Monthly Archives: July 2015

The CRTC’s Wireline Wholesale Decision and the ISP Levy

I bet you didn’t think those two were related. If you’re primarily interested in broadcast policy (as I am) you probably didn’t even read the CRTC’s Wireline Wholesale Decision. I will freely admit that telecomm feels like another world and another language to me so I don’t tend to read the decisions and rely instead on the summaries in the news. Then Sasha Boersma pointed out to me Mark Goldberg’s tweet about Commissioner Raj Shoan’s dissent to the decision and I got excited and I just need to share that.

First, the decision. Wholesale wireline services are the part of their network that major telecommunications companies (e.g. Rogers, Bell) have to make available to small independent services (e.g. TekSavvy, VMedia) at a regulated fee to allow the independents to provide competitive voice, broadcast and internet services to their customers. The hearing was to review the policy framework to ensure that it contributed to competition and choice. You can read the press release here for a brief summary – the major issues are expanding the network that must be made available to include fibre and disaggregating the services so that an independent doesn’t have to take all services if they only want, for example, Internet.

Commissioner Shoan’s dissent wasn’t about those two main points but about the decision’s narrow focus on the Internet as a provider of alpha-numeric data and the missed opportunity to revamp policy, or take a first step towards revamping policy in recognition that broadcasting and telecommunications are no longer separate silos. Shoan’s position is that so much evidence was provided by intervenors that broadcasting is now part of the services that the independent providers offer to customers that the Broadcasting Act should have also applied. The world is rapidly evolving to one where there is only one pipe to the home providing all of our communications services and that is not reflected in the policy framework:

“In essence, under the current legislative framework, the Internet, through market forces, consumer use, and industry development, is evolving from a telecommunications service into a broadcasting service. The implications of this evolution are profound for not only the Commission’s regulatory frameworks, but all Canadians and the public interest.”

Commissioner Shoan breaks down Internet services into really three types of services:

  • licensed or exempt IPTV broadcasting (television channels delivered over the Internet by companies like VMedia and Zazeen)
  • exempt broadcasting delivered over the Internet (OTT services like Netflix)
  • non-broadcast Internet (websites, email etc.)

IPTV was a hot topic at the hearing with many independents looking for access to fibre to be able to provide customers with an IPTV offering. They need the bandwidth and speed. IPTV is broadcasting. Shoan’s analysis is that the Commission cannot use the Telecommunications Act to provide access to broadcasting. The Broadcasting Act must apply, specifically s. 9(1)(f):

s.9(1) Subject to this Part, the Commission may, in furtherance of its objects,

(f) require any licensee to obtain the approval of the Commission before entering into any contract with a telecommunications common carrier for the distribution of programming directly to the public using the facilities of that common carrier;

The exempt broadcasting services are exempted by the Broadcasting Act under the Digital Media Exemption Order. S. 28 of the Telecommunications Act provides an obligation on the Commission to regulate the transmission of programming over telecommunications services to guard against undue preference or unjust discrimination (i.e. incumbents favouring their services over the independents). Shoan sees a missed opportunity here to identify what would be undue preference or unjust discrimination “as high-speed networks rapidly transition to becoming predominantly video distribution platforms”. This was an opportunity to create a framework to address problems before they occur rather than after.

Now back to the ISP levy. When the CRTC reviewed the New Media Exemption Order (as it was then called) in 2009 there was a call from creator groups for the CRTC to impose an ‘ISP levy’ on ISPs who were increasingly providing consumers with access to programming without making any contribution to the creation of that programming. The levy would go to fund more programming and replace lost BDU revenues to the CMF and the other independent production funds as consumers increasingly cut or shave the cord. During the hearing the BDUs challenged the CRTC’s jurisdiction to impose such a levy and the CRTC referred the question of jurisdiction to the Federal Court of Appeal.

