Shaw's Big Switcheroo

Few Canadian companies have been as critical of Canada's telecom and broadcast regulator as Shaw Communications Inc., the Alberta-based cable giant, whose appearances are often viewed as must-see regulatory TV by industry watchers. In light of the contentious history, it came as no surprise when Shaw appeared before the Canadian Radio-television and Telecommunications Commission in 2008 as part of its new media hearings to unequivocally reject potential CRTC new media regulation.

In its written submission, Shaw stated that in Canada "the Internet has flourished because of government policies that have supported the development of a competitive, unregulated new media environment." It concluded with a dire warning against new regulation:

"Shaw is extremely concerned that any new regulatory measures would undermine existing and future investments in broadband and new media, as well as Canadians' access to and enjoyment of new media products and services. This would be both regrettable and unjustifiable given the tremendous successes that Canada has achieved in building a sophisticated and accessible broadband infrastructure throughout the country."

Shaw emerged largely victorious out of the new media proceeding, with the commission concluding that further regulation was unwarranted. Moreover, it punted the issue of a potential Internet provider levy to the courts, which ruled last year that such a scheme was outside the current scope of the Broadcasting Act.

In the two years since the CRTC hearings, the world that Shaw envisioned is increasingly a reality. Services like Netflix, a movie rental download service, have launched in Canada to considerable acclaim. Hulu.com, the popular U.S. video site, is rumoured to be preparing for entry into the Canadian market, while GoogleTV and AppleTV are likely not far behind.

While this is precisely what Shaw and others promised -- more consumer choice and more options for the distribution of both Canadian and foreign content -- the company told a much different story in an appearance earlier this month before the Standing Committee on Canadian Heritage.

Having invested more heavily in the broadcast sector with its purchase of Canwest Global, Shaw executives told the committee that "foreign competitors such as Netflix, Google TV, Apple TV, and Hulu have internationally known brands, sophisticated technologies, marketing expertise and very deep pockets. These foreign content providers remain exempt from regulation under the CRTC's new media exemption order. This exempt status needs to be reconsidered, given that the Canadian broadcasting rights market is threatened."

Turn around! Turn around!

What is behind Shaw's complete about-face on Internet regulation?

It appears to be an obvious shift in corporate priorities, with the broadcaster distributor now a major broadcaster. As companies ping-pong between policy positions, consumers and creators are invariably stuck in the middle with the public interest a forgotten part of the regulatory process.

While Shaw's previous approach may have been linked to its status as an Internet service provider and the recognition that new Internet-based services make its own services more attractive to potential customers, it may now be seeking to solidify its position as a broadcaster and attempting to leverage the regulatory environment to hamstring new competitors.

Yet the danger extends beyond the prospect of targeting a handful of new video sites. If politicians or the regulator take up Shaw's call to re-examine Internet regulation, there is little reason to believe that it will stop at sites like Netflix. Rather, the issue of broader new media regulation will be back on the table, ironically at the urging of one of its most vocal critics.