OTTAWA – Whether it’s the move to super fast broadband speeds and the applications they enable or personalized TV viewing experiences brought on by on-demand, online providers, players in this sector are struggling to adapt with the times. There can be little doubt innovation is seriously disrupting Canada’s communications sector.
The broadcast sector is, of course, seeing tremendous change caused by the proliferation of online viewing and the significant decline in advertising revenue on linear TV. Broadcasters have responded by making their programming available in a variety of web-based platforms. But they haven’t figured out how to deal with the lost ad revenue component.
As Barbara Williams, executive VP and COO at Corus Entertainment, noted during a panel session at the IIC Canada conference on Tuesday, broadcasters have moved away from the traditional one-to-many relationship. But this challenges the business model, she said, adding innovation in measurement and monetization of data becomes increasingly important.
Being able to measure the viewing habits of people on the various platforms – and then using that data to provide targeted advertising or dynamic ad insertion – would be a boon to the company and advertisers, said Williams. But the broadcaster isn’t allowed to do that thanks to privacy issues, so it represents “a real block” on the business model (even though Facebook and Google and others do it with abandon).
For Jeff Fan, managing director of equity research for telecom, cable and media at Scotiabank, there are several elements to consider when looking at innovation in the communications sector. Among them are the policies governing telecommunications and broadcasting. He noted that policies need to incent infrastructure investments because better, more prolific pipes enable other industries to flourish.
This isn’t always the case, Fan added.
“There has to be balance between investment incentives and choice and competition. And sometimes, regulators tend to sway too far one way and sometimes too far the other way. But there has to be a balance,” he said.
The investment banker also questioned the federal government’s current policy around foreign ownership in the communications sector. Currently, only telecom firms with less than 10% national market share can be acquired by foreign firms.
“Should we have different rules between telecom operators and cable operators? Do ownership restrictions actually further Canadian culture? I think we really need to ask these questions,” he said.
“As an observer some of these rules don’t make sense,” – Jeff Fan, Scotiabank
Fan acknowledged that foreign ownership of domestic broadcasters is a sensitive issue, but he wondered why would it matter when there are already limits imposed on licence holders with respect to Canadian content requirements.
“As an observer some of these rules don’t make sense,” he said.
Robert Watson, president and CEO at the Information Technology Association of Canada, brought up the talent issue in his presentation. He noted that there will be a huge number of unfilled information and communication technologies (ICT) jobs in the not so distant future. Therefore when it comes to any innovation agenda, the talent component must be a critical component.
“We need to spend money and we need to focus on talent. We’ve said it before that there is going to be over 180,000 ICT jobs unfilled by 2020,” he said (something ISED Minister Navdeep Bains echoed in his address to the conference on Thursday).
This means governments have to implement programs that guide more students into the science and math areas. But even with more of them in those programs, there will still be a big hole to fill, noted Watson.
“We still have to complement that with attracting… temporary talent,” he said, adding ICT trained people need to be able to come in when required. “If you don’t let talent flow freely then it will be done remotely. It’s not like coming in and picking tomatoes. And we also have to have a program for persons transitioning from one sector to another.”
When it comes to research and development in the communications sectors, the government could make it easier for firms to invest, noted both Watson and Fan. This could be done by using accelerated capital depreciation mechanisms.
Fan noted this is a very good tool. This would put more money in the hands of the companies willing and able to invest, he said.
The Scotiabank analyst noted during his presentation that the telecom providers may also have to break free of their pipes-only business. Just as U.S. providers such as Verizon and AT&T are expanding into other services, Canadian providers should expand beyond connectivity and an innovation agenda should encourage that.
Cartt.ca will have more from the IIC Canada Conference in the coming days.
