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Archive for March, 2012

An Open Letter: Press, Politics and the National Press Club

Sometimes you work hard on things, throw your all into it, and hope that good things come as a result. For the last several months I’ve been doing this with the National Press Club, after being elected as member of the board of directors of the Club in October last year.

The National Press Club of Canada, as it is formally known, was at one time an illustrious organization, created in 1928 and serving journalists and other media professionals from its headquarters opposite Parliament in Ottawa until falling under bad leadership and hard times recently.

Some believe that in today’s context of relentless upheaval in the media world, and journalism in particular, that it is a good time to resurrect the moribund institution and put it back on the map. I agree, and this is why I decided to stand for election to the board of directors after being approached by one of my former students.

Part of putting the organization back on the map is good stewardship and carving out events that illustrate that the National Press Club has its finger on the pulse of important issues of our time. To this end I have been working with a few others in the Press Club to put a couple of events on the agenda

The first of which was intended to be held on the eve of the Government’s re-introduction of Bill C-30, you know, the internet surveillance bill notoriously pitched by the Government as the Child Online Predators Act (Bill C-30) and that was scathingly lampooned by Rick Mercer in one of his famous rants and loathed by people all across the country and all across the political spectrum before being yanked by the government, at least for the time being. Despite some good efforts, the NPC missed the boat on this one.

For the last month I’ve been working on another event that would feature Glenn Greenwald, a renowned journalist in the U.S. whose work appears regularly in the New York Times, L.A. Times, Washington Post and Slate and whose work on Wikileaks not only won him important awards for investigative journalism but also made him the target of a Bank of America-led dirty tricks campaign aimed at those seen to be overly sympathetic to Wikileaks and Julian Assange.

The first event was never held, a missed opportunity, let’s say. It is still too early for the final word on what role the NPC will play in the second event. Earlier this week, the ‘executive committee’ approved our sponsorship of it; yesterday, the same committee apparently reversed itself. None of the reasons for why the event was first approved then rejected have been given, and who was involved in both decisions remains unknown.

One thing is for sure, however: Greenwald’s talk will go ahead on April 12th at St. Paul University in Ottawa, with or without the NPC, at an event organized by Bill Owen, and sponsored by the School of Journalism and Communication, Carleton University.

While the NPC does embarrassing flip flops in the dark, Greenwald has been booked to appear on the Power and Politics show with Evan Solomon just prior to his speaking engagement. Other journalists are lining up for interviews while he is in town. Clearly, as other journalists’ indicate, the subject matter and the speaker are important and, shall we say, newsworthy. Why doesn’t the NPC see this?

Now I have relayed some of this stuff to you because in the hurly-burly of new boards we find a clash of visions between those striving to revive and restore the NPC to some of its former glory but in the context of the realities of journalism in the 21st century while others see opportunities for self-promotion and to shore up their own declining place in the sun.

That the NPC is in disarray, there can be no doubt. Two board of directors have resigned in the past two weeks. Another member who has served for decades and decades was unceremoniously thrown overboard by the President and so-called ‘executive committee’. No reason was given for such actions; inquiries as to the justification and basis for such actions have elicited no response among either the President or her hand-picked appointees that occupy most of the so-called ‘executive committee’.

Several other directors stand on the precipice, waiting to see how all this plays out. I am one of them.

However, rather than standing idly by, I have decided that the NPC is probably something worth fighting for. Hence this “open letter” to the current President of the NPC, the Honourable Shiela Copps.

This is indeed a struggle for the soul of the NPC. It will either be left to become the plaything of the President and her handmaidens or they will be removed and a new directors elected.

There are important first principles at stake. And one of those important stakes is that the President and her self-appointed members of the executive were not elected but appointed. The NPC is currently ruled as if this is a tinpot dictatorship, where board members are suppose to sit idly by waiting for edicts to come down from on high.

There are several problems in all of this, three of which I’ll outline before turning to the ‘open letter’ that I’ve sent to the rest of the NPC this morning.

First, as just indicated, without having been elected, the President and her self-appointed ‘executive committee’ lack legitimacy. These unelected positions are being used to create and fund new positions without proper quorum from a majority of the directors.

Second, given her far better known status as a key figure in the Liberal Party, and having just lost the leadership race for that Party, Copps’ position as un-elected president of the NPC stands at odds with the tenets of a free press which mandates, at a minimum, a separation of political parties and government, on the one side, from the press on the other.

I have criticized the extent to which former Cabinet Ministers, Prime Ministers and other politicos occupy places across the boards of directors at the major telecom-media-internet companies in Canada. I’ve called this crony capitalism and an affront to the ideals of the press.

That a representative journalistic organization like the National Press Club would similarly provide sinecure for a party stalwart who now dabbles in journalism is likewise problematic. Tell me if I’m wrong, but “the Honourable Sheila Copps” as a signature on NPC letterhead creates the wrong optics for a press organization that is in the early throes of revival.

Third, it is not just that the optics are bad, but the actual practices within the so-called leadership. The actions of the President and her ‘executive committee’ are opaque, lack the guidance of rules, procedures and principles consistently applied – the Constitution notwithstanding. Meetings are held without notice, minutes, or indication of who participated, etc. and decisions dispensed from on high. Such practices are not acceptable on any board, least not that of an organization that purports to representat the interests of media workers and journalists committed to a well-functioning free press within a democratic society.

As things currently stand, the NPC – at the direction of the President and the so-called executive committee – sells access to ‘newsmakers’ to the NPC platform. Got $650? Well, line up behind the NPC podium to have your say.

The upshot is that it is those who pay and have interests to flog rather than any sense of newsworthiness and journalistic or public values that determines what events will be held. This makes the NPC look like a shill for monied interests versus a platform for intelligent discussion of the issues that now face us, as journalists and as Canadians

With these points in mind, please have a look at the following letter, and feel free to let me, the NPC or the President and her select members of the executive committee know what you think.

