OTTAWA – Government and regulatory bodies need to be mindful of the impact its policies, or a lack thereof, can have on small media and communications companies, said a panel of such CEOs at the International Institute of Communications Canada conference on Tuesday.
Cal Millar, president and CEO of Channel Zero, said his company (which owns CHCH, CJNT, Movieola and Silver Screen Classics) is ready to compete with over the top services, but is at a disadvantage because OTT video providers aren’t regulated. “We are in a world today where content is somewhat ubiquitous. And in that marketplace we’ve now got competitors coming over the top of the trenches that have been carved out from a regulated system and are being met with no regulatory resistance,” he explained. “We’re looking for regulatory symmetry as we face this new world.”
Without the same regulatory obligations on OTT as they are for licensed companies, the opportunity for gaming the system is there for the taking, Millar argued. He pointed to closed captioning where his company is already subject to some pretty stringent requirements and they could be getting tougher. Netflix isn’t. “If we’re going to continue to have obligations placed on us, which I think is fair, in exchange there has to be some protections to level the playing field.”
But what if regulatory symmetry remains elusive, Millar was asked? Well then his company might consider gaming the system just as OTT is right now.
Channel Zero has a U.S. channel (Fight Now) and could apply to have that channel designated as a Part 2 eligible satellite service, which could then be brought into Canada without any Canadian content. “It wouldn’t be our first choice,” Millar said. “But it does mean that if you are going to allow foreigners advantages that you’re not going to give to Canadian firms who are abiding by the rules, you’re going to have us trying to do that as well.”
In the content sector, copyright is a major issue, but for Eric Boyko, co-founder, president and CEO of music broadcaster Stingray Digital (Galaxie, Karaoke Channel, Concert TV, etc.), Canadian regulation not that big of a deal and is not something he’s not too concerned about.
“To be honest, I’ve put almost zero focus on that,” he said, noting the company is building well beyond Canada. “I’ve got a deal in Turkey. I’ve got two deals in Hong Kong. We’re very aggressively going to the States, we’re signing Comcast for Concert TV. That’s my main focus as CEO, the progress of the company.”
Boyko noted that while Canada is a good market and enjoys 100% penetration of its Galaxie service, the real opportunity is internationally. The Comcast deal will see 22 million subscribers added to its Concert TV specialty channel.
For Anthony Lacavera, chair and CEO of Globalive Holdings and Wind Mobile, one of the big problems for smaller communications firms is the dominance that the established players wield in this highly concentrated sector. He said he has witnessed first hand that might and it affects new entrants in the market.
But his most pressing issue is trying to ensure the federal government establishes a set of rules that will allow it to continue to exist in the Canadian wireless market. Lacavera is referring to the auction of the 700 MHz band. Without fixes to the tower/site sharing and roaming rules as well as set asides for new entrants, he fears Rogers, Bell and Telus will pay whatever it takes to keep new entrants out of this band. Even given the government’s apparent rule that the amount of foreign investment doesn’t matter as long as the firm is controlled by Canadians won’t change this, Lacavera added.
“There is no way I will be able to get investors when they (the incumbent wireless companies) can bid for those frequencies regardless of how much financial backing we might have. No one is going to do it if the conditions don’t exist for us to be able to build a business case,” he argued. “This concept of foreclosure economics enters where they can pay an amount beyond the ever foreseeable utility of the frequencies to stave off further competition. So there is no business case that we could every build to be in that auction and I simply won’t have the investors support to show up.”
Lacavera said without appropriate policies that support tower sharing and roaming in addition to a set aside, the new entrants will simply fold into one another or be swallowed by one of the incumbents.
“The new entrant wireless picture will be dead without government policies that permit us to continue to exist and attract investors,” he said.
