Canada's Bizarre New Broadcast Policy

After months of intense lobbying and marketing that pitted broadcasters ("Local TV Matters") against cable and satellite companies ("Stop the TV Tax"), the Canadian Radio-television and Telecommunications Commission weighed in last week with its much-anticipated broadcasting regulatory policy decision.

Broadcasters were generally viewed as the short-term winners, since the CRTC opened the door to negotiations on a new fee for local television signals, subject to a court ruling confirming the Commission's jurisdiction to implement such an approach. That left some very unhappy -- cable and satellite companies warned of increased costs, while the CBC lamented that it was a "dark day" for public broadcasters after it was excluded from the proposed negotiating process.

Two perspectives were largely missing from the decision, however. The consumer impact was left to a second report, released the following day, in which the commission admitted that prices would go up, but maintained Canadians would continue to pay based on past experience of steady price increases imposed by cable and satellite companies. That conclusion prompted a stinging minority report from Commissioner Michel Morin, who argued the CRTC was defending "the interests of the industry to the detriment of consumers who, for their part, remain powerless."

The second missing perspective was the failure to account for the emergence of the Internet as a significant delivery channel for broadcast content. Indeed, it seemed appropriate that on the day the CRTC released its decision, a new study was published that found Canadians now spend more time online than watching television.

CRTC needs to log on

While the world is increasingly moving online, the CRTC decision acted as if the Internet scarcely exists. It mentioned the Internet only once, acknowledging that it is a platform for content distribution. Moreover, the report did not include any references to streaming, YouTube, podcasts, BitTorrent, or peer-to-peer (the technology used in 2008 by the CBC to distribute its content).

The reality of how consumers access broadcast content was surely worth considering in the context of a broadcast policy that envisions the possibility of blocking U.S. broadcasts of television shows where a Canadian broadcaster has purchased local rights to the program and failed to negotiate a fee with a cable or satellite company. In other words, if the Canadian broadcaster chooses to negotiate for a new fee but fails to reach a deal, it will have the right to mandate blocking broadcast of programs from both local and foreign sources.

That could result in millions of Canadians regularly encountering blank screens instead of expected programs. Given the increasing expectation of on-demand program viewing, the policy would harm both broadcasters and broadcast distributors, sending more Canadians away from broadcast television to the Internet where there are no blackout messages and most programs are readily available in both legal and illegal forms.

This may be precisely what the CRTC is counting on, hoping the blackout option is so unpalatable to both parties that it will force them to reach a deal. Consumers may not be inclined to wait around for this particular fight to be resolved, however.

Forced program scarcity?

Given that they now spend more time online than watching television, the programs are readily available online, and U.S. over-the-air digital signals are freely accessible to a sizable percentage of the Canadian population, basing a broadcast policy that presumes consumers will continue to pay escalating fees and be willing to settle on forced program scarcity in a world of abundance hardly seems like a recipe for success.