Canada Unprepared for 21st Century TV

The government's promise to implement a "pick-and-pay" television model that would allow consumers to subscribe to individual channels from cable and satellite providers garnered significant attention this fall. The approach was promoted as a pro-consumer reform that better reflects expectations that the public controls when, where, and on what device they watch broadcast programming.

Consistent with the government's policy commitment, the Canadian Radio-television and Telecommunications Commission will soon report on the regulatory implications of such a reform. Changing cable packages may only be the beginning, however, as CRTC chair Jean-Pierre Blais has stated that the regulator needs to "develop a regulatory framework that will be flexible enough to be adapted to the new technological reality."

The unbundling of television packages represents the broadcast distribution side of the changing environment, but the flip side of the coin involves the need for changes to Canadian broadcast policy. If Industry Minister James Moore and the CRTC are prepared to shake up the way Canadians access television, they should also consider changing longstanding and increasingly outdated broadcast rules, starting with the gradual elimination of "simultaneous substitution" policies.

Simultaneous substitution dates back to 1971, when the CRTC published a detailed policy statement for the nascent cable industry that allowed for the substitution of local commercials for U.S. advertisements where the same program ran on Canadian and U.S. channels at the same time. The effect was to simultaneously impose the Canadian feed on both the Canadian and U.S. channels. The Supreme Court of Canada upheld the validity of the policy in 1977, leading to decades of frustrated Super Bowl viewers who are unable to see the U.S. commercials during the game.

Canadian broadcasters have been big boosters of the simultaneous substitution policy, claiming that it generates significant revenues that can be used to support more expensive and less profitable Canadian programming. The U.S. programs can be licensed for a fraction of the cost of original Canadian programming and simultaneous substitution increases the visibility of Canadian advertising by placing it on multiple channels.

A heavy price

Yet despite the purported advantages, simultaneous substitution has come at a heavy price to the independence of Canadian broadcasters. Given their reliance on the policy, U.S. broadcasters effectively control the Canadian prime time broadcast schedule since the Canadian priority will be to match whatever the U.S. counterpart is broadcasting. If the U.S. broadcaster moves the time or date of a program, the Canadian broadcaster typically matches the change in order to retain simultaneous broadcast.

Moreover, Canadian programming invariably suffers as a result since Canadian broadcasters often limit their promotion of domestic programs and can rarely guarantee a steady placement in the programming schedule. U.S. programming also becomes more expensive, since simultaneous substitution increases its economic value.

The new technological reality suggests that simultaneous substitution should become less and less important over time. Given consumer ability to watch programs through a myriad of non-broadcast avenues such as cable on-demand features, Internet streaming, personal video recorders, or online subscriptions, viewing a program in its designated time slot is increasingly part of a bygone era.

There is little doubt, however, that broadcasters will fight to retain the policy. Bell Media said earlier this fall that it would support a policy that would block Canadian access to U.S. channels altogether if simultaneous substitution were removed. Alternatively, it favours a non-simultaneous substitution policy that replaces U.S. commercials whenever the program airs.

Canadian broadcasters may have been content to compete largely on picking U.S. winners in the past, but future success will depend on developing their own original content to sell to a global audience. Simultaneous substitution creates a protected market that delays the inevitable. The policy may have made sense in the 1970s to support the development of the Canadian broadcast distribution system, but if the government is serious about bringing broadcast into the 21st century, it is simultaneous substitution that should face cancellation.