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Stop Protecting Broadcasters

Feds should end free ride for Canada's Big Media.

By Michael Geist 25 Sep 2007 | TheTyee.ca

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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Homer: another CTV import.

Soon after taking over as chair of the Canadian Radio-television and Telecommunications Commission, Konrad von Finckenstein commissioned Laurence Dunbar and Christian Leblanc, two leading broadcasting lawyers, to conduct a comprehensive review of Canada's regulatory framework for broadcasting services.

Dunbar and Leblanc sparked a firestorm when they released their 337-page report earlier this month with the Canadian Association of Broadcasters characterizing their recommendations as an assault on the foundation of Canadian broadcasting. In this instance, the broadcasters are correct. The report is indeed an assault on the regulatory foundation of Canadian broadcasting -- one that is long overdue.

Canadian broadcast regulation was designed for a world of scarcity where broadcast spectrum and consumer choice was limited. This led to a highly regulated environment that used various policy levers to shelter Canadian broadcasters from external competition, limited new entrants, and imposed a long list of content requirements and advertising restrictions.

As a result, a dizzying array of regulations kept the entry of new broadcast competitors to a minimum, enshrined genre protection so that Canadians were treated to domestic versions of popular channels such as HBO and ESPN, and firmly supported simultaneous substitution, a policy that allows Canadian broadcasters to simulcast U.S. programming but substitute their own advertising.

Gorging on US content

Given that framework, it comes as no surprise to find incumbent broadcasters averse to significant change. Media consolidation has left the market with a handful of private Canadian broadcasters who fill their broadcast schedules with profitable U.S. programming, relegate most original Canadian content to undesirable timeslots, and generate an estimated $200 million annually from the simultaneous substitution rules alone.

Yet today's broadcasting environment is no longer one of scarcity, but rather one of near limitless abundance as satellite, digital channels, and the Internet now provide instant access to an unprecedented array of original content. Spectrum limits have given way to broadband pipes that carry everything from original television networks to YouTube videos. Fledgling broadcasters rely primarily on Internet distribution, while conventional broadcasters make their programming freely available online on multiple sources and give users the ability to embed clips of their shows anywhere they choose.

In this new environment, Dunbar and Leblanc rightly conclude that many broadcasting regulations should be re-considered. They recommend dropping domestic genre protections, freeing up consumer choice by creating greater flexibility in program bundling, and removing some advertising restrictions.

More controversially, they suggest re-thinking the simultaneous substitution rules, which they note results in Canadian broadcasters having their schedules largely dictated by the decisions south of the border. Although highly profitable, the rules have not generated the anticipated Canadian content benefits. Moreover, increasing costs for U.S. programming and the move toward online streaming threatens to further erode this cash cow.

New media to the rescue?

The report is at its most frank in discussing the Canadian new media environment. It notes that the influx of foreign content is only likely to increase as users access content "anytime, anywhere" whether by means of authorized or unauthorized services. In fact, the growing use of Internet streaming may soon mean that Canadian broadcasters will face competition from the very programs they purchase from U.S. distributors.

The authors remain optimistic, however, concluding that "the solutions to this issue lie not in imposing new regulatory restrictions on Canadian companies as some stakeholders have suggested -- but rather in encouraging them to stake out territory on the Internet ... to regulate Canadians, while the rest of the world competes in an open market, would in our view be counterproductive."

The message is clear -- broadcasters must adapt by shifting from their reliance on protective regulations and inexpensive U.S. content to instead competing on the unregulated global stage with their own, original Canadian content delivered to an international audience on conventional and Internet platforms. This should dramatically alter Canadian content production from one mandated by government regulation to one mandated by market survival.

The government can assist in this regard -- the report calls for the establishment of a national policy for digital media -- but its biggest contribution would be to follow the path outlined in the Dunbar and Leblanc report by launching their own assault on a regulatory environment designed for a bygone era of broadcast scarcity.

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