Media and Internet Concentration in Canada, 1984-2012

Reposted from the Canadian Media Concentration Research Project website (for a downloadable pdf version of this report please click here).

This is the second post in a series. Building on last week’s post that analyzed the growth of the media economy between 1984 and 2012, this post addresses a deceptively simple yet profound question: have telecom, media and internet (TMI) markets become more or less concentrated over the same period of time?

In Media Ownership and Concentration in America, Eli Noam (2009; also see 2013) notes that creating a coherent portrait of media concentration is difficult. Strong views are plentiful, but good evidence is not.  Canadian scholar Philip Savage makes much the same observation, noting that debates over media concentration in Canada “largely occur in a vacuum, lacking evidence to ground arguments or potential policy creation either way”.

This post addresses that gap by providing a long-term, systematic, data-driven analysis of concentration trends across a dozen or sectors in Canada for the years between 1984 and 2012: wireline and wireless telecoms, internet access, BDUs (cable, satellite & IPTV), specialty and pay TV, broadcast TV, radio, newspapers, magazines, search engines, social media sites, online news sources, browsers and smart phone operating systems. These are the essential elements of the network media economy.

Concentration trends are assessed sector-by-sector and then across the network media as a whole using two common analytical tools — concentration ratios (CR) and the Herfindahl – Hirschman Index (HHI). While we cite our sources below, by and large, the following documents and data sets underpin the analysis in this post: Media Industry Data, Sources and Explanatory Notes and the CMCR Project’s Methodology Primary.

Media Concentration: Contentious Debates, Main Issues

Some consider discussions of media concentration in the age of the internet to be ridiculous. Leonard Asper, the former CEO of bankrupt Canwest, quipped, “the media have become more fragmented than ever. People who think otherwise probably believe that Elvis is still alive”. Chris Dornan points to how a Senate report that came out in 2006 was written by a bunch of Senators with their heads buried in the sand.

In Bell Astral 2.0, BCE said that while many critics allege that concentration in Canada is high, the evidence, “regardless of the metric employed – proves otherwise” (Bell Reply, para 46). When there are thousands of websites, social networking sites galore, pro-am journalists, a cacophony of blogs, 744 TV channels licensed for distribution in Canada, ninety-five daily newspapers and smartphones in every pocket, how could media concentration possibly be a problem?

If there was ever a golden media age, this is it, argue Thierer & Eskelen, 2008. Media economics professor, Ben Compaine (2005) offers a terse one-word retort to anyone who thinks otherwise: Internet.

Shackling media companies with ownership restrictions when they face global digital media giants like Google, Amazon, Netflix, Facebook, and so on is to condemn them to a slow death by strangulation (Skorup & Thierer, 2012; Dornan, 2012). Journalist’s too often share this view mostly, it seems, because they rely on industry insiders while considering balance and objectivity to be achieved when two industry insiders are shown to disagree with one another. 

Critics, in contrast, tend to see media concentration as steadily going from bad to worse. Ben Bagdikian, for instance, claims that the number of media firms in the US that account for the majority of revenues plunged from 50 in 1984 to just five by the mid-2000s. Canadian critics decry the debasement of news and the political climate of the country (here and here). Others see internet as another frontier of capitalist colonization and monopolization (Foster & McChesney, 2012).

A third school of scholars aims to detect the influence of changes of media ownership and consolidation by quantitatively analyzing reams of media content. They generally find that the evidence is “mixed and inconclusive” (here). The newest of such studies, Cross-Media Ownership and Democratic Practice in Canada: Content-Sharing and the Impact of New Media, comes to similar conclusions (Soderlund, Brin, Miljan & Hildebrandt, 2011).  

Such findings, however, proceeds as if ‘impact on content’ is the only concern, or as Todd Gitlin put in many years ago, as if ‘no effect’ might not be better interpreted as preserving the status quo and thus a significant problem in its own right.

A fourth school of thought, and one that I largely subscribe to, sees the shift from the industrial media of the 19th and 20th centuries to the online digital media of the 21st century as entailing enormous changes. However, it also argues that these changes also entail an equally enormous “battle over the institutional ecology of the digital environment” (Benkler, 2006, ch. 11). The history of human communication is one of recurring ‘monopolies of knowledge” (Innis, 1951) and oscillations between consolidation and competition (John, 2010; Babe, 1990), so why should we expect this to be any less true today(Noam, 2009; Benkler, 2006; Wu, 2010; Crawford, 2012)?

As Noam (2013) states after reflecting on the results of a thirty-country study, concentration around the world is “astonishingly high”.  Whether Canada ranks high by international standards, low or in between will be dealt with in a subsequent post.

The core elements of the networked digital media – e.g. wireless (Rogers, BCE, Telus), search engines (Google), Internet access (ISPs), music and book retailing (Apple and Amazon), social media (Facebook) and access devices (Apple, Google, Nokia, Samsung) – may actually be more prone to concentration because digitization magnifies economies of scale and network effects in some areas, while reducing barriers in others, thereby allowing many small players to flourish. A two-tiered digital media system may be emerging, with numerous small niche players revolving around a few enormous “integrator firms” at the centre (Noam, 2009; Wu, 2010).

All this matters because the more core elements of the networked media are concentrated, the easier it is for dominant players to exercise market power, coordinate behaviour, preserve their entrenched stakes in ‘legacy’ media sectors (e.g. television and film), stifle innovation, influence prices and work against market forces and the needs of consumers and citizens (see here, here, here, here and here).  Large consolidated telecom, media and internet giants also make juicy targets for those who would turn them into proxies working on behalf of the copyright industries, efforts to block pornography, and as part of the machinery of law enforcement and national security (see here, here and here).

In sum, the more concentrated the digital media giants are, the greater their power to:

• set the terms for the distribution of income to musicians, journalists and media workers, and authors (Google, Apple, Amazon);
• turn market power into moral authority by regulating what content can be distributed via their ‘walled gardens’ (Apple);
• set the terms for owning, controlling, syndicating and selling advertising around user created content (Google, Facebook, Twitter) (van Couvering, 2011; Fuchs, 2011);
• use media outlets they own in one area to promote their interests in another (see Telus intervention in Bell Astral, 2.0 pages 4-6 and here);
• and set defacto corporate policy norms governing the collection, retention and disclosure of personal information to commercial and government third parties.

Whilst we must adjust our analysis to new realities, long-standing concerns remain as well. Consider, for example, the fact that every newspaper in Canada, except the Toronto Star, that editorially endorsed a candidate for Prime Minister in the 2011 federal election touted Harper –three times his standing in opinion polls at the time and the results of the prior election.

Ultimately, talk about media concentration is really a proxy for conversations about consumer choice, freedom of the press and democracy. Of course, such discussions must adapt to changes in the techno-economic environment of the media but the advent of digital media does not render them irrelevant (Baker, 2007; Noam, 2009; Peters, 1999).

Methodology

Measuring media concentration begins by defining the media studied, as noted at the outset. I then collected revenue data for each of these sectors and for each of the firms within them with over a one percent market share. This handy dandy list of sources and others listed here were used.  

Each media is analyzed on its own and then grouped into three categories, before scaffolding upward to get a birds-eye view of the entire network media ecology: (1) platform media; (2) content media: (3) online media. The results are analyzed over time from 1984 to 2012. Lastly, two common tools — Concentration Ratios (CR) and the Herfindhahl – Hirschman Index (HHI) – are used to depict levels of concentration and trends over time within each sector and across the network media ecology as a whole.

The CR method adds the shares of each firm in a market and makes judgments based on widely accepted standards, with four firms (CR4) having more than 50 percent market share and 8 firms (CR8) more than 75 percent considered to be indicators of media concentration (see Albarran, p. 48). The Competition Bureau uses a more relaxed standard, with a CR4 of 65% or more possibly leading to a deal being reviewed to see if it “would likely . . . lessen competition substantially” (p. 19, fn 31).

The HHI method squares and sums the market share of each firm in a market to arrive at a total. If there are 100 firms, each with a 1% market share, then markets are highly competitive, while a monopoly prevails when a single firm has 100% market share. The US Department of Justice set out new guidelines in 2010 for determining when concentration is likely to exist, with the new thresholds set as follow:

HHI < 1500                                 Unconcentrated

HHI > 1500 but < 2,500             Moderately Concentrated

HHI > 2,500                                    Highly Concentrated

At first blush, these higher thresholds seem to water down the earlier standards that had been set at lower levels and used since 1992. The new guidelines, however, are probably even more sensitive to reality and tougher than the ones they supersede.

This is because they go beyond setting thresholds to give more emphasis to the degree of change in market power. For instance, “mergers resulting in highly concentrated markets that involve an increase in the HHI of more than 200 points will be presumed to be likely to enhance market power”, observes the DOJ (emphasis added, p. 19).

Second, markets are defined precisely based on geography and the relevant details of the good at hand versus loose amalgamations of things that are based only on superficially similarities. This is critical, and it distinguishes those who would define the media universe so broadly as to put photocopiers and chip makers alongside ISPs, newspapers, film and TV and call the whole thing “the media” versus the ‘scaffolding approach’ we use that starts by analyzing each sector before moving up to higher levels of generality from there until reaching a birds-eye perspective on the network media as a whole.

Third, the new guidelines also turn a circumspect eye on claims that enhanced market power will be good for consumers and citizens because they will benefit from the increased efficiencies that result. What is good for companies is not necessarily good for the country (see Stucke & Grunes, 2012).

Lastly, the new guidelines are emphatic that decisions turn on “what will likely happen . . . and that certainty about anticompetitive effect is seldom possible and not required for a merger to be illegal” (p. 1). In practice this means that the goal is to nip potential problems in the bud before they occur; to “interdict competitive problems in their incipiency”, as the guidelines say (p. 1). Crucially, this means that experience, the best available evidence, contemporary and historical  analogies as well as reasonable economic theories are the basis of judgment, not deference to impossible (and implacable) demands for infallible proof (p. 1).

These assumptions overturn a quarter-century of economic orthodoxy and its grip on thinking about market concentration (see Stucke & Grunes, 2012 and Posner). Freed from the straight-jacket of Chicago School economic orthodoxy, and the subordination of policies and politics to economists and judges, the new guidelines set a tough hurdle for those with the urge to merge. It was precisely this kind of thinking that killed the bid by AT&T – the second largest mobile wireless company in the US – to acquire the fourth largest, T-Mobile, in 2011, for instance (also Stucke & Grunes, 2012).

In Canada, in contrast, the CRTC Diversity of Voices sets up thresholds for a broadly defined TV market in which a proposed deal that results in a single owner having less than 35% of the total TV market will be given the green light; those that fall in the 35-45% range might be reviewed; anything over 45% will be rejected (para 87). Unlike the Competition Bureau that uses the CR4 method whereby a deal that result in a CR4 over 65% may be reviewed to determine whether it will substantially lessen competition, the CRTC has no such guidelines, although a recent accord between the two regulators might change this.

The CRTC’s threshold for TV, instead, is based on a single snapshot of a single company’s share of one broadly defined market – the total TV market –“before” and “after” a single transaction. It is a static measure that has no sense of trends over time, the relational structure of markets or any capacity to analyze the drift of events across media and the network media ecology as a whole.

