Thoughts on the CRTC’s “Harnessing Change: The Future of Programming Distribution in Canada”, Report to the Governor in Council
The problems start with the title. “Harnessing Change” reflects a long history of Canadian governments and the CRTC sticking fingers in holes in the dike of broadcasting policy and regulation, to keep out invading hordes, while communications technologies undermine the dike’s foundations — from without and from within — because Canadians have consistently been early, eager and rapid, adopters.
Little wonder that it was Canadian Marshall McLuhan who coined the phrase “the medium is the message”: communications media influence societies more than the content that they carry. Ya think? Check out that thing called the internet, eh… Marshall built on the work of Harold Innis, who explained the importance of communications to empires (ponder that in the context of regulation). Meanwhile, Ithiel de Sola Pool wrote the history of governments trying and, in the long run failing, to control communications technologies which he called “Technologies of Freedom”.
• Canadian policy and regulation first “harnessed” over-the-air radio and TV.
• Then they “harnessed” the Trojan horse of cable-TV: Its primary business was to offer Canadians the US channels they craved. So the beast was saddled with regulated demand and subsidized supply of CanCon, including Canadian clones of popular US channels. Meanwhile, simultaneous substitution kept US content in prime-time to “cross subsidize” CanCon. So CanCon became, for Canadian broadcasters, an off-prime cost of doing business rather than an audience-driven investment. And the horse was fattened with monopoly cash-flow.
• Then policy and regulation “harnessed” direct-to-home satellite TV under the same “system”, now with the illusion of competition — never enough to risk cash-flow, cross-subsidies, regulated demand and subsidized supply.
It all worked, more or less. Because over-the-air radio and TV, cable-TV, and satellites, were all “closed access“, domestic networks, they were easily regulated. And regulation was justified because network owners controlled content and access to it. But inevitably, regulation also served the interests of the regulated: conferring privilege in a protected market.
So the characteristics of broadcast media, their privilege and their protection explain why, from a public policy perspective in a democracy, regulation is the exception, among communications media.
Canada fosters, supports and promotes Canadian content in all media from publishing books, magazines and newspapers to the performing and visual arts, to sound recording and film production. Measures include tax credits, direct subsidies, funding agencies like the Canada Council, Telefilm and Canada Media Fund, and public institutions like museums, galleries, the NFB, National Arts Centre and the CBC. But only broadcasting — radio, TV, and distribution — is regulated. After half a century of regulation, it’s easy to forget that, in a free and democratic society, regulating media of communications and cultural expression is, and ought to be, an exception.
Under regulation, a protected industry flourished, now consolidated into: a vertically-integrated domestic oligopoly of carrier-BDU-ISP-broadcasters, fringed by content producers and creators that have come to depend on an artificial market of regulated demand and subsidized supply — “the system”. It’s a broad constituency with a vested interest in its exceptional status quo.
But then came the open internet, enabling widespread, and permission-less, innovation, creation and distribution of content, including audio and video, and on-demand access, worldwide. Canadians, including Canadian creators, embraced it with a vengeance. Canadians know that the internet is not “broadcasting”. On the contrary, it is all about freedom. Given the nature of the internet, public policy should be finding ways to “unleash” its opportunities for all.
For a while, the CRTC seemed to understand this. Now, captured by those it regulates and their dependents, the CRTC proposes to “harness” the internet, under the same old “system”, at inevitable cost to Canadians. They might just as well propose regulating cinemas, bookstores, newsstands, theatre stages, private and public galleries and museums, newspapers, book publishers — the works. Because the open market characteristics of the internet make it much more like those media and cultural outlets than it is to the closed, controlled world of radio and television that now must evolve or die.
Can it be done? There is an army of vested interests lined up to try… a regulator evidently willing to lend its weight… and a government heading into an election. So dice are rolling…
The internet is remarkably resilient. And Canadians love the internet.
If it takes its task seriously, the policy review Panel appointed by government will set aside the outdated notion of “harnessing change”. They will recognize that regulation is not the norm for communications media. And they will consider, instead, how to unleash the internet’s opportunities for all Canadians, with the most forward-looking, market driven, effective and efficient means of promoting the production and exhibition of Canadian content online:
• They should seek out the views of Canadians who are succeeding on the internet, rather than rely on those who fear it and want it “harnessed” to serve their interests.
• They should look to the evidence of unprecedented market demand demonstrated by the growth of content production in Canada — including significant increased foreign investment in Canadian content (CMPA’s Industry Profile data) — and not forget online games and software.
• They should assess, given rapid growth, the benefits, for innovation and production quality, of the risks and rewards of the market, compared to the protected “certainty” of regulation. Which is more likely to serve the interests of Canadiansrather than of those in “the system”?
• They should consider the benefits to Canadian creators, and to Canada, of Canadian content produced for, and reaching, global audiences online.
• They should consider the irony of continuing to prevent foreign-financed productions that meet CanCon criteria from being recognized as “Canadian” — both in the context of tax credits, and for awards for Canadian creators — while treaty-coproductions with no discernible connection to Canada get tax credits, subsidies and awards.
• They should consider how CRTC regulation of online content providers would work in practice: could it avoid arbitrary distinctions among services? Does Canada want to regulate online newspapers and magazines (domestic and foreign) that increasingly, and prominently, feature audio and video?
• They should consider to what extent regulation would incentivize online services to simply geo-block access from Canada rather than register with the CRTC, file revenue and subscriber data, and face “contributions”. Canada is a market small enough to forego. How is that outcome consistent with net neutrality? Would Canadians agree to, and comply, with that outcome?
• And they should consider, very seriously, the dead weight on the economy, on innovation, on creativity, on Canadians’ access to online content, and on freedom of expression, that necessarily flow from a situation where online services from anywhere in the world, including Canada, must consider the regulatory consequences of allowing Canadians to access their service.
Perhaps the CRTC report has served one purpose: it has made clear that this policy review is not solely about broadcasting. It is about the future of the internet for Canada and Canadians.
The above article represents the state of discussion in the Internet Society, Canada Chapter, and is accordingly a collective output. -TMD, Chairman