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Critical Media and Communication Studies Today: A Conversation between Dwayne Winseck and Christian Fuchs. Part 4

Part 1 of the conversation can be found on Dwayne’s blog here and on Christian’s blog here. 
Part 2 of the conversation can be found on Christian’s blog here and on Dwayne’s bloghere.

Part 3 of the conversation can be found on Dwayne’s blog here and on Christian’s blog here

Dwayne Winseck: Christian, as always I hope that you’re well.

Wow, you’ve certainly put a lot out there for consideration. Let me do my best to respond to some of what you’ve said about ideology, alienation and Garnham’s critique of what he sees as the critical marxian political economy of communication school.

First of all I need to clarify that I have not criticized Smythe for being too reductionist but actually praised him for his point that traditional communication and media studies’ focus on ideology, texts and effects distracted us from two fundamental elements that help to constitute a critical materialist (Marxist or otherwise) political economy of media and communication: first, the economic importance of media industries and specific firms in their own right and, second, through the provision of communication infrastructure, news and information flows, and advertising that serve as central coordinating mechanisms in the capitalist economy as a whole. So, the critique here is that so-called ideology critique has too often served – past and present – to divert our attention from these economics realities.

Based on this, I’m afraid that I have to disagree with the example that you offer using social media in an attempt to illustrate why ideology is as important as economic considerations to a political economy approach. You say that a “techno-deterministic techno-optimistic ideology” has been necessary to turn social media into a new site of capital investment and accumulation, in other words, to turn things like Facebook, Twitter, Flikr, LinkedIn, etc. into hot new markets and sites for investment. Given that, you say that our task is as much to understand and critique this ideology as it is to focus on economic arrangements and media capital accumulation models?

I do not agree that ideology has been essential to the emergence of social media as significant new markets and sources of financial investment. Indeed, the notion that techno-optimistic ideology serves as the handmaiden of capitalism and is behind speculative booms followed by, first, the dot.com crisis and then the Global Financial Crisis is misguided in my view. I think that several of our colleagues have done extremely impressive work that helps shed light on how ideas, knowledge circulation and, if you will, a more modest conception of ideology that goes by some other name works. I have in mind the work of Peter Thompson, Aeron Davis, Wayne Hope and Marc-Andre Pigeon.

Each of them have focused closely on knowledge flows and the role of very specialized, high end financial market and business news services and databases among a trilogy of groups – institutional and high end financial investors/traders/analysts, corporate insiders and financial journalists. In its most basic of outlines, knowledge and data flows among the first two groups far more quickly before it ever reaches mass media channels such as CNNfn, MSNBC, Wall Street Journal, Your Hometown Daily News Outlet, etc. Financial journalists play the role of switching node here, but the differences in who is speaking to whom, the narrow vs mass audience, and vast differences in temporality (ie. insiders get stuff in milliseconds and zero time delay and trades are executed in a flash) mean that it is what is happening inside the elite groups and the narrow conventions that they share and subscribe too rather than techno-optimistic hyperbole/ideology that gets attached to all new media.

Instead of ideology, then, I think we need to pay attention to specialized, elite knowledge and channels of communication, on the one hand. The rhetoric, language, myths and uses of media and ICTs are important in their own right, and are structured by class, primarily greasing the slide of new media from novelty to part of the furniture. This is similar to the Abercrombie, Hill and Turner critique of the ‘dominant ideology’ thesis in 1980. It is not the ideology is irrelevant, but rather that its grip is mostly present among elites and diffuse across other social classes as a whole (a point that C. Wright Mills also made). Much more could be said along these lines, but my basic point is that vast flows of capital investment into media doesn’t involve ideology but rather ‘fast circuits’ of data and knowledge production, which, from analysts and consultants of the dot.com era (analysts/snake-oil sales reps, H. Blodget, M. Meeker, etc.) and standards and rating agencies (Fitch, Standard and Poor, Moodys), have systematically torqued their data and sold investors (and the political class) a bill of goods that later turned out to be little more than Ponzi-like schemes.

To move on to the points you made about social totality, I think we may be closer on this than might initially appear. I think that the ambition of trying to make the connections between media and ICTs and capitalist modernity as a whole is one that gives political economy some of its impressive reach and allows it to provide compelling accounts of our times, sometimes. I agree with you that the Culturalist Turn has resulted in simplistic/cultural reductionistic analyses that neglect class and the economy, and lead to fragmented portraits of the contemporary condition that actually recursively feed into, and reproduce, the fragmentary character of contemporary societies that are our objects/subjects of study to begin with.

Again though, I think the thrust of my work is more towards, lets say, a better sense of the interplay between top-down macro-level, deductive approaches that aim to synthesize complexity into a portrait of the social totality based on propositions derived from Marx versus a bottom-up examination of what Botanski calls ‘situations’, or ‘contexts of action’, where emergent properties and how people actually think, act and so on arises out of empirical observation. Discovering such emergent properties through empirical observation means that you have to bracket aside, at least for the moment, your own politics and agendas, lest you superimpose that on the conditions and ‘subjects’ (people) at hand.

Time and again I’ve discovered this to be true when I observe what people do with the media/Internet, or pay close attention to what others who study such things have to say. That is, I’ll discover that people actually employ elaborate, even if unreflective, practices that tell us about how they feel about others with whom they communicate, privacy and surveillance, etc. They can tell you about such experiences too, reflexively. The expressions that emerge from what people are actually doing often clash with the reigning practices and strategies of Facebook, ISPs, Google, etc., as one can see in their Acceptable User Agreements/Policies, etc. The fact that you spend a lot of time looking at these things all the time in your work is one, among many things, that has impressed me so much with your work.

So, key point on this? We need to focus more on textured interplay between macro and micro level analysis, theoretico-deductive approaches versus inductive but still theory-grounded empirical observation. There are too many ungrounded analyses that regurgitate politico-theoretical propositions in light of each new round of communications media (Internet, web 2.0, etc.) as if that constitutes analysis.

Let me turn, quickly because this is becoming far too long, to some points you raise about Garnham.  First, you say that you want to insist on a “Critique of the Political Economy of X” or “the Critical Political Economy of X”, and do not personally want to be associated with Neoliberal Political Economy of X.

While I want to consider what I do as fitting within the ‘critique of the political economy of communication’, I do not have the same qualms as you do with respect to other strands of political economy on offer. I put this out in more elaborate form in a long introductory essay to our new edited collection to which you contributed, The Political Economies of Media, which just came out last month.

The key point that Garnham is making, it seems to me, is that critical Marxist political economists have spent more time denouncing markets and commercialization than studying how they actually work, are structured, change over time, etc. Of course, there are exceptions to this, and your work is among such exceptions. However, the rule remains . . . .

One thing that I’ve done recently is joined with Eli Noam, a Professor of Finance and Economics at Columbia University, and also an expert from within the mainstream of economics in all aspects of telecom, media and Internet economics. He’s also recently published the authoritative Media Ownership and Concentration in America (2009). I’ve learned a great deal from the work that I’ve done with him on the International Media Concentration Research Project. I’ve produced reams of evidence on all manner of the telecom-media-Internet industries in Canada covering the past 25 years as part of this project. By simply gathering, organizing and trying to make sense of this data, from the bottom, over such a long span of time, have allowed things aplenty to emerge that I could not have anticipated or derived from propositions drawn from Marxist political economy.

I can’t go any further here into this, but on this point let me just say that there are others who you and I also know well and I think respect as heterodox, if not Marxist political economists, such as Paschal Preston, Guillermo Mastrini and Martin Becerra. They are also part of this project. Even Noam and Robert McChesney, from what I understand, are on the phone or sharing emails once in a while to compare notes and update data for both of their purposes, and in particular the important work that McChesney spearheads by way of his powerful advocacy organization in the US, Free Press.

And we must remember too that it was others such as the institutionalist Joseph Schumpeter in Capitalism, Socialism and Democracy (see part I) as well as the radical American sociologist C. Wright Mills, in The Marxists, who argued that the point when it comes to Marx, is that first and foremost we need to know our Marx. They both, each in their own way, praise Marx the sociologist and economist, but condemn him, again for their own reasons, as political theorist and prophet. We must each have our Marx, so to speak, carefully and judiciously selecting the things from him that we think still apply – expansionary and dynamic tendencies of capitalism, pressures toward consolidation, congenital instability and crisis tendencies, power and class distinctions – while rejecting other elements that we don’t believe work: e.g. base/superstructure model of society, ideology, labour theory of value, etc.

So, this is why I speak of political economies of communication. It is meant to (1) prise away this approach from its conflation with a Marxist analysis in many circles, (2) to reflect that there are several schools of thought (e.g. Marxian, liberal, institutional, heterodox, etc.), (3) that rather than the whole of society being subordinated to the universal rule of exchange value (the market), we still see multiple economies (as Aristotle said) where we produce things for ourselves (DIY, self-sufficiency, Wikipedia, YouTube videos), for others and our neighbours (gifts, social economy) and for the market (exchange); (4) that communication, media and information goods are atypical commodities, as Garnham but also the Cultural Industries School never fails to stress, that can only be forcefit into the commodity mold through the force of the state, law and intellectual tyranny of conservative Chicago School economics that works to achieve in the realm of thought (ideology) what cannot be achieved in the ‘real world’: the sublimation of everything to the principles of market exchange.

Whilst I am aware of the power of Chicago School thought and how it has buttressed the imposition of a neoliberal template on many areas of life and the world (and dictatorships through Latin America), we have not yet seen the universalization of the market as the measure of all things, as Marx felt, and as those who still subscribe to his views and speak uniformly of neoliberalism tend to think.

I agree with you about the globalization of capitalism generating increased socio-economic inequality, especially in the heartlands of capitalist modernity (Europe and North America). However, elsewhere – China, India, Russia, Turkey, Brazil, South Africa, etc. – the embrace of capitalism has not just aggravated social economic inequality, but fueled incredible levels of growth and development to the extent that what used to be the periphery now serves as the outposts of new, in many cases, authoritarian, unbridled capitalism states that increasingly look to one another for ‘models of development’ and inspiration rather than even the liberal ideals of capitalist modernity. This can be seen especially with respect to China and how it is viewed now in Africa and Latin America. It was also clear at our conference in Istanbul, where the speakers on the plenary made it absolutely clear that the political masters in that city and Turkey’s political capital of Ankara no longer kowtow to the west and sing from the hymn sheets of liberal democracy that go along with capitalist modernity but reject that in favour of some new mélange of politico-religious-hyper-technologized iron-state view of capitalism.

So, this points to one other thing that I have found problematic with the main lines of critical marxian political economies of communication, and that is the notion that neoliberalism constitutes a uniform horizon in which nations around the world are simply folded into capitalism. I don’t think that there is one capitalism but rather a variety of capitalisms with their own specific characteristics that need to be understood and, once again, studied at two levels: first, in terms of distinctive qualities but also, and second, in relation to the common fundamentals that harmonize things.

Again, it is the interplay between the two dimensions that is key, and it is the uniform preoccupation with the generic characteristics of capitalism that those who invoke notions of neoliberalism lay all their stress that seems like an overly easy short hand for real observations. It also struck me as odd too that whilst neoliberalism was supposedly remaking the world in the singular image of Anglo-American capitalism, the number of regulatory institutions within just our field alone exploded worldwide, from something like 14 in 1990 to 90 a decade later and around 150 or so today. Regulators translate the general ‘logics’ of markets, technology and rule-making in specialized domains into the specific rules and procedures that compose the local political economy to which they are being adapted, as Sassia Sassken puts it. There’s a lot of ‘translation’ work that goes on in this and I think it belies the overly generic notions implied by the rhetoric of neoliberalism.

And besides, just as neoliberalism was seen to be triumphant circa 2000, what happened? A decade of crises, that’s what, starting with the collapse of the dot.com bubble in 2000 and instability ever since, coming to a head once again since the Global Financial Crisis of 2007/8ff.  And unlike what David Harvey, the crisis didn’t start on the margins, or get displaced there, but in the core and wreaked its havoc in Europe and the U.S.

So Marx should be back in light of Global Financial Crisis. Indeed, the instabilities of capitalism are visible all around us and sharp jolts and crisis tendencies emerge one day, disappear the next, and reassert themselves the day after that. This is crazy instability, precarity. However, the underlying universalist notion that many interpret as leading to economic, social and cultural homogeneity does not follow. This is another one of the key points that Garnham makes when he likewise advises that we reject notions that the media are bound up with forces of cultural homogenization, cultural imperialism, etc.

I agree, and thing it is important to remember the other side of Marx, who stated that, in the face of the tumultuous, disruptive dynamism of capitalism, “all that is solid melts into air”, by which he meant the break down of traditional societies and ossified ways of life and thinking. The upshot of that, however, is not the superimposition of a higher level of homogenous integration (again, contra what notions of ideology often suggest) but greater levels of sociological differentiation, as sociologists from Tarde, to Parsons, to Habermas, Giddens, Bauman and many others in between have noted. And that is mirrored in the domain of media and ICTs because it seems to me what we are seeing is not total integration and convergence under an ever smaller number of corporate rulers, but simultaneously and paradoxically, both consolidation in some dimensions, generally those with general utility like functions (Google, Facebook, etc.) and where economies of scale (but not scope) are strong, ie. integration between tv and film, but not tv, film and Carriers/Internet, to wit the misfortunes/calamities of AOL Time Warner, News Corp/MySpace, Vivendi Universal, etc. (with exception of recent Comcast NBC-Universal merger). Garnham in his school marmy way is admonishing us to understand this reality and seems to believe that until we reject our dogmatic ways, we won’t even be able to see things clearly, let alone understand them. I have some sympathy but . . . .

