Whatever the future of TV may hold
GATINEAU – The rise of online TV distribution platforms such as Netflix, Amazon Prime and others are upending the delicate balance of the Canadian broadcasting system and that means the federal government and the CRTC need to change the way they regulate the sector. In a nutshell, Canadian broadcasters, producers and distributors want these platforms treated the same way they are.
In comments to the CRTC’s consultation on new TV program distribution models (which was requested by the federal government ostensibly as the first step towards modernizing the Broadcasting Act and Telecom Act), many interveners are rerunning comments previously made in other proceedings such as Let’s Talk TV: These online platforms are generating great value from Canadian content but are contributing little to nothing into the domestic ecosystem.
Rogers Communications argues in its December 1 intervention that the current approach where broadcast distributors (BDUs) and broadcasters are subjected to significant regulatory obligations whereas their over-the-top (OTT) competitors aren’t is no longer sustainable. This is “a structural impediment” preventing regulated Canadian broadcasting undertakings “from competitively responding to the actions” of OTT providers.
“The time has come to adopt a new regulatory framework that would apply equitably to all platforms that are delivering television content into Canadian homes,” it says. “It is only by creating a more equitable framework that Canada will be able to realize its full potential as one of the strongest and most competitive creative economies in the world.”
Faced with the considerable upheaval caused by OTT providers (it’s primarily Netflix draining eyeballs from prime time TV), the large vertically integrated players aren’t standing still. Bell Canada notes that it is now live streaming Bravo, Space, Comedy and Gusto, in addition to the download to go feature for TMN.
Even with these changes, however, more needs to be done to level the playing field with foreign OTT services, the company says, adding this means the Commission needs to stop treating these companies as if they’re operating outside of the larger broadcasting system.
“The extent of change occurring in the industry requires more than stopgap solutions; it requires a redefinition of the Commission's role and powers.” – BCE
“The extent of change occurring in the industry requires more than stopgap solutions; it requires a redefinition of the Commission's role and powers. The Commission must roll-back certain areas of regulatory oversight to bring its approach towards traditional broadcasting services in line with its treatment of the new distribution models,” says BCE.
Telus agrees that “greater latitude” should be given to regulated services. Shaw Communications notes “licensed Canadian BDUs require regulatory flexibility, certainty and meaningful symmetry (including appropriate deregulation and a reduced financial burden) to support their continued ability to remain relevant to Canadians.”
Corus Entertainment adds to the chorus calling for more flexibility by arguing that private broadcasters shouldn’t be told how much content they have to buy from independent producers.
“In a digital era where consumers have no restrictions on programming choices, private broadcasters must have the freedom to make the same choices on where to source content as our main competitors (like Netflix) do. Quotas are counter-productive in the global communications environment and especially in the non-linear digital environment,” the company writes.
While the larger companies are calling for fewer regulations and more flexibility in how they run their businesses, smaller production houses and the independent producers association want more stringent rules imposed on the OTT sector.
The traditional broadcasting system is under pressure from online TV providers, or Internet television services, as the Canadian Media Producers Association (CMPA) calls them, which has caused decreased viewing and subsequent revenue from licensed players. This translates into lower financial contributions from the BDUs to the Canada Media Fund (CMF) and Certified Independent Production Funds (CIPFs).
To rectify this challenge, the contribution framework under which Canadian programming is funded must be modernized to reflect this new reality, says the CMPA. It suggests the Commission do undertake a few actions.
The Digital Media Exemption Order and the Video on Demand Exemption Order should be reviewed; the CRTC should better collect data on Internet TV services; and perhaps most importantly the Commission should determine that ISPs and wireless carriers are “key elements” of the broadcasting system in Canada, that they have a role to play in meeting the Broadcasting Act’s objectives and that the Commission should have the power to require them to contribute to Canada’s broadcasting policy.
“These determinations and proceedings will ensure that Canada’s broadcasting system continues to support a vibrant domestic market as online video consumption increases and business models change,” writes the CMPA.
Smaller players such as Independent Broadcast Group and Blue Ant Media add that foreign entities operating in Canada should have to contribute financially to the Canadian system.
Even as licensed Canadian players, both large and small, vertically integrated and independent, argue that the current two-silo approach to the new broadcasting environment needs to become one, the company at the heart of transforming the broadcasting model says what it’s doing isn’t an evolution of broadcasting but something entirely different.
“Policymakers should look to the characteristics of the open public internet: first, its propensity to foster innovation, creativity, and competition.” – Netflix
“Online media have more in common with the open markets that characterize most media of cultural expression – books, newspapers, magazines, visual arts, movies, sound recording, music, dance, and theatre – than with regulated ‘broadcasting,’” Netflix writes in its December 1 intervention. “These other media all have significant cultural value, but have no regulatory obligations attached to either their physical or online form. As a regulated medium, ‘broadcasting’ is the exception, not the norm, among media of cultural expression.”
The foreign OTT, which committed to spend a minimum of $500 million over five years on Canadian productions in an agreement with the federal government earlier this fall (which was praised by some and derided by others), says online providers are providing great value to Canadian productions. Shows such as Alias Grace – viewed in 189 countries, in 26 languages and named one of 2017’s top TV shows by TIME magazine – Frontier, Travelers, Between and others, are having significant international success.
Netflix says that the growth of global online video services will only result in greater investments in high quality content produced in Canada. It points to figures from the CMPA as evidence. Prior to 2014 foreign financing of Canadian English language TV ranged between 8% and 10%. It jumped to 16% in 2014/2015 and then to 18% in 2015/2016.
Saddling Netflix with regulatory obligations from the licensed environment and attempting to “shoehorn online media” into traditional broadcasting “and reflexively apply legacy policies that applied to linear TV,” won’ serve the public interest, reads its submission.
“Policymakers should look to the characteristics of the open public internet: first, its propensity to foster innovation, creativity, and competition; and, second, the manner in which Canadians interact with, and consume, online content. They should look for non-regulatory means to help and encourage Canadians to seize the opportunities, both local and global, that online distribution offers, to ensure Canada’s continued success online,” it adds.
The CRTC’s consultation on future distribution models is far from complete. A date for the proceeding’s second phase, which will allow for additional interventions, has yet to be set.
UPDATE: The CRTC has set the deadline for the next phase of comments for January 31, 2018, noting it plans to do a consumer survey as well. Click here for that notice released Thursday, December 7.