Stepping outside the board of directors like this is neither easy or fun. However, once I decided to accept my position on the board, I committed to doing the best I could and “the right thing”.

In the face of intransigent stone-walling for several public events that had strong backing from a majority of the board versus the ‘NPC as paid shill for monied interests’ events that have been held, and in the face of an executive hell-bent on not addressing such questions and ruling by fiat instead of open conversation and a sense of democratic decision-making, I felt that this ‘open letter’ was the best way to accomplish what needs to be done.

I offered to tender to my resignation should the majority of the board so desire two weeks ago.  The offer still stands.

Dwayne

Dear Honourable Sheila Copps,

How unusual that you would convene a second meeting of the “executive committee” yesterday on the matter of the Glenn Greenwald event when one was just held on Tuesday by two other members of said committee to deal with the same matter. That two versions of the executive committee appear to have come to opposite conclusions is very odd.

May I also remind you that the executive comittee acting unilaterally to reverse the approval of what other of its members have approved is not only untoward, but it makes the NPC look amateurish and silly.  Glenn Greenwald is a renowned journalist in the U.S. whose work appears regularly in the New York Times, L.A. Times, Washington Post and Slate and whose work on Wikileaks not only won him important awards for investigative journalism but also made him the target of a Bank of America-led dirty tricks campaign directed at those seen to be overly sympathetic to Wikileaks and Julian Assange.

The significance of Greenwald speaking in Ottawa is obvious and so it was not hard at all to drum up sponsorship for the event. Notably, the School of Journalism and Communication at Carleton University — one of Canada’s leading schools of its kind in Canada, if not the leading school — has enthusiastically lined up as a sponsor of the event. The CBC’s Power and Politics have also lined up an appearance by Greenwald on the show prior to his speaking engagement at St. Paul University on April 12th. Other journalists have lined up for interviews as well. Do you have special journalistic insights unavailable to these entities?

The approach taken to this event by myself and others who have supported me is more legitimate than the model the executive is trying to foist on the NPC as the only model: i.e. the NPC sells access to its platform for $650, a model which is outrageously out of step with what a serious journalistic organization is about but which makes the NPC look like a shill for whoever has the coin to promote their interests. In our alternative model, we invite people based on their merit and newsworthiness, then figure out how to raise sponsorship and other funding for the event once the majority of directors have agreed on it in principle.

Back to the Greenwald event: there were no grounds given for the approval of the event after last Tuesday’s meeting and none given for yesterday’s reversal of that decision. Indeed, there was no notice given to others on the board of either meeting, or any attempt to canvas members views, despite the fact that 9 of 16 directors approved an earlier iteration of the event that would have seen it as a stand-alone venture organized by the NPC.

Please explain how it is that the so-called executive of the NPC can meet twice in one week with no prior notice given to other board directors, come to completely opposite conclusions, and all without any announcement afterwards of the results, minutes from the meeting, etc.  Also, pray tell, how it is that an illustrious institution that has been central to journalism in Canada for the last six decades — the School of Journalism and Communication — could see this as an event worthy of sponsorship, while the President of the NPC and a few of her hand picked nominees cannot?

May I remind you that you were appointed rather than elected as President of the NPC at the end of last year when the last person stood down, while many of the rest of us who are working our best to advance the rejuvenation and significance of the press club among journalists and other media professionals were elected. The National Press Club is not the plaything of either an unelected president or her handpicked appointees on the so-called executive committee.

The opaque means by which meetings are called, matters dispensed with and indeed who even attended such meetings is completely at odds with the values of an open press in an open society.  A National Press Club unable to embody those values in its own operations is a travesty and a farce.

It is problematic enough that a person of high rank in one of the central political parties of this country — the Liberal Party in this case — occupies the position of President within a press club, an obvious violation of the basic liberal principle that a free press should stand independent of the political powers that be.

That you ply the dark arts of party politics in the matters of the press is completely unacceptable. That you and your hand-picked maidens on the so-called executive are abrogating to yourselves the authority to make and pronounce decisions from on high as if the rest of the board should fall in line underscores the wisdom of the Party/Press separation principle. And what strikes me as especially unseemly is the way in new which new positions have been created and funds allocated to those whose main credentials appear to be some kind of connection to the President and her executive.

In your previous, very limited correspondence on this matter you have pointed to the need for internal discipline and suggested that the two recent resignations from the board are a consequence of ‘email overload’. Nothing can be further from the truth. Instead, when you try to rule from the top without legitimacy, rules or procedure, you will beget backlash amongst those who care. Some directors will understandably want to avoid cross-fire between a President and appointed executive bent on dictating things from the top, on the one side, and those who think there are values, principles and potential future for a reconstituted NPC worth fighting for, on the other.

You have called these kinds of things upon yourself and the NPC. I act in the best interests of the NPC and in my capacity as an elected and independent director.

I call for a meeting of all the directors to be held as soon as possible and to address the following matters:

  1. The need for all members of the NPC board of directors to be elected;
  2. The need, if any, for an ‘executive committee’ and, if there is to be one, the relationship between the executive and the rest of the board;
  3. Determining the proper procedures for nominating, selecting and holding events under NPC auspices.

Sincerely,

Dwayne Winseck

Comcast versus Common Sense: New Frontiers for Net Neutrality?

A new brouhaha has broken out in the U.S. over actions taken by Comcast that give its television and video services delivered via Microsoft’s Xbox a free pass, while still applying bandwidth caps to rival over-the-top television services such as Netflix, Apple TV, HBO Go, etc. It’s the latest frontier in the network neutrality disputes in the US.

The act may not breach the formal rules of network neutrality set out by the FCC in 2010, states Stacey Higginbotham, but it certainly seems to breach the spirit of network neutrality, she implies. Others such as Public Knowledge and the Free Press are much more forthright in the condemnation of the move, but are still holding fire while building a legal and regulatory case.