The Competition Bureau draws selectively from the US HHI guidelines. It does not use the HHI thresholds. Instead, it focuses on “the relative change in concentration before and after a merger” (emphasis added, p. 19, fn 31). How faithful it is to either its CR4 guidelines or the HHI criteria for judging relative changes in market power is open to question, however, in light of its decision earlier this year to bless Bell-Astral 2.0 (here). In Canada regulators appear to mostly make it up as they go along rather than consistently follow a coherent set of guidelines.

The Historical Record and Renewed Interest in Media Concentration in the 21st Century

There has always been keen interest in media ownership and concentration in Canada and the world since the late-19th and early-20th centuries.

In 1910, for example, the Board of Railway Commissioners (BRC) broke up the three-way alliance between the two biggest telegraph companies — Canadian Pacific Telegraph Co. and the Great Northwestern Telegraph Co. (the latter an arm of the New York-based goliath, Western Union) – and the American-based Associated Press news wire service. Why?

The BRC did this because, it argued, in the face of much corporate bluster, that allowing the telegraph companies to give away the AP news service for free to the leading newspaper in one city after another might be good for the companies but it would “put out of business every news-gathering agency that dared to enter the field of competition with them” (1910, p. 275). In a conscious bid to use telecoms regulation to foster the development of rival news agencies and newspapers, the BRC forced Western Union and CP Telegraphs to unbundle the AP news wire service from the underlying telegraph service. It was a huge victory for the Winnipeg-based Western Associated Press – which initiated the case – and other ‘new entrants’ into the daily newspaper business (Babe, 1990).

Media concentration issues came to a head again in the 1970s and beginning of the 1980s, when three inquiries were held: (1) the Special Senate Committee on Mass Media, The Uncertain Mirror (2 vols.)(Canada, 1970); (2) the Royal Commission on Corporate Concentration (1978); and (3) the Royal Commission on Newspapers (Canada, 1981).

Things lay dormant for more than two decades thereafter before springing to life again after a huge wave of consolidation in the late-1990s and turn-of-the-21st century thrust concerns with media concentration back into the spotlight. Three inquiries between 2003 and 2008 were held as a result: (1) the Standing Committee on Canadian Heritage, Our Cultural Sovereignty (2003); (2) the Standing Senate Committee on Transport and Communications, Final Report on the Canadian News Media (2006); (3) the CRTC’s Diversity of Voices report in 2008.

Competitive Openings and Two (three?) Waves of TMI Consolidation

As I noted in my last post, the media economy in Canada grew immensely from $39 billion in 1984 to $73.3 billion last year (in inflation-adjusted “2012 real dollars”). Between 1984 and 1996, new players meant more diversity in all sectors, except for newspapers as well as cable and satellite video distribution. Concentration climbed significantly in both of those sectors.

Conventional as well as pay and subscription television channels expanded during this time as well. In terms of ownership, incumbents and a few newcomers – e.g. Allarcom and Netstar –cultivated the field, with their share of the market growing steadily.

Concentration levels remained very high in wired line telecoms in the 1980s and early 1990s, too. Mobile wireless telecoms services were developed by two incumbents, Bell and Rogers. As had been the case in many countries, telecoms competition moved slowly from the ends of the network into services and then network infrastructure, with real competition emerging in the late-1990s before the trend was reversed and concentration levels began to climb again, notably after the dot.com crash in late-2000.

In the 1980s and early-1990s, consolidation took place mostly among players in single sectors. Conrad Black’s take-over of Southam newspapers in 1996 symbolized the times. In broadcast television, amalgamation amongst local ownership groups created the large national companies that came to single-handedly own the national commercial television networks by the end of the 1990s: CTV, Global, TVA, CHUM, TQS.

While weighty in their own right, these amalgamations did not have a big impact across the media. The CBC remained prominent, but public television was being eclipsed by commercial television as the CBC’s share of all resources in the television ‘system’ slid from 46 percent in 1984 to less than half that amount today (20.4%).

Gradual change defined the 1980s and early-1990s, but things shifted abruptly by the mid-1990s and into the 21st century as two (and maybe three) waves of consolidation swept across the TMI industries. A few highlights help to illustrate the trend:

Wave 1 – 1994 to 2000: Rogers’ acquisition of Maclean-Hunter (1994), but peaking from 1998 to 2001: (1) BCE acquires CTV and the Globe & Mail ($2.3b); (2) Quebecor takes over Videotron, TVA and the Sun newspaper chain ($ 7.4b) (1997-2000); (3) Canwest buys Global TV ($800m) and Hollinger newspapers papers, including National Post ($3.2b).

Wave 2 – 2006-2007.  Bell Globe Media re-branded CTVglobemedia, as BCE exits media business. CTVglobemedia acquires CHUM assets (Much Music, City TV channels and A-Channel).  CRTC requires CTVglobemedia to sell City TV stations – acquired by Rogers (2007). Astral Media’s buys Standard Broadcasting. Quebecor acquires Osprey Media (mid-size newspaper chain)(2006). Canwest, with Goldman Sachs, buys Alliance Atlantis (2007) (Showcase, National Geographic, HGTV, BBC Canada, etc) – and the biggest film distributor in Canada.

Wave 3 – 2010 – ? Canwest bankrupt. Newspapers acquired by Postmedia, TV assets by Shaw.  BCE makes a comeback, buys CTV (2011) and bids for Astral Media in 2012, but fails to gain CRTC approval.

The massive influx of capital investment that drove these waves of consolidation across the telecom, media and Internet industries is illustrated in Figure 1 below.

Figure 1: Mergers and Acquisitions in Media and Telecoms, 1984–2012 (Mill$)

Sources: Thomson Reuters. Dataset on file with author.

Mergers and acquisitions rose sharply between 1994-1996, and spiked to unprecedented levels by 2000. The collapse of the TMT bubble ended such trends, until they restarted again between 2003 and 2007 before being ground to a halt by the Global Financial Crisis (2007ff), and with only a tentative step up since. These patterns reveal that trends in the network media economy parallel the state of the economy in near lockstep fashion; they also closely track those in the US and globally.

Consolidation has yielded a specific type of media company at the centre of the network media ecology in Canada: i.e. the integrated media conglomerate. While popular in the late-1990s in many countries, many media conglomerates have since collapsed or been broken up (AOL Time Warner, AT&T, Vivendi, CBS-Viacom, and parts of NewsCorp, etc)(see, for example, Jin, 2011; Jin, 2013; Skorup & Thierer, 2012; Thierer & Eskelen, 2008; Waterman & Choi, 2010).

Despite deconvergence trends elsewhere, in Canada media-telecom and internet conglomerates are still all the rage. Figures 2 and 3, in fact, illustrate the acceleration of the trend toward vertical integration from 2008 to 2012, largely due to Shaw’s acquisition of the Global TV and a suite of specialty and pay TV channels from Canwest (2010) and Bells re-purchase of CTV (2011).

Figure 2:

Figure 3:

Sources: Media Industry Data, Sources and Explanatory Notes

By 2012, four giant vertically integrated TMI conglomerates accounted for 56% of all revenue across the network media economy: Bell (CTV), Rogers (CityTV), Shaw (Global) and QMI (TVA). Add Telus to the fold and the number swells to 71 percent. The ‘Big 5’ are joined by a second tier of a dozen or so more focused entities: the CBC, MTS, Google, Cogeco, Torstar, Sasktel, Postmedia, Astral, Eastlink, Power Corporation, the Globe and Mail, Facebook and Netflix, ranked on the basis of Canadian revenues.

Strip out the wireline and wireless telecoms sectors and we get a more sensitive view of what is going on across the rest of the media universe because those two sectors are so big that they cast a shadow over everything else. From this vantage point, the big ten’s share of revenue reached it’s low point in 1996 (51.7%), before reversing course to reach 58% in 2000. By 2004, the big four’s share of all revenues (without telecoms) soared to 70%, where things have stayed basically flat since.  The big 10’s market share in 2012 was 69%: Bell, Shaw, Rogers, QMI CBC, Google, Cogeco, Torstar, Postmedia and Telus, in that order.

The big four’s share of the network media economy rose significantly to 48% in 2010 (after Shaw’s acquisition of Global) and rose again to 51% in 2011 (when Bell re-acquired CTV), where it has basically stayed since — an all-time high and well above the low point CR4 score of 24% in 1996. Media concentration in Canada is currently more than twice as high as in the US based on Noam’s analysis in Media Ownership and Concentration in America.

Figure 4 below depicts the relative share of the major players in the network media economy as things stood in 2012, without the telecommunications sectors. 

Figure 4:

Sources: Media Industry Data, Sources and Explanatory Notes

The next section doubles back to look at things sector-by-sector, and within the three main categories in which we group these sectors:

• platform media (wireline & wireless, ISPs, cable, satellite, IPTV);
• ‘content’ (newspapers, tv, magazines, radio);
• ‘online media’ (search, social, operating systems).

At the end, I combine these again one last time to complete the analysis of the network media industries as whole.

Platform Media

All sectors of the platform media industries are highly concentrated or at the high-end of the moderately concentrated scale, and pretty much always have been, although Internet Access is a partial exception.

Table 1: CR and HHI Scores for the Platform Media Industries, 1984 – 2012

Sources: Media Industry Data and Sources and Explanatory Notes.

CR4 and HHI measures for wireline telecoms scores fell in the late-1990s as some competition took hold. They reached their lowest level ever at the time between 2000 and 2004 before the the dot.com bubble collapse took out many of the new rivals with it (CRTC, 2002, p. 21). Competition waned thereafter until 2008, but has risen since. Levels of concentration for this sector are very high nonetheless by both the CR4 and HHI measures.

Mobile Wireless

Much the same can be said with respect to wireless services. They have consistently been highly concentrated, and still are, despite the advent of four new entrants since 2008: Mobilicity, Wind Mobile, Public and Quebecor.

Some recent studies argue “that there is not a competition problem in mobile wireless services in Canada” (see here and here). That conclusion rests on questionable assertions about efficiencies are often asserted but seldom hold up under scrutiny and contestible markets theory in contrast to realities on the ground (see here, here and here).

Claims that there is no wireless competition problem in Canada clash with the reality that CR4 scores have been stuck in the ninety-percent range for the entire history of wireless in Canada, a level well-above the Competition Bureau’s standards. Concentration is a durable fixture in the wireless sector rather than something that will wilt over time. CR and HHI scores have drifted downwards since new rules to encourage new entrants were adopted for the spectrum auction in 2008, but in 2012 the HHI score was still 2873 – far above the 2,500 market that defines a highly concentrated market. 

Two competitors – Clearnet and Microcell – emerged in the late-1990s and managed to garner 13.4 percent of the market between them, but were taken over by Telus and Rogers in 2000 and 2004, respectively. It is still too early to tell whether the new entrants will fare, but with only 7% market share in 2012 they were just half way to restoring the high-water mark of competition set a decade ago with mounting signs of trouble swirling about all of them, except Quebecor and, to a lesser extent, perhaps Wind – but these are points for next year’s post.

Internet Access

As the telecoms and Internet boom gathered steam in the latter half of the 1990s new players emerged to become significant competitors, with four companies taking over a third of the ISP market by 1996: AOL (12.1%), Istar, (7.2%), Hook-Up (7.2%) and Internet Direct (6.2 percent).

