September 9, 2014 2 years 5 months ago

LET’S TALK TV (day two): Relax regulations on broadcasting industry in face of growing Netflix threat, says Quebecor

GATINEAU - Calls for relaxed broadcast regulations from Quebecor Media appeared to ring hollow with CRTC commissioners on the second day of the Regulator’s Let‘s Talk TV policy hearing. During its appearance, the dominant Quebec media and cable company argued that unless the Commission takes immediate action, Netflix will become one of the largest distributors and broadcasters in Canada.

“There’s nothing to prevent Netflix from offering television distribution services for a pittance while adapting its business model, moving into more and more linear broadcasting windows in order to squeeze out traditional BDUs, and responding to market demand, all without being subject to any regulation,” argued Pierre Dion, president and CEO of QMI, in his opening remarks.

The Quebec media giant said it needs “greater latitude” to provide consumers the type of content they want, when they want it and on the platform of their choice.

“That is the only way to keep them within the Canadian broadcasting system, to slow the worldwide trend towards cord-cutting and cord-shaving, and to stem the growing prevalence of cord-nevers among young consumers,” argued Dion, speaking in French.

“Deregulate broadcasting in order to allow Canadian players to compete with Netflix and other OTT services on a level playing field.” – Pierre Dion, Quebecor

Globalization and the worldwide availability of content on the Internet combined with the fact that the Commission can’t regulate the Internet has rendered the Canadian broadcasting regulation “obsolete,” he added. This, Dion said, leaves the CRTC with a single choice: “deregulate broadcasting in order to allow Canadian players to compete with Netflix and other OTT services on a level playing field.”

Quebecor’s attempt to convince commissioners that traditional TV players need less regulation, rather than impose more on unregulated OTT providers, didn’t seem to sit well with the panel. Vice-chair of broadcasting Tom Pentefountas took the Quebec media giant to task over calls for less regulation. He wondered what was stopping the company from using its Club Illico online service to compete against Netflix on its own turf.

An exchange of several minutes ensued with Dion only being able to point to genre protection as the major barrier. Still Pentefountas appeared unimpressed with QMI’s response.

The commissioners eventually turned away from OTT to focus on other elements of the QMI proposal such as skinny basic and mandated pick and pay. The Quebec cableco is already a leader in Canada, offering a small basic package with substantial channel choice. The company is, however, opposed to the CRTC’s proposal to mandate a skinny basic and full a-la-carte channel packaging.

Manon Brouillette, president and CEO of Videotron, noted mandates from the Commission in both respects will “reduce the choices available to Canadians” as “programming services will see further declines in penetration and BDUs will lack the manoeuvring room to operate effectively.”

“The burden of flexibility and its cost can no longer be borne by the BDUs alone, while sparing programming services the revenue losses associated with subscription fluctuations resulting from the build-your-own package.” Manon Brouillette, Videotron

Rather, BDUs should be given the opportunity to build packages that are attractive and viable and where the risk inherent in a more flexible channel packaging environment is shared by both broadcasters and the distributors. “The burden of flexibility and its cost can no longer be borne by the BDUs alone, while sparing programming services the revenue losses associated with subscription fluctuations resulting from the build-your-own package,” she said.

The consumer-oriented organizations, collectively the Groups for the Public Interest, also spoke about the importance of a mandated skinny basic and pick and pay as being key elements for providing consumers with greater choice. It pointed to the Commission’s own research as evidence that this is in fact the case. According to results from a Harris/Decima survey, 61% of Canadians not already paying for a BDU subscription would consider doing so if they had more channel flexibility.

“Some interveners have suggested that giving consumers more flexibility would create higher costs for subscribing to individual services,” said Alysia Lau, legal counsel for the Public Interest Advocacy Centre. “However, the Groups’ Environics survey shows that almost one in two Canadians still want the option to be able to pick and pay for individual channels, even if the cost of those channels would be higher than in a pre-assembled package.”

The Let’s Talk TV policy hearing continues Wednesday with Bell Canada, the Canadian Media Production Association and Corus appearing, among others.

Follow the hearing live on cpac.ca, crtc.gc.ca or on Twitter via @gregobr and @CarttCa

Photo of Dion scrumming reporters outside the hearing doors by Greg O'Brien