CRTC Ruling a Small Step Toward Broadcast Overhaul
Coverage of last week's Canadian Radio-television and Telecommunications Commission ruling on mandatory carriage of a couple of dozen channels may have focused on the future of the Sun News Network (no mandatory carriage that would have guaranteed payment from all cable and satellite subscribers) and the monthly cost of cable and satellite bills (a very small increase since virtually all new proposals were rejected), but the decision really represents a small step toward a complete overhaul of Canadian broadcasting regulation that is likely to unfold over the next ten years.
The Commission will hold a further hearing on how to treat news channels, telegraphing that it plans to adopt a must-carry approach so that all Canadians can subscribe to the news channels of their choice. Yet the entire process harkened back to a different world, when space on the television dial was scarce, access to Canadian content scarcer still, and consumer choice for broadcast content largely unknown.
The reality of the current environment is that none of these conditions exist. Cable and satellite providers have virtually unlimited space (my provider currently features a trio of channels that continually display a fireplace, aquarium, and sunset in high definition), Canadian content can be found through a multitude of venues including video-on-demand and Internet-based streaming services, and consumers can access broadcast content from anywhere on any device.
The upcoming battle will not be about which channels benefit from regulatory handouts, but rather over whether there is a need for any broadcast regulation beyond basic principles of non-discrimination on what consumers can access through conventional broadcast and the Internet. These principles, now found in the Commission's policies on vertical integration and Internet traffic management, will become an increasingly important part of the regulatory process.
This may take a decade to play itself out, but will ultimately place four foundational issues at stake.
First, there will be growing pressure to eliminate all must-carry rules, instead adopting a must-offer system in which cable and satellite companies will be required to offer channels to their end users on a pick-and-pay basis. Those channels may prove costly, but the purchasing decisions will lie in the hands of consumers, not regulators or vertically integrated cable and satellite providers.
Second, the foreign ownership restrictions on broadcast distributors will face the prospect of elimination. The imminent entrance of foreign telecom companies into the Canadian market will place the spotlight on how the restrictions create a significant disadvantage to new entrants that wish to offer bundled telecom and broadcast services.
Third, rules designed to benefit Canadian content creators and broadcasters, including mandatory contribution requirements and simultaneous substitution policies that allow domestic broadcasters to replace U.S. commercials with their own, will be re-examined as Canadians consider whether an open broadcast market inevitably leads to the elimination of those longstanding policies.
Fourth, the main event will pit the regulated broadcast framework against the unregulated broadcast market (ie. the Internet). As the unregulated market, which includes Netflix, YouTube, and a myriad of unregulated online broadcasters, captures an increasing share of the viewership market (and consumers "cut the cord" in bigger numbers), the regulated side of the equation will argue that a dual track is unsustainable and that either everyone should be regulated or everyone should be unregulated.
Faced with a choice of regulating a seemingly unregulatable, growing Internet market or removing most existing broadcast regulations, the need to side with an unregulated space will seem obvious to government, regulators, and a generation of Canadians who will be puzzled that the system once involved debates over whether consumers should be forced to pay for channels they don't want.