The early ‘competitive ISP era’, however, has yielded to more concentration since. Although the leading four ISPs accounted for a third of all revenues in 1996, by 2000 the big four’s (Bell, Shaw, Rogers & Quebecor) share had grown to 54 percent, where it stayed relatively steady for much of the rest of the decade. Since 2008, however, the CR4 has crawled upwards to reach 59% last year.

HHI scores for internet access doubled between 1996 and 2000, but are still low relative to most other sectors and to this measure’s standards for concentration. However, this reflects the limits of the HHI method in this case, since 93% of residential internet subscribers use one or another of the incumbent cable or telecom companies’ for internet access. The top 5 ISPs account for 76% of all residential high-speed internet access revenues (CRTC Communication Monitoring Report, pp. 143-144).

Climbing down from national measures to the local level, internet access is effectively a duopoly, with the left over 7% of the market not dominated by the incumbents scattered among 500 or so independent ISPs. TekSavvy is the biggest ISP with an estimated 180,000 subscribers in 2012 and just over 1% market share. Other small ISPs are on the wane (Primus). Indy ISPs’ market share has increased slightly from 2010, but it has stayed flat for the past two years and is nowhere near returning to the high-water mark of competitive internet access in the late-1990s. 

Canada has relied on a framework of limited competition between incumbent telecom and cable companies for wireline, wireless, internet access and video distribution markets. Incumbents still dominate all of these sectors, while smaller rivals continue to eek out an existence on the margins in each.

Cable, Satellite and IPTV

Concentration in cable, satellite and IPTV distribution rose steadily from low levels in the 1980s (850) to the upper end of the moderately concentrated zone (by the new HHI guidelines) in 1996 (i.e. HHI=2300), before drifting downwards to the low 2000s by the turn-of-the-century. This is where things have stood until recently as the incumbent telcos’ IPTV services exert pressure on the incumbent cable companies.

The cable, satellite and IPTV industry is still largely a duopoly at the local level. The CR score has dropped 5% since 2004 but the big four still dominate with 81% market share: Shaw (25.1%), Rogers (22.3%), Bell (21.1%) and Quebecor (12.5%). Add the next five biggest players – Cogeco (7.5%), Eastlink (3.8%), Telus (3.6%), MTS (.9%) and SaskTel (.9) – and all but two percent of industry revenues are accounted for.

The telcos’ IPTV services are making incursions into the incumbent cable and satellite service providers’ turf, accounting for 7.5% of the TV distribution market by revenue in 2012 (based on my numbers, or about 6.7% percent using CRTC data)(see p. 110). In terms of subscribers, IPTV services account for 10% of the market (CRTC numbers are slightly lower, p. 111) (see here for partial explanation of the differences).

Since IPTV services began to be rolled out by MTS and SaskTel in 2004, followed later by Telus and Bell in 2008 and 2009, respectively, the HHI score has fallen 320 points (see Table 1 above) and now sits at the lower end of the “moderately concentrated” scale. The threat to incumbent cable companies is greatest in western Canada, where MTS, SaskTel and Telus have rolled out IPTV services faster than Bell from Ontario to the Atlantic.

Within the platform media industries as a whole, new players have emerged, but it is primarily the expansion of incumbent telcos and cable companies outside their traditional turf and into one anothers’ industries that is generating the greatest effect. There has been a modest increase in competition in all platform media sectors in recent years since except internet access. While new technologies have increased the structural complexity of platform media, they have not disrupted the long-standing trajectory of development when it comes to tv distribution: more channels, and a few new players, but with more of the whole in the hands of the old.

The Media Content Industries

Television

In the late 1980s until 1996, concentration in broadcast TV fell sharply while the specialty and pay TV channels emerging at this time displayed similarly high levels of competition. TV became much more diverse as a result.

Such trends abruptly reversed in the late-1990s, however, with something of a lag before the specialty and pay TV market began to follow suit. After the turn-of-the-century concentration levels for TV climbed steadily and substantially. The upswing since 2008 has been especially sharp. Figure 5, below, shows the trend in terms of CR scores; Figure 6, in terms of the HHI.

Figure 5 CR Scores for the Content Industries, 1984-2012

 

Figure 6 HHI Scores for the Content Industries, 1984-2012

Sources: Media Industry Data and Sources and Explanatory Notes.

In 2012, the largest four television providers controlled about 78% of all television revenues, up substantially from 71% four years earlier. In terms of the 700 TV channels actually operating in Canada, the big four own 171 of them in total and which account for just under four-fifths of all revenue: Shaw (66 tv channels), Bell (61), Rogers (24) and Quebecor (20). In contrast, in 2004, the big four accounted for 62% of the TV biz, a time before major players such as Alliance Atlantis and CHUM had carved out a significant place for themselves in the TV marketplace (circa 2000-2006), respectively.

Concentration across the total TV market has been pushed to new extremes in recent years, first, by Shaw’s take-over of Canwest’s television assets in 2010 and, second, by Bell’s buy-back of CTV the year after that. They would have been higher yet had the CRTC approved Bell’s acquisition of Astral Media – the fifth largest television provider – rising to about 86%. The about face on that matter in 2013 will be dealt within in next year’s version of this post.

In 2012 the largest four tv providers after Bell and Shaw are: the CBC, Rogers, Astral, and QMI, respectively, and in that order. Together, they accounted for 91% of the entire television industry last year. Similar patterns are replicated in each of the sub-components of the ‘total television’ measure (conventional television, pay and specialty channels), as the chart above illustrates.

In contrast, in 2004, the six largest players accounted for a little over three-quarters of all revenues. The run of HHI scores reinforces the view that the television industry is has become markedly more concentrated in the past two years.

CR and HHI measures for tv were the lowest in the 1990s when newcomers emerged (Netstar, Allarcom), yet before the time when the multiple ownership groups that had stood behind CTV and Global for decades combined into single groups. The period was significantly more diverse because the CBC no longer stood as the central pillar in tv and radio, while specialty and pay television channels were finally making their mark. Today, the latter are the jewel in the TV crown, but they are highly concentrated by the CR4 measure, with a CR4 of 81%, yet only moderately so by HHI standards with a score of 1906.

Newspapers

Concentration in the newspaper industry rose steadily from 1984 until 2008, when it peaked.  In 1984, the top four groups accounted for 61% of all revenues, a number which had risen to about two-thirds of the market in 1996 – a level that stayed fairly steady for most of the next decade before rising again to an all-time high within the time frame studied here in 2008. At that point, the four largest newspaper groups accounted for three-quarters of the market: Canwest (23.7%), Quebecor (21.5%), Torstar (19.3%) and Power Corp (10.5%).

Levels have since declined considerably by either the CR4 or HHI measure, with the former falling to 69% in 2012 and the latter dropping from 1628 in 2008 to 1,398 – well within the ‘competitive’ range by the lights of the new HHI standards or only moderately concentrated by the old standards. The new conditions likely reflect Postmedia’s decision to sell some of its newspapers (Victoria Times Colonist) and to cut publishing schedules at others. Indeed, its market share has fallen steeply from 24% in 2008 when the papers were still in the hands of Canwest to just 17% last year, and within a significantly smaller market. A few new publishers have also emerged amidst the tough times now facing the newspaper industry, notably Black Publishing and Glacier Publishing in western Canada.

Magazines

Of all media sectors, magazines are least concentrated, with concentration levels falling by nearly one half on the basis of CR scores and two-thirds for the HHI over time.

Radio

Radio is also amongst the most diverse media sectors according to HHI scores, and only slightly concentrated by the C4 measure. The shuffling of several radio stations between Shaw/Corus and Cogeco in 2011 had continued the long-term decline in concentration, but in 2012 there was an uptick as the CR4 rose from 56% to 60% and the HHI from 954 to 1027. Bell’s take-over bid for Astral – Canada’s largest radio broadcaster – would have further pushed radio along this path had it have been approved by the CRTC in 2012. Levels of concentration would have been high by the CR measure, with the CR4 rising from 60% to 68%, but with an HHI of 1371 it would still have been well within the unconcentrated zone by the revised HHI guidelines or moderately concentrated by the old ones. .

Online Media

As the earlier discussion of internet access showed, there is little reason to believe that core elements of the Internet are immune to high levels of concentration. But what about other core elements of the Internet and digital media ecology: search engines, social media sites, browsers, operating systems and internet news sites?

Concentration in the search engine market grew markedly from 2004 to 2011. CR4 scores have been persistently sky-high during these years, rising from 93% in 2004 to almost 98% in 2011, while HHI scores have been off-the-charts in the 4000-7000 range. Google’s dominance seemed to be locked in the low 80%-range, with others lagging far behind, during this period.

Google’s share of search, however, tumbled in 2012 to just under 68%, although this still leaves Microsoft (17.8%), Yahoo! (5.4%), and Ask.com (6.2%) trailing far behind. The CR4 and HHI scores are still sky-high at 97% and 4995, respectively, and as Table 2 shows.

Table 2: CR4 and HHI Scores for the Search Engine Market, 2004-2012

Source: Experien Hitwise Canada. “Main Data Centre: Top 20 Sites & Engines.” last Accessed May 2013.

Social media sites display a similar but not quite as pronounced trend. Facebook accounted for 46% of unique visitors to such sites in December 2012, followed by Twitter (15%), LinkedIn (12%), Tumbler (12%), Instagram (9%) and Pinterest (6%) (Comscore). Again, the CR4 score of 85% and HHI score of 2762 reveal that social networking sites are highly concentrated.

Similar patterns hold for the top four web browsers in Canada. Microsoft’s Explorer (55%), Firefox (20%), Google’s Chrome (18%), Apple’s Safari (5%) have a market share of 98 percent (Netmarketshare).  In terms of smart phone operating systems, the top four players accounted for 96 percent of revenues: Apple’s iOS (55%), Google’s Android OS (29%), Java (7%), Nokia’s Symbian (5%). RIM (3%) and Microsoft (1%) accounted for the rest (Netmarketshare).

Internet news sites are an exception to the extremely high levels of concentration in the online digital media environment. Internet users time on top 10 online news sites nearly doubled from 20 to 38 percent between 2003 and 2008. Most of that increased time is spent on sites that are extensions of well-known traditional media companies: cbc.ca, Quebecor, CTV, Globe & Mail, Radio Canada, Toronto Star, Post Media, Power Corp. Other major sources included CNN, BBC, Reuters, MSN, Google and Yahoo! (Zamaria & Fletcher, 2008, p. 176).

Despite this rapid “pooling of attention” on the top 15 or so news sites, concentration levels stayed flat between 2004 and 2007. They declined thereafter until 2011 – the latest year for which good data is available. Online news sources are not concentrated by either the CR or HHI measure and are diverse relative to any of the other sectors, except magazines.

Table 3: Internet News Sources, 2004-2011

Source: Table calculated by Fred Fletcher, York University, from the Canadian Internet Project Data sets (Charles Zamaria, Director). Reports on the 2004 and 2007 surveys are available at http://www.ciponline.ca.

The Network Media Industries as a Whole

Combining all the elements together yields a birds-eye view of long-term trends for the network media as a whole. Figure 7 below gives a snapshot of the state of the network media economy in 2012, listing those sectors that were unconcentrated, those that were moderately concentrated and finally those that were highly concentrated by HHI standards.

