Follow us:
The CRTC's Over-the-top 'Fact Finding Mission': Key Submissions
By Adam Webb and Alex Ly for OpenMedia.ca
For the second time in two years the CRTC has requested submissions from concerned parties on the increasing prevalence of over-the-top (OTT) services.
Like so many of the Commission’s actions, the decision to prematurely reopen discussion is derived from a mix of obsessive cultural concern, private sector lobbying and a dependence on external research.
Despite their 2009 decision to exempt new media from regulation under the Broadcasting Act, the Commission has embarked on what they call a ‘fact finding mission’ to comprehend the evolving role of OTT services in the Canadian broadcasting industry.
The following summarizes the positions of some key players in the CRTC fact-finding exercise on over-the-top (OTT) programming.
Jump to:
CBC
Shaw
ACTRA
Friends of Canadian Broadcasting
Netflix
Google
Apple
CBC
For the CBC, although Netflix and other OTT services are making an impact on how Canadians consume TV, it is too early to tell whether OTT services will significantly change how TV is consumed in the next five years.
While the extension of the Internet to the TV set and the emergence of Netflix have garnered industry attention, “the use of OTT services like Netflix is still rather modest in audience terms.” The majority of the TV viewing (89%) is still from the cable TV or satellite environment. As well, the mere adoption of a device that allows for OTT services does not translate equally to viewing time. 6% of Canadians subscribe to Netflix, yet it only accounts for less than 0.5% of the total viewing.
The CBC is cautious about making any assumptions about the effects of growing OTT programming for the Canadian broadcasting system. It is still too early in the lifecycle for OTT services like Netflix to draw any conclusions about their impact on Canadian TV consumption behaviour. As they note in their submission, “Consumer behaviour and network infrastructure does not change overnight. OTT services are the continuation of an on-going evolutionary trend to on-demand programming that broadcasters and distributors have been responding to for some time…”
Shaw
Shaw makes two key points in its submission. First, OTT services are and will continue to be competitive with Canadian broadcasting and broadcast distribution undertakings (BDUs). Second, Canadian broadcasters and BDUs are disadvantaged “by an inflexible and asymmetrical regulatory environment.”
Currently, the regulatory regime acts as a “walled garden” that manages the effects of non-Canadian services on the Canadian market. Broadcasters receive some type of protection from foreign competition if they make contributions to further the objectives in the Broadcasting Act. For Shaw, this system no longer works with the advent of OTT and the borderless digital environment.
The problem for Shaw is that the new OTT entrants are not subject to the same regulatory constraints as traditional broadcasters. As a result, there are two asymmetrical systems in Canada. There is the regulated system where broadcasters, BDUs, ISPs, telecommunication providers, and content producers are subject to CRTC regulation and make contributions to meet objectives in the Broadcasting Act. On the other hand, there is the unregulated OTT system where it is predominantly non-Canadian entities competing directly against the regulated Canadian companies, all the while avoiding the regulatory polices, rules, and regulations.
Ultimately, Shaw believes that OTT services are “disrupting the traditional approach to regulation.” As a result, regulatory subsidies and obligations need to be reworked because they are no longer tenable in this digital age.
ACTRA
In ACTRA’s submission, they assert that OTT broadcasting is “firmly entrenched in Canada” and “have a significant impact on the existing ecosystem.” For ACTRA, what makes these OTT services different is that they do not have to contribute to the broadcasting policy objectives in the Broadcasting Act.
Policies are in place to ensure that the Canadian broadcasting industry remains competitive against foreign content and foreign entities and that Canadians have the option to watch Canadian content. Because OTT services do not have to follow the regulations, the effectiveness of such regulations is undermined.
As a result, ACTRA argues “a significant negative impact will occur on the Canadian content creation industries because of reduced funding for the CMF and independent production funds.” Furthermore, less Canadian content will be available because those who solely rely on OTT services may have less Canadian content available to them since OTT services have no obligation to make Canadian programming available.
Consequently, in ACTRA’s view, OTT services should be guided by the similar policies that guide traditional broadcasters and the CRTC must ensure that the new OTT players contribute in an appropriate manner to the creation of Canadian content.
Friends of Canadian Broadcasting
The position of the Friends of Canadian Broadcasting’s is that these new OTT services need to be regulated. To elaborate from their submission, “…permitting unfettered access to digital platforms with no content rules [is] neither fair to existing broadcasters nor consistent with the Broadcasting Act’s goals.”