The Federal Court of Appeal decided in 2010 that ISPs were not broadcasters and therefore the CRTC did not have jurisdiction under the Broadcasting Act over the ISPs (and could therefore not impose a levy under that Act). The decision was appealed by the creator groups (ACTRA, CMPA, DGC, and WGC) to the Supreme Court of Canada, who agreed in 2012 based on their interpretation of the facts that ISPs were not broadcast distribution undertakings [EDIT: earlier version said ‘broadcasting’ but it is more accurate to say broadcast distribution undertakings – sorry for any confusion]. They are merely passive conduits that ‘take no part in the selection, origination, or packaging of content’.  You can find the history of the Digital Media Exemption Order and the Federal Court of Appeal decision here and the Supreme Court decision here.

Now we have a CRTC hearing where independent ISPs looked for access to fibre so that they could provide BROADCASTING services. Shoan’s dissent makes a very good case for applying the Broadcasting Act to ISPs.  [EDIT:  It has also been pointed out to me that there have been some changes in how ISPs operate including how they promote the video content they carry that could justify a re-examination of the case and to what extent they really are only passive conduits.  As well, the growth of IPTV renders the question of whether ISPs are broadcast distribution undertakings moot at least for those services.]  I’m not a telecomm lawyer so there could be flaws in the argument that I can’t see. Perhaps telecomm and broadcast people should have a conversation because Shoan’s analysis undermines the factual underpinning of the Supreme Court’s decision. If anyone is up to the cost of another reference, it could be time to challenge the Supreme Court decision or (and this is less expensive) encourage the CRTC to take a bold step toward creating a regulatory framework that better reflects the services being offered to Canadians and ensures that Canadians will continue to have the choice to watch Canadian programming on those services.

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Old White Guy TV – The Senate on the CBC

I thought of this more irreverent title after I posted the following to TV, Eh! after reading the Senate Committee’s report on the CBC released yesterday (July 20, 2015):

Yesterday the Senate Standing Committee on Transport and Communications released its report on the CBC: The CBC/Radio-Canada in the Twenty-first Century. Despite its title, it seemed mired in the Nineteenth Century.

Well, maybe the mid-Twentieth.

The report described the current challenges that the CBC and all of Canadian broadcasting is facing with the advent of services like Netflix and YouTube but offered no suggestions for how the CBC could better embrace the digital age. There were some good suggestions on eliminating waste, reducing salaries and selling off real estate (which at times came very close to micromanaging) and a worthwhile discussion of governance which correctly objected to the CEO of the CBC reporting to the PMO and not the Board (though it failed to point out that under the Conservative government the CBC’s Board has become a patronage appointment so does not have the expertise to oversee a broadcaster).

However, the core message was that the CBC should be broadcasting what the private broadcasters will not – Canadian historical dramas, nature documentaries, amateur sports such as university athletics, performing arts with an emphasis on symphonies and Reach For The Top. Yes, it specifically suggested Reach For The Top, a show that the CBC broadcast from 1966 to 1989. Old White Guy TV*.

Before you get up in arms, I love Canadian historical dramas and nature documentaries but broadcasts of the Toronto Symphony Orchestra and Reach For The Top are not going to increase CBC’s market share nor will it engage younger, diverse, urban audiences. The CBC needs to be relevant to a wide range of Canadians.

There is no vision in this report. The Committee complained that the Broadcasting Act mandate for the CBC was too broad but its only recommendation for amendment was to include a specific reference to airing more historical drama and Canadian feature film. It did not explain why only those two genres needed to be singled out. It complained that the Broadcasting Act did not contemplate the 21st Century and needed to be updated but gave no guidance on what revisions needed to be made. It complained that witnesses kept saying that the CBC was underfunded, demonstrated that in inflation-adjusted dollars government funding is at its lowest in the past 25 years, but then suggested that new funding models including telethons and corporate sponsorship, should replace the shortfall.

Over the years there have been many studies of the CBC. The House of Commons Standing Committee on Canadian Heritage conducted a study in 2008 on the CBC that contained a number of very good recommendations including a memorandum of understanding between the government and the CBC that would set out specific goals and make sure that the CBC was sufficiently funded to meet those goals. The study also looked at digital media, diversity, Canadian programming, governance and accountability. The government declined to implement any of the recommendations.