Figure 7: Concentration Rankings on the basis of HHI Scores, 2012

Clearly, things are not all to one side, with several sectors showing low levels of concentration. However, there is no shortage of segments where concentration is either moderately high or very high. Perhaps one of the most striking things to stand out from Figure 7 is the extent to which core elements of the internet and digital media ecology seem to be prone to very high levels of concentration.

Figures 8 and 9 show the trends over time on the basis of, first, CR1, CR4 and CR10 scores, followed by a depiction of the trends based on the HHI.

Figure 8: CR 4 Score for the Network Media Economy, 1984-2012

Sources: Media Industry Data and Sources and Explanatory Notes.

 

Looking the entirety of the network media economy, several distinct points emerge: The biggest company’s share of revenues across the whole of the media twenty-eight years ago was 48%; in 2012, it was 26.4% albeit in a vastly larger media universe. That company in 1984 was BCE; it is still the same company today, and substantially larger than the second and third ranked firms, Rogers and Shaw.

The CR4 levels today are about the same as they were twenty-eight years ago: 66.7% versus 65.1%. Today, the top 10 firms have a larger market share than they did in 1984: 81% versus 76%. These figures would have been higher had the CRTC given the green light to BCE’s first bid to acquire Astral in 2012, as Figure 8 shows.

Figure 9: HHI Scores for the Network Media Economy, 1984-2012

Sources: Media Industry Data and Sources and Explanatory Notes.

As Figure 9 shows, the HHI fell by half from 1984 to 2000. Trends then moved erratically for the next few years before stabilizing in the 1200 to 1300 range, before a significant step up in 2010 and with another potential step in the same direction last year before the CRTC nipped Bell’s bid to acquire Astral in the bud.

The results depict a competitive scenario by the revised 2010 HHI standards (or moderately concentrated by the old standards) – if we take the ‘total media universe’ as the beginning and endpoint of analysis (e.g. Ben Compaine, Ken Goldstein, Adam Theirer). But this is problematic for several reasons.

First, it obscures trends at lower levels of analysis, i.e. sector-by-sector and then by category – platform media, content media and online media – before moving to the total network media. We use the “scaffolding method” precisely so that we can pick up on such things.

Second, such conclusions skate over the fact that while concentration levels according to the most sensitive measure – the HHI — fell greatly between 1984 and 2000, they have basically stayed flat ever since, with a significant uptick since 2010.

Third, from the point of view of the CR4 and CR10, there is a distinct u-shape trend over the past three decades. Concentration fell steeply in the 1980s until 1996-2000, when there was a sharp reversal leading to the CR4 being pretty much the same now as it was thirty years ago. On the basis of the CR10, concentration levels were higher in 2012 than in 1984, i.e. the CR10 in 2012 was 81% vs. 76% in 1984.

From this perspective, concentration has grown significantly over time. At best, one might argue that the CR and HHI scores cut in somewhat different directions, or at least the latter are not so pronounced as the former, and thus the results must be seen as mixed. There is little reason, however, to view the current state of affairs and contemporary trends through rose-tinted glasses.

Concluding Thoughts 

Several things stand out from this exercise. First, we are far from a time when studies of media and internet concentration are passé. Indeed, theoretically-informed and empirically-driven research is badly needed because there is a dearth of quality data available. Moroever, general developments and the press of specific events – Bell Astral 1.0 in 2012, the resurrected version of the Bell Astral deal that was approved earlier this year, and now the wireless wars in which some claim there is no competition problem in mobile wireless services at all versus those who argue the opposite – demand that we have a good body of long-term, comprehensive and systematic evidence ready-to-hand.

This kind of data is still very hard to come by and data collection for 2012 reconfirmed that at every step of the way. The CRTC still needs a dramatic overhaul of how it releases information and of its website. The underlying data sets included in the Communications Monitoring Report, Aggregate Annual Returns, and Financial Summaries should be made available in a downloadable, open format (also see David Ellis’ series of posts on this point).

The regulated companies themselves must also be made to be more forthcoming with data relevant to the issues, not less as they so strongly desire (see here for a recent example). The CRTC also publishes too much data that does not square with what the companies themselves state in their Annual Reports. Good decisions cannot be made poor data.

The trajectory of events in Canada is similar to patterns in the United States. Concentration levels declined in the 1980s, rose sharply in the late-1990s until peaking circa 2000 and staying mostly flat thereafter. While processes of deconsolidation and vertical dis-integration have taken hold in the US — with the exception of Comcast’s 2011 blockbuster take-over of NBC-Universal — trends in Canada are running in the opposite direction and with the forces of concentration having gained momentum since 2010.

Of course, trends are not all to one side. The assets from the bankrupt Canwest have been shuffled in recent years, and the process is ongoing with Postmedia selling off further papers in the past year, thereby allowing small newspaper publishers to grow (Black Publishing, Glacier). Some significant new entities have emerged (e.g. Blue Ant, Post Media, Remstar, Teksavvy, Netflix, Tyee, Rabble.ca, Huffington Post, a worker-owned TV station in Victoria, CHEK, and a and CHCH in Victoria and another independently owned TV station in Hamilton, CHCH).

The overall consequence is that we have a set of bigger and structurally more complicated and diverse media industries, but these industries have generally become more concentrated, not less. There is a great deal more that can and will be said about what all this means, but in my eyes it means that concentration in no less relevant in the “digital media age” of the 21st century than it was during the industrial media era of centuries’ past.

The next two posts will look at the state of media concentration in the English- and French-language regions of the network media economy, followed by another that will look at the state of media concentration in Canada relative to the US and the thirty countries studied by the International Media Concentration Research (IMCR) project, including the U.S. Germany, Japan, Australia, the UK, France, and so on. The final two posts in the series will profile the top 20 TMI companies in Canada as well as trends with respect to ownership, boards of directors, revenue, profits and debt.

Media and Internet Concentration in Canada, 1984 – 2011

As my last post explained, the media economy in Canada has grown immensely and become far more complex in the past twenty-five years with the rise of the Internet and digital media. In this post, I ask whether the media have become more or less concentrated amidst all these changes?

While opinions are rife on the issue, as McMaster University professor Philip Savage (2008) observes, the debate over media concentration in Canada “largely occurs in a vacuum, lacking evidence to ground arguments or potential policy creation either way” (p. 295).

The need for good evidence on the question has been obvious over the past year in the context of Bell Canada’s bid to buy Astral Media, the ninth largest media company in Canada. Indeed, the CRTC’s decision to kill the deal in late October turned in a big way, although not entirely by any stretch of the imagination, on the evidence about media concentration.

The same question will be front-and-centre in Bell Astral Round Two. While nobody knows what version 2.0 of the deal looks like outside of the two companies’ inner sanctum, and the CRTC staff currently vetting it before it is opened for public interventions (probably in the new year), the issue of concentration will undoubtedly loom large in whatever discussions, and regulatory actions, do occur.

That said, however, we must make no mistake about it, studying media and internet concentration is not about Bell or Astral, or any specific transaction. In fact, the issue in the Bell Astral case is not if Bell is too big but whether telecom, media and internet markets in Canada are already too concentrated as a whole? How do we know one way or another? This post helps to address these questions.

Competing Views on Media Ownership and Concentration

Grappling with these issues is not just about remedying the ‘missing evidence’ problem, but thinking clearly about how the issues are framed.

Many critics point to media concentration as steadily going from bad to worse, but with little to no evidence to back up such claims. Perhaps the best known example of this is Ben Bagdikian, who claims that the number of media firms in the U.S. that account for the majority of revenues plunged from 50 in 1984 to just five by the mid-2000s. Similar views also exist in Canada, where critics decry what they see as the inexorable trend towards greater media concentration and its debilitating effects on “democracy’s oxygen”, for instance, or vilify the media moguls behind such trends who have, in these critic’s words, created “Canada’s most dangerous media company”.

A second group of scholars set out to debunk the critics by quantitatively analyzing reams of media content only to find the evidence about how changes in media ownership and market structure effect content to be mostly “mixed and inconclusive” (Soderlund, et. al al. 2005). The problem with this conclusion, however, is that it proceeds as if media concentration’s ‘impact on content’ is the only concern, or as if preserving the existing status quo might not be a significant problem in its own right (Gitlin, 1978). Undeterred, this line of scholarship trundles on so that, half a decade later, similar studies by many of the same authors, Cross-Media Ownership and Democratic Practice in Canada: Content-Sharing and the Impact of New Media, reach pretty much the same conclusions (Soderlund, Brin, Miljan & Hildebrandt, 2011).

A third school of thought mocks concern with media concentration altogether. According to this school, how could anyone believe that the media are still concentrated when there are thousands of news sources, social networking sites galore, pro-am journalists, user-created content and a cacophony of blogs at our finger tips, 700 television channels licensed by the CRTC, ninety-four newspapers publishing daily and smartphones in every pocket? Ben Compaine (2005), a media economist at MIT, has a one-word retort for those who think that concentration still matters amidst this sea of plenty: internet!

Those in this camp also argue that focusing on concentration when traditional media face the perilous onslaught of global digital media giants such as Google, Amazon, Netflix, Facebook, and so on is akin to rearranging the deck chairs on the Titanic – foolhardy and doomed to fail (Thierer & Eskelen, 2008; Dornan, 2012). Journalistic accounts often share this view, routinely invoking, in mantra-like fashion, the idea that media are more competitive than ever. Like their acdemic counterparts, such accounts offer little to no evidence to support such claims, other than pointing to the same roster of foreign digital media goliaths as if examples equals evidence. It does not.

While some might find it hard to fathom, there’s a fourth school of thought, and one that I largely subscribe to, that accepts that fundamental changes have occurred, but rejects claims that this renders concern with media consolidation obsolete. For all those who guffaw at charges of media concentration, it is easy to point, for example, to the fact that only about a third of the 94 daily newspapers said to exist are actually still publishing original content on a daily basis. Of the 700 television channels listed on the CRTC’s books, just over 200 actually filed a financial return last year. And half of those tv channels belong to just four companies — Bell (33), Shaw (46), Rogers (11) and QMI (12). Their share of the market, as we will see, is much higher yet. Keeping our eye on these facts also highlights, for example, how dominant incumbent players use price (usage-based billing) and bandwidth caps, for example and among other tactics, to protect their legacy television businesses (i.e. CTV, Global, CityTV, TVA), while hobbling rivals (Netflix) and limiting people’s choice as a result.

This school also suggests that core elements of the networked digital media – search engines (Google), Internet access (ISPs), music and book retailing (Apple and Amazon), social media (Facebook) and access devices (Apple, Google, Nokia, Samsung, RIM) – may actually be more prone to concentration because digitization magnifies economies of scale and network effects in some areas, while reducing barriers in others. If this is correct, then we may be witnessing the rise of a two-tiered digital media system, with many small niche players revolving around a few enormous “integrator firms” at the centre (Noam, 2009; Benkler, 2006; Wu, 2010).