Higginbotham argues that, technically speaking, the FCC’s 2010 Network Neutrality rules allow Comcast to set aside portions of its networks for managed services, and therefore Comcast’s deal with Microsoft to stream tv and video to the Xbox without caps while applying them to everybody else is probably just fine.  She may be right.

The argument is not unusual. It is part of the incumbents’ arsenal. It is exactly the argument that Mirko Bibic, Bell’s chief regulatory pitbull, used last year when justifying why Bell’s IPTV services won’t count to the infinitely more tight-fisted bandwidth caps in Canada while for everybody else distributing video online it would.

But to get back to the Comcast/Microsoft Xbox case presently at issue, I wonder if the governing set of rules is not the 2010 Open Internet order, as some seem to be fixing on, but rather the “Comcast Network Neutrality Rules” that were fleshed out with much greater precision and sense of specificity when the FCC approved the Comcast-NBC Universal take-over last year?

While many, including then commissioner Michael Copps, have argued that the deal was a travesty and a sop to the new integrated corporate media titan, looked at from a Canadian and international comparative vantage point, the Comcast NBC-Universal deal was actually quite a big thing. The FCC (2011a) and Department of Justice asked for, and got, quite a lot.

The regulator made it crystal clear that it thought that “the harms that could result [from the take-over] are substantial” (p. 3). Among the conditions of approval, Comcast accepted several fairly tough demands that are directly relevant to the case at hand.

According to the “Comcast rules”, any Comcast service involving “caps, tiers, metering, or other usage-based pricing shall . . .”:
1. “. . . not treat affiliated network traffic differently from unaffiliated network traffic” (p. 38).

2. offer the same facilities and capabilities to others on commercially equivalent terms(p. 38);

3. insure that even its set-top boxes adhere to the “broadband Internet access service rules” (pp. 38-40).

Arguments over whether or not ‘managed services’ can be usefully and fairly segregated from the rest of an integrated broadband network media ecology can be a bottomless pit of contention and strategic manipulation, and it is indeed true that the FCC’s Open Internet rules of two years ago side stepped the quagmier.

The Comcast decision, however, was dealing with the specifics of a monumental corporate transaction and in that more circumscribed context, the specifics of network neutrality rules were brought more sharply into focus. Thus, even if having been battered in the courts for the past decade and the FCC’s own prevarication, the network neutrality rules are not dead.

Tales from New Zealand — the Ultrafast Broadband Internet: Digital Public Works for the 21st Century vs. Incumbent Interests?

Last month I visited Auckland, New Zealand to give a talk at the The Future with High Speed Broadband Conference organized by the Competition Commission (full paper here).

The aim was to assess the factors that might encourage or hobble the country’s plan to make ultrafast, broadband internet service available to all. The Ultrafast Broadband Initiative, and its counterpart for rural areas, looks like a digital public works project for the 21st century, with the government forcing a restructuring of the country’s backwards incumbent telecoms players and investing nearly $2 billion in rolling out a combination of fibre-optic and wireless connections to over 90 percent of New Zealanders in the next six- to eight years. However, as I discovered, there are several factors that significantly stand in the way of such ambitions.

New Zealand shares several things in common with Canada that could turn this project into a big ‘white elephant’. The most important similarities are (1) extremely high levels of media concentration (higher in NZ than Canada); (2) powerful and recalcitrant incumbents; and (3) being two of just four countries worldwide where bandwidth caps are nearly universal and set at exceeding low levels (Iceland and Australia are the other two, see OECD).

As luck would have it, the British comedian and actor Steven Fry was in New Zealand working on Peter Jackson’s new film The Hobbit at the same time I was in town. He set things up perfectly a day before my talk by lambasting the pathetic state of New Zealand’s internet service after his attempts to upload recently completed film footage were throttled and thwarted by the ridiculously low bandwidth caps of between 2 to 5 GB per month that come standard with most telecom-ISP plans.

New Zealand has “probably the worst broadband I’ve ever encountered”, Fry railed on Twitter. Turns itself off, slows to a crawl. Pathetic!”

Media, ministers, Telecom NZ spokespeople and the island was abuzz with a basic fact of life in the country that everybody knows, but which takes an outsider to cast a bright light on in none-too-polite terms: the country’s internet service sucks. That was my role too: the outsider who can say things that local industry-regulatory-political insiders cannot.

With attention on high alert, the attendance at my talk was likely higher than it might have been. Media coverage was good from day one, too, with ComputerWorld catching the gist of my talk as follows: “Get real on data caps, peering and Sky TV dominance, says Canadian professor”. A video of the talk is below.

The Minister responded the next day by trying to squelch any idea that things were as bad as I painted, or that new approaches to regulation are needed. The New Zealand Herald and ComputerWorld, however, have drawn directly on my paper since then to counter such a do nothing attitude.  We’ll know better next month how all this will play out when the Competition Commission publishes its much anticipated final report on the matter.

The New Zealand situation is interesting and important beyond its own inhabitants for several reasons. For one, for much of the last quarter-of-a-century, it has been the outpost of a ‘free market fantasy’. To supporters of such a view, deregulation would liberate telcos from the heavy hand of government intervention and competition, innovation and lower prices for better service would flourish for all as a result.

That never happened. The “free market fantasy” years were nothing short of a disaster.

More recently, however, the country has embarked on a series of seemingly forceful steps that would leave the free market fantasy years behind in favour of something altogether different. The four key steps in this process include the development of telecoms specific regulation and functional separation at Telecom NZ in 2006, followed by the launch of the Ultrafast Broadband (UFB) initiative by the right-of-centre, conservative National government after its election in 2008, and finally what some call the ‘nuclear option’ in telecoms regulation — structural separation — earlier this year.