Is the Senate report more in line with the Conservative government’s position on the CBC. Likely. Should we be worried? I don’t think so. For one thing, we do have an election this Fall and nothing will be done before then or, if a minority government is elected, after then. As well, there is very little in this report that Conservative MPs have not said before (except maybe Reach For The Top, that’s new). For example, they have been advocating for a PBS-style funding model for years. The reality is that many of these recommendations would not be popular with their constituents, who do not want to sit through a telethon to be able to watch Coronation Street.

Yes, it was a wasted opportunity but honestly do we need another study that the government will ignore? Or do we need political will and vision at both the government and the CBC to work together to provide Canadians with the public broadcaster that we need and deserve. Yeah, that.

*With apologies to Senator Betty Unger, the one woman on the Senate Committee.

Digital Canada 150 2.0 – Have They Gotten It Right Yet? Not so much.

I was going to break down the differences between Digital Canada 150 (released April 4, 2014) and Digital Canada 150 2.0 (released today) but it’s kind of ridiculous. Very little has changed in the past year. It is still more of a ‘look what we did including a bunch of stuff that has nothing to do with a national digital strategy but sounds good’ than a plan for ensuring that Canada and all Canadians are digitally literate, part of the digital economy, using the tools and enjoying the content.

Yay – the government connected more rural Canadians to broadband but still no mention of ensuring affordable access to broadband for Canadians regardless of where they live. Increasingly, digital literacy and access are essential elements to exercise of Canadian citizenship and this continued omission supports the digital divide between those who can exercise their citizenship and those who cannot.  [Note – contrast that with the Digital Argentina law of 2014 that, among other things, is aimed at ensuring fair access of all citizens to telecommunications including the Internet.  Under that law the government of Argentina can set the rates for Internet access to ensure affordable access for all.  Just saying.]

Yay – the CRTC (which is an arm’s length tribunal so can’t really be part of the government’s strategy unless it isn’t that arm’s length) has instituted unbundling like the government said it would. No mention of the fact that we really won’t know the consequences of that decision for consumers and for broadcasters until it is implemented in 2016 or explanation of how that relates to a digital strategy.

Yay – the @Canada twitter handle exercises digital diplomacy. I dare you – go check out that twitter handle.

Screenshot 2015-07-15 14.22.22

Yay – the government created digital content through the NFB, funding the Canada Book Fund and the Canada Music Fund and digitizing publications for Library and Archives Canada. They actually have funded a great deal of digital content through the Canada Media Fund and their budget cuts have forced the CBC to be more innovative in using digital platforms but for some reason these are accomplishments the government does not want to brag about. I get the CBC point (it’s hard to brag about what someone has had to do when you slashed their budget) but CMF?? [They do describe Telefilm Canada as an audio-visual industry success story so I do wonder if someone at Industry Canada got confused and thinks Telefilm and the CMF are the same thing and doesn’t realize that Telefilm only funds features.]

The report does cover a number of other issues (I’m not going to even touch the reference to Bill C-51 as an example of Internet Safety) but those are of greatest relevance to an audio-visual industry. BUT. What the audio-visual industry called for in the 2010 consultations was vision and a plan to ensure that all Canadians had access to digital platforms and the choice to enjoy Canadian content when they got there. It asked for an overhaul of the various silo’d funding programs to have a coordinated strategy to fund single platform and multi-platform content in a digital world. It asked for funding mechanisms to ensure that Canadian content continued to be created even as business models and technology evolved.  It asked for training programs that ensured that emerging and more established talent had the skills needed to create and exploit content.

For a quick refresher on the agonizing pace of waiting for a National Digital Strategy that included content, see my post on the release of Digital Canada 150 on April 4, 2014 in response to the Industry Canada consultation in 2010.

So, we’re still waiting for some vision.