CRTC official’s pointed remark to Quebecor gets to the point

While it might have seemed like a meaningless barb during what has become a series of testy exchanges between witnesses and CRTC officials during the Let’s Talk TV hearings, what one regulatory officer said on Tuesday was actually one of the more telling moments of the proceedings so far.

As Quebecor officials talked (subscribers only) about how strict broadcasting regulations put the company at a competitive disadvantage to online streaming services such as Netflix, the CRTC’s vice-chairman of broadcasting Tom Pentefountas asked them: “If the danger is real, why not transfer everything you have on TVA [to OTT]? Why not give back the [broadcast] licence?”

Why not, indeed.

As possible outcomes to this review of the country’s television system, the CRTC has proposed ideas such as pick-and-pay TV and the end of simultaneous substitution. What the regulator hasn’t done is give any direction to how over-the-top (OTT) video services should be incorporated into, or at least acknowledged within, the regulatory framework of the broadcasting industry.

Nonetheless, Internet sources of television programming have been and will continue to be a big part of the discussion during these hearings. They are the elephant in the room when it comes to the future of Canadian TV.

Ken Engelhart, Rogers’ vice-president of regulatory affairs, seemed to acknowledge as much when he said television broadcasting will inevitably move to an Internet-based distribution model, and the current system probably has only another five to 10 years of life in it.

Industry participants seem to be a step or two ahead of the regulator in adjusting to the changing reality, as can be seen in recent news that Rogers and Shaw are teaming up to launch their own OTT service called Shomi. Rogers took another step in the direction of OTT when it said it would offer more than 1,000 NHL games through an online streaming service this season.

Telus, however, had a legitimate point when its representatives said this week that a true OTT service should be open to everyone with an Internet connection, not just those who happen to subscribe to the TV or Internet service providers involved in the project, as is the case with Shomi, at least initially.

There has been talk about whether providing OTT services are self-defeating for the distributors in the sense that they give people another reason to cut the TV cord.

Perhaps they do, but consider this: what is the point, in this day and age, of having television and Internet as separate services from a customer’s point of view? From the service provider’s perspective, it’s obvious; selling a customer two services is better than selling them one.

But if push comes to shove, what would prevent cable companies like Rogers or Quebecor from giving back their broadcasting licences and offering all their content in the form of live or on-demand streaming over the Internet?

David Elder, a communications lawyer with Stikeman Elliott, told The Wire Report that it would be “possible” for a broadcast distributer to go entirely OTT, though there are many legal and practical hurdles.  For one, he noted that an OTT service would lose its automatic right to over-the-air channels, and the carriage of many specialty channels would also be in question since initial agreements were likely on the basis of being carried on a conventional distribution service.

Elder questioned whether the CRTC would “stand by” as broadcast distributors took themselves and the money they provide to Canadian content funds out of the system.

Heritage Minister Shelly Glover seemed to put the kibosh on the idea of regulating and creating contribution requirements for U.S. Internet companies such as Netflix and YouTube operator Google. Elder, however, said these companies might be treated as “an entirely different animal than a [Canadian] cable company turning itself overnight into an OTT broadcaster, particularly if it still owns all the same equipment.”

Still, there is no disputing that people, particularly those in the millennial generation, are increasingly using online services to satisfy their television habits, and that it’s a trend unlikely to reverse course any time soon.

While there are expectations, and even worries, that the decisions the CRTC makes as a result of the Let’s Talk TV hearings are about to change the TV industry forever, I would argue it was happening anyway. The regulator’s moves as a result of the proceedings will pale in comparison to the hoops that customers, who are increasingly turning away from paid TV subscriptions, will be making service providers jump through in the years ahead to retain their business.

Derek Abma is editor of The Wire Report. He can be reached at dabma@thewirereport.ca.

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