Finally, I do not agree with you that alienation is a unique pathology of capitalism. Of course, it was the task of Critical Theory, in particular Eric Fromm and Herbert Marcuse to lay out a theory of alienation combining Freud with Marx to understand alienation under capitalism. That bore some fruit, but try raising it with most feminists today. It ain’t gonna go anywhere, as far as I know. The bottom line on this for me is that alienation is not a capitalist problem, but an existential one. Here, Marx does not offer much of value. We must read our Sorensen Kieregaard, J. P. Satre, Lu Xun, and Albert Camus for insights on that.

That, in my view, is not an indictment of Marx, but rather a marker of the scope and limits of his thoughts. I hope that the above ideas clearly indicate that I am no turn-coat enemy of Marx and some of the many important thinkers who have translated his ideas into central pillars in the critical marxian approach to the political economy of media and communication. I continue to be interested in this work and draw on it often and extensively, while still hoping that I may make some modest contributions to it. However, I do not believe that such an approach holds the magic key to understanding our times, and in fact believe that adhering too closely to a marxian view of political economy will only impoverish us.

Well, Christian, this has really gotten out of hand. It’s dragged up a whole ton of ideas that I’ve been thinking about for a long time now. There’s obviously much more to say, but I think I’ll leave it here for now and await your response. I’d say that we wrap it up after that, perhaps returning some time in the future to pick up where we leave off.

Cheers and all the best, Dwayne

The Telecom Travelogues, Part I: News Corporation in Flames, Media Moguls on Trial

I’ve been gone for two the past two weeks. Traipsing the streets, alleys and waterways of Istanbul with Kristina, my wife.

We conferenced, we hung-out with friends, and we partied at a swank event held for IAMCR conference goers at the Archeology Musuem in the heart of the old part of Istanbul, Sultanamet.

We gazed about the Hagia Sofia, the world-renowned Christian Church constructed in the 5th century (CE) and subsequently remodeled into a mosque after the Ottoman Empire conquered the city in 1453. The Topaki Palace was a sensorial blend of opulence, barbarism, and glories of a cosmopolitan empire whose time has passed.

Perched atop the slopes of the Bosphorous fjord that separates Europe from Asia, we could see a wide swath of the landscape. And from where I stood, the following five telecom-media-Internet (TMI)-related issues kept coming into view:

  1. The News of the World telephone hacking scandal.
  2. The deal between Hollywood and ISPs providers in the United States — Verizon, AT&T, Comcast, Time Warner, etc. – that will see the latter take on greater gate-keeper roles vis-a-vis online content.
  3. The export of bandwidth caps and the pay-per Internet model to the U.S. from Canada, as Time Warner and Verizon get set to follow the adoption of such measures by Comcast and AT&T (in 2008 and in May 2011, respectively).
  4. The outbreak of information guerilla warfare between Wikileaks, Anonymous, LulzSec, and so forth against Paypal, Visa, Disney, News Corp, Lockheed Martin, Arizona State Police because they see all of these entities as links in a much bigger cyber-military industrial chain (also see James Der Derian’s Virtuous War for one of the best scholarly treatments of this issue).
  5. The relationship between rapid TMI expansion and economic development in Turkey versus the reality of a strong state with a solid grip on Internet censorship and control, a system of moral and political regulation that the LGBTT community in the country expects will hit them especially hard.

I will write about these things in the next few days. The first post, though, is on the strange illusion that the News of the World telephone hacking scandal might somehow drive the final nail in the coffin for the much reviled, and seldom revered, Media Mogul.

First up, the dominant owners and hands-on controllers at News Corp, the world’s third largest media conglomerate: Rupert and James Murdoch. The News of the World telephone hacking scandal that has engulfed News Corp has already wiped out twenty percent of the media behemoth’s market capitalization in two weeks, roughly $8 billion (see here).  This is indeed a steep cost for transgressing the boundaries of law, good taste and solid journalism.

The Murdoch Family wield controls in News Corp despite the modest scale of their economic ownership stake.  While the family only owns about 12.5 percent of the capital stock of the company, it controls the company through voting shares and via positions in the executive and on the company’s board of directors. In narrow terms, the family’s coffers have definitely taken a hit.

News Corps’ telephone hacking scandal threatens bigger damage to the media conglomerate. Its contentious attempt to gain the remaining sixty percent ownership stake in BSkyB that it does not yet control has been suspended. The News of the World (NOTW) — a hundred and sixty some odd year old popular low brow paper — has been shuttered. The NOTW editor-in-chief (Rebecca Brooke), a sub-editor (Clive Goodman), Prime Minister Cameron’s director of communication and ex-editor at the NWOT (Andy Coulson) and two high ranking police officials have all resigned and/or been arrested (see herehere and here for chronologies and over-views).

This was not a one off deal. It has been going on for years, with episodic attention to this aspect of the sordid underbelly of journalism in the UK spurred on at the instigation of journalist Nick Davis and Guardian newspaper. Now, the subject has has been dragged out of the closets and once again been put into the spotlight. Heads may yet role.

What is interesting, however, is the extent to which observers are already extrapolating from the troubles of the Murdochs to the fate of media moguls as a whole. Indeed, many are predicting the imminent demise of the media mogul, the widely reviled character of the 19th and 20th centuries ‘industrial media age’, as if somehow the travails of News Corp and Mssrs. Murdoch — Rupert and James — are an index of what will happen to the media industries as a whole, and to media barons specifically.

The Economist seems to hope for the demise of the media mogul writ large should the Murdochs fall. It worries, however, that the world will be a worse off place without News Corp. The giant global media conglomerate with $40 billion plus per annum revenues and a vast stable of globe straddling entities — 20th Century Fox Films, Fox News, BSkyB, MySpace, Wall Street Journal, the Times, etc — plays an valuable role in the media and entertainment world, and in journalism and politics, too. It’s loss would impoverish us all.

I doubt that any such thing will come to pass. However, I do agree with Jeff Jarvis, albeit for entirely different reasons that will become evident below, that should this somehow turn out to be the beginning of the end for News Corp, such an outcome is not to be lamented.

Jeff Jarvis agrees with The Economist that the media mogul as a ‘type’ is on its last legs. He has some great stories from a long career that basically boils down to the idea that, individually, media barons are quirky and drawn to power and like to use it for personal gain and on a whim. Some moguls are pleasant and unobtrusive (he lists Rupert Murdoch as one of these types, based on his own personal experience); most are not and come across as tiny tyrants. All, however, Jarvis declares, are doomed to die, slaughtered by ineptitude and the Internet.

I first heard this chain of reasoning that stretches from the phone hacking scandal and News Corps woes, on the one side, to predictions about the imminent death of the mogul, on the other, last week when the New York NPR station WYNC contacted me in Istanbul to do an interview. The topic? The role of the media baron in American media history and “whether Rupert Murdoch is one of the last”.

The story was temporarily put on the shelf, for one reason or other. In retrospect, it is clear that the NPR folks were on to something. I hope they’ll pick it up again and run with it.

My answer, though, from the get-go is no, Murdoch is not the last of a dying breed. The future of the media mogul rests on much bigger forces in finance, markets and technology than the hacking scandal. The media mogul type, as I will argue, almost by design, gives rise to intrigue and scandals like those now afflicting the UK press. That is the ‘causal chain’ in such events, rather than the reverse one assumed by the Economist, Jarvis, etc., where scandal takes down moguls.

These events will undoubtedly cause NewsCorp to flounder, as I have already clearly indicated above, and maybe some heads will roll. But I do not believe for a moment that the phone hacking scandal will, by some lengthy chain of reasoning, lead to the death of the media baron.

To be sure, the media baron no long cuts as an imposing figure as Jay Gould, William Randolf Hearst or Lord Beaverbrook did in the 19th and early 20th centuries when the ‘industrial media age’ was taking root.  As Eli Noam (2009) indicates in his authoritative Media Ownership and Concentration in America, the number of owner-controlled media firms in the U.S. fell from 35 percent to just 20 percent between 1984 and 2005 (p. 6).

So maybe the Murdochs are hang-overs from a time now slipping irretrievably into the past?

I don’t think so. They may have declined overall, but not as much as Noam and others suggest. In fact, far from being a dying breed, the mogul type is actually quite prominent right across the TMI industries, and is in the process of being retrofitted for the digitally-networked media age.

Three of the top ten firms in the U.S., the largest and most developed medie economy in the world, are owner-controlled: Comcast (Roberts), News Corp (the Murdochs), Viacom-CBS (Redstone). Steve Jobs also holds a significant, but not controlling, stake in Disney. Other significant players still stand out as well, notably the New York Times (the Ochs family) and the Washington Post.

In Canada, the mogul cuts an even more imposing figure, with 7 out of the 10 biggest mediacos being owner-controlled (eg. Shaw, Rogers, QMI, Astral, Thomson-Reuters, Cogeco, Toronto Star). A similar scene prevails in Latin America, Russia and some parts of Europe too.

Of the top ten global media players, five are owner-controlled — Comcast (the Roberts family), News Corp (the Murdoch family), Viacom-CBC (Redstone family), Bertlesmann (remnants of the Bertlesmann and Mohn families) and Thomson Reuters (the Thompson family).

The media baron is not just a hold-over from the industrial media age, either, but a prominent feature among seven of the leading ten Internet firms as well: Apple (Jobs), Facebook (Zuckerberg), Google (Page, Brin and Schmitt), Microsoft (Gates and Ballmer), Yahoo! (Yang), IAC (Diller and Malone) and CBS (Redstone). In sum, new technologies and the Internet firms have not whisked away the owner-controlled media organization.

News Corps’ organizational structure thus is a mirror of this broader phenomenon and an index of something unique and deeply intriguing about the media, even in the 21st century and at a time when Google, Apple, Facebook and so forth are moving ever closer to centre stage. News Corp embodies the resilience of the media mogul form initially forged in the 19th century, and provides us with an opportunity to understand just how this seemingly anachronistic form is being retrofitted for the 21st Century TMI industries.  For the time being, we might call the new versions TMI Barons.

The media mogul has been familiar figure since the late-19th century industrialization of the press and entertainment industries, typically more prone to being reviled than revered. The Robber Baron Jay Gould was the target of public scorn when he ruled the Western Union, Associated Press, a couple of New York dailies, and railways across the country in the 1870s and 1880s (see Richard R. John’s Network Nation or my review of it).

All of these entities worked in tandem to advance the interests and intrigues of the movers and shakers arrayed around Jay Gould. They served the Republicans in the 1876 elections especially well, too, essentially throwing the outcome to that Party’s candidate over the Democratic opponent.

Upton Sinclair revived the indictment of the media mogul in his hugely popular The Brass Check, first published in 1920 and already in its ninth printing with over a 150,000 copies sold by 1928. As the power of the media mounted in the 20th century, Orson Welles’ 1941 film Citizen Kane updated the indictment of the press baron for the cinema, with its key protagonist, Charles Foster Kane, a media mogul cut from the mould of William Randolph Hearst. The film, like Orson Welles’ War of the Worlds radio drama before it, served as a meditation on power and persuasion in the age of the mass media.

The basic problem of the media mogul form of ownership and organizational structure stems from the fact that it personalizes power and politics. It colonizes public space and discourse with powerful personal agendas.

Its very form and the unremitting flash of all-too-many of those who occupy the role clash with popular and journalistic sensibilities. The ‘free press’, as A. J. Liebling (1947) famously quipped, as a result belongs mostly to those who one. Criminality is not foreign to the role, but at least episodically seems endemic too it, as the Corporate Fraud Task Force’s Report to the President put into place after the collapse of the dot.com bubble regularly demonstrate (see, for example, pp. 25-30 in the 2008 report)

The ‘familial model’ of ownership, control and politics that are the hallmark of News Corp, as the Financial Times stated the other dah in direct reference to the events at hand, are midieval in character, opaque and impenetrable. News Corp has always been close to the centres of political power in the US, UK and wherever it operates, it brazenly wields its influence in way that are as much opportunistic as they are ideological. That company’s owners do use political influence for their own commercial ends, there is no doubt.

News Corps’ board of directors is also one of the most politicized of the leading global media conglomerates. Whereas bankers, financiers and commercial goods purveyors such as Proctor and Gamble stack the boards of most major media conglomerates, of the seventeen members of News Corps’ board, three are from the Murdoch family (James, Lachlan & Rupert) and two are ‘global war on terror’ veterans closely aligned with the Bush II Administration (2000 – 2008):  Viet Dinh, a Georgetown University law school professor and one of the main architects of the Patriot Act, and former Spanish President during the ‘war on terror years’, José María Aznar.

