OTTAWA – While the main governmental expert panel reviewing the Telecom, Broadcasting and Radiocommunication Acts is only now getting under way, some of the most interesting conversations on the matter are happening now in front of the Senate (who knew?!).
While CRTC chairman Ian Scott appeared today (October 30) in front of the Standing Senate Committee on Transport and Communications, to talk about the Regulator’s needs, last week Canadian Communications Systems Alliance CEO Jay Thomson told the senators about his members’ (115 independent carriers who serve more than 1,200 communities – lots rural – with broadband, phone and TV) unique challenges – and what they need from rewritten Acts.
“Canada’s communications legislation should address the competitive problems created by industry consolidation and vertical integration,” said Thomson, kicking off his appeal.
“As I expect members know, the largest cable companies in this country, Bell, Rogers, Quebecor and Shaw (through Corus) also own almost all of the Canadian television services that they and our members carry. Bell and Shaw own the satellite delivery system. In many cases, the large communications companies own the fibre transport networks. That is, the large, vertically integrated companies in this country control all of the upstream inputs to the businesses of our smaller, independent members and their direct distribution competitors,” he explained.
CCSA members have a long history of butting up against the big broadcasters when it comes to programming agreements and the organization has often stood firm against what they feel is anticompetitive behaviour by the larger companies. “Such anti-competitive behaviour can limit the communications choices available and frustrate competition, innovation and affordability of services in the smaller markets which our members serve,” he said.
The CRTC thought the whole situation so bad that in 2016 it instituted a Wholesale Code of conduct to govern relations and Bell liked it so much, it challenged it in court – and won. At least, the code is written into Bell Media’s conditions of licence, so it remains in place until 2022, when those broadcasting licenses come up for renewal. “The CRTC has found as fact that the large, vertically integrated companies have both the incentive and the ability to act anti-competitively in their broadcasting activities,” said Thomson.
Elimination of these protections must then be prevented by instead enshrining them in law, changing the Broadcasting Act so that the CRTC has more power to regulate anticompetitive behaviour – something which normally falls under the jurisdiction of the Competition Bureau. “Historically, the Bureau has ceded its jurisdiction in competitive questions to the CRTC when it relates to companies under the CRTC’s jurisdiction,” noted Thomson under questioning. However, he added “the Bureau’s processes and focus don’t lend themselves to addressing the issues that we’re concerned about; the CRTC is really in a much better position to do that.”
The CCSA CEO also added the CRTC should be the sole ruler of telecom issues in Canada, including access to provincial hydro poles and municipal rights of ways, for example. The CRTC wants this, too, by the way – as does every carrier we’ve heard or talked to.
Thomson also wanted to make it clear the Acts should not be adjusted in a way which forces internet service providers to divert revenues towards the production of Canadian content (the big carriers are with him on this). Cable operators must divert 5% of their video revenues to Canadian content like to the Canadian Media Fund and few carriers want to see this extended to ISPs.
In fact, the Supreme Court already ruled ISPs are not broadcasters and can’t be forced to contribute to Canadian content production, so only a revised Act could cause this to happen.
(Ed note: Most CCSA member TV providers are too small to contribute revenues from their video businesses. Only those with 20,000 video subscribers and above must contribute to the CMF. However, many of those independents still create thousands of hours of original Cancon through their community channels.)
“Any requirement for ISPs to allocate revenue to support Canadian content production would not only divert money away from investing in broadband rollout to improve services to many unserved and underserved communities, but could also increase the cost of Internet services for Canadians living in those communities.” – Jay Thomson, CCSA
“In our view, any benefit that might flow from requiring ISPs to contribute to Canadian content production would be greatly outweighed by the negative impact it would have on the provision of affordable broadband Internet services to all Canadians, wherever they may live,” said Thomson. “Any requirement for ISPs to allocate revenue to support Canadian content production would not only divert money away from investing in broadband rollout to improve services to many unserved and underserved communities, but could also increase the cost of Internet services for Canadians living in those communities.”
Thomson did add that foreign OTT operators are better targets to draw upon for Cancon production dollars. “The Netflix and Amazons of the world who are in Canada making money from Canadians and providing programming services here – we support the notion of a level playing field in that respect, so they should make contributions as other programmers like them make contributions,” he said.
An additional CCSA recommendation to the senators was that new legislation has to make it easier for others to get into the wireless business. Incumbents make it too difficult and expensive for anyone, let alone a small, independent provider, to contemplate launching a mobile virtual network operator (MVNO) here – which would be a third party wholesale wireless provider, leasing spectrum from an incumbent.
There’s nothing in the laws and regulations which explicitly prevent MVNOs in Canada, but there’s nothing that eases their entry either. They are practicably impossible, given the intransigence of the spectrum-owning Canadian incumbents, said Thomson. American MVNOs include Xfinity Mobile, Cricket, Straight Talk, among many others.
“The large players don’t make spectrum available to smaller players to lease so they can offer competitive service in their own markets,” he explained. “What the MVNO model would do is require the large providers to open up their networks to allow smaller providers to lease components of it and therefore offer those services to their customers.
“Current availability of the MVNO model in the U.S. has created a $20 billion market which offers many attractive packages there and alternatives to both residential and business customers. The MVNO model could do the same for Canadians, if it were permitted here.”