According to many observers, such steps and a strong regulator are necessary to counter incumbents intent on thwarting the rise of real competition and open networks. The UK regulatory, Ofcom, for instance, argues that only once it stiffened its spine and required British Telecom to break itself into two parts —  one for wholesale, and one for retail — under the Openreach framework did telecoms and Internet development significantly improve in that country.

The new regime led to a huge influx of service-based competition, new investment, cheaper broadband prices and more internet providers, while broadband use increased significantly as a result. Prices for residential broadband services fell 16% per year between 2005 and 2007.

With an eye on the UK experience, New Zealand followed suit in 2006. The results to many observers have been impressive. As the Berkman study (2010) concludes, “in the two earliest instances where functional separation was introduced [UK and New Zealand], it had rapid effects on competitive entry, penetration, prices, and/or speeds” (Benkler, et. al, 2010, p. 84).

New Zealand’s Ultrafast Broadband (UFB) initiative charts new ground as well, both as a way out of a legacy of a muddling market and as a forceful response to the financial crisis of 2007-8. The scale and hefty investment in commercial and state-owned companies involved is unique, but several other countries have also begun to follow suit, not just for legacy networks, but for ‘next generation access’ (NGA) networks based on a combination of fibre optics and wireless, too, including: Australia, Italy and Sweden (see the OECD’s study on Next Generation Access Networks).

The state of telecom and internet development in New Zealand has indeed improved since these changes were implemented. There is a modest increase in competition in some telecom markets and an improved regulatory environment.

Nonetheless, the country still sits at the bottom of the pack when it comes to broadband internet development. Moreover, its rank has actually fallen relative to other countries. Thus, where the Berkman study ranked New Zealand 22nd out of 30 countries based on 2008 data, my ranking puts it at 28th out of 34 OECD countries based on 2010 data. The following table shows the results.

Table 1: Country Ranks Based on Weighted Averages for Broadband Penetration, Price and Speed (2010 Data)

Country

Penetration

Speed

Price

Overall Weighted Avg Rank

1 Sweden

5.3

1

8.7

5.0

2 Japan

11.3

3

2

5.4

3 Finland

8.3

6.5

4.7

6.5

4 Korea

2

6

15

7.7

5 Denmark

4.7

11

10.3

8.7

6 France

15.7

5

10

10.2

7 Netherlands

8.3

6.5

17.7

10.8

8 Norway

4.3

4.5

23.7

10.8

9 UK

14

11

9

11.3

10 Estonia

18

11.5

7.3

12.3

11 Slovak Rep

22.3

3.5

12.3

12.7

12 Australia

17

9

12.3

12.8

13 Iceland

7.7

12.5

18.3

12.8

14 Austria

19.7

10.5

8.3

12.8

15 Italy

25

8.5

8.3

13.9

16 Germany

15

15.5

12.3

14.3

17 Switz.

13

14

18

15.0

18 Belgium

18

11.5

17.3

15.6

19 Portugal

22

1.5

24

15.8

20 Slovenia

24.3

3

20.7

16.0

21 Czech Rep.

22

10.5

15.7

16.1

22 Poland

23.7

11.5

13.7

16.3

23 US

12

17.5

21.3

16.9

24 Hungary

23.7

14

14.3

17.3

25 Canada

16

13.5

24.7

18.1

26 Greece

26

18

10.3

18.1

27 Israel

18.7

16.5

21.7

19.0

28 New Zealand

16.3

15

28.3

19.9

29 Lux

13.3

20

31.3

21.5

30 Ireland

20.7

20.5

26.3

22.5

31 Spain

22

19

27

22.7

32 Turkey

33.3

15.5

23.3

24.0

33 Chile

32.7

22.5

30

28.4

34 Mexico

33

23.5

32

29.5

Note: Prices in USD PPP and include line charges (where applicable). Penetration is a composite of fixed broadband subs/100, households and mobile broadband; Speed is based on average advertised download speed plus fastest speed; Price on low, mid and high-end offerings. Source: OECD (2011). Broadband Portal.

The significant decline in New Zealand’s broadband conditions relative to other countries, slipping from 22nd to 28th, reflects the fact that other countries are also pushing similar initiatives, too, seemingly faster than New Zealand.

Ultimately, the UFB could be the great national digital public works project of the 21stcentury, but if New Zealanders are to realize its full benefits, they must confront several realities head on: (1) high levels of media concentration; (2) restrictive bandwidth caps, (3) low levels of media and internet use, (4) a regulator that is not yet accepted as an essential element in an open, competitive and pluralistic media environment, and (5) strong incumbents intent on bending new technologies and possibilities to their ends.

The last point is particularly important because whilst all the policies and indeed the UFB initiative itself is based on an open Internet model that places as much of the capabilities and resources of these networks at the ends of the network and on to the desktops and into the hands of as many online service providers and users as possible (Saltzer, Reed, & Clark, 1981; Isenberg, 1996; Benkler, 2006), New Zealand’s telecom and broadcasting industry incumbents are hell-bent on creating a supplier-driven walled garden model, circa 1999, where power and resources reside in the core of the network, owned and controlled by network operators and their business partners.

A series of unregulated deals struck between Sky TV — the local monopoly provider of pay-tv services delivered by satellite and local arm of the global behemoth, News Corp. — and all of the key telecom and ISP players (except Orcon) since late-2009 reveal a full-court press by the incumbents to simply graft the ultrafast broadband Internet now being built out mostly at government expense onto their current business models. If they succeed, the media economy will not expand as much as it could; nor will it be as pluralistic. Media and internet use will also likely remain low, because uninspired. Competition, diversity and an open Internet, in short, will be crushed in the name of preserving incumbent interests.

For those who are fans of structural separation, the New Zealand case shows how even that form of regulation can be subverted. It also shows that strong measures are needed to enhance not just network neutrality but also to deter alignments between network and content providers alike designed to throttle competitors and to maintain their own position at the centre of the network media universe.