The sprawling global media behemoth’s second largest share-holder is Prince Alwaleed bin Talal, the nephew of the King of Saudi Arabia. He is also one of the Murdochs’s steadfast allies on the board and business partner in other joint Arabic media ventures with News Corp (see News Corps’ Annual Report, 2009, p. 112). All of these murky political ties irretrievably compromise News Corp’s ability to live up to the standards of autonomy from governments demanded by the most mainstream theories of a free press.

The fact that the Murdochs have played their political connections opportunistically and ideologically in equal measure has served them well. To the untrained eye, the fact that the company endorsed Tony Blair’s ‘third way’ Labour Party in the UK at the same time that it stood behind the rabidly conservative Bush II Administration in the US might seem to be ideologically incoherent. However, such a stance has the virtue of allowing News Corp to further its commercial interest regardless of the political context that prevails at any single moment in time.

In Britain, these ties have persisted with the discredited NWOT editor Andy Coulson having served as advisor to Brit PM Cameron before the 2010 election and then as his director of communication after the election, until is resignation last week. Indeed, News Corp is a fixture of the deep state, the buried channels of political communication within the countries in which it operates. These are the grounds that breed things such as the phone hacking scandal.

The News of the World telephone hacking scandal is not new but has been doggedly pursued by the Guardian journalist, Nick Davis, for the past half-decade or more. The story of calumny, political intrigue and the over-inflated egos of media moguls, senior and junior – i.e. Mssrs. Rupert and James Murdoch – continues to have legs and may be growing in scope.

Davis provides an excellent account of the history behind the phone hacking scandal and many of the other woes facing the British press in his 2009 book, Flat Earth News. Over the past few weeks the re-igniting of the phone hacking scandal has also spread across the Atlantic, where James Murdoch, the deputy chief operating officer of News Corp and son of the company’s famous public face, Rupert, could face criminal charges in the US as well.

The fact that the events occurred at all and eventually saw the light of day is probably also due in no small measure to the fact that the UK newspaper market is more competitive and ideologically robust than anything we’d find in Canada or the US. The fact that it targeted the cellphones of the Royal Family, dead soldiers, celebraties, politicos and murdered school girls also thrust the scandal into the limelight, pissing off a broad spectrum of the powerful and popular alike as a result.

The subject has stayed at a steady boil throughout the two weeks we were in Istanbul, and a Parliamentary Inquiry in the UK is looking into these events is now under way and releasing testimony and documents pretty much as it occurs. Call this the acceleration of the political cycle and scandal laundering.

Besides destroying wealth, the scandal has put media moguls on trial. Indeed, the whole British Media System, is on trial. The British Press Complaints Council, for example, has been thoroughly discredited for its previous whitewash of widespread and systemic uses of phone hacking in 2007 and 2009. The rot runs deep and is, as they say in sociological circles, it is systemic.

The Press Complaints Commission (PCC) first report, for instance, stated categorically that “the activities . . . of two people [private investigator Glenn Mulclaire and Royal Affairs editor Clive Goodman] working for the News of the World in 2006 were deplorable, illegal and unethical”.

And the PCC kept its head stuck in the sand the next time around, in 2009, when its second report on phone hacking stated: there was “no new evidence to suggest that the practice of phone message tapping was undertaken by others beyond Goodman and Mulcaire, or evidence that News of the World executives knew about Goodman and Mulcaire’s activities.”

In other words, according to the PCC, phone hacking by News of the World journalists was the product of two bad apples: the Royal page editor Goodman and one-time petty criminal, Mulclaire. Once the ‘two bad apples’ story line was taken, the PCC stuck to it and, for all intents and purposes, abdicated its responsibilities.

The Murdochs are now trying to extend this argument by claiming that the ‘organizational complexity of modern media conglomerates’ is so Byzantine, that they cannot possibly know what is going on in every nook and cranny of the company. According to this tale, the two Murdochs – Rupert and James — were unaware of the goings on at the NOTW. This was pretty much the line that the PCC took. Others say they turned a blind-eye. The first tact injects a sense of humility into events that may now be spinning out of company and its owners’ control, while the latter looks just clumsy and neglectful. Stupid yes, but not a crime.

The scale of global media corporations like News Corp. does mean that the Murdochs cannot be, and are not, privy to every single act that takes place across its sprawling operations. Indeed, with $40 billion plus in annual revenues and interests spanning the globe, News Corp and others of its kind cannot be run on a day-to-day basis by just two people, no matter how omnipotent. However, the Murdochs have also over-played their hand on this score.

Owners do control the media they own indirectly through their control of resources (i.e. allocational control) and long-range decision-making. They sometimes also intervene directly on a day-to-day basis (i.e. operational control).

The Murdochs, in fact, are hands-on owners, in the classic mogul type, not just passive investors and dividend takers. Some former executives have stepped forward to argue that the Murdochs were complicit in, paid for, consented to and helped cover up illegal behaviour. As a result, the Murdochs’ testimony to Parliament has already been tainted and even PM Cameron as admonished them to double-check the accuracy of their testimony at last week’s Parliamentary hearings.

The idea that moguls, or at least editors’ interpretations of their interests, can set the agenda and output of a company like News Corp can be seen in the current phase of the phone hacking scandal. As a timely Project for Excellence in Journalism study released in the past week shows, Fox News has aired much, much less coverage of the phone hacking scandals as CNN and MSNBC, the two other major cable tv news outlets in the US.

Whereas CNN and MSNBC each gave about 130 minutes to the topic from July 6-8 and between the 11-15th, Fox News gave just a fifth of that amount, with only 23 minutes of airtime devoted to the subject. Coincidence, or the guiding hand of the owners and News Corp. interests in setting the editorial agenda? News Corp and the Murdochs have interests, and the flagship of their ideological enterprise in the US, Fox News, is helping to set the parameters of public knowledge and debate on the topic.

So, whether by the structure of interests or direct editorial intervention, it comes to pass that editorial policy within News Corp. is being bent to personal and political imperatives. It is just this reality that not only leads to congenital suspicions of media barons, but which have a corrosive effect on journalism as a whole.

Thus, while newspapers elsewhere flourish, and even enter something of a ‘golden age’ in Turkey, South Africa, India, China, Brazil, Indonesia and Russia, among other places, the crisis of journalism in parts of Europe, Britain and the US is being aggravated by self-inflicted wounds. The crisis may also reflect the deadhand of the media mogul – a figure that is well-past its past due date — running companies for power and personal profit, rather than standards of good journalism or corporate governance.

In sum, it is still far too early to erect the RIP epitaph over the grave of the last media mogul just yet. However, one thing is for sure and that is that the phone hacking scandal does so much portend the death of the mogul but rather reminds us of the dangers of media moguls and media concentration.

Telecom-Media-Internet Politics in Canada: Evidence, Theory & Ideology

We are at a fundamental turning point, a constitutive moment when decisions taken now will set the course of developments across the telecom-media-Internet ecology for years, maybe decades, to come. We’ve just finished one set of hearings, and two more are on the immediate horizon: the CRTC’s hearings on Usage-Based Billing that begin Monday, July 11 and its upcoming so-called ‘fact finding’ hearings on Over-the-Top/new media.

In an interesting and helpful post today, Peter Nowak argued for 7 fundamental guiding rules for telecom issues in Canada, by which he meant the full gamut of issues right across the TMI (telecom-media-internet) spectrum. They are very useful guides and starting points for discussion, and easy to remember to boot. They are:

  1. Ditch Usage-Based Billing
  2. Don’t regulate new media/over-the-top (OTT) services (e.g. Netflix)
  3. Strengthen Net Neutrality
  4. Turf Foreign Ownership Restrictions
  5. Spectrum Set Aside for New Players
  6. Don’t Regulate Cross-media market power (aka vertical integration)
  7. Plan ahead for ‘shared networks’.

I find these very useful starting points; perhaps because I agree with most of them wholeheartedly (1, 2, 3, 5). Others I’d endorse with some caveats (4). Some I would expand on greatly (7). Others I would reject completely because they lack any basis in evidence, history or theory (6).

In terms of foreign ownership, Nowak proposes to drop all of the current limits on ownership of telecoms industries in Canada. He suggests that doing this will increase ‘real competition’ in the market by adding new players. This is not an uncommon position and in my view, its goal of increasing competition is basically a good one. Michael Geist and Mark Goldberg, each in their own way, make much the same point.

There are at least three or four problems, some of which I’ve outlined in another recent post, however, with this notion of dropping foreign ownership, although I am, to repeat, not against the idea in principle. First, there’s a good chance that we could drop the rules and nobody would come. These times are not those of the high-tide of foreign investment, in case anybody has been sleeping under a rock for the past few years.

Second, even if new investment does occur, this doesn’t necessarily mean that new competitors will enter the market. It’s more likely that they’ll just take over one of the incumbents, thereby switching the ‘title’ to the underlying telecom property but not doing anything at all to increase the market, unless the new owners turn out to be better than the current ones.

This is exactly the point made by a recent report by the C.D. Howe Institute. Despite its exuberant support of the idea that all foreign ownership rules across the telecoms-media-Internet board should be dropped, the Howe report was forthright that this would probably not result in more competitors. Instead it would lead to something much woolier: “performance gains” (p. 3).

Good luck assessing that, I’d say. Like “beauty”, performance would mostly be subjective and in the eyes of the beholder. Besides, with all of the existing telecom and broadcast players clamouring for less information disclosure, less regulatory oversight and less transparency, as they did one after another during the vertical integration hearings, how could we possibly know whether this nebulous objective was achieved?

Third, Nowak’s piece is couched in the idea of being a “pragmatic” set of proposals, rather than one that dogmatically sticks to what he sees as the right or left of the political spectrum. Thus unlike the Howe Report’s suggestion to drop foreign ownership rules across the board, he argues that if an integrated telecom-media player wanted to sell to foreign investors, say a US telco like AT&T or Verizon or, just as likely, a private equity group, then Bell Media, for example, would have to sell off its television interests, e.g. CTV (and 28 specialty channels, 28 local television stations and 33 radio stations, although he doesn’t spell that out).

Quebecor would have to do the same with respect to TVA, for example, and its extensive holdings of newspapers and magazines. Rogers would do the same with CityTV, 17 specialty channels and stable of magazines, while Shaw would have to part with its assets in television (Global) and specialty channels (Corus). Fat chance that’ll happen, I’d say.

Moreover, because there is a much broader range of media involved than just telecoms and television due to the fact that the ‘big four’ vertically-integrated media companies (VIMCos) (Bell, Rogers, Shaw, Quebecor) also all have, in different combinations, extensive holdings in radio, newspapers and magazines, it’s not going to be so easy to simply hive of telecoms from television. Indeed, with newspapers and magazines swaddled in their own bundle of tax and investment incentives designed to shore up Canadian ownership, unravelling this stuff will be messy and complicated.

To my mind, this part of the proposal not might have been as fully thought through as it could have been. The C.D. Howe Institute report at least has the virtue of purity and clarity: drop the barriers on everything, telecom, broadcasting, media in general.

Fourth, a very significant problem and one that strikes deeply at whether we want to further allow our culture to be ‘securitized’ and ‘militarized’, US telecom-media-Internet companies and investment capital comes with a lot of national security baggage, particularly so in the telecoms-media-Internet space. Their operations are subject to the Patriot Act and US telecom providers and ISPs have shown a propensity to cooperate with national security agencies in a very murky zone outside the rule of law and without cover of authorized warrants in ways that subsequent courts have found illegal (here, here, here and here).

Microsoft’s acknowledgement in Britain this past week that all U.S. companies like it, whether they admit it or not, are subject to the Patriot Act, was the first real candid acknowledgement of the extra-territorial reach of U.S. national security policy when it comes to matters of the information infrastructure. As Gordon Frazer, managing director of Microsoft UK, admitted, data stored in the cloud was well within the reach of the PATRIOT Act.

The acknowledgement came in response to a question posed by ZdNet journalist, Zack Whittaker. Whittaker asked,

“Can Microsoft guarantee that EU-stored data, held in EU based datacenters, will not leave the European Economic Area under any circumstances — even under a request by the Patriot Act?”

No, Fraser explained, “Microsoft cannot provide those guarantees. Neither can any other company”.

Tying networks, servers, the Internet and everything else in Canada that runs through and on top of these facilities to US national security policy is to sell out fundamental principles regarding open media, transparency and a networked free press for the feint hope that we might achieve a modicum of more competition than we have now, and even then, not ‘real competition’, but rather the kind of newfangled Schumpeterian ‘innovation economics’ pushed by the C.D. Howe report.

But let’s move beyond the issue of foreign ownership to Nowak’s sanguine approach to vertical integration, an approach that I also find problematic. Why? Because he offers no evidence, lessons from history, or theory to support his case.

This is problematic because current evidence shows that concentration across the spectrum of telecom-media-Internet services in Canada is high, in absolute terms, and relative to comparable international standards. I offered a snapshot of this evidence in an easy-to-digest form in my Globe and Mail column last week.

I’ll repeat that here for convenience. In Canada, the ‘big 4 VIMcos’ — Bell, Shaw, Rogers, Quebecor (QMI) — account for:

  • 86 per cent of cable and satellite distribution market
  • 70 per cent of wireless revenues
  • 63 per cent of the wired telephone market
  • 54 per cent of Internet Service Provider revenues
  • 42 per cent of radio
  • 40 per cent of the television universe
  • 19 per cent of the newspaper and magazine markets
  • 61 per cent of total revenues from all of the above media sectors combined.

