GATINEAU – On the empirical side, unsurprisingly, data compiled and released today by the CRTC in response to a government request, show the slow decline of the popularity and revenues of traditional media.
But for the future, the report called Harnessing Change: The Future of Programming Distribution in Canada identifies four options available to the federal government as it mulls its promised overhauls of the Broadcasting Act and Telecommunications Act:
- Status quo
- Deregulate traditional players
- Apply the existing regulatory approach to new players
- Develop new, adaptable and innovative approaches which engage new players. This is the one the Report recommends.
“To ensure a vibrant domestic market and be equitable to all players, it will be essential to develop better regulatory approaches that engage all audio and video services and for each to participate. Accordingly, if legislative change is to take place, it should clearly and explicitly make any video or audio services offered in Canada and/or drawing revenue from Canadians subject to the legislation and incorporate them into the broadcasting system. This should apply to traditional and new services, whether Canadian or non-Canadian.”
“Will they do it this time? I think they have to. The system as it exists today, certain parts of it are unsustainable.” – Ian Scott, CRTC
But that would require legislative change and CRTC chairman Ian Scott says this report will fuel discussion (has it ever, so far!) and then, he said, we need to finally see the Acts updated.
“Government has said it was going to review the Broadcasting and Telecom Acts. They asked us to produce a report. My understanding is that is not far away,” Scott told Cartt.ca in an interview yesterday after the report’s release.
“We understand that this report will be an important input into the work of whatever mechanism they use to (examine) those legislations – and above and beyond it will stimulate the debate and discussion. Will they do it this time? I think they have to. The system as it exists today, certain parts of it are unsustainable. So there is a challenge.”
So, with a new approach to funding Canadian content, continues the report itself, “the burden of supporting content by and for Canadians would be partly reallocated within the system to include appropriate telecommunications services (such as ISPs), while continuing support for broadband deployment. This approach recognizes the fact that the vast majority of the demand for telecommunications services and the associated growth in their revenues is driven by video and audio content. It further recognizes that most telecommunications services in Canada are part of highly vertically integrated companies that also include BDUs and often programming services of various types.
“Public funding makes possible the production of content that wouldn’t be made otherwise and helps stabilize production levels relative to fluctuations in the market. It has become a less prominent component over time as industry revenues have grown but is still significant.” See the chart at top (click to enlarge) which shows federal spending on culture and broadcasting as a share of the economy is half what it was a generation ago.
The report proposes we now replace prescriptive licensing with comprehensive and binding service agreements that include traditional and new players
“Traditional licensing models do not reflect the emerging reality of broadcasting or the ways in which Canadians consume and create content,” it reads. “Nimble regulatory approaches, such as binding agreements that clearly and transparently set out obligations, would better incent constructive participation and secure essential commitments from all participants.” That would mean serious legislative change as the licencing regime is at the heart of the Broadcasting Act, of course.
In fact, by removing the licencing regime and the fact that most tariffs are forborne, both Acts start to look the same, meaning they could be merged.
The government’s contribution agreement with Netflix would then logically require funding of redefined Canadian Content. However, who would then own the rights, and would they then replace the likes of CTV/Global as a window, for example, is a serious question.
However, timing is everything especially with the federal election coming in 2019. Those with a lengthy institutional memory recall that the last time the Broadcasting Act was updated began in 1984 with the start of the Caplan Sauvageau Report and ended in 1991 with minimal changes to the original 1968 Act.
Continues Harnessing Change: “New or revised legislation… should include the necessary and sufficient powers to transparently implement and ensure compliance with binding agreements and the commitments set out therein. These tools could include the ability to impose administrative monetary penalties in instances of non-compliance.”
“A restructured funding strategy should be based on a revised contribution structure that is broad-based, equitable and sustainable in the longer term.” – CRTC report
“A restructured funding strategy should be based on a revised contribution structure that is broad-based, equitable and sustainable in the longer term. It could integrate or at minimum align the existing contributions of the federal government directed to audio and video content. It could also incorporate a portion of the revenues derived from spectrum licensing and auctions, since the demand for spectrum is driven to a large extent by the demand for audio and video content.”
The existing level of contribution is approximately $800 million. (This does not include the funding which goes to the CBC.)
“Preliminary analysis suggests that such an integrated fund could potentially be revenue-neutral across the entire system. Given the growth in revenues in certain telecommunications sectors, an integrated fund could also ensure continued support for audio and video content,” reads the report.
“This would include all beneficiaries of existing funds without the need for additional costs for Canadians, who ultimately fund the contributions of all players. Any potential for retail cost increases would be further mitigated by competition in the connectivity markets.”
This report WILL fuel discussion. Will the government finally act on the Acts? That's unknown at this time.