This is particularly problematic in the context of the UFB because, left unaddressed, one gets the impression that the government is financing the roll-out of a state-of-the-art broadband Internet for incumbents in the telecoms and media industries. Perhaps that’s how we can square the  decidedly right-of-centre government’s decision to publicly-fund such a project to begin with?

Bell’s Bid to Swallow Astral Media

Sometimes I just wish I could wake up in the morning and not be thrust into the hurly-burly of all the stuff roiling the telecom-media-Internet industries in Canada. But no! If it ain’t copyright maximalists trying to lock up content (Bill C-11) or spooks trying to stuff the telecom-Internet infrastructure with new surveillance gear (Bill C-30), it’s big TMI conglomerates like Bell swallowing up erstwhile competitors like Astral.

Now, this is not just a little deal, but a massive deal between Bell/CTV, the largest TMI conglomerate in the country with revenues of just over $22 billion, and Astral, the eighth largest media outlet in Canada with revenues of $888.1 million in 2010. While Astral is the fifth largest television operator (after Bell/CTV, Shaw/Global, Quebecor/TVA, CBC, in that order) and second largest radio station owner (after the CBC) in Canada, it is but a pygmy alongside Bell. If this deal goes through, we will have lost yet another independent and our position as having one of the most concentrated set of TMI industries amongst the developed capitalist economies will be yet further cemented (see here).

Bell has major and more often than not dominant stakes in the following TMI sectors (with ranking in each market indicated in parentheses): wired (1) and wireless telecoms services (3), internet access (1), tv distribution (cable, DTH, IPTV) (3), broadcast television (2), pay and specialty channels (2) and radio (5).

For it’s part, Astral is the fourth largest specialty pay television service provider in the country with 24 channels (e.g. the Movie Network/HBO Canada, Super Écran, Family, Disney Junior, Disney XD, Canal Vie, Canal D, VRAK.TV and TELETOON). It currently has just over 15 percent of the market. Astral is also the second largest radio station ownership group in the country, with 83 stations and 17.1% of the market.

All told, it is, as indicated above, the eighth largest media player on the media landscape in Canada (excluding wired and wireless telecoms services). Steve Faguy has a good break-down according to English and French language markets.

Astral has also been important because in a country where vertical integration has moved from the margins to the norm, it was one of the most significant non-integrated actors. Astral is to television and radio what Telus is to telecoms: a large, indeed, dominant player in its own right, but without clout across the mediascape as a whole and thus a source of some diversity within each of the media sectors they operate.

The figure below shows the “big 10″ media companies in Canada before this transaction.

Should this deal be permitted, Bell will end up with:

  • 40% of the pay and specialty television market;
  • a whopping 34.3% share of the entire Canadian television universe;
  • and catapult from being the fifth ranked player in radio to top dog with over a quarter of all radio revenues;
  • its dominance across the TMI industries as a whole will be further cemented, rising from roughly 16% of all revenues across the network media industries to just under a fifth of all revenues (excluding wired and wireless telecoms).

All said and done, if the Competition Bureau and CRTC approve the transaction, Bell will add 24 pay and specialty television services to the 29 it already owns (total 53 services) in addition to already owning the largest conventional television broadcaster, CTV, plus the second english-language network, CTV2 (the former A-channels). It will have 116 radio stations, whereas it currently has 33.

Instead of relying on the market as a way of acquiring and developing programming and content, Bell’s acquisition of Astral would simply absorb a significant part of the television and radio market into its sprawling hierarchy, in the hope that doing so will drive it’s efforts to drive more traffic over its broadband networks and thus feed its desire to have bandwidth, not content, serve as a key source of revenue.

As the famous economist Ronald Coase noted as far back as 1937, there are two ways of dealing with uncertainty and complex business environments: the market or hierarchies. The fact that “Astral products currently represent Bell’s largest single content cost”, as the news release announcing the deal this morning notes and as Faguy observes, is probably one of the most important elements of the transaction. Indeed, it is. No longer needing to rely on the market, Bell’s acquisition puts an over-weighted thumb on the scales of hierarchies over markets.

Bell CEO, George Cope’s claim that “Anything that moves the pendulum away from regulation is a good thing for consumers, the concept of monopoly is . . . antiquated” is simply self-serving cant.  Yet, it really is an open question as to whether or not regulators will turn back this deal.

I have my doubts mostly because the CRTC seems congenitally incapable of encountering a merger or take-over it can’t justify. The arguments are always the same: deep pockets are good for CanCon, Canada’s media economy is small relative to world standards, integration will give behemoths incentives to invest. All such claims are mostly bogus.

The CRTC’s 2008 Diversity of Voices decision set out some rules on the matter, but I’m afraid that they are too weak.  That decision set out four key guidelines to be used to evaluate mergers and acquisitions, but the most important one in the present case is the ownership caps it set out.  According to these new guidelines, any transaction that results in a single ownership group controlling less than 35% of the television broadcasting and pay and specialty market will be seen as not diminishing diversity and approved.  Those that fall into the 35-45% range will be considered as potentially lessening competition and reviewed, while anything over 45% will be seen as creating excessive concentration and rejected.

Today’s deal falls in category two as potentially lessening competition and thus will no doubt be reviewed. However, the problem is that the adopted thresholds are based on standards originally developed by the Competition Bureau for measuring competition in banking services. They have nothing to do really with important values related to diversity of sources and content, freedom of expression, and so forth that are relevant to assessing communication and media matters.

The transaction will not cross the 45% threshold which triggers outright rejection, but in pay and specialty television services, the fact that Bell will have 40% of the market comes damn close.  A more reasonable standard would see this rejected on its own merit. As I’ve said a million times before, we already have one of the most concentrated markets in the world and we are no better for it. This deal should be stopped in its tracks.

At the end of the day, and seen from the perspective of the media economy as a whole, this will also move levels of concentration amongst the “big four” (Bell, Shaw, Rogers, QMI) even higher.