These numbers are not trumped up in the slightest, and in fact on the matter of the Internet and television services they are actually lower than those offered by the CRTC because of the different methodologies we use. Nowak doesn’t refute these numbers; he just doesn’t deal with them.

Theory tells us that media concentration, for which vertical integration is just one manifestation, embeds a bias for trouble in the ‘structure of the media’. Tim Wu, in the Master Switch, gets things right when he sets up the simple premise that it is important for regulators to curb the potential for companies to leverage power and resources across the three main layers of the telecom-media-Internet system: networks, content/applications and devices.

In theory, I think he is right and, based on the current and historical record, strong measures are needed to prevent companies from leveraging control over any one of these three layers — networks, content, devices — to curb competition and diversity in any other layer.

Nowak is clearly aware of the connection in this regard and he hopes that his first and second principles — ditching UBB and leaving ‘new media’/OTT untouched by regulators — will take care of vertical integration problems by removing the ability of Bell, QMI, Rogers and Shaw from using bandwidth caps and the pay-per Internet model to basically undermine the viability of rival online video distribution services (AppleTV, GoogleTV, Netflix, etc.) that they see as a threat to their own broadcast services. I think that these are important steps, but insufficient to deal with the full range of ways in which leverage across the three layers of the telecom-media-Internet system can be used to hogtie competitors and stifle the fullest range of voices and expression possible.

This is not just hypothetical potential, either, but rather documented by case after case of examples where either access to content or to networks is deployed in the strategic rivalry between less than a handful of players in oligopolistic markets. And when highly capitalized Netcos such as Bell own much smaller content companies like CTV, they have every incentive to use the latter to shore up the position of the former.

The recently completed vertical integration hearings at the CRTC were replete with example after example of this, from network companies such as Telus, SaskTel, MTS Allstream and Public Mobile as well as media content companies, whether the CBC or smaller production companies like Stornoway Productions.

These examples are not just limited to Canada either, but global in scope. They are behind the recent detailed regulatory framework put into place in the US by the FCC and Department of Justice that blessed the merger between Comcast and NBC-Universal, but not before taking comparatively stern steps, especially by Canadian standards, to ensure that NBC-Universal content could not be locked up or used by Comcast to the disadvantage of rivals in the broadcasting business. Furthermore, Comcast was also required to make its television and film content available to Internet competitors and ‘online video distributors’ (OVDs), a new category designed to cover services such as Netflix, Hulu, AppleTV, and so on, and to adhere to open Internet requirements generally.

Other countries such as Australia, Belgium, Britain and New Zealand have dealt with their own experience of networks being used to trample competition and diminish the range of voices and expression possible by going even further to set up rival ‘unbundled’ open networks (Australia) or by mandating ‘structural separation’ between incumbents’ networks (layer 1) and other layers (services, content, devices) in the system. In an important post yesterday, Bill St. Arnaud also talks about the development of networks that are essentially based on pick and choose access to capabilities and functionalities that respond flexibly and recursively to  user generated communication and information needs

The problem, thus, is one that is buttressed by evidence, by theory and by global experience. In light of this, robust measures rather than a sanguine approach to vertical integration is most definitely needed.

And to bring this to a close, the issues raised by vertical integration are not the consequence of innovative, new industrial arrangements or newfangled theory, but rather deeply entrenched historically and indeed endemic to situations where those who control the medium (networks) are also in a position to control the messages (content) flowing through those networks.

Thus, in the first decade of the 20th century in Canada, the Canadian Pacific Telegraph Co. and Great North Western Telegraph Co (the latter under ownership control of Western Union) had exclusive distribution rights for the Associated Press news services in Canada. As part and parcel of the telegraph companies’ bid to buttress their dominance in the highly lucrative telegraph business against a couple of smaller rival upstarts (the Dominion Telegraph Co in Canada and Postal Telegraph Co. in the US), the Canadian Pacific Tel. Co. and Western Union-backed Great North Western Tel. Co. offered one of their premier set of clients — newspapers across the country — access to the AP news service at a very cheap rate. In fact, they gave it away “free”. Sound familiar? (observant readers might also note the persistent recurrence of ‘network infrastructure duopolies’, too)

The AP news service was so cheap because instead of paying the cost for both the news service and the telegraph charges for delivering it from one place to another, Canadian Pacific Tel. Co. and Great North Western Tel Co only charged newspaper subscribers the ‘transmission costs’ for the AP service. The content, under such arrangements, was ‘free’. Of course, this was a real boon to established members of the press and to AP, while it also helped to stitch up the companies’ lock on the telegraph business.  It was a menace to rival news services and a competitive press or telegraph system, however.

The fly-in-the-ointment was that any competitor news service was at a huge disadvantage because its subscribers had to pay the ‘transmission costs’ plus the cost of the news service. Thus, when Winnipeg-based upstart, the Western Associated Press, tried to set up a rival Canadian news service to that of the Associated Press in 1907, it found it’s opportunities blocked at every step of the way because there was simply no way its subscribers could pay two costs — transmission and for the news service — while the AP service was essentially given away free after subscribing newspapers paid the telegraph companies their fees for distribution.

As one muckraking journalist W. F. Maclean wrote in the Toronto World,

“attempts on the part of public service companies [the telegraph companies] to muzzle free expression of opinion by whitholding privileges that are of general right cannot be too strongly condemned.”

The matter found its way before one of the long-lost predecessors to today’s CRTC, and one of the first regulatory bodies in the country, the Board of Railway Commissioners. Canadian Pacific Tel. Co. came out swinging, arguing that the BRC simply had no authority over the news services or to compel it to separate the costs of the news services from transmission costs.

Times were different then, it seems, and the BRC didn’t wilt one bit amidst the hot-heated rhetoric but blasted back that it was compelled by  law to insure that rates were “just and reasonable” and that unless transmission rates were separate, explicit and equitable “telegraph companies could put out of business every newsgathering agency that dared to enter the field of competition with them” (BRC, 1910, p. 275).

The upshot was separation of control over the wires from control over the news business. The regulator had all the authority in the world it needed to break up the ‘double headed news monopoly’.  It is a lesson that the CRTC and everybody else interested in ensuring that we oversee the creation of the most open media with the maximum range of voices and creative expression possible should pay close attention to.

Of course, the modalities of communication have changed tremendously and we now live in age of information abundance rather than scarcity, but as Tim Wu’s Master Switch and the mounting evidence before our very eyes attests, the basic logic of leveraging content and networks to confer advantages on one’s own operations whilst driving others into submission, if not out of business altogether, is alive and well.

This is a basic and easy-to-grasp point, and until we firmly implant it at the heart of the structure and regulation of the telecom-media-Internet system, we will continue to forgo the economic, political, cultural and personal benefits of the most open network media system possible and which further the goals and values that define a free and democratic society.

On that score, Nowak is right, these are not ‘left’ and ‘right’ issues. They are issues, principles and values of concern to all who take the precepts of liberal capitalist democracy seriously and who see in the status quo a condition that is badly lacking by even that non-ideological/utopian standard.

Source:

Board of Railway Commissioners (BRC). (1910). The Western Associated Press v. The Canadian Pacific Railway Company’s Telegraph and the Great Northwestern Telegraph Company of Canada. In Sessional papers of the Parliament of Canada. Ottawa: J. De Labroquerie Tache, Printers to the King’s Most Excellent Majesty.

Rubber Stamp or Real Questions?: CRTC Addresses Vertically Integrated Media for Next 2 Weeks

As I normally do, this post largely replicates my column for the Globe & Mail today with the addition of a few more links so that you can follow up on things that I refer to. I was at the opening of the hearings today and plan to be there a few more times this week and next. I’ll have more to report in a few days.

Altogether, seventy-eight different parties filed interventions with the CRTC. There are 50 scheduled to give presentations over the next two weeks. You can find all of the links to the briefs and studies filed with the CRTC by the companies and other intervenors here.

The CRTC’s hearings on vertical integration began Monday. For the next two weeks this means that the four major vertically-integrated media companies in Canada – Bell, Shaw, Rogers and Quebecor – could face tough questions about whether they have the clout to dominate telecom, media and Internet services across the country and, if so, what should be done to curb that potential?

The hearings were scheduled last November after the CRTC approved cable giant Shaw’s $2 billion take-over of bankrupt Canwest Media’s television assets (27 television stations, the Global network, 30 specialty cable and satellite channels). It was given added impetus after Bell’s $3.2 billion deal to acquire CTV and the A-channels was given the green light in March.

There is every reason to be skeptical about these hearings given that they are a classic case of “bolting the barn door after the horse has already left the stable”. It is also CRTC approvals all down the line that have allowed integrated media conglomerates to become the norm to begin with.

In the U.S., media conglomerates have become the exception (Comcast/NBC-Universal) after the disastrous AOL Time Warner merger, the collapse of the ‘old’ AT&T, break-up of Viacom-CBC, and so on. Indeed, vertical integration is in retreat in almost every other developed capitalist democracy.

We should also remember that Bell attempted – and failed– to extend its reach from the medium to the message from 2000 to 2006 by taking-over CTV, CHUM, and the Globe & Mail. The fate of Canwest was worse. Yet, we seem to be stuck in a time warp, with CEOs, Cabinet Ministers and the CRTC singing in unison that media conglomerates are all the rage, for much the same reason that they did back in the 1990s.

Be that as it may, Bell, Shaw, Rogers and Quebecor Media Inc. (QMI) do exemplify the trend in Canada. They are the ‘big four’ and the hearings are all about them. They stand at the apex of a set of telecom, media and Internet markets that have grown greatly from $42 billion in revenue in 1998 to $73 billion today (in constant 2010$).

The real issues, however, are not about the sheer size of the ‘big four’, but their market power. Between them, Bell, Shaw, Rogers and QMI control:

  • 86 percent of cable and satellite distribution
  • 70 percent of wireless revenues
  • 63 percent of the wired telephone market
  • 54 percent of Internet Service Provider revenues
  • 42 percent of radio
  • 40 percent of the television universe
  • 19 percent of the newspaper and magazine markets
  • 61 percent of total revenues from all of the above media sectors combined.

That, by any standard measure of concentration, constitutes a highly concentrated market.

The fact that Bell, Shaw, Rogers and Quebecor stand as gateways to so much raises concerns that they will give undue preference to their own services rather than serve as open gateways to the maximum range of entertainment, communication, knowledge and news possible. In this regard, more is a stake than anti-competitive behaviour, because the range of expression available in a society is a barometer of the quality of freedom of expression and democracy in it. None of the ‘big four’ waxes much about this, however, insisting as they do that the laws of normal economics should be the only measuring rod of value.

To be sure, the ‘big four’ are hardly the only players in town. There is also an important second tier of a dozen or so smaller players that have stuck to their knitting in just one or two media: Telus, MTS, SaskTel, Cogeco, Bragg/Eastlink, the CBC, Astral, Postmedia, Transcontinental, Power Corp, Thomson/Globe & Mail, Torstar and Brunswick News. Then there is a third tier made up of the thousands who fill in the nooks and crannies of the media universe: Wikipedia, the Mark, media workers, star journalists, opinion leaders, blogs, your best friend, personal websites and so on.

The position of all these parties turns on where they sit. To the ‘big four’, to the extent that there’s ever been a ‘golden age’ of media, the picture just presented is it. Thousands upon thousands of actors, big and small, making it nearly impossible for any single entity to exert excess influence over it all.

According to Bell’s hired-gun, University of Alberta economics professor, Jeffrey Church, “vertical integration is beneficial for consumers”. According to him and other briefs filed by the big four, consolidation is good for consumers and Canada because:

  • it reflects efficiencies, spurs competitive innovation and is a global trend.
  • telecom, media and Internet markets in Canada are “highly competitive”.
  • our ‘small media economy’ needs a few deep-pocketed ‘national champions’ to compete globally and invest heavily in innovation at home.
  • instances of harm are mostly imaginary and few and far between.
  • it helps keep “consumers . . . within the regulated system” (Shaw, p. 4)

The collapse of media conglomerates elsewhere, the evidence of market power above, and the fact that Canada has the eight largest media economy in the world, after France and Italy, and just before South Korea and Spain, should raise an eyebrow or two about claims one through three. Claim four is false (see below), and the last one repugnant.

Many in the second tier and ‘nooks and crannies’ of the media also challenge these claims. Telus, for instance, argues that the harms are real, not prospective. Buying program rights, for example, from CTV, the Comedy Network, TSN and two-dozen other channels, it argues, became a whole lot harder, and more expensive, after Bell Media took them over.

Access, a cooperatively run cable-system-cum-Internet provider in Saskatchewan raises similar concerns. Those that have content, but not distribution networks – Astral, CBC, media workers – make a similar case, but point to how control over networks rather than programming rights can cause real world harm.

Periodic squabbles between Quebecor and Bell highlight much the same point, with Quebecor’s SunTV hobbled in equal measure by self-inflicted wounds and its inability to sign an acceptable ‘contract for carriage’ with Bell. Just last week, the CRTC declared that Bell’s decision to move Shaw’s ‘Cave TV’ service into the upper stratosphere of its offerings conferred an undue preference on channels Bell owned, and ordered the change to be reversed. If these pitched Goliath versus Goliath battles are regular occurrences, we can only imagine the problems that David – the little guy – is having.