Consumers cutting the cord will affect BDU revenues and profits. More importantly however, unregulated OTT services will negatively affect production funds such as the Canadian Media Fund. This is seen as a serious threat to accessibility to quality Canadian content.
Ultimately, Friends maintains that, “All players within the Canadian broadcasting system, regardless of country of origin, must contribute to the health of the system and realization of the goals of the Act. OTT services, in common with all other broadcasting undertakings, must make a meaningful contribution to the well-being of the system.”
Netflix
At the heart of the issue is Netflix — proprietor of OTT services, accused usurper of traditional broadcasting audiences, and unregulated ‘cheater’.
Writing in response to the claims of the Committee Report and the Working Group, Netflix maintains that OTT services pose little threat to the market base of traditional broadcasters and that the proceedings of the Commission’s ‘fact-finding exercise’ have taken a subjective turn for the worse. Arguing that OTT services have been cast as detrimental to the Broadcasting Act, Netflix urges the Commission to remain judicial in their reading of submissions.
As for claims of OTT services adversely affecting traditional broadcasters, Netflix contends that they’re unwarranted, and pure speculation —since OTT services are at an early stage in their development in Canada, it is too soon to deduce how Canadians will receive TV content. Needless to say, Netflix insists that OTT services are a limited threat to the vertically integrated Canadian broadcasting industry. Netflix, in contrast to licensed Canadian broadcasters, does not have privileged access to any distribution system, and, because their services are delivered via public Internet, bandwidth caps or other pricing regimes often inhibit them.
As for Canadian content, Netflix argues that OTT services can “unite fragmented audiences and create viable market opportunities that were previously unexploited”. In other words, if foreign OTT services were able to acquire international distribution rights for Canadian productions, Netflix believes that Canadian content could be made available to audiences throughout the world. In summation, Netflix is thoroughly opposed to the regulation of OTT services and warns of “stifling the growth of new media and harming consumer choice”.
Side by side with Netflix is Google — owner of YouTube, host to decades worth of amateur online content and seasoned opponent of heavy-handed government intervention.
Taking the tone of outright dismissal, Google condemns the OTT Working Group’s attempt to have the Commission impose traditional forms of broadcasting regulation on New Media. Thoroughly opposed to the prospect of regulation, Google asserts that “the open Internet represents a competitive and innovation-driven platform” and that Canadian broadcasters have failed to seize the opportunity to implement competitive OTT services of their own.
Similarly, this leads Google to believe that OTT services should be exempt from regulation because they lack the inherent, sheltered benefits of being a traditional broadcaster — “genre and channel placement, protection, simultaneous substitution and market exclusivity flowing from the Canadian licensing regime”. In fact, Google goes one step further and argues that the objectives of the Broadcasting act are met by the online content that Canadians create, watch and monetize; no regulation necessary. To Google, regulation would hurt, not help, Canadians.
Apple
Rounding out the submissions from foreign OTT services is Apple — keeper of the iTunes store, go-between content retailer and model of vertical integration.
According to Apple, the definition of OTT services put forth by the Commission encompasses many distinct business models with varying effects on the Canadian broadcasting system. Not wanting to be mislabeled, Apple contends that iTunes is not engaged in broadcasting; rather, it competes with retailers – like Futureshop, Amazon.ca and Best Buy. Akin to the sale and rental of movies and television programs at “brick and mortar” retailers, Apple argues, “the iTunes Store is largely complementary to the broadcasting system, and serves to promote the programs carried on this system.”
Indeed, the iTunes Store helps Canadian Broadcasters by giving their programs global exposure within a trusted brand thereby providing Canadian creative industries and broadcasters additional outlets for sale. Further, Apple continues by emphasizing that the iTunes Store does not buy content on a non-exclusive basis and does not compete with Canadian broadcasters for exclusive content rights. The iTunes Store, as Apple explains, has a marginal impact on the purchasing of content rights, BDU subscriptions and the degree of competition currently found in the Canadian broadcasting system. Simply put, Apple sees no need for this revisit of policy and any subsequent regulation.
You can read the entire list of submissions here.
— Adam Webb and Alex Ly for OpenMedia.ca
- Login or register to post comments
Print this
Email this