Concentration levels among the big four for pay and specialty television services will move from roughly 84% to just under 90%. If we combine conventional broadcast tv with pay and specialty tv, the big four will go from controlling 77.5% of the the entire television market to 85.%. And if we take the big view and look across the entire network media economy, levels of concentration amongst the big 4 will rise from the already historic all-time high of 59 percent to about 68%.

This is truly incredible and if we care at all about the health, diversity and range of voices in the Canadian media, such ventures need to be turned back. We must also remember that Bell has failed at this once before, when it owned CTV and the Globe and Mail between 2000 and 2006 before failing and bailing.

Categories: Internet Tags: , ,

Rise of the Prime Time Internet vs the Death of Television

I often write about the Internet and its place in the broader network media ecology in relation to three things:

  1. That core elements of the network media ecology are becoming more concentrated: e.g. ISPs, search engines, social networking sites, browsers, operating systems, traditional media;
  2. Efforts to turn ISPs and other digital intermediaries into copyright police, as some have pushed to have done through the Copyright Modernization Act (Bill C-11) now in third reading before Parliament;
  3. Efforts to make those same digital intermediaries into agents of state, national security and law enforcement agencies, such as the Child Online Predators Act (Bill C-30) that was recently yanked by the Harper Government after an outpouring of public protest and one of Rick Mercer’s rants.

An underlying idea behind these points is that online gate-keepers are being created and the Internet generally being recast in the image of older models of the ‘industrial media’ set down in the 19th and 20th centuries. Today, however, I want to write about something else: the rise of the “Prime Time Internet” that looks and feels a lot like the ‘old model’ of television.

Preposterous you say? You’re not alone.

Commentators have been declaring television to be in terminal decline for the last decade-and-a-half. Indeed, so popular is this belief that a Google search of “death of television” turns up 957 million hits.  The death of television, however, is much exaggerated and probably just wrong.

Television viewing is not declining. Instead, in all but two of the countries surveyed in the International Communications Monitoring Report by the UK communications and media regulator, Ofcom, it has been increasing, including: Canada, the U.S., the UK, France, Sweden, Australia, Italy, Spain, Italy, Germany and a few others (p. 146).

Furthermore, for the most part, the economics of television are strong, as I’ve shown elsewhere. Revenues have not shrunk for television channels or distribution platforms (e.g. cable, satellite, IPTV). In fact, they have expanded significantly, in Canada, the US and worldwide. In China, Russia, Brazil, Indonesia, Turkey, India, and a few other countries with fast growing economies the development of television has entered a golden age.

All those who talk of a new generation of digital natives dumping television in favour of their smart phones, Facebook, laptops, Internet, and so forth might be startled to discover that the “consumption of television by teens has stubbornly continued to grow”. In “Why the Internet Won’t Kill TV”, Sanford C. Bernstein & Co. senior analyst Todd Juenger writes, “so far teens are following historical patterns, and in fact, their usage of traditional TV is increasing”.

As Juenger notes, of course, young people use mobile devices and computers to do so, but these devices “are in addition to television.”  More generally, while online video is being downloaded to an ever more diverse range of mobile devices, increasingly the conventional television screen is the final destination.

The Internet is also increasingly being used more like television in other ways.  For one, people download far more information than they upload. In sum, despite all the user-generated content unleashed over the past decade, and the real potential for widely dispersed social interaction and communication, we still communicate mostly with those we know, while remaining primarily net consumers of information.

According to Internet-equipment makers such as Sandvine and Cisco, “Real-time entertainment” services now account for more than half of all Internet traffic at peak time in North America and the Asia-Pacific region (e.g. Netflix, Hulu, NCAA, YouTube, Google Video, Spotify, BBC iPlayer, Pandora, Rdio). The numbers are less for mobile Internet access but still substantial and growing fast: one-third of mobile traffic in North America and roughly forty percent in Asia-Pacific consists of entertainment-type audio-visual services.

Online video is not just the biggest source of traffic during peak hours but those hours coincide with the same “prime time hours” between 8–11 pm that have defined the television audience for decades. In short, the ‘prime-time Internet’ has a lot in common with the ‘old tv’ model, with television programs, online video and the classic prime time hours playing starring roles in the phenomenon. The two figures below show the trend for North America and the Asia-Pacific region.

Figure 1: The Prime-Time Internet in North America

 

Source: Sandvine, 2011, p. 5.

 

Figure 2: The Prime Time Internet in the Asia-Pacific Region

Source: Sandvine, 2011, p. 15.

More than just chronicling the greater role of online entertainment, however, the rise of the ‘prime-time Internet’ poses significant challenges to claims that network public sphere that we now associate with the Internet marks a vast improvement over the standards of communication, social connectedness and democratic participation set by the industrial media of the past.

Yochai Benkler (2006) makes exactly such claims in The Wealth of Networks:

“A substantial body of empirical literature suggests. . . that we are in fact using the Internet . . . at the expense of television, and that this exchange is a good one from the perspective of social ties . . . .  [I]n addition to strengthening our strong bonds, we are also increasing the range and diversity of weaker connections” (p. 15).

While I often draw on Benkler’s work and find myself in agreement with it far more often than not, the evidence recounted above suggests that his first claim about watching television less to use the Internet more is not correct. Internet use does not displace but complements television viewing.

More importantly, though, does the idea of the ‘prime-time Internet’ call into question all of the other benefits of tighter social bonds, reinvigorated citizen journalism, higher levels of political and community engagement, and an improved network public sphere that Benkler and others in far less qualified ways claim (e.g. see here and here)?

I do not think that we need to see this as a zero-sum game, where our pursuits of pleasure and entertainment comes at the expense of these other things. However, the rise of the prime-time Internet does demand at least a scaling down of the more hyperbolic views that the internet, by displacing television and other ‘mass media, has served fundamentally to refortify the atrophying social connections and to revive the possibilities for greater participation in social and political life that are essential to a decent democratic society.