While Bell, Shaw, Rogers and QMI operate their own online video services, they assert that congestion problems require them to manage traffic through usage-based billing and bandwidth caps, although such measures cripple rival online video distributors such as Netflix, Apple TV, GoogleTV, and so on. Netflix, for instance, downgrades its services relative to standards elsewhere, and bitterly complains about having to do so, all the time. Smart and savvy telecom guys like Jean-Francois Mezei and rabble-rousing groups like Open Media are convinced that such practices are a deadweight on creativity, innovation, freedom of expression and an open internet.

For the public, the practices just listed and networks that are under-developed and over-priced by global standards constitute subtle yet pervasive constraints on how we use and experience the emerging networked digital media. Stubbornly, Canadians lean against the wind and remain heavy Internet users, downloading and uploading to and from Youtube, virtuously contributing to Wikipedia, and watching porn at rates that rank at the very top by global standards.

All this, too, despite the fact that, as Shaw’s brief repeatedly states, the industry and regulators are one when it comes to the goal of keeping “consumers in the existing broadcasting system”. We can only imagine what things might be like if they strove for the maximum freedom of expression possible, rather than only “as much diversity as practicable”, as the CRTC put it in its 2008 Diversity of Voices decision.

Ultimately, the problems of fully-integrated media conglomerates are congenital, not imaginary. They run hand-in-hand with media history the world over and until we accept that, we’ll have to continue settling for scraps off the table as regulators let the ‘big four’, I mean, the market rip.

“The Death of the Music Industry” in Canada and other Copyright Myths

The following is my column for the Globe and Mail today, with the addition of a few links here and there. I am fully alert to the fact that this is a very, very touchy subject, not least because musicians and artists are at the centre of the debate, but have been, other than a few megastars, the least to benefit financially from either conditions in the past, or those that prevail today.

Those interested in the topic might find my previous two posts of interests in this regard: the first one looks at the ‘methods’ involved in assessing the state of the music industry. It ends with the crucial proviso that we can collect “all the evidence in the world but still be morally stupid because you’ve thrown the artists and musicians amongst us under the bus”. In other words, this is not just about fun and games, but real people trying to make a real living.

That said, however, I am skeptical of the claims typically made on behalf the ‘music industry’, and equally circumspect that the interests of musicians are interchangeable with those of ‘the suits’ in the business. For those who want to hear something similar from somebody ‘inside the biz’, and who really knows his stuff, look at Bob Lefsetz’s newsletter.

Thanks to Bob, I’m listening to two great bands right now: Fleet Foxes and Mumford & Sons. It’s all about the music, being good, nay great, at what you do, and crucially the fans, those who adore your stuff and rave about you to others.

The second of these two posts sets out the idea that the music industry was in many fundamental ways the offspring of rivalry between the telegraph giant Western Union and then snarly upstart Bell Telephone Company in the late-1870s and 1880s. If rivalry between ‘network technologies’ gave birth to the music industry in the late-19th century, I think it is unlikely that ‘network technologies’ like the Internet and P2P are going to lead to their demise in the 21st century. History, in short, may be a useful and sturdy guide for thinking through the issues now in front of us.

Now, I’ll turn to the slightly revised/extended version of my column from today.

For more than a decade, the music industry in Canada, and globally, has been cast as being in dire straits — a portent of things to come for all media in the ‘digital age’, unless copyright laws are updated soon to combat illegal downloading.

The notoriety of file-sharing networks from Napster in the late-1990s, to Pirate Bay and the meting out of stiff punishment to Limewire is legendary. New sites emerge as swiftly as old ones are prosecuted out of business, fueling perceptions that the music industry is under siege.

Many claim this will only get worse as broadband Internet becomes a taken-for-granted fixture of everyday life. Copyright legislation has been proposed three times since 2005 by Conservative and Liberal governments alike.

Last year’s effort, The Copyright Modernization Act (Bill C-32), died when the election was called. It’ll be back. The Conservative’s election manifesto said it would be.

The Canadian Recording Industry Association (CRIA), backed by the Recording Industry Association of America (RIAA) and International Federation of Phonographic Industries (IFPI), argues that legislation delayed is justice denied. While Parliament dithers, they say, musicians and the music industry are getting slaughtered.

According to the IFPI, “overall music sales fell by around 30 per cent between 2004 and 2009” worldwide. The trend in Canada appears even worse, with “recorded music sales” plunging to a third of what they were in 2004, as the following figure shows.

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

Source: Statistics Canada; PriceWaterhouseCooper.

But stop the music. What if this image of a beleaguered music industry is badly flawed?

Cont’d on Page 2 . . . . . . . .

Pages: 1 2

Politics, the Press and Bad News for Democracy: Newspaper Endorsements Update on Last Day Before Election

For the last three days we’ve been playing the politics and the press game, counting up the editorial endorsements for Prime Minister made by the major daily newspapers across the country.

I’ve been focusing on 61 daily newspapers that belong to one of the nine main newspaper ownership groups in Canada that account for roughly 95 percent of the newspaper industry revenues. Today I added another newspaper to the list, the Winnipeg Free Press.

This means that we now can speak of the 10 largest newspaper groups in Canada. Our “sample” in other words now accounts for roughly 97 percent of the newspaper business in Canada.

The basic idea behind the free press is that it is suppose to reflect a plurality of a society’s voices and political forces. If that is true, shouldn’t the range of editorial opinion in the press come at least somewhat close to matching up with public opinion?

The news that I’ve delivered so far has not been good. On day one, I showed that out of the four editorial endorsements made by that time — one by the Globe and Mail and three others by members of the Post Media Group (National PostTimes Colonist and the The Province) – all picked Harper as their man. By yesterday, the number of endorsements had grown to 13, with 12 plunking down foursquare behind Harper.

In other words, despite only having support of roughly a third of Canadian citizens, 92% of editorial opinion in the press in Canada were stumping for Harper. Something was definitely out of whack, but perhaps there was hope because conceivably the remaining papers could come along to save the day, singing the praises of Ignatieff, Layton, Duceppe, or May in some way that roughly corresponded with the distribution of votes and voices in Canada.

Sorry, that hasn’t happened. For those hoping that somehow the editorial pages might finally line up with popular sensibilities and the disparate political forces that make up the fabric and culture of democracy in Canada, the bad news is now really bad news.

By today, Sunday before the election, the number of endorsements has leapt to 31. If the ‘editorial voices’ of Canada’s main daily newspapers roughly corresponded to people’s views based on a mixture of current opinion polls and the last election, then we would expect something like, give or take a few, 10 to 12 endorsements for the CPC and Harper, just under a quarter to line up behind either Layton and the NDP or Ignatieff and the Liberals, and the remainder to be split across the Greens and Bloc.

So, where do things now stand? The table below shows the results

Parent Group & Titles Mrkt. Share ($ 2009) Dailies / Group CPC Lib. NDP Just Vote/ Multiple Parties
Post Media 27% 12 10 1
Sun Media 25.9 18 6 3
Toronto Star 13.9 1 1
Globe & Mail 7.2 1 1
Power Corp/ Gesca 9.8 7 3
Winnipeg Free Press 1 3.5 1
Transcontl. Media 3.2 11 1 2
Glacial 2.9 6 1
Halifax Herald 2.2 1 1
Brunswick News 2.1 4 1
10 Groups Total Tally  62 Titles 97.5% Market Share 21  0 1 10

Layton luckily picked up an endorsement from the Toronto Star. He and the NDP also got some mixed blessings among the papers of the La Presse group — which stands out as the most representative among the papers across the country, with papers in its group such as La Presse, Le Soleil and Le Droit backing a mix of candidates from all of the parties.

Counting just the endorsements of specific candidates for PM (Harper, Layton, Ignatieff, Duceppe, May), we find a stunning 21 out of 22 backing Harper. In other words, 95 percent of editorial opinion has solidified behind Harper. This is almost three times his standing in the public mind, and the last election.

The newspapers aligned with the Sun Media Group (Quebecor Media Inc, or QMI) and the re-incarnated Post Media Group have engaged in ‘bloc endorsements’. That they have done so is an indictment of editors who have sold their souls, shilling for owners one by one right across the country rather than exercising any editorial autonomy and freedom of their own minds. Instead, they take their marching orders from Montreal and Toronto. Readers deserve better.

This is also an indictment of the heavily concentrated nature of the newspaper and media business in Canada, with just two entities — QMI and Post Media — accounting for over half of the newspaper industry.

To be sure, their grip is not iron clad, and within both groups a few smaller papers like QMI’s Barrie Examiner, The Brockville Recorder and Times and The St. Catharines Standard as well as the Post Media’s Regina Leader-Post, appear to have been not quite so willing to swallow their master’s line. Instead, each of these small town papers has chosen to write ‘get out and vote for somebody’, civic-duty editorials. More than half of the small city newspapers in places like Nainamo, Sault St. Marie, Kenora, Dawson Creek, and so on offered no editorial endorsements at all.

The editorials of the small city papers listed above and others like them are so important because at least they express an independent local editorial voice, and are more varied than unison of voices that have been strung through most of the big city papers.

But make no mistake that these are minor papers in the QMI and Post Media stables. In Vancouver, Calgary, Edmonton, Saskatoon, Toronto, Montreal (but not Halifax and much of the Maritimes) and other major cities right across the country where these groups have dailies, editors are stumping for Harper. Even single major newspapers such at the Globe and Mail and the Winnipeg Free Press have weighed in strongly on the CPC side of the scale in Canada’s biggest cities and nation-wide.

This is not a free press. This is bad for democracy. The fact that a shackled press now stands to an extraordinary degree singing their praises for Dear Leader S. Harper from the same hymn sheet should give us pause for thought and reflection.

Even though I think that this is a problem of the highest order, let me close with three caveats that I think might lead us to a somewhat happier place:

First, opinions pronounced from the bully pulpit of the editorial page on behalf of media owners comes across as much more of phalanx of congealed opinion than the rest of the pages of the press. In other words, the solidity of editorial opinion is not matched to the same degree by journalistic opinion which, while still constrained, is of a broader range.

Second, journalists, and maybe even editors, are people too. The Globe and Mail, to its credit, seems to be doing some soul searching around these issues. Yesterday it published an exceptionally strong condemnation of its own editorial endorsement by Concordia University journalism professor Matthew Hays.

Today, it has also opened up the pages as well to deeper reflections from readers, while acknowledging the dominantly negative response to its choice. Despite looking like the press of a banana republic from some angles, the editorial pages at the overwhelming majority of Canada’s newspapers that are now serving as the mouthpiece of the CPC — Conservative Party of Canada — are not the same as the Xinhua News Agency and the Communist Party of China.

Third, the fact that editorial opinion is so out-of-step with popular opinion reveals the tenacity and autonomy of the public mind. Our minds are not blank slates upon which editors stamp their views.  That, however, does not excuse the gap one wit, but rather should make us wonder what a real free press would look like, one that actually did simultaneously draw from the public well while also contributing to it.

Tomorrow’s a big day. Let’s change things around so that we can address some of the bigger issues at hand, including some of those relayed here in the past three days.

Oh yes, for the super-duper, updated paper-by-paper breakdown of each newspaper’s editorial stance (with links to the editorial), please see Editorial endorsements Updated (May 1).

Angels to Telus: Don’t be Evil

A reader, Sean, sent me an email yesterday, two actually and a couple of questions. They reminded me of something, and then inspired me to read and write. Thanks Sean.

The immediate point was that Shaw Media and Telus are about to ramp up bandwidth caps and UBB — the cornerstones of the the pay-per Internet model — in western Canada. To be sure, people in Alberta and BC have already had lots of this model already.

However, while both Shaw and Telus have had ‘bandwidth caps’ and UBB on the books, they have not used them. That looks set to change.

Shaw appears to be first off the mark in wanting to kick these into action, as it told, again, those pesky investment bankers who are now hovering around companies because it is the ‘end of quarter’ reporting season of its plans. As Shaw stated, it has the market power to impose the pay-per pricing model and supposedly the consent of its users. I don’t doubt the former, but the latter claim is circumspect.

Shaw has come full circle in the past sixth months after acquiring Global TV and has begun to sing a new gospel from the top of its lungs in favour of regulating OVP (online video providers) such as Apple TV, Google, Netflix, etc..

Telus, too, has had pretty tough bandwidth caps and UBB on its books.  It’s cost per ‘extra’ GB when going over the cap is a punitive $2-5. Telus infamously shut down access over its ISP to the website “Voices of Change”, a site run by the Telecommunication Workers Union, during a strike in 2005.

It has been no angel. However, I am also reminded that amongst the ‘big six’ — Bell, Shaw, Rogers, Quebecor, Telus and Cogeco — Telus is something of an exception, or at least has a few characteristics that distinguish it from the others and put it on, as my friend Marc-Andre put it, “the side of the angels”. We should probably give credit where credit is due.

First, we must remember that in a situation where Canada stands unique, if not completely alone, in the universal coverage of ‘bandwidth caps’ and pay-per GB ‘excess usage charges’, Telus has not yet made the move to implement these measures and might yet be dissuaded. So, for what that’s worth: Telus, please don’t be evil.