The more that central elements of the networked digital media are concentrated, the easier it is to turn these nodal points — Facebook, Google, ISPs, Twitter, and so forth — into proxies that serve other interests in, for example, the preservation of dominant market power in ‘legacy’ media sectors (e.g. television and film), the copyright wars, efforts to block pornography, and in law enforcement and national security matters. In other words, the more concentrated such nodal points are, the more potential digital media giants have to:

• set the terms for the distribution of income to musicians, newspapers and books (Google, Apple, Amazon);
• turn market power into moral authority by regulating what content can be distributed via their ‘walled gardens’ (Apple),
• set the terms of ownership and use of user created content and how it is sold in syndicated markets as well as to advertisers (Google and Facebook) (van Couvering, 2011; Fuchs, 2011);
• and set defacto corporate policy norms governing the collection, retention and disclosure of personal information to commercial and government third parties.

Whilst we must adjust our analysis to new realities, it is also true that long-standing concerns have not disappeared either. To take just one case in point, consider the fact that during the 2011 election campaign, every single newspaper in Canada, except the Toronto Star, that editorially endorsed a candidatefor Prime Minister touted Harper – roughly three times his standing in opinion polls at the time and the results of the prior election. When 95 percent of editorial endorsements for PM across the nation stump for one man – Harper — something is amiss.

Ultimately, talk about media concentration is really a proxy for bigger conversations about consumer choice, freedom of expression as well as democracy. While such discussions must adapt to new realities, the advent of digital media does not mean that such conversations should fall silent. Politics, values and heated debates are endemic to the topic, and this is how things should be (Baker, 2007; Noam, 2009; Peters, 1999).

Methodology

Discussions of media concentration will never turn on the numbers alone, and nor should they, but it is essential to be as clear as possible about the methods used to assess the issue. To begin, there is no naïve vantage point from which data about these issues can be innocently gathered and presented as if evidence is just out there laying in a state of nature, somewhere, waiting to be plucked like apples from a tree.

Data, in other words, does not serve as a one-to-one map of the reality it claims to describe. Nonetheless, there are good ways to make a good body of evidence and bad. An essential factor all down the line is the need for researchers to be open and reflexive about their methods and theoretical starting points.

A fuller discussion of the methodology that I use can be found here, here and here, but for now we can lay out the bare bones of the approach before turning to the analysis itself. I begin by selecting a dozen or so media sectors at the heart of the analysis: wired & wireless telecoms; cable, satellite & IPTV distributors; Internet access; broadcast tv; pay & subscription tv; radio; newspapers; magazines; search engines; social media sites; and online news services.

Data were collected for each of these sectors over a twenty-seven year period, 1984 – 2011, first at four-year intervals up until 2008 and annually since. For the DIYers among you, here’s a handy dandy list of sources.

Data for the revenues and market share for each ownership group in each of these sectors was then assembled. I then group each of the above sectors into three categories, assess the concentration level in each category, and then scaffold upward from there to examine the network media industries as a whole: (1) network infrastructure; (2) content: (3) online media.

I typically drop wired and wireless telecoms from the whole of what I call the network media industries because the size of these sectors means that they tend to overshadow everything else.

Lastly, I use two common tools — Concentration Ratios (CR) as well as the Herfindhahl – Hirschman Index (HHI) – to depict levels of competition and concentration over time. The CR method adds the shares of each firm in a market and makes judgments based on widely accepted standards, with four firms (CR4) having more than 50 percent market share and 8 firms (CR8) more than 75 percent considered to be indicators of highly levels of concentration.

The HHI method squares and sums the market share of each firm with more than a one percent share in each market to arrive at a total. If there are 100 firms, each with a 1% market share, then markets are highly competitive, while a monopoly prevails when one firm has 100% market share. The following thresholds are commonly used as guides:

HHI < 1000                                     Un-concentrated

HHI > 1000 but < 1,800             Moderately Concentrated

HHI > 1,800                                    Highly Concentrated

The Historical Record and Renewed Interest in Media Concentration in the 21st Century

There has always been, even if episodically, keen interest in media ownership and concentration in Canada and the world since the late-19th and early-20th centuries.

In 1910, for example, the Board of Railway Commissioners (BRC) broke up the three-way alliance between the two biggest telegraph companies — Canadian Pacific Telegraph Co. and the Great Northwestern Telegraph Co. (the latter an arm of the New York-based goliath, Western Union) – and the American-based Associated Press news wire service. Why?

In the face of much corporate bluster, the BRC did this because the two dominant telegraph companies were giving away the AP news service to the top newspaper in cities across Canada for free in order to bolster their stranglehold on the lucrative telegraph business. Allowing this to continue, stated the BRC matter-of-factly, would “put out of business every news-gathering agency that dared to enter the field of competition with them” (1910, p. 275).

Thus, in a conscious bid to use telecoms regulation to foster competition amongst newspapers, and to free up the flow of news on the wires, the BRC effectively dismantled the alliance. For upstarts such as Winnipeg-based Western Associated Press – which had initiated the case – it was a significant victory (Babe, 1990).

Media concentration issues arose episodically thereafter and came to a head again in the 1970s and beginning of the 1980s, when three inquiries were held: (1) the Special Senate Committee on Mass Media, The Uncertain Mirror (2 vols.)(Canada, 1970); (2) the Royal Commission on Corporate Concentration (1978); and (3) the Royal Commission on Newspapers (Canada, 1981).

Things lay dormant for more than two decades thereafter, but sprang to life again in the late-1990s and turn-of-the-21st century after a huge wave of consolidation thrust concerns about media concentration back into the spotlight. Three inquiries were held between 2003 and 2007 as a result: (1) the Standing Committee on Canadian Heritage, Our Cultural Sovereignty (2003); (2) the Standing Senate Committee on Transport and Communications, Final Report on the Canadian News Media(2006);[i] as well as (3) the Canadian Radio-Television and Telecommunications Commission’s Diversity of Voices inquiry in 2008.

Structural Transformation: Two (three?) Waves of Consolidation and the Rise of TMI Conglomerates

As I noted in my last post, for all sectors of the media economy in Canada, revenues grew immensely from $37.5 billion in 1984 to just under $70 billion last year (or from $12.1 billion to just under $34 billion when we exclude wiredline and wireless telecoms) (in inflation-adjusted “real dollars”). Between 1984 and 1996, new players meant more diversity in all sectors, except for newspapers as well as cable and satellite video distribution, where concentration climbed significantly.

Conventional as well as pay and subscription television channels were already expanding during this time. In terms of ownership, incumbents and a few newcomers – e.g. Allarcom and Netstar – cultivated the field, with their share of the market growing steadily in tandem with the number of services available (underlying data for these claims can be found here).

Concentration levels remained very high in wired line telecoms in the 1980s and early 1990s, while wireless was developed by two companies, Bell and Rogers. As had been the case in many countries, telecoms competition moved slowly from the ends of the network into services and then network infrastructure, with real competition emerging in the late-1990s before the trend was reversed and concentration levels again began to climb.

In the 1980s and early-1990s, consolidation took place mostly among players in single sectors. Conrad Black’s take-over of the Southam newspaper chain in 1996 symbolized the times. In broadcast television, amalgamation amongst local ownership groups created the large national companies that came to single-handedly own the leading commercial television networks – CTV, Global, TVA, CHUM, TQS – by the end of the 1990s.

While weighty in their own right, these amalgamations did not have a big impact across the media as a whole. There was still significant diversity within sectors and across the TMI sectors. The CBC remained prominent, but public television was being eclipsed by commercial television as the CBC’s share of all resources in the television ‘system’ slid from 46 percent in 1984 to half that amount by 2000 to just over twenty percent today (see the motion chart on CMCR website illustrating this point).

While gradual change defined the 1980s and early-1990s, things shifted dramatically by the mid-1990s and into the 21st century as two (and maybe three) waves of consolidation swept across the TMI industries. A few highlights help to illustrate the trend:

Wave 1 – 1994 to 2000: Rogers acquisition of Maclean-Hunter (1994). Peaks from 1998 to 2001: (1) BCE acquires CTV and the Globe & Mail ($2.3b); (2) Quebecor takes over Videotron, TVA and the Sun newspaper chain ($ 7.4b) (1997-2000); (3) Canwest buys Global TV ($800m) and Hollinger newspapers papers, including National Post ($3.2b).

Wave 2 – 2006-2007.  Bell Globe Media re-branded CTVglobemedia, as BCE exits media business. CTVglobemedia acquires CHUM assets (Much Music, City TV channels and A-Channel).  CRTC requires CTVglobemedia to sell City TV stations – acquired by Rogers (2007). Astral Media buys Standard Broadcasting. Quebecor acquires Osprey Media (mid-size newspaper chain)(2006). Canwest, with Goldman Sachs, buys Alliance Atlantis (2007) (Showcase, National Geographic, HGTV, BBC Canada, etc) – and biggest film distributor in Canada.

Wave 3 – 2010 – ? Canwest bankrupt. Newspapers acquired by Post Media Group, TV assets by Shaw.  BCE makes a comeback, re-buys CTV (2011) and bids for Astral Media in 2012, but fails to gain CRTC approval.

That the massive influx of capital investment drove consolidation across the telecom, media and Internet industries during these periods is illustrated in Figure 1 below.

Figure 1: Mergers and Acquisitions in Media and Telecoms, 1984 – 2011 (Mill$)

Sources: Thomson Financial, 2009; FPInformart, 2010; Bloomberg Professional; CRTC, Communication Monitoring Report.

Consolidation has yielded a fundamentally new type of media company at the centre of the network media ecology: i.e. the integrated media conglomerate. Extremely popular in the late-1990s in many countries around the world, many media conglomerates have since collapsed or been broken up (AOL Time Warner, AT&T, Vivendi, CBS-Viacom, and parts of NewsCorp, etc)(see, for example, Jin, 2011; Thierer & Eskelen, 2008; Waterman & Choi, 2010). The trend elsewhere has not, however, taken hold in Canada.

Indeed, in Canada, sprawling media conglomerates are still all the rage. Four such giants and a half-dozen other large but more specialized companies part their size make-up the core ‘big 10’ companies in the network media economy: Bell (CTV), Shaw (Global), Rogers (CityTV), QMI (TVA), CBC, Post Media, Cogeco, Telus, Astral, and Eastlink. A detailed chart of each by ownership, revenues, and sectors operated in is available here and will be addressed further in the next post.

Looking at media concentration from the vantage point of the ‘big ten’, the media have become more concentrated than ever. Their share of all revenues (excluding telecoms services) rose sharply in the 1990s and between 2000 and 2008 hovered steadily in the mid- to low-60 percent range. The big four’s share of the network media economy subsequently rose significantly to just under 68 percent in 2010 (after Shaw’s acquisition of Global) and rose again to just under 70 percent in 2011 (when Bell re-acquired CTV) — an all-time high and a substantial rise from 52% in 1992. The levels of media concentration in Canada are more than twice as high as those in the U.S., based on Noam’s analysis in Media Ownership and Concentration in America (2009).

Breaking the picture down into the following three categories and applying the CR and HHI tools provides an even better view of long-term trends:

• ‘network infrastructure’ (wired and wireless telecom services, ISPs, cable, satellite and other OVDs);
• ‘content’ (newspapers, tv, magazines, radio);
• ‘online media’ (search, social, operating systems).

At the end of the post, I combine these again to complete the analysis of the network media industries as whole in a slightly different form.