Sure, the creative commons is being fortified with user-created content, citizen journalism is probably helping to improve the quality of journalism against a deep-seated backdrop of failures and woes, and the more connected online we are the more likely we will be connected to others around us in ‘real life’. For all those who see the Internet as a democratizing force and as having unleashed people’s inner political beast, however, the rise of the real-time Internet suggests that kicking back, goofing off and being entertained is still the centre of the media universe for a whole lot of people.

Wealth Destroyers and End Game for the Copyright Modernization Act (Bill C-11)

Some of you may have noticed that I’ve been away for a while. Sorry about that for those of you who missed me. Let’s just say that I learned the hard way the steep cost of blogging, twitter, facebook, writing for the Globe and Mail, all for free, while holding down a real paying job where one has to actually teach, research and contribute to the department you’re in. There’s only so many hours in a day.

While away there’s been a mounting backlog of stuff to write about, and over the next few weeks I’ll unfold a series of blogs, but let me kick off with the current state of play for the Copyright Modernization Act (Bill C11). This is the fourth effort to revamp copyright law in Canada in the last seven years, and things are rapidly coming to head.

The bill itself has numerous elements that are actually not bad as currently written (no term extension for copyright holders, a very limited role for ISPs, search engines and others as ‘digital gatekeepers’, an innovative user created content add-on to fair dealing, etc.), but deeply troubling aspects as well (the digital locks provisions, notably). While the Bill has passed second reading and finished committee review yesterday (March 7), during the latter stage the ‘copyright maximalists’ lined up one after another in a last ditch push to convince MPs that the bill needs to be radically overhauled so as to stuff it with all sorts of things that have thus far been rejected.

The bill goes back to Parliament for a clause-by-clause reading on Monday and while there’s still third reading and Senate review to pass, its now or never to make sure that last ditch attempts by a few lobbyists to rewrite the bill never see the light of day.

What kind of stuff, you no doubt ask? Here’s just a partial list, culled mostly from the music and gaming industry lobbyists and like-minded legal advisors (see here and here):

  1. Tough rules that could require intermediaries from ISPs through to search engines (e.g. Google), social networking sites (e.g. Facebook, Digg, Twitter) and data/web hosting sites (e.g. BlackSun and other ‘cloud’ providers) to block access to websites and others alleged to enable copyright infringement;
  2. The substitution of a ‘notice and take-down’ and graduated response regime that would see ISPs disconnect subscribers accused of repeated infringement instead of the much less intrusive ‘notice-and-notice‘ regime already included in the bill and practiced as a matter of course by all of Canada’s major ISPs.
  3. Claw backs to the innovative user-generated content (UGC) clause of the act that allows people to make mashups and remixes for non-commercial uses.
  4. Copyright term extension from lifetime of the creator plus 50 years to life + 70 years.
The chances of any of these things being adopted is uncertain, but it needs to be stated clearly that any attempt to stuff the bill full of SOPA like provisions is a non-starter. For those not in the know, SOPA stands for the Stop Online Piracy Act in the US that gained so much notoriety earlier this year that its backers finally put a stake through its heart, at least for the time being, but only after an extraordinary outcry against the bill and after WikipediaFirefox, Google, and thousands of other sites went black for a day on January 18th, 2012.

SOPA would have required: (1) ISPs to block access to ‘rogue websites’, (2) search engines to make such sites disappear from their results, (3) payment providers like Paypal and Visa cut-off payments, (4) advertisers to cut-off suspect sites from advertising placement, etc. The fundamental remaking of the Internet such activities contemplated unleashed a firestorm of protest, in the US and globally, ultimately leading to a tactical withdrawal of SOPA. Yet as SOPA was being withdrawn in the US, the copyright maximalists here in Canada were on a roll and began pushing what looks like much of the same thing.

The first indication of this can be seen in the language used, with the copyright maximalists such as Barry Sookman, James Gannon, the Entertainment Software Association of Canada (p. 6) and the Canadian Federation of Musicians carving up the world into “good guys” and “bad guys”, backed by repeated references to “wealth destroyers”. This stuff is imported directly from copyright maximalists as Daniel Castro at the supposedly ‘non-partisan’ Information Technology and Innovation Foundation (ITIF) in the U.S. who referred to “parasites”, “rogues” and “leeches” to make his case for the ‘mother of SOPA’ early last year.

I’ve done this before but it bears repeating that the claims of wealth destruction are bogus. The trick is simple when it comes to the music industry, which in the present case has been bandying about a figure of $800 million dollar as having simply disappeared. That figure has been subsequently recycled by those on the committee, notably by Dean Del Mastro of the Conservatives, who stated on opening day, and drawing directly on the lobby group Music Canada:

“over $800 million a year [is] going missing. That’s coming right out of the pockets of artists, and that’s money that’s not being invested in this country (at 1645-50 in the transcripts).”

I have no idea where this figure has been tallied from, but it seems to be a magnification of already circumspect numbers that have been used in the past. The ruse in all this, as I’ve shown in earlier posts, is to take just one part of music industry revenues — recorded music sales (cds, LPs, etc.) — that really have suffered badly, i.e. dropping about $550 million (not $800m) in the past eight years, and then let this one segment stand for all revenues across the music industries as a whole. Looking at just the single category of recorded music industries, the situation does look dire, indeed, as the following diagram shows.

‘Recorded Music Industry’ Revenues in Canada, 1998 – 2010

The music business only appears to be in dire straits if we look at things from this cock-eyed view of the world. It looks entirely different when we include the recorded music segment and the three fastest growing segments of the business: (1) concerts; (2) internet and mobile phones; (3) publishing rights. Once we do that, the world looks entirely different, as the figure below shows:

Total Music Industry’ Revenues in Canada, 1998 – 2010

Source: Statistics Canada; PriceWaterhouseCooper; Socan.

