick the can as far as she can. Two and a half years into Joly’s mandate, and we have only vague ideas for restructuring our broadcasting system. In a year or two these might turn into concrete recommendations. Maybe a year after that we could have new legislation and policies in place.
The only question is whether the broadcasting system will still be in place by the time that happens.
My guess is that we’ll see some incremental changes, some reforms to things the CRTC was already going to consider, and Joly will continue stalling on the file, maybe presenting a few populist goodies in the months before the next federal election instead of working to give the system the restructuring it so desperately needs.
UPDATE: I was a guest on CBC’s On the Money to talk about this report.
The CRTC has released a report recommending Canada put an internet tax into effect, but journalist Steve Faguy @Fagstein says although the report is detailed and well researched, he doesn't think it'll be coming into effect any time soon. pic.twitter.com/b1uDAkxvzk
— On The Money (@OnTheMoneyCBC) June 1, 2018
Binding service agreements is how France Conseil supérieur de l’audiovisuel (CSA) regulates national, local and foreign services. My understanding is that a contract is drafted, signed and registered through a notary. It covers all the aspects under the purview of the communications act, regulations and policies. The sole exception is when a foreign service is already regulated by another country of the European Union, in these instances the service distribution is authorized without having a binding agreement with the CSA.
This screams of the CRTC attempting to make itself both relevant and at the center of the digital / online revolution, and failing at both. Fundamentally, they are trying to do it by trying to lock the internet back into a broadcast model box, which is something those services really are not.
The whole thing stinks of 1980s mentality, where content comes from X number of sources, and you punish them into producing (buying, playing, using, supporting) Cancon. The CRTC could do it because they held the big stick of regulation.
It’s not 1980 anymore.
Digital content comes from wherever. Forget Netflix or spotify, and consider how much content is produced (and streaming live) on services like youtube, Twitch, and other stream yourself services (there are many). This is 2018 content, there is no Cancon-ing Ninja playing Fortnite on Twitch to a million viewers (over 200 million stream views to date). That is what the next generation is watching, not some silly Cancon comedy.
Cancon, heavy handed regulation, licensing… it’s all in the past. It’s the DeSoto of the modern era, a classic concept that is interesting to look at, but not relevant in a world of Teslas and Hybrid supercars.
The problem is the CRTC. Their policies and decisions have slowly but surely painted Canada’s broadcast and distribution network into a corner, with few players and vertical market integration. There is nowhere for this to go anymore.
I have suggestions, maybe another post will come later…