NOTHING PUTS THE “FUN” into the dysfunction of our broadcasting system more than a 9(1)(h) hearing. The spectacle in Ottawa two weeks ago was the latest such event, with eight would-be suitors lining up for what has been called, “the last must-carry” by this publication and others.
The last hearing for new 9(1)(h) licenses was in 2013, when sixteen(!) applicants applied and almost all were all swatted away like flies by then-CRTC chair Jean-Pierre Blais (the few exceptions being TV5’s second channel, Unis, AMI-tv Français and the Legislative proceedings of Nunavut and NWT for distribution in the North). This paved the way for the Let’s Talk TV decision which was supposed to usher in a new era of competition led by consumer choice. Predictably, vertical integration has instead proved more enduring and it has become clear to everyone that the only way to get a channel launched with any size is with a license like a 9(1)(h).
Even three of the vertically integrated companies showed up for a crack at it this time around.
It should tell you all you need to know about how locked out the system is when eight groups are prepared to compete for one 9(1)(h) while no other new, sizable Canadian services have been launched in years. Perhaps the better question we should be asking is: Why are the conditions of the mandatory order so extraordinary? If this is the only type of service that can now be successfully launched, should we be launching more?
Better yet, are there aspects of this license that we could apply to existing Canadian services – particularly the independent ones – to help them thrive and survive in the current environment?
There are two key parts of the 9(1)(h) license: (i) mandatory carriage – with large audience access; and (ii) good payment. There is no question that in a declining system any discussion about financial payment is going to meet with resistance from the BDUs. This was made clear either directly or indirectly in most of the interventions. However, what about carriage and access? Access didn’t seem to be a key issue for any of the intervenors.
“Why is it considered exceptional to give mandatory carriage and large audience access to a Canadian service?”
Then why is it considered exceptional to give mandatory carriage and large audience access to a Canadian service – leaving aside the wholesale fee? Remember that for the first 50 years of the broadcasting system all services were carried in the same way as basic is now. No one questioned that a licensed service would simply be picked up and carried; in the free-to-air world there was no reason for it not to be added. What changed?
In a word: Technology.
The development of cable and satellite through the 1970s and ’80s created the possibility for more services, but capacity and cost were always a concern. Things really got complicated in the 1990s with the explosion of dozens more channels. Fortunately, the business was booming and there was ample opportunity for new services to get carriage (sometimes begrudgingly) and enough revenue to grow.
The landscape changed in the 2000s as the number of services reached a saturation point and the beginnings of the digital revolution began to cut into revenues and market share. The response was more corporate concentration and, in Canada, the vertical integration of the system in order to become “more competitive.” (I have dealt with the problems of vertical integration in a four-part analysis on Cartt.ca earlier this year. Part I Part II Part III Part IV)
“As anyone who operates an independent BDU or programming service knows all too well, the vertical integration of the system in 2008 effectively ended a competitive marketplace.”
As anyone who operates an independent BDU or programming service knows all too well, the vertical integration of the system in 2008 effectively ended a competitive marketplace. There is now no path for more audience access for independent services except through a 9(1)(h) application. The best independent services can hope for is to hang on to what they already have – regardless of performance.
The financial question is always tough but is it the same for access? Is it such an exceptional condition in the digital age? There is an old story about a mother who is teaching her child to cook a roast. The mother says to the child, “first thing you do is cut the ends off the roast, then you put it in the pan.” The child asks, “Why do you cut the ends off?” The mother replies, “I don’t know. It is what Gramma taught me. Let’s call Gramma.” They call Gramma and ask her. She replies, “I don’t know why you would do it and waste so much meat. I had to do it because I had a small pan.”
Such it is with the broadcasting system. We’re still thinking like we have small pan.
Mandatory carriage and audience access were a really big deal in a world where space and capacity were limited. However, capacity is no longer a problem and delivery, storage, transmission and all related broadcasting costs (apart from satellite!) are now a fraction of what they once were. The Broadcasting Act says that the Canadian system should “be readily adaptable to scientific and technological change”. So, maybe it is time to give Canadian services – especially independent services – greater access to our own market.
“This gives every service the chance to build their audience and the opportunity to invest in programming organically to grow their audience. What a novel concept.”
If we were starting with today’s technology we would not see mandatory carriage or broad access as exceptional – we would see it as standard. All audience access is the normal, expected position for services on all of the new digital platforms launching around the world. Competition does not take place at the wholesale level as it does in our system; it takes place at the consumer level where gaining audience is the only measure that matters. This gives every service the chance to build their audience and the opportunity to invest in programming organically to grow their audience. What a novel concept.
The Broadcasting and Telecom Legislative Review panel will have to grapple with this issue among many. This is important, as we know we also have to consider how we re-configure our system to assist our broadcasters in getting carriage on new BDU entrants coming from outside Canada.
Next year we will start to see new foreign and online-based BDU-like platforms enter the Canadian market. Assuming they’re regulated, shouldn’t these platforms have to carry Canadian services? And if they do – should they not grant them access to the broader Canadian market?
Positioning Canadian services on these platforms will be critical for our future because they may one day be our dominant BDUs. In addition, they will be globally-focused platforms and will offer the opportunity for Canadian services to go global with them. If we don’t require these platforms to carry our services in our own territory, what chance do we have of getting them picked up outside of Canada?
It’s time for us to re-think what we deem exceptional in our broadcasting system. Access to audience should not be considered exceptional in a world where capacity is not an issue. We hope that such a recommendation is in the BTLR panel’s first report but it would make sense for the government and even the CRTC to consider moving on this issue much sooner.
Brad Danks is CEO of OUTtv and an Adjunct Professor of Law at the University of Victoria.