The Network Infrastructure Industries

All sectors of the network infrastructure industries are highly concentrated and pretty much always have been, although Internet Access is a partial exception.

Table: CR and HHI Scores for the Network Infrastructure Industries, 1984 – 2011

Much the same can be said with respect to wireless services: they have consistently been highly concentrated, and still are until this day, despite the advent of four newcomers in just the past two years: Mobilicity, Wind Mobile, Public and Quebecor.CR4 and HHI measures for wired telecoms scores fell during the late-1990s as greater competition in wired line telecom services took hold. They reached their lowest level ever between 2000 and 2004 before after shocks from the collapse of the speculative dot.com bubble took out many of the new rivals (CRTC, 2002, p. 21). Competition grew more and more feeble for most of the rest of the decade before drifting modestly upwards since 2008. Concentration levels, however, still remain high by late-1990s, turn-of-the-century standards, as well as those of the CR and HHI measures.

Two competitors – Clearnet and Microcell – emerged in the late-1990s and managed to garner 12 percent of the market between them, but were then taken over by Telus and Rogers in 2000 and 2004, respectively. Whether the recent round of newcomers will fare any better it is still too early to tell, but with only 2.2 percent of the market as of 2011 they are a long way from the high tide of competition set a decade ago.

As the telecoms and Internet boom gathered steam in the latter half of the 1990s new players emerged to become significant competitors in Internet access, with four companies taking more than a third of the ISP market by 1996: AOL (12.1%), Istar, (7.2%), Hook-Up (7.2%) and Internet Direct (6.2 percent).

The early ‘competitive ISP era’, however, has yielded to more concentration since. Although the leading four ISPs accounted for a third of all revenues in 1996, by 2000 the big four’s (Bell, Shaw, Rogers & Quebecor) share had grown to 54 percent. Things stayed relatively steady at the level for most of the decade before inching upwards in the past few years to reach 57.1 percent in 2011.

HHI scores for internet access also moved upward between 1996 and 2000, but are still low relative to most other sectors. However, this is probably more an indicator of the limits of the HHI method in this particular case, since 93% of high-speed Internet subscribers rely on one or another of the incumbent cable or telecom companies’ ISPs to access the Internet, according to figures in the CRTC’s Communication Monitoring Report (p. 148).

ISP provision in Canada is effectively a duopoly, with the left over 6-7% of the market not dominated by the incumbents scattered among the 400 or so independent ISPs that still exist. This is a slight increase from last year, but it does not mark the return to competitive internet access.  Canada has relied on a framework of limited competition between incumbent telecom and cable companies for wiredline, wireless, internet access and video distribution markets and in all of these markets they dominate, with some other smaller rivals in each.

Cable, satellite and IPTV distribution is one of the only segments assessed where concentration has risen steadily from low levels in the 1980s (850) to the top of the scales in 1996 (2300), before drifting downwards by the turn-of-the-century to the low 2000s where it has remained ever since. It has dipped below that, to the 1900-range, for the last five years, but this is still at the very high end of the scale.

As I noted in the last post, the IPTV services of the incumbent telcos – Bell, MTS, Telus and SaskTel – are becoming a more significant factor in the distribution of television, after a slow and staggered start. By 2011, IPTV services accounted for 7.6 percent of the TV distribution market, based on my numbers, or 3.8 percent using CRTC data (see page 96).

While I have yet to get to the bottom of why this discrepancy exists, what can be said is that, on the basis of my figures, the growth of IPTV services has made small incursions into the incumbent cable and satellite service providers’ turf (i.e. Shaw, Rogers, Quebecor, Cogeco and Eastlink). However, this has done little more than nudge the CR and HHI scores, as the table above shows.

Over the last twenty-seven years, cable tv has become ubiquitous and new tv distribution infrastructures have been added to the fold – DTH in the 1990s, and now, slowly, IPTV. New players have emerged, but never have so few owned so much. New technologies have generally added to this and have not fundamentally disrupted the broad trajectory of development when it comes to tv distribution channels: more channels, and even some new players, but with more of the whole in the hands of the old. The wired society in Canada is probably the poorer for this.

The Content Industries

Until the mid-1990s, all aspects of the tv industry (i.e. conventional broadcast tv as well as pay and specialty channels) were moderately concentrated by HHI standards and significantly so by CR measures. Competition and diversity made some modest inroads from 1998 to 2004, but the trend abruptly reversed course and levels have climbed steadily and substantially since, and sharply in the last two years. Figure 2, below, shows the trend in terms of CR scores; Figure 3, in terms of the HHI.

Figure 2 CR Scores for the Content Industries, 1984 – 2011

 Figure 3 HHI Scores for the Content Industries, 1984 – 2011

The largest four commercial television providers control about 81% of all television revenues in 2011, up from 75% a year earlier. Levels of tv concentration were pushed to new extremes by

Shaw’s take-over of Canwest’s television assets in 2010 and Bell’s buy-back of CTV last year. The big four’s share of all tv revenue before these transactions in 2008 was 70%. A ten percent leap in concentration in two years is a lot.

If the CRTC had approved Bell’s acquisition of Astral Media – the fifth largest television company in Canada, ahead of Quebecor – the all-time high levels of concentration set in 2011 would have been surpassed by an even higher 89.5%. In contrast, the big four accounted for 61% of the tv biz in 2004, a time before major players such as Alliance Atlantis and CHUM were bought out by the now defunct Canwest and Bell/CTV 1 (circa 2000-2006), respectively.

The CR and HHI measures for tv were at all time lows in the 1990s. This was a time when newcomers emerged (Netstar, Allarcom), yet before the time when the multiple ownership groups that had stood behind CTV and Global for decades combined into single groups. The period was also significantly more diverse because the CBC no longer stood as a central pillar in tv and radio, while pay and specialty television channels were finally making their mark. Today, the latter are the crown-jewel in the tv crown.

Today the largest four tv providers after Bell and Shaw are: the CBC, Rogers, Astral, and QMI, respectively, and in that order. By 2011, these six entities accounted for ninety-five percent of the entire television industry. Similar patterns are replicated in each of the sub-components of the ‘total television’ measure (conventional television, pay and specialty channels), as the chart above illustrates.

In contrast, in 2004, the six largest players accounted for a little over three-quarters of all revenues. The run of HHI scores reinforces the view that the television industry is highly concentrated and has become markedly more so in just the past two years.

Like the cable industries, there has never been a moment when diversity and competition has flourished in the newspaper sector. Consolidation rose steadily from 1984, when the top four groups accounted for two-thirds of all revenues, to 1996, when they accounted for nearly three-quarters – a level that has stayed fairly steady since, despite periodic shuffling amongst the main players at the top. Levels declined slightly in 2011 from 2010, from 77% to 75%, likely on account of Postmedia’s decision to sell some of its newspapers (Victoria Times Colonist) and to cut publishing schedules at others.

Of all media sectors, magazines are least concentrated, with concentration levels falling by one-half on the basis of CR scores and two-thirds for the HHI over time. I have not been able to update the data for this sector for 2011, but there is little to suggest a need to change this view.

Radio is also amongst the most diverse media sectors according to HHI scores, but slightly concentrated by the C4 measure. In fact, in 2011, it became moreso, likely because of a shuffling of several radio stations between Shaw/Corus and Cogeco. Bell’s take-over bid for Astral – the largest radio broadcaster in Canada with 17.5% market share – would also have further pushed radio in the direction of concentration had it been approved last month by the CRTC. Had that scenario come to pass, levels of concentration would have still remained well-beneath the CRTC’s self-defined thresholds, but high by the CR measure and just moderately high by the HHI.

Online Media

So far, there’s little reason to believe that trends are any different in the online realm, as measures of the ISP segment showed. But what about other core elements of the increasingly Internet-centric media universe, such as search engines, social media, online news sources, browsers, and smartphone operating systems?

The trends are clear. Concentration in the search engine market continued to grow between 2010 and 2011, with the CR4 score rising from 94% to 97.6%. Google’s share of the market, however, seems to have plateaued, at just over 81 percent of this domain. Microsoft (8.6%), Yahoo! (4.2%), and Ask.com (3.7%) trail far behind, yielding a CR4 of 97.6% and an off-the-charts HHI of 6,683.

Figure 3: C4 Scores for the Search Engines, 2004 – 2011

Source: Experien Hitwise Canada. “Main Data Centre: Top 20 Sites & Engines.” last Accessed October 11, 2012.  http://www.hitwise.com/ca/datacenter/main/dashboard-10557.htm

Social media sites display a similar but not quite as pronounced trend, with Facebook accounting for 63.2% of time spent on such sites in 2010, trailed by Google’s YouTube (20.4%), Microsoft (1.2%), Twitter (0.7%), and News Corp.’s MySpace (.6%) (Experien Hitwise Canada, 2010). Again, the CR4 score of 86% and HHI score of 4426 reveal that social networking sites are highly concentrated.

Similar patterns also hold for other layers of the media ecology. The top four web browsers in Canada – Microsoft’s Explorer (52.8%), Google’s Chrome (17.7%), Firefox (17.1%) and Apple’s Safari (3%) – have a market share of over 90 percent (Comscore, 2011).  There is no data available for Canada with respect to smartphone operating systems, but US data shows that the top four players in 2010 accounted for 93 percent of all revenues: Google’s Android OS (29%), Apple’s iOS (27%), RIM (27%) and Microsoft’s Windows 7 (10%) (Nielsen, 2011).

However, not all areas of the internet and digital media environment, of course, display such patterns. The picture with respect to online news services, for instance, is significantly different. Between 2003 and 2008, the amount of time spent on online news sites nearly doubled from 20 to 38 percent, with most of the leading 15 online news sites simply being the extensions of well-established media companies: cbc.ca, Quebecor, CTV, Globe & Mail, Radio Canada, Toronto Star, Post Media, Power Corp. The other major sources included CNN, BBC, Reuters, MSN, Google and Yahoo! (Comscore, 2009; Zamaria & Fletcher, 2008, p. 176).

While that trend meant that attention was consolidating around a few online news sites, and those of traditional journalistic outlets in particular, it nonetheless seems clear that Canadians have diversified their news sources relative to the traditional news environment (newspapers, tv, radio, magazines).  On either the CR or HHI measure, online news fall under the concentration thresholds and are diverse relative to any of the other sectors, except magazines.

However, the fact that concentration levels edged upwards between 2004 and 2007, after the rapid “pooling of attention” that took place between 2003 and 2007 (see immediately above), suggests that a certain plateau might have been reached in terms of the range of sources people are using. Nonetheless, online news sources are not concentrated on the basis of the measures used here. The following table shows the results.

Table: Online News Sources, 2004 – 2011

News website	2004 (N=1482)	2007 (N =1306 )	2011 (N=1651 )
CBC	10.6	18.3	13.8
Google	5.3	9.2	10.4
MSN / Sympatico	18.2	11	14.7
Yahoo	9.3	7.4	6.5
CNN	9.3	9.4	6.1
CTV	—	6.2	2.9
Canoe	2.4	7.6	2.9
Cyberpresse	3.5	3.3	3.9
Globe and Mail	4.1	5.9	3.6
BBC	—	4.9	2.8
Toronto Star	2.6	2.4	1.5
Global	—	—	2
Other	32.6	14.4	31.1
CR4	43.4	45.9	45.4
HHI
	97.9	100	100.2

Source: Table calculated by Fred Fletcher, York University, from the Canadian Internet Project Data sets (Charles Zamaria, Director).  Reports on the 2004 and 2007 surveys are available at http://www.ciponline.ca.