Second, on some key ‘structural issues’ that go to the heart of the organization of the network media in Canada, Telus stands alone amongst the ‘big six’ for not following the path of ‘empire’ by becoming vertically-integrated with a dominant broadcaster.  This means that its voice has been absent among all of the others who have called in unison for the CRTC to regulate online video providers.

Third, Telus recently told the Standing Committee on Canadian Heritage  in no uncertain terms that it opposed the Shaw-Global TV and Bell-CTV amalgmations, respectively. In sum, Telus has not embraced the shangri-la of ‘media convergence’.

That, however, does not mean that it is not in the TV business. It serves as distributor of Bell satellite TV in the west. It has its own IPTV service, mobile tv channels, and so forth. It  needs programs and ‘content’ for its IPTV service, mobile tv channels, and so forth as well, and therein lies a problem.

Telus already claims to be having a lot of difficulty getting the programming that it wants on reasonable terms. This is more grounds for its opposition to vertical integration still. For that reason, Telus will stake out a unique stance at the upcoming CRTC hearings on vertical integration in being the only major incumbent likely to argue on behalf of some form of structural separation. This is a good thing and, again, Telus is on the side of the angel

Having just been blessed by the CRTC (and Competition Bureau) over the past six months, it is hardly likely that the CRTC will do much more than tinker around the edges with vertical integration. The fact that Industry Minister Tony Clement has already voiced his view that vertical integration is the way of the future and structural separation irresponsible only reinforces the impression.

All of this reminds me that the commitments to open networks is not about paying homage to abstract principles but to a concrete trilogy of real considerations: open networks, open sources and open societies. At the present conjuncture, each is under severe pressure, but yet to be bowed.

While no angel, Telus is on the side of the good with respect to open networks and should be applauded to the extent that it is. In terms of open source, the approach helps generate ideas, examination and conversation like Sean’s email did yesterday. Several others have written lately too, so thanks, but I would also like to suggest that it is best to raise issues here. That way others can weigh in, and go off on their own, too.

These are also the things upon which an open society — the ultimate endpoint of the trilogy to begin with — depends.  There are important questions about just how far Canada has fallen from that standard.

We have corporate disclosure rules that pale alongside those in the United States. Not just the major network media conglomerates, but publicly-traded corporations in Canada generally disgorge far less information to the CRTC and Competition Bureau than their counterparts in the US are required to do by the FCC and Department of Justice.

The Harper Government has clamped down on information flows and the general tenor it has set has simultaneously fortified and calcified the historical proclivity towards information secrecy in Canada relative to other capitalist democracies. Without a full-commitment to open societies and open sources and open networks, none of these elements can flourish on their own. It is a thought worth bearing in mind, I think.

The Great Struggle for the Soul of the Internet and Network Media in Canada (Part 1)

A strange confluence of forces has just made the push to have Netflix and other over-the-top video distributors (OVDs) such as Amazon, Apple and Google regulated by the rules of the Broadcasting Act a whole lot stronger.

Events kicked into high gear this week when Astral Media renewed calls for the CRTC to regulate OVDs just like any other broadcaster. Bell, Rogers and Shaw quickly endorsed the call.

Astral, Bell and other incumbents are coming under increased scrutiny from investment bankers worried that OVDs could wreck their bottom line and this seems to have increased their resolve to thwart would be rivals. Moody’s – the investment ratings agency – also recently raised such concerns, while casting doubt on the dominant integrated media companies’ — Bell CTV, Shaw Global (Corus), Rogers City TV and Quebecor Media – decisions to acquire ever bigger stakes in the television business.

When investment bankers worry, CEOs tremble and Netflix as well as the open Internet generally could end up paying the price.

The Canadian Media Production Association‘s recent appeal to the CRTC to regulate Netflix under the Broadcasting Act added to the full court push, as did the Supreme Court‘s decision last month to hear a case from various groups representing media workers who want ISPs as well as Netflix, Apple, Google, and so on to be regulated like broadcasters.

Lastly, a Standing Committee on Canadian Heritage report published last month and the CRTC’s upcoming reviews of its unpopular wholesale UBB decision and vertical integration have also brought the issues to a head.

These issues are not new. In fact, in its famous “new media” decision in 1999, the CRTC categorically asserted its authority to regulate broadcasting services delivered over the Internet, but decided to stand on the sidelines while such services were in their infancy.

The vertically-integrated, dominant telecom, cable and internet service providers love the approach because it has given them a green light to develop new markets while letting them off the hook with respect to issues about vertical integration, anti-competitive behavior, Cancon requirements and funding commitments in the emerging digital media universe.

The CRTC’s decision to stand on the sidelines has no doubt played well to the ‘hands-off-the-Internet’ crowd, as well. The truth is, however, that this has only postponed the day of reckoning.

That day of reckoning has been moving ever closer since broadcasters finally made a concerted effort to launch substantial video portals in 2007/2008 (e.g., CBC.ca, CTV.ca, GlobalTV.com), while offering some programs through Apple iTunes and YouTube. Simultaneously, they have  fought tooth and nail to defend their existing markets and expand into new ones, while using a well-stocked arsenal of measures to block rival OVDs such as Netflix. Six such tactics stand out:

First, bandwidth throttling was used by Bell in 2008 to cripple the CBC’s attempt to use BitTorrent to distribute an episode of Canada’s Next Great Prime Minister, while today Rogers’ throttling of P2P applications causes no end of frustration for those who play World of Warcraft online.

Second, ‘bandwidth caps’ and Usage-Based Billing are being used by all of the major ISPs to deter online video use. Netflix has deliberately degraded the quality of its service to help subscribers avoid these punitive and restrictive measures as a result.

Third, the incumbents do not apply the same measures to their own services. Bell’s chief regulatory officer, Mirko Bibic, recently provided a great example of the tortured logic used to justify such treatment when he argued that, despite using the same network facilities, Bell’s OVD service is not a ‘true’ Internet-based service, while Netflix is.

Fourth, the incumbent telecom and cable companies’ refusal to interconnect their systems with others has blocked large OVDs and Internet companies such as Amazon, Apple, eBay, Facebook, Google, and Netflix from bringing their ‘content distribution networks’ as close to users as possible.

Fifth, Canada’s integrated multimedia conglomerates have used a combination of program rights, geo-gating and digital rights management (DRM) technologies and a smattering of deals with Apple and Youtube to shore up their control over access to our ‘national media market’. The Rogers, Bells, Shaws, Quebecors, and so on of this country do not like the prospect of having to compete for each and every new digital market with newcomers one bit; nor do cable providers in the United States.

As a recent New York Time’s article observes, Time Warner and Cablevision are locked in battle with Viacom (MTV, VH1, etc.) and Scripps Howard (HGTV, Food Network, etc.), with the cable companies arguing that the rights they have acquired to deliver channels to audiences’ tv sets also lets them beam those same channels over the Internet to iPads and iPhones. Viacom and Scripps Howard vehemently disagree.

In the incumbents’ “perfect world”, they would simply fold the OVD market into the suite of rights they acquire for traditional television markets without having to compete with Netflix at all. If they had it their way, the Internet would just be bolted on to the side of their lucrative television business.

Netflix strengthens the hands of content creators and rights holders on both sides of the border relative to traditional broadcasters. In Canada, this battle over the essential resources of the media economy — networks, money and copyrights — are concealed by a fog of sanctimonious rhetoric about cultural policy led by vested interests.

Seen from the broadcaster’s point of view, Netflix’s recent acquisition of new drama series and its deal with Paramount Studios for online video distribution are just further evidence that the company is steadily encroaching on their turf — one more reason why it should be quickly brought to heel. Even if we thought for a moment that regulating Neflix and OVDs was a good idea, what should we do as Hollywood experiments with using Facebook as a new ‘window’ for blockbusters such as The Dark Knight, Philosopher’s Stone, Yogi Bear, and Chamber of Secrets, among others?

Do we regulate Facebook as a broadcaster too?  I’m all for attending to that company’s privacy issues and other mattters, but Facebook and broadcasting? Obviously, there is no shortage of slippery slopes and pitfalls along the incumbents’ garden path.

The sixth defensive weapon in the incumbent’s bid to hobble new rivals is their coordinated push for government regulation. Perhaps the award for sharpest U-turn on these issues goes to Shaw after it acquired Global TV in the fall of 2010.

After a decade of opposition to the CRTC in general and to the regulation of the Internet specifically, Shaw President Peter Bissonnette laid out the new gospel in front of the Canadian Heritage Committee referred to earlier: “If there’s one message we want to leave with you . . . it is that over-the-top competitors have a free ride. They’re aggregators of broadcasting. They provide broadcasting services in Canada.” They should be regulated like broadcasters.

For anybody still under the illusion that the Internet is unregulable, Shaw and others point to extensive regulatory tools that they’d like to see pressed into service: e.g. ISP levies; extending Section 19 Income Tax Act Exemptions so that adverting on Canadian Internet sites can be written off just as it is for Canadian-owned newspapers, magazines and broadcasters; Canadian Media Fund contributions; Cancon Quotas, etc.

Acceding to the full sweep of this agenda would not just wreck Netflix’s ‘business model’, it would destroy the future of the Internet. To stem the tide, we need to understand just how wildly out of synch the ‘sky-is-falling’ rhetoric is with the fact that the television industry is more lucrative then ever. We also might wonder if Netflix, Apple, Google, Amazon, et. al. might agree to adding some water to their wine in return for a quick stop being put to the discriminatory practices that now hobble their activities in Canada?

Anything But Digital: Politics, Elections and Four ‘Traditional Media’ Issues

It’s fine to talk about the Internet and all things digital. There’s no shortage of fundamental issues whose resolution in the near future will set things on a fairly fixed path for a long time to come. Nonetheless, it’s important to keep our eye on ‘traditional media’, too, and in the context of the current Canadian federal election, four such issues stand out in particular.  They are in no special order of importance:

(1) the Broadcast Consortium consisting of CTV, Global and TVA and CBC/Radio-Canada — that sets the terms for the leadership debates.  Their capacity to set the rules of debate arguably has a strong influence on national elections.

The exclusion of Elizabeth May on the basis of electoral seats held (none) makes some sense from a technical and procedural view of representative democracy; from a broader view of her significance as the embodiment of important stream in the political culture of Canada, the decision to exclude her is a no-brainer.

There is strong evidence of media concentration in Canada (see here). That less than a handful of the dominant players, and this applies just as much to the CBC as to the commercial media organizations, are able to set the terms of debate from their position at the centre of the media universe is problematic.

Off the top of my hat, I would suggest two things might help to turn things around: first, that the Broadcast Consortium be revamped as a “Network Media Consortium” (NWC) consisting of a wider array of players of a more diverse type. This might include, for example, significant online websites such as the Tyee, for example, prominent Canadian blogs, web journalists, a facebook page, etc. The structural diversity of the “NWC” is meant to better represent the structural diversity of the media environment, and the political culture of the country.

Next, we need new rules of engagement that fit our times. A couple of academics from, say, the Canadian Media Research Consortium, a political science, sociology or philosophy professor or two, and a couple of Internet-savvy people who know the politics of digital media well might all contribute to such a make-over. Among the latter, I’m thinking that someone such as Ron Diebert of the Citizen Lab at the UofT might fit the bill (as would many others).

Diebert and his colleague are experts on the worldwide political conditions of the Internet and their most recent book, Access Controlled: The Shaping of Power, Rights, and Rule in Cyberspace has been widely praised. The ultra conservative, cyber-libertarian Technology Liberation Front called it “one of the 10 best info-tech policy books of the year” and “. . . essential reading for anyone interested in studying the methods governments are using globally to stifle online expression and dissent”. That not the way I see it, but fine. The broad appeal of Diebert’s expertise would make him or others like him ideal candidates to help steer efforts to create a revamped Network Media Consortium.

(2) The second big issue that is near the surface in this election is the future of the CBC.  In my last post, I indicated that the Conservative Party election platform is mum on the CBC and that could be construed as a good or bad thing.

This might be a good thing because at least it is not singled out to have its budget, or further yet, remit and even right to exist, slashed.  Things could have been a lot worse. Just this week, as my good friend Peter Thompson at the University of Wellington tells me, the New Zealand Government announced that its closing down NZTV 7. The equivalent in Canada would be eliminating the CBC News Network — not the main channel, but one that supplements its offerings in light of changes in the media environment, but a move disparaged by the commercial players as encroaching on their turf.

Maybe this is just a smokescreen, though. Launching a scorched earth policy for the CBC would be too contentious during an election. Is holding back on just such a move part of Harpen’s ‘hidden agenda’?

Besides just staying-the-course or slashing and burning, however, there’s a third option: a strong commitment to a strong role for the CBC as a public service media provider that is central to the digital media ecology, morphing in line with changes in the overall environment in which it and our culture more generally are situated. Perhaps it could start by offering a more expansive digital archive of television programs along the lines already being pursued by the National Film Board (NFB) in Canada and by the BBC through its iPlayer service in the UK — both of which have had very considerable success.

(3) the third big issue stems from the volley of charges that the CBC is the hand-maiden of the Liberal Party. The claims have been trumpeted loudest by various arms of the Quebecor Media group (TVA, Sun TV, Sun Newspapers, Le Journal de Quebec, Le Journal de Montreal, etc.) — the mouthpiece of the Harper Government in Quebec.