And this is not just the case for the music industry, but the movie industry as well. Again, the following chart helps illustrate the point (If you can’t see the figure below, click here).

Source: MPAA (2011). Theatrical Market Statistics.

And again, as with the music industry, these figures for “Box Office Revenues” are only half the matter, actually a little less than half the matter. When we open our eyes wider to look at all revenue sources for the film industry, including pay-per view tv, cable and satellite channels, video rentals, rapidly declining dvd sales, and fast rising new areas such as online subscriptions and digital downloads, the picture changes dramatically.

Doing that, it is clear that the movie business is doing even better than the box office numbers suggest, rising sharply on worldwide basis from $46.5 billion in 1998 to $87.4 billion in 2010. Table 1 below shows the trend.

Table 1:  Worldwide Film Industry Revenues, 1998 – 2010 (US$ Millions)

1998 2000 2004 2008 2009 2010* Change %
Film 46,484 52,803 82,834 82,619 85,137 87,385 + 88%

Sources: PriceWaterhouseCoopers (2010; 2009; 2003), Global Entertainment and Media Outlook.

The same case can be made for the electronic software and video gaming industries, the constituents of the Entertainment Software Association of Canada (ESAC) and their corporate lobbyists who have also been out their plying their trade, backed by similar dubious assertions.

The biggest problem with all of this is not the underlying faulty economics and total absence of meaningful evidence, but rather the complete bankruptcy of the lawyers and lobbyists peddling the case. They appear to have no moral compass when it comes to these matters and would just as easily turn ISPs, search engines and social networking sites into online gatekeepers working on their behalf as they’d toss their grandmothers overboard if she hacked a digital lock.

That their positions are indeed those of radical extremists can be seen by, for example, comparing them with other interests in the mainstream of business thinking, such as the Business Coalition for Balanced Copyright. The BCBC group represents most of the major ISPs in Canada (Bell, Rogers, Telus, SaskTel, MTS Allstream), Google, Yahoo, eBay,  and so forth.

Thus, whereas the ESA (p. 7), Canadian Federation of Musicians, Canadian Independent Music Association (pp. 8-9), and copyright lawyers like Sookman and Gannon, call for a “much stronger and enforceable” notice-and-takedown regime, and graduated responses that would require ISPs to disconnect internet users accused of repeatedly infringing copyright material, the Business Coalition for Balanced Copyright forcefully rejects “notice-and-takedown and graduated response policies, which would turn intermediaries into ‘copyright police'” (p. 6). The group also rejects such a role being imposed on other digital intermediaries such as Google and social media services.

This is not unusual. To its credit, one of the world’s largest telecom and internet gear manufacturers, Ericsson, makes the same case in perhaps even more expansive language. Indeed, while supporters claim that the “graduated response” and digital intermediary strategy have only a minimal impact on individual liberties (see here and here), a recent UN Internet & Human Rights minced no words when it argued exactly the opposite point of view:

“. . . [C]utting off users from Internet access, regardless of the justification provided, including on the grounds of violating intellectual property rights law, [is] disproportionate and thus a violation of article 19, paragraph 3, of the International Covenant on Civil and Political Rights” (p. 21).

As for the attempted claw back on user-generated content, once again we see the copyright maximalists as not just being out of step with others but so wedded to a restricted view of the world that they think that copyright law is all about them. Yet, as James Boyle observes in The Public Domain: Enclosing the Commons of the Mind (pp. 66-70), copyright sets out rights for creators and owners, on the one side, and users, readers and audiences to do as they please with media acquired legitimately, on the other.

From the blinkered, ego-centric position if the maximalists, it’s easy to understand the drive to extend copyright terms from life of the author plus fifty years to seventy, but why not in perpetuity? That they have not pursued this is mere capitulation to political reality versus any kind of principled stance.

Reading any of the above ‘copyright maximalists’ interventions one would be hard pressed to know that copyright law is about two sets of interests: copyright holders and media users. Thus, from the position of the ESA (p. 7), Canadian Federation of MusiciansCanadian Independent Music Association and copyright maximalist lawyers like Sookman and Gannon, the idea that the Copyright Modernization Act (Bill C-11, sec. 22) would carve out space for non-commercial user-generated content is completely unacceptable, akin to a tax, a subsidy, a sop thrown to the masses. It is not, it is simply recognizing that people have rights too.

Nowhere is this idea more evident than in the digital locks provisions of C-11. Indeed, whilst the bill contemplates some reasonable measures and in fact does acknowledge a new user right with the user created content provision, the fact of the matter is that the restrictions on tampering with digital locks effectively nullifies those rights. In other words, what the bill gives with one hand, it taketh away with the other.

Again, the Business Coalition for Balanced Copyright is much more onside in this matter than the content and entertainment industries. Indeed, they are emphatic that the greater articulation of user rights in the Bill is an advance, and that this is especially so with respect to the user created content right, but state equally emphatically that “the digital locks provisions render them illusory” (p. 4).

Ericsson stakes out a similar position, setting out three general principles that ought to govern whatever digital locks mechanisms that are used and backed by the force of law:

  1. They should be “built on an interoperable set of proprietary standards or consist of DRM technologies that are based on open industry-wide standards;
  2. “Must not limit individuals’ statutory right to make legal private copies of Music, Books and AV works;
  3. “[C]ontract law and technical standards should not be allowed to override statutory exceptions such a fair use regime or private copy exemptions, thereby limiting the availability of lawfully acquired content to format or device shift within the scope of the private sphere” (p. 6).

My point in all this is not to make a fetish out of those who make, own and run the pipes that make up the Internet and the networked, digital public sphere. Instead, it is to highlight some of the mainstream currents of thinking on the issues at hand and to highlight those who are now trying to stuff Bill C-11 with SOPA-stlye restrictions that will gut the Internet for what they are: radical extremists, and well in the minority.

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