The Network Media Industries as a Whole (excluding wired and wireless telecoms)

Combining all the elements together yields a birds-eye view of long-term trends for the network media as a whole. As Figure 4 below shows, the HHI score across all of the network media industries is not high by the criteria set out earlier, but the long-term upward trend is clear and significant.

Figure 4: HHI Scores for the Network Media Industries, 1984 – 2010

 

While the HHI for the network media fell in the 1980s and early-1990s, by 1996 trends had reversed and levels were higher than they were a dozen years earlier. Thereafter, the number rose steadily to close to 600 in 2000, where it hovered for several years before falling again in 2008. Since then, however, the HHI score has shot upwards, rising from 510 in 2008 to 623 after Shaw acquired Global and then to 739 once Bell re-acquired CTV after having sold down its majority stake a few years earlier.

The effect of the Bell Astral deal would have been significant in terms of the network media as a whole, raising the HHI score to over 800 – an all time high. This is still low by HHI standards, but we must bear in mind that we are talking about concentration across the entire sweep of the network media industries, not just a random assortment of a few sectors.

The CR4 standard, as shown in Figure 5 below, reveals the trend even more starkly, with the big four media conglomerates – Bell, Shaw, Rogers & QMI – accounting for more than half of all revenues in 2011, a significant rise in a vastly larger media universe from just under forty percent held by the big four twenty-seven years earlier in what was a Lilliputian pond by comparison. While still only moderately concentrated by the CR4 standard, this is for all media combined.

In each and every single sector of the media that the big four operate, they dominate, as the earlier review of CR and HHI scores illustrated. Moreover, the trend in both scores is up, significantly so in the past three years from a CR4 of around 40% to its current level of just over 50%. If this really was a golden digital media age, as some like to contend, that number should be going firmly in the opposite direction.

Figure 5: CR 4 Score for the Network Media Industries, 1984 – 2010

Concluding Thoughts 

Several things stand out from this exercise. First, we are far from a time when studies of media and internet concentration are no longer needed. Indeed, theoretically-informed and empirically-driven research is badly needed because there is a dearth of quality data available and because, one after another, the press of events and specific transactions – Bell Astral in 2012, but Bell’s re-acquisition of CTV the year before and Shaw’s acquisition of Global in 2010 – demands that we have a good body of long-term, comprehensive and systematic evidence ready-to-hand.

This kind of data is still very hard to come by and data collection for 2011 reconfirmed that at every step of the way. The CRTC still needs a dramatic overhaul of how it releases information and of its website, as David Ellis has recently argued so eloquently. The underlying data sets it includes in seminal publications like the Communications Monitoring Report, Aggregate Annual Returns, and Financial Summaries needs to be made available in a downloadable, open format that allows people and researchers to use it as they see best. The regulated companies themselves must also be made to be more forthcoming with data relevant to the issues, and not less, as they so strongly desire.

The trajectory of events in Canada is somewhat similar to patterns in the United States. Concentration levels declined in the 1980s, rose sharply in the late-1990s until peaking around 2000. However, it would appear that whereas in the U.S. a process of deconsolidation set in thereafter, with the obvious exception of Comcast’s blockbuster acquisition of NBC-Universal last year, concentration levels in Canada have climbed, and steeply so, in the past three or so years.

Current media concentration levels in Canada are roughly two-and-a-half times those in the U.S. and high by global standards (Noam, 2009). Moreover, large media conglomerates straddle the terrain in Canada in a manner that is far greater than in any of the other thirty countries studied by the IMCR project, including the U.S., Germany, Japan, Australia, the UK, and so on, where media conglomerates are no longer all the rage as they once were a decade ago.

The assets from the bankrupt Canwest have been shuffled in recent years, and some significant new entities have emerged (e.g. Channel Zero, Post Media, Remstar, Teksavvy, Netflix, The Mark, Tyee, Rabble.ca, Huffington Post). The overall consequnence is that we have a set of bigger and structurally more complicated and diverse media industries, but these industries have generally become far more concentrated, not less.

There is a great deal more that can and will be said about what all this means, but in my eyes it means that concentration in no less relevant in the “digital media age” of the 21st century than it was during the industrial media era of centuries’ past.

Media and Internet Concentration in Canada, 1984 – 2010

Last time we spoke, I said that over the next few posts I would be unravelling a mass of data that I’ve been assembling on the telecom-media-Internet (TMI) industries in Canada. The data has just been updated for 2010 with yeoman’s help from Adam Webb and now I’m putting it to use.

Last week I did so in a bid to illustrate the growth of the network media industries over time, paying attention to where this was greatest, which sectors have stagnated, and those that have declined. The purpose of this post is to address the question of whether the telecom-media-Internet (TMI) industries in Canada have grown more concentrated between 1984 and 2010, or less?

Of course, you are no doubt asking, why bother?

Repeating what I said last time, the most important reason to do this is because, as Prof. Philip Savage (2008) argues, “the media ownership debate occurs in a vacuum, lacking evidence to ground arguments or potential policy creation either way” (p. 295). I agree. One aim of my work here and as part of the International Media Concentration Research (IMCR) project is to help fill that gap.

I did a similar post on this topic last year, and now my aim is to annually update the account while broadening and improving the quality of the coverage along the way.

So why is there this void to begin with? I blame the lack of a systematic body of empirical data for the TMI industries mainly on three things:

(1) the issues at stake are highly politicized,

(2) gathering data on these industries is not easy and

(3) the CRTC’s minimalist approach to disclosing information.

Besides just trying to fix things, I think that assembling reams of data and peering deeply into it offers amazing insights into how all of the bits and parts and moving pieces of the TMI industries fit together, evolve, mutate, grow and become more differentiated and complex over time. I can think of few better ways to obtain detailed knowledge of our ‘subjects/objects of analysis’ than by pouring through data covering a span of roughly a dozen TMI sectors over more than a quarter-of-a-century.

Too often ideology and wishful thinking carry the day when it comes to issues of media ownership and concentration. There is no particular school or perspective that has a lock on this either, and when we look out across the writing on the topic, it is useful to look at four different ‘schools of thought’.

Some critics see media concentration as constantly going from bad to worse, robbing us of “democracy’s oxygen” or creating “Canada’s most dangerous media company”, as the subtitle to another book stats (Winter, 1997; Edge, 2007). Yet, such accounts work rather fast and loose with the evidence, in my opinion, and I’m not sure it’s the scholar’s task to revile or revere media companies without first having a really good handle on the issues involved.

A second group tries to tries to hug the middle ground, head-to-the-grindstone measuring how changes in media ownership affect media content. Their conclusion? Not much, and that the evidence is mostly “mixed and inconclusive” — as if “impact on content” is the main issue at stake or the absence of change might not be a significant problem in its own right (Gitlin, 1978)?

A third school group sees concern with media concentration as ridiculous. Millions of web pages, thousands of news sources, social networking sites galore, pro-am journalism, user-created content and a cacophony of blogs at our finger tips, 700 television channels licensed by the CRTC, and 94 newspapers supposedly publishing everyday. Smartphones in every pocket.

How could anyone believe that the media are still concentrated amidst all this choice? MIT media economics professor, Ben Compaine (2005), has a terse one-word retort for anyone who still sees a problem here: Internet.

Many journalists in Canada seem to have an innate affinity with this view, regularly invoking “ferocious competition”, “a crowded marketplace” and the “marketplace of ideas”, as I saw three times in just the last week, in reference to the state of television, online music, and professional journalism in Canada. But devoid of any data, I get the feeling that these are not so much meant to accurately describe the world, but rather to be taken as articles of faith and to assure us that the machinery of capitalism and democracy is in good working order.

Despite an absence of data, journalists are in good company with Compaine, who argues that while the democracy of the marketplace of ideas might be flawed, it’s getting better, not worse. The best exemplar of this work in Canada is probably that of economist and iconoclastic consultant to the commercial media players, Kenneth Goldstein (see MeasuringMedia).

Hard as it might be for some to fathom, however, there is a fourth school of thought that says that digital media and Internet are no more immune to consolidation than any other media in the past. For all those who guffaw at charges of media concentration, it is easy to point, for example, to the fact that only about a third of the 94 daily newspapers said to exist are actually still publishing original content on a daily basis. Of the 700 television channels listed in the CRTC’s books, less than 200 are up and running and more than half of them belong to just four companies — Bell (28), Shaw (52), Rogers (17) and QMI (13). Their share of the market, as we will see, is higher yet.

In The Master Switch, Tim Wu argues that there are strong and the recurring tendencies toward consolidation in the media industries, and that there is no reason to believe that core aspects of the Internet, say search engines (Google), Internet access (ISPs), online music (Apple), social media (Facebook), devices (Apple, Google, Nokia, RIM, Sony Ericsson), are any less susceptible to the pressures of consolidation than their predecessors.

Eli Noam (2009) similarly sees digitization as a double-edged sword: economies of scale are magnified as the costs of information production, transmission, storage and display fall. This furthers concentration within some markets. However, it also reduces barriers to entry, allowing some new competitors to emerge, too.

A two-tiered digital media system is taking shape as a consequence, Noam states, in which many specialist firms revolve around a few “large integrator firms”. This applies as much to “traditional” media conglomerates (e.g. Disney, News Corp., Time Warner) as it does to digital media giants (e.g. Apple, Google, Facebook, RIM, etc.) (pp. 33-39). Technology is important in this equation, but where capital is invested is king.

Andrew Odlyzko of the Digital Technology Centre, University of Minnesota, observes that all of these issues involve a centuries-old “conflict . . . between society’s drives for economic efficiency and for fairness” that “has never been resolved completely”. Policy issues like network neutrality will never go away until basic political choices like these are dealt with.

“Should something like net neutrality prevail, the conflict would likely move to a different level. That level might become search neutrality . . . .”, Odlyzko says (p. 3). Cloud neutrality might be next and so on and so forth.

Does this mean that a massive trust-busting effort on the digital media frontier is in order? Umm, maybe, but not so fast. More importantly, it means that we should pay close attention to assembling evidence and interpreting what it means. It also tells us that the answers to these issues will not turn on data alone, but politics.

Indeed, talk about media concentration is often code for a much bigger discussion of political philosophy and democracy, and it is on such matters that outcomes here will ultimately turn (Baker, 2006; Peters, 2004; McChesney, 2008; Curran & Seaton, 2010). No wonder things are so complicated and hotly contested.

On Method

To answer the question at hand, I began by defining the range of media to be studied as follows: wired & wireless telecoms; broadcast tv; pay & subscription tv; cable, satellite & IPTV distributors; newspapers; magazines; radio; Internet access; Search Engines; Social Network Sites; and Smartphone Operating Systems. I then collected data for each of these sectors over a twenty-six period, 1984 – 2010, again with yeoman’s help for the 2010 data from Adam Webb.

Data for each ownership group/firm in each sector was then assembled. I then group each of the sectors into three categories, assess the concentration level in each category, and then scaffold upward from there to a portrait of the network media industries as a whole: (1) network infrastructure; (2) content: (3) online media.

I typically drop wired and wireless telecoms from the whole of what I call the network media industries because the size of these sectors means that they tend to overshadow everything else. As you might imagine, keeping track of twenty-six years of data for 13 different segments, three categories, and one composite picture of the network media as a whole is not easy, and sometimes it all feels a bit like herding cats. Suggestions and constructive criticisms are always welcome.

Lastly, I use two common tools — Concentration Ratios (CR) as well as the Herfindhahl – Hirschman Index (HHI) – to depict levels of competition and concentration over time. The CR method adds the shares of each firm in a market and makes judgements based on widely accepted standards, with four firms (CR4) having more than 50 percent market share and 8 firms (CR8) more than 75 percent considered to be indicators of highly levels of concentration.

The HHI method squares and sums the market share of each firm to arrive at a total. If there are 100 firms each with a 1% market share, markets are highly competitive, while a monopoly prevails when one firm has 100% market share. The following thresholds are commonly used as guides:

HHI < 1000                                     Un-concentrated

HHI > 1000 but < 1,800             Moderately Concentrated

HHI > 1,800                                    Highly Concentrated

For those do-it-yourselfers, here’s a handy list of resources that you might find helpful so that you can gather and assemble your own information.

The Historical Record and Renewed Interest in Media Concentration in the 21st Century

Now of course, there’s no analysis without out a wee bit of historical context, as I always like to say. There has always been, even if episodically, keen interest in media ownership and concentration in Canada and the world since the late-19th and early-20th centuries.

In 1910, for example, the Board of Railway Commissioners (BRC) broke up the three-way alliance between the two biggest telegraph companies — Canadian Pacific Telegraph Co. and the Great Northwestern Telegraph Co. (the latter an arm of the New York-based goliath, Western Union) – and the American-based Associated Press news wire service. Why?

The BRC did this because, it argued in the face of much corporate bluster, letting the telegraph companies give away the AP news service for free to the top newspaper in cities across Canada in order to bolster their hold on the lucrative telegraph business would “put out of business every news-gathering agency that dared to enter the field of competition with them” (1910, p. 275).

In a conscious bid to use telecoms regulation to foster competition amongst newspapers, and to free up the flow of news on the wires, the BRC effectively dismantled the alliance. For upstarts such as Winnipeg-based Western Associated Press – which had initiated the case – it was a significant victory (Babe, 1990).

Media concentration issues arose episodically thereafter and came to a head again in the 1970s and beginning of the 1980s, when three inquiries were held: (1) the Special Senate Committee on Mass Media, The Uncertain Mirror (2 vols.)(Canada, 1970); (2) the Royal Commission on Corporate Concentration; and (3) the Royal Commission on Newspapers (Canada, 1981).

Things lay dormant for more than two decades, but sprung to life after a huge wave of consolidation in the late-1990s and turn-of-the-21st century thrust concern with media concentration back into the spotlight. Three inquiries were held between 2003 and 2007: (1) the Standing Committee on Canadian Heritage, Our Cultural Sovereignty (2003); (2) the Standing Senate Committee on Transport and Communications, Final Report on the Canadian News Media (2006);[i] as well as (3) the Canadian Radio-Television and Telecommunications Commission’s Diversity of Voices inquiry in 2008.

Structural Transformation: Two (three?) Waves of Consolidation and the Rise of TMI Conglomerates

The media economy in Canada grew immensely from $19.7 billion in 1984 to $56.1 billion in 2000 and to $68.7 billion in 2010 (‘real dollars’), as I noted last post. Between 1984 and 1996, new players meant more diversity in all sectors, except for newspapers as well as cable and satellite video distribution, where concentration climbed significantly.

Conventional as well as pay and subscription television channels were already expanding. In terms of ownership, incumbents and a few newcomers – e.g. Allarcom and Netstar –cultivated the field, their share of the market growing steadily in tandem with the number of services available, with minor shuffles along the way.

Concentration levels remained very high in wired line telecoms in the 1980s and early 1990s, too. Wireless was developed by two companies, Bell and Rogers. As had been the case in many countries, telecoms competition moved slowly from the ends of the network into services and then network infrastructure, with real competition emerging in the late-1990s before the trend was reversed and concentration levels again began to climb.

In the 1980s and early-1990s, consolidation took place mostly among players in single sectors. Conrad Black’s take-over of the Southam newspaper chain in 1996 symbolized the times. In broadcast television, amalgamation amongst local ownership groups created the large national companies that came to single-handedly own the leading commercial television networks – CTV, Global, TVA, CHUM, TQS – by the end of the 1990s.

While weighty in their own right, these amalgamations did not have a big impact across the media as a whole. There was still significant diversity within sectors and across the TMI sectors. The CBC remained prominent, but public television was being eclipsed by commercial television as the CBC’s share of all resources in the television ‘system’ slid from 46 percent in 1984 to half that amount by 2000 and about 18 percent today.

Gradual change defined the 1980s and early-1990s. Things shifted dramatically by the mid-1990s, however, as two (and maybe three) waves of consolidation swept across the TMI industries. A few highlights will help to illustrate the trend:

Wave 1 – 1994 to 2000: Rogers acquisition of Maclean-Hunter (1994). Peaks from 1998 to 2001: (1) BCE acquires CTV and the Globe & Mail ($2.3b); (2) Quebecor takes over Videotron, TVA and the Sun newspaper chain ($ 7.4b) (1997-2000); (3) Canwest buys Global TV ($800m) and Hollinger newspapers papers, including National Post ($3.2b).

Wave 2 – 2006-2007.  Bell Globe Media re-branded CTVglobemedia, as BCE exits media business. CTVglobemedia acquires CHUM assets (Much Music, City TV channels and A-Channel).  CRTC requires CTVglobemedia to sell City TV stations – acquired by Rogers (2007). Astral Media’s buys Standard Broadcasting. Quebecor acquires Osprey Media (mid-size newspaper chain)(2006). Canwest, with Goldman Sachs, buys Alliance Atlantis (2007) (Showcase, National Geographic, HGTV, BBC Canada, etc) – and biggest film distributor in Canada.

Wave 3 – 2010? Canwest bankrupt. Newspapers acquired by Post Media Group, TV assets by Shaw.  BCE makes a comeback, buys CTV.

The massive influx of capital investment drove consolidation across the telecom, media and Internet industries during these periods is illustrated in the Figure below.

Figure: Mergers and Acquisitions in Media and Telecoms, 1984 – 2010 (Millions$)

Sources: Thomson Financial, 2009; FPInformart, 2010; Bloomberg Professional.

We can see a clear trend towards increased investment in mergers and acquisitions beginning in 1994, mounting steadily to unheard of levels by 2000, a fall after the collapse of the TMT bubble, and significant rise again between 2003 and 2007, before falling off sharply after the onset of the Global Financial Crisis (2007ff).  The patterns closely parallel those in the US and globally.

Whether Shaw’s and Bell’s (and Post Media’s) acquisitions at the end of the decade constitutes yet a third wave, or just tidying up the wreckage of Canwest, it is still too early to tell.

Consolidation has yielded a fundamentally new type of media company: the media conglomerate. Extremely popular in the late-1990s everywhere, many media congloms have since collapsed or been dismantled in other countries (AOL Time Warner, AT&T, Vivendi, etc.).

In Canada, they are still all the range, where four such behemoths and a half-dozen other large but more specialized companies part their size, that now make-up the core ‘big 10’ companies in the network media economy: Bell (CTV), Shaw (Global), Rogers (CityTV), QMI (TVA), CBC, Post Media, Cogeco, Astral, Telus and Torstar. A detailed chart of each by ownership, capitalization, revenues, and sectors operated in is available here.

Looking at media concentration from the vantage point of the ‘big ten”, the media have become more concentrated than ever. Their share of all revenues (excluding telecoms services) between 2000 and 2010 hovered steadily around 71-75% — a substantial rise from 63% in 1996, and an increase further still from 56% in 1992. The levels are more than twice as high as those in the U.S., based on Noam’s analysis in Media Ownership and Concentration in America (2009).

Breaking the picture down into the following three categories and applying the CR and HHI tools provides an even better view of long-term trends:

• ‘network infrastructure’ (wired and wireless telecom services, ISPs, cable, satellite and other OVDs);
• ‘content’ (newspapers, tv, magazines, radio)
• ‘online media’ (search, social, operating systems).

At the end, I combine these again in slightly different form to complete the analysis of the network media industries as whole.

Cont’d on Page 2 . . . . . . . .

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Down the Rabbit Hole at the CRTC: Regulator and Big 4 Make Molehill Out of Mountain on Telecom-Media-Internet Concentration Issues

As per my usual practice, this post is a slightly altered version of my column in the Globe and Mail today. It is a a wee bit longer and, as is my standard practice, comes more fully-equipped with citations and sources that you can turn to to follow up on, assess my take on things, and so forth.

In the first of two column’s last week I offered evidence and argument as to why the CRTC’s current vertical integration hearings are not likely to deal effectively with the question of telecom-media-Internet concentration in Canada. Sitting in on three full days of hearings last week has convinced me that the prospects may be even dimmer than I thought.

If you know how to say “voluntary code”, “case-by-case dispute resolution”, “skinny basic”, and status quo, you’re in luck because that’s probably what the outcome will be. Some consumers will benefit with slimmed down and more affordable basic cable and satellite packages and there’s a fifty-fifty chance that a hands-off-Netflix approach is in store, if I am right. The pay-per Internet model and less than a handful of telecom-media-Internet behemoths, however, will be still stand astride a set of highly concentrated industries, and we will be the poorer for this.

The hearings had an Alice-in-Wonderland feel, mainly because the evidence offered by all sides was remarkably poor. Consequently, discussion meandered between speculative worries and rose-tinted visions brought to us courtesy of the great media corporations of Canada.

The CRTC’s refusal to do much original research of its own compounds this problem, and compares badly with research conducted by, for example, the FCC and Ofcom, respectively. Like the mythical beaver that castrates itself in self-defense, the CRTC seems to worry that conducting original research might bias its decisions. Strange.

All of the top brass from Bell, Shaw, Quebecor Media Inc. (QMI) and Rogers attended, sometimes with as many as ten to a delegation. With few exceptions (see below), the Big Four stood as one against almost everyone else, but nonetheless they seem to have set the parameters of discussion around less than a handful of touchstone themes:

• That we should rely on market forces to the maximum extent possible.
• Canadian markets are competitive, small by global standards and need big media companies to compete.
• problems that do arise should be settled one by one after they occur rather than establishing clear regulatory rules before hand.
• concerns about the anti-competitive potential of vertical integration are mostly speculative rather than real.

Rogers allowed a crack of light to peak through when it broke ranks with Bell, QMI and Shaw to table a “code of conduct” that would require vertically-integrated media firms to sell programming rights to traditional broadcasters, such as the five CityTV stations that it owns. While the others tried to belittle or ignore Rogers’ stand on this point, the CRTC seemed to like the voluntary code of conduct idea very much. I suspect we’ll have some version of it.

Otherwise, Rogers, Bell, Shaw and QMI united behind the view that smaller rivals should not be entitled to a regulated guarantee of fair and reasonable access to their networks or the content rights associated with TSN, Rogers SportsNet, the History Channel or any of