Quebecor’s charges look like a more apt description of itself than the CBC. Its board of directors  provides a comfortable perch for former Prime Minister Mulroney as well as the former Conservative appointed CRTC Commissioners (Francoise Bertrand). The sprawling, bloated, debt addled media conglomerate is ruled with an iron fist by the marxist-cum-media oligarch Karl Pierre Péladeau. The company is far closer to the reigning centre of political power than the CBC would (and should) ever be.

Its current attempt to revamp its money-losing Sun TV in Toronto into a viable national cable and satellite TV ‘brand’ is being spearheaded by none other than PM Harper’s recent spin doctor, Kory Teneycke. The outfit proudly styles itself as FNN (Fox News North).

This does not necessarily mean that the sky is falling, but it does mean that Quebecor’s charges are a better reflection of itself than the CBC. As for its claims to representing a kind of working class populism, before we buy into that line we might want to ask the workers at the Le Journal de Quebec and Le Journal de Montreal, respectively, who were locked-out (illegally) and ultimately cut loose over the past five or so years just so something that looks like a contract could be obtained.

(4) News Consumption and its not all doom and gloom (but some of it is).  Two important studies came out this week, each pointing in somewhat opposite directions. One by the Media Research Consortium found that Canadians are over-whelmingly not agreeable to paying for news. As the authors state, “Canadians are more willing to pay for music, games, movies, e-books and even ringtones online than they are to pay for news . . . ” (p. 2). If news is vital to democracy, that doesn’t sound very hopeful.

The annual NADbank readership study also came out.  However, it presented a rosier view when it comes to readership and the press. More people are reading more newspapers. You have to follow their logic carefully to reach their conclusion, but it is safe to say that, at least in terms of ‘attention to news’, there is no ‘crisis’ per se. This could be good for democracy.

Obviously, there is a ton to say on each of these things.  For the time being, though, I thought it was time to put a few things on the map that are out there, but perhaps not quite drawn altogether as they might be.

Bandwidth Caps, Bankers and the Canadian Pay-Per Internet Model

Not being the quickest guy with numbers, I often wonder just how much of what we can do on the Internet before hitting the Rogers ‘Bandwith Cap” wall that comes with my service? Using Rogers high-speed express service, I get 60GB per month, after which I will have to fork out $2 per GB.

I mean, first of all, just having to even think about this, let alone having to calculate it is a pain in the neck.  The Globe and Mail had a good break-down the other day of how much bandwidth is involved in downloading email, music files, tv programs and movies. Here’s its graphic.

So, I could send 4 million emails or download 8,570 songs, 37.5 television shows (hd) and 19 movies (hd).  Even if I’m a mad, crazy emailer or music downloader, I’d unlikely hit the limit. But, then again, what if I had a mass distribution list for the eco-feminist news letter I send out to 2,000 people every month, or to my red meat eaters club?

What if I play World of Warcraft? If you think I’m being funny, well, I am trying. But take a look at Teresa Murphy’s letter to the CRTC outlining how Rogers throttles World of Warcraft players. The problem is that restrictions and limits on how we use the Internet are popping up all over the place and for everyone, not just the villified ‘bandwidth hogs’.

The limits are also impinging on how Netflix operates in Canada as well. On March 28 2011, Netflix set the default quality of its video streaming service in Canada to low to help people conserve bandwidth.

In other words, Netflix has deliberately degraded it services relative to what it offers in the U.S. in response to the restrictive conditions imposed by the ‘big six ISPs’ in this country: Bell, Telus, Shaw, Rogers, Quebecor and Cogeco.  Users do, however, have a choice and can still select from three settings:

  1. “Good” – The default setting with good picture quality and lowest data use per hour (about 0.3 GBytes/hour)
  2. “Better” – Better picture quality and medium data use per hour (about 0.7 GBytes/hour)
  3. “Best” – Best picture quality and highest date use per hour (generally about 1.0 GBytes/hour – or up to 2.3 GBytes/hour when streaming HD content)

Tying up the Internet and its users in a thicket of technical and economic restrictions, however, could come back to bite the big 6 in the ass. For that too happen, however, we probably shouldn’t look to the CRTC or to the Harper Government.

The CRTC has already brazenly said that the review sparked by the furor over its January 25, 2011 UBB decision will be narrowly focused on that decision alone. In doing so, it ruled out a critical public examination of the ‘long march’ to the pay-per, provider controlled Internet model in Canada.

Industry Minister Tony Clement is a little more ambivalent on the matter. He offered no rebuke to the CRTC for stubbornly sticking to its myopic focus. He did, however, rebuke Bell’s attempt to replace its wholesale UBB with a new Aggregate Volume Pricing Model.

There are two more interesting areas that hold better prospects of turning this wreck of a digital media policy around, and both lead straight not to the consumer Internet market but rather to the capital investment market.

In a study by the New York branch of the investment bank, Credit Suisse, the author stated that the added cost of using over-the-top video services such as Netflix, AppleTV, etc. due to ‘excess usage charges’ (but which the “big six” exempt their own video/tv services from) could result in people cutting back on their cable and satellite bills. They could do that either by subscribing to a cheaper tier of channels, or dumping cable and satellite TV altogether.

The latter is improbable, at least in any great number, anytime soon.  The idea of cutting back to a cheaper tier of cable channels while cobbling together a range of over-the-top services such as Netflix, Boxee, etc., however, may have more legs. That scares the investment bankers because cheaper tiers mean lower ARPUs (average revenue per user), in the lingo, and that is one of the holy grails for figuring out how much companies are worth on the stock market, i.e. their market capitalization.

The UBB uproar has also spawned fears in the capital investment markets in Canada that Bell, for one, is taking seriously. Thus, during a Conference Call on February 10 2011 with Canada’s leading investment bankers, Jeff Fan of Scotia Capital posed the following question to George Cope, BCE’s CEO:

Yes, good morning.  Thanks very much.  I want to ask you guys about the broadband situation that’s going on.  A lot of  investors are obviously quite concerned about what’s going on on the regulatory front with usage-based billing so perhaps can you give us a sense of what . . . the impact of this could be should the government move forward on a more Draconian basis? (emphasis added, see page 12)

Fan was not alone in raising the issue. And Cope went on and on to assuage any concerns. But look again at the last line in Fan’s quote that brands any attempt by regulators to roll back the pay-per Internet model juggernaut would be “Draconian”. Clearly, investment bankers are not on the side of the ‘good and the just’, but their fears reveal cracks in the walls that may play well into the hands of those who do want to turn back the tide.

These are important things to bear in mind as the politics of the Internet unfold. I’ve said in the past that the CRTC is constrained by a heavy-handed and interventionist Harper Government. It is also constrained, apparently, by perceptions on Bay Street. It is also limited by its own timidity.

Nonetheless, there is scope for maneouvre in all this. So long as World of Warcraft players and Internet users of the world unite there may yet be opportunity to stem the tide. A quick search of the Internet shows that others around the world wish Canadians well in their battle against a model that they hope never sees the light of day in their own countries (or more correctly, hope that it never becomes the norm, as it is in Canada, as Professor Geist’s recent study shows).

The Political Economies of Media: New Book by Winseck and Jin

Well, here’s a little bit of shameless self-promotion.  It’s the front cover of a new co-edited collection that I’ve put together with Dal Yong Jin, an assistant professor at the School of Communication, Simon Fraser University in Vancouver, Canada as well as the College of Culture and Technology, Korea Advanced Institute of Science and Technology (KAIST).

The book is called The Political Economies of Media and will be published by Bloomsbury Academic — the academic publishing arm of the same company behind the Harry Potter series — in June.  I think the cover looks great. The authors that have contributed to this volume are exceptional as well: Bernard Miege, Susan Christopherson, Terry Flew, Amelia Arsenault, Guillermo Mastrini, Martín Becerra, Dwayne Winseck, Elizabeth van Couvering, Dal Yong Jin, Christian Fuchs, Aeron Davis, Peter Thompson, Marc-Andre Pigeon.

You can read sample chapters here by myself, Aeron Davis and Christian Fuchs here.

Cassandra’s and Copyright: Creative Destruction and Digital Media Industries

A new study released yesterday on peer-to-peer content sharing and copyright in the United Kingdom, Creative Destruction and Copyright Protection, provides a further challenge to those who claim that strong new measures are needed to make sure that swapping digital content online does not damage the bottom line of the media and entertainment industries. The study was co-authored by London School of Economics and Political Science Professors Bart Cammaerts and Bingchun Meng.

It is a part of several steps being taken in the U.K. that challenge last year’s hastily passed Digital Economy Act. The bill became law after only two hours of debate in the House of Commons and is a real gift to the media and  entertainment industries and the various lobby groups that represent them: e.g. the International Federation of the Phonographic Industry (IFPI), its British counterpart, the British Phonographic Industry Association, the Recording Industry Association of America (RIAA), Motion Picture Association (MPA), and so on.

Among other things, the Act turns Internet Service Providers into agents of the media and entertainment industries. Upon notification, ISPs must send a warning notice to suspected copyright infringers and if that does not work they can be directed by the Secretary of State to disconnect the offending user.

As the IFPI noted in its latest Digital Music Report, it has been pushing for such measures around the world in the past couple of years. Indeed, this push supersedes the emphasis earlier in the decade for DRM (digital rights management technologies).  The IFPI has chalked up several ‘wins’ for this approach in the UK, France, Sweden, South Korea, Taiwan, and a few others (see pp. 25-27).

Two of the biggest ISPs — BT and Talk Talk — in the UK have not taken these requirements lying down. They have launched a legal challenge that will be heard this week by the UK High Court of Justice on the ground that the Digital Economy Act’s requirements amount to overkill.

Cammeart and Meng are clear that P2P technologies should be encouraged rather than discouraged. In contrast, the Digital Economy Act stifles innovation and attempts to shore up faltering traditional business models. The message of this report, in other words, is that governments are not in the ‘business model’ protection racket. However, as I have written in earlier posts, that they are in just such a business is also evident in Canada, where Usage Based Billing is clearly linked with attempts to protect the cable and telephone companies forays into the online video business by hamstringing would-be rivals such as Netflix, Apple TV, even Youtube.

In contrast to the current approach, the authors and various people interviewed for the study suggest a significantly different approach. Thus, as one of the report’s authors, Bart Cammaerts states,

“The music industry and artists should innovate and actively reconnect with their sharing fans rather than treat them as criminals. They should acknowledge that there are also other reasons for its relative decline beyond the sharing of copyright protected content, not least the rising costs of live performances and other leisure services to the detriment of leisure goods. Alternative sources of income generation for artists should be considered instead of actively monitoring the online behaviour of UK citizens.”

Early in the report, they also quote from Ed O’Brian from the band Radiohead, who had the following to say:

“We disagree with the industry on what should be done with the persistent file-sharers. The industry has said we will suspend their internet accounts. But you can’t just do that, it isn’t possible and neither feasible. The kind of technical measures that are required to implement this get you into dodgy areas such as civil liberties, tracker software and the second thing is that it costs a lot of money to do this, and even if you do it, you are going to drive a lot of people underground into darknets. Our problem is how do you differentiate between a serial infringer and someone who does it in the spirit of discovery” (Ed O’Brian from Radiohead on BBC, 22/09/2009).
My only real criticism of this report is that the authors take the IPFI’s data on the drastic decline in sale of recorded music at face value, but attempt to offset it by pointing to changing patterns of music consumption, falling disposable household income and the rise of online digital platforms. Their points are well-taken.
Indeed, income levels in western capitalist democracies, including Canada, have largely stagnated for the past 30 years, while wealth has concentrated at the top. To this, we can also had the decline in ‘liesure time’ over the same period, as the historical tendency for the workday to shorten was reversed, resulting in people spending greater and greater amounts of time at work. It doesn’t take a genius to understand that less time and money erodes media consumption.
Such trends run exactly counter to the massive rise in both income and ‘liesure time’ that gave rise to the media and entertainment industries between 1870 and 1945, as Gerben Bakker exhaustively illustrates in his 2009 book Entertainment Industrialized.
These points are indeed important, but I would add another that I think is even more important: namely, that taking into account all sources of income, the music industry has not contracted, but expanded greatly since the late-1990s, precisely alongside the massive popularization of the Internet. In order to understand that, we need to focus not just on the sale of ‘recorded music’ and ‘online revenues’, but also publishing royalties and, crucially, live entertainment. When we do that, as I showed in another post last week, the music industries have expanded greatly.
Here’s the data showing, first, the drastic decline in the sale of recorded music, followed by the full picture:
Figure 1: Worldwide ‘Recorded Music Industry’ Revenues, 1998 – 2010 (US$ Mill.)


Source: Source: PWC (2010; 2009; 2003), Global Entertainment and Media Outlook

Clearly, just on the basis of recorded music sales, the music industry is in dire shape indeed. However, things look decidedly different once we take a look at the full picture, as the following figure does.

Figure 2: Worldwide ‘Total Music Industry’ Revenues, 1998 – 2010 (US$ Mill.)


Sources: PWC (2010; 2009; 2003), Global Entertainment and Media Outlook and IDATE (2009). DigiWorld Yearbook.

The top line shows the picture: a sharp increase in total revenues. Against declining revenues for recorded music, each of the other segments has risen considerably: Internet/mobile; publishing and concerts. Cammaerts and Meng do an excellent job showing the rise of digital revene

Telecom History and the Internet

I remember the puzzled looks from people back in the late-1980s and early-1990s when I told them I was studying telecommunications.  They looked perplexed. Why the hell would anyone want to study wires, switches, telephones. Boring!

It was indeed a bit of a hard sell. The history of telecoms, though, teaches us much about contemporary developments, not least those related to the Internet. In the previous post, I mentioned how Australia, in 2009, created the National Broadband Network Company in the face of incumbent obstruction. I also indicated that, worldwide, a dozen-and-half governments have earmarked $71 billion to extend next generation broadband networks to the doorstep, and to poor, rich urban and rural folk alike. I also referred to how Ofcom broke-up BT in the UK in 2005/6. Faced with all of this state intervention, the Paris-based consultancy, IDATE, wonders if we are witnessing the ‘renationalization’ of telecoms?

I don’t think so. All of this activity does, however, remind us of the role of politics and popular discontent in all things telecoms. Public uprising over the perceived under-development of communication networks, excessive rates, neglect of the rural and the poor, and so forth are not unique to the Internet. In Canada, they go back at least to the telephone in the late-19th and 20th centuries, and arguably to the telegraph and post office before that. Old media become the content of new media, as McLuhan once put it, warts and all.

In Canada, public outrage with the perceived under-development of the telephone system led to the Mulock Committee Inquiry in 1905. Hundreds of testimonies and piles of evidence later, the committee’s report seemed to fall on deaf ears. But in the next three years between 1906 and 1909, the Alberta Government Telephone System (1906), Manitoba Telephone System (1908) and SaskTel (1909) were created.

The public interest was not a phantom idea at this time.  Instead, it was the sum total of the expressions found in traces 0t the Mulock Report, journalism and what people were saying about the existing state of affairs and how they felt things ought to be. The under-development of communication networks not only sparked public discontent and political revolts, it spawned a legion of independent ‘network providers’ — some were state-owned, others were entrepreneurial, many were rural cooperatives, not a small number were municipally-owned (Thunder Bay Telephone).

Five years after Mulock (1910), the Board of Railway Commissioners (BRC) also stepped into the fray, this time to slay a loathed ‘double-headed news monopoly’ between the Canadian Pacific Telegraphs (to the west of Montreal) and the Western Union Telegraph Co. (with lines from Montreal to the Atlantic provinces and Nfld), on the one hand, and the NY-based Associated Press, on the other.  The two telegraph companies jointly held exclusive distribution rights for the Associated Press news agency in Canada. By ‘bundling’ the cost of transmission (the medium) with the cost of the news service (the message), they drove every potential rival news service out of business.

The monopoly over the wires, in short, conferred a monopoly over news. The impact on journalism was considerable, but indirect and hard to calculate.  The BRC, a long lost distant cousin of the CRTC, nonetheless nipped the operation in the bud.

The history of telecoms in Canada has much to teach. In this instance, these two examples teach us that the public interest is real, that public ownership is a potential, and that there is good reason to be concerned about letting those who control the medium control the message. Sections 27 and 36 of the current Telecommunications Act (1993) preventing those who own the wires from giving undue preferential treatment to their own services and from exercising editorial control over the messages transmitted through their networks are the legacies of this history.  The narrow choices that are being made about fundamental issues today is a matter of political expendiency and a denial of that history.

UBB, the Unholy Trinity and the Future of the Internet in Canada

In the last two weeks worries about the future of the Internet in Canada have been thrust into the spotlight. Thankfully, it is still going strong.

The lightning rod was the CRTC Usage-Based Billing (UBB) decision on January 25th.  This, however, was the culmination of a year in which the regulator bumbled its way through no less than three other related decisions in a bid to do one simple, bad thing: sweep aside the final hurdles to the dominant telephone and cable companies’ plans to impose ‘bandwidth caps’ and a ‘metered internet’ model on independent Internet Service Providers (ISPs) that rely on the big companies’ cables and wires for ‘last mile’ access to subscribers homes (see UBB Orig.Dec; UBB Telco Appeal; UBB Wholesale Access/SpeedMatching)

The January 25th decision, in fact, would only affect 5 percent of Canadian Internet users. These are the ones who obtain access to the Internet from one of the nearly 500 small ISPs scattered across the country. The significance and symbolic importance of this group, however, goes well beyond its tiny numbers: if the UBB decision stands, they will be the last to have had unlimited Internet service replaced by a provider-controlled, pay per model of the Internet. Bandwidth caps and “excess usage charges” for everyone else, however, have been stealthily put into place during the past five years by an unholy trinity that involves the dominant telephone and cable players, a compliant CRTC, and the Harper Government.

A succinct history of the emergence of UBB is essential to understanding the concept and just how it came to be such a unique (and undesirable) fixture of the Internet in Canada. Open Media offers a snapshot overview that covers the past year, but I think we must go back several years further.

As early as 2000, the CRTC expressed its belief that user fees could be an appropriate tool for disciplining heavy users, but never acted on that belief. The Conservative Government’s ascent to power in 2006, however, marked a pivotal turning point. The radical remodeling of the Internet from an open, user-centric model to a provider-controlled, pay per model begins to be kicked into high gear at this point. This is primarily because the Government issues a slew of Cabinet Directives that required the CRTC to rely on “market forces to the maximum extent possible”, even though it is patently obvious that the Canadian Internet Access market is highly concentrated.

For all intents and purposes, this did not mean relying on the idealized competitive ‘market forces’ of textbook economics but the small number of companies that dominate the market. In Canada, this means the incumbent telephone and cable companies that control 95% of the Internet access market. More specifically, it refers to the ‘big six’ entities that account for well-over two-thirds of the market alone: Bell, Telus, Shaw, Rogers, Quebecor and Cogeco.

The Conservative Government’s relentless pressure on the CRTC to rely on “market forces” to the fullest extent possible essentially gave the ‘big six’ a green light to do as they please because, by and large, they are the market. It should not come as a big surprise that they took the cue and ran with it. Bell took the lead, shutting down unlimited Internet plans and imposing bandwidth caps and so-called “excess usage fees” in late 2006, before removing unlimited Internet service as an option for new subscribers altogether in February 2007 (see UBB Telco Appeal at para 10) . Once Bell had established the new benchmark, and made it stick, the other players soon followed suit.

This is not at all surprising because in highly concentrated markets, the small number of rivals that do exist tend to move like a flock, mimicking one another’s behaviour and competing on the margins rather than in a forceful way. Last month’s UBB decision was merely the coup de grace, sweeping aside the final hurdles to the big six’s plans to impose their provider-controlled Internet model on the rest of the population through the wholesale rates they charge independent ISPs that use their cables and wires for ‘last mile’ access to subscribers homes – all with the blessing of the CRTC.

The telephone and cable companies argue that these steps are necessary to curb the minority of excessive users who consume a disproportionate amount of traffic on their networks, leading to congestion. Yet, such claims are circumspect. First, because the only thing that has grown faster than the 40-50% year-on-year increase in Internet use over the past decade has been the rate of growth in network capacity and the declining costs of network technology.

Second, according to the CRTC, while the companies can use user fees, bandwidth caps, and other economic measures to manage traffic on their network, the priority is suppose to be on expanding network capacity through additional investment.  To be sure, in absolute terms, the telephone and cable companies invest billions every year in upgrading their facilities.  However, by international comparative standards, investment in Canada has been weak and, as the following figure shows, there is little evidence of greater investment following on from the Government’s directive to let the market rip. In fact, following a steep rise in the late 1990s associated with the dot.com boom, network investment by the telephone companies has stayed relatively flat. The cable companies investment levels actually fell significantly after 1996 and has stayed remarkably flat at relatively low levels throughout the past decade, despite the emergence of the Internet as a vast new source of revenue. One might have expected to see an upward swing in investment to meet the emergence of new needs and the new revenue sources. That does not appear to have happened.

Stagnating Network Infrastructure Investment, 1984 – 2009 ($ millions)



Source:  Statistics Canada (2010b), Capital and Repair Expenditures – Broadcasting and Telecommunications (2001 – 1009) Cansim Table 029-0013 and Statistics Canada (2010c)Capital and Repair Expenditures on Construction and Machinery– Broadcasting and Telephone (1984 – 1993), Table 029-0033; CRTC (2002). Status of Competition in Canadian Telecommunications Markets.

Third, there is no apparent link between the ‘excess usage charges’ that the dominant players are charging (i.e. from .50 cents per Gigabit (GB) to $5 per GB), and the cost of bandwidth. Experts peg the cost per gigabit as being anywhere between .01 cents and 10 cents. Even if we take the high end of this range, excess usage charges still entail an extortionate 500 to 5000 percent mark-up on costs.

Finally, as the Organization for Economic Cooperation and Development (OECD) observes, Canada stands alone in terms of the near universal use of ‘bandwidth caps’ and excess usage fees for Internet use. Such measures are sometimes used in the US, but do not constitute the norm. Comcast, one of the largest cable companies and ISPs in the US offers a far more generous bandwidth cap of 250 GB per month than even the most expensive services available in Canada (except Telus’s most expensive service). Charges for ‘excess use’ are also non-existent. The following table offers a snapshot comparison between the four largest providers in Canada and two of their counterparts in the US.

It must also be recognized that the comparison between the Canada and the US sets the bar low because neither country is a leader by comparative international standards when it comes to the Internet. Using a composite score based on speed, price and accessibility for wired and wireless networks, the Benkler Report (2010) ranks the US 13th out of the 30 OECD countries, and Canada 22nd. Both lag far behind leaders in the Scandinavian countries, France, Germany, Japan, and South Korea, among others.

The Benkler report has been criticized in Canada and the US by some of the major players, but its findings are in line with most studies. In other words, it represents a consensus position, not an outlier.

The key point is that while most countries are encouraging the use of the Internet to the greatest extent possible and doing their utmost to create a ‘digital media’ strategy, a combination of corporate strategy, incoherent government policies, and misguided regulation have done exactly the opposite in Canada.

Sadly, as a recent survey indicates, 9-out-of-ten Canadians have no clue that their use of the Internet has been so heavily clipped by ‘market forces’: bandwidth caps, excess use charges, and restrictions on what people can and cannot do with their Internet connections in the major providers ‘acceptable user policies’. The general drift of events has been obscured each step of the way by what can only be described as UnBearably Bland CRTC decisions as well as Cabinet Directives and the dominant players’ own “acceptable use policies” that are hedged about by a thicket of techno-economic mumbo jumbo. The cumulative effect of which is to conceal how one foundational principle after another of the open, user-centred Internet has been laid to waste.

The fantastic thing about last month’s so-called UBB decision by the CRTC is that it has helped to pierce through the veil of ignorance cultivated by the politics of a cozily regulated industry and shattered Canadian’s complacent delusions about the state of the Internet and Internet policy. If that is in fact the case, the ill-thought decision may ultimately serve a noble cause. However, we are going to have to go far beyond just the January 25th UBB decision to re-open all of those that preceded it, and that have had far more pervasive and now firmly rooted effects. There is, in short, a long slog ahead to undoing the state-sanctioned, corporate regulated Internet that has been put into place in Canada over the past decade, and especially the past five.

Fortunately, the first steps are already well underway. As I write, the number of signatures on the ‘stopthemeter’ petition launched by the advocacy group, Open Media, has soared past 420,000. The NDP and Liberals have both blasted the UBB decision. A private citizen, Jean-Francois Mazei, with a stake in these affairs from a business (he is the owner of Montreal-based ISP, Vaxination Informatique), political and intellectual point of view, has had his petition to overrule the UBB decision recognized by the powers-that-be, and widely circulated. The CRTC has also been given a stern public dressing down by Industry Minister Tony Clement, initially by Twitter, and later by official press release, and then by Prime Minister Harper’s own tweet to the same effect. Many see this as a clear signal that the UBB decision will be overturned.

The CRTC has got the message, but whether it will ultimately do the right thing is still an open question. CRTC chairman, Konrad von Finckenstein, told a hastily convened session of the Standing Committee on Industry, Science and Technology last week that he had already ordered a review of the decision and delayed its implementation for two months. A further two-month extension was made February 8. However, his advice to people to “shop around for a plan that best meets their needs” and staunch defense of the pay-per Internet model that he has been pushing, as if the market is competitive and the internet just another commodity, should give pause for doubt that the CRTC can lead the kind of thorough-going review that is needed.

If the aim is just to overturn the January 25th UBB decision, we should be careful what we wish for. If, however, this is just a stepping-stone to a far-reaching review of the step-by-step strangulation of the Internet that has taken place over the past decade, and especially the past five years, then we will have cause for joy.

Notes:

[1] Prices for each service is for standard rate versus temporary discounted promotional rates. Figures collected February 8, 2011.

[2] Excess use charges to first 300GB for the Basic and Express versions, $1/GB thereafter.

[3] Prices expressed in Canadian dollars.  Based on advertised rates for unbundled Internet access.

[4] Each ISP indicates that download speeds fluctuate.  The figures here are the maximum speeds.

[5] Only available bundled with TV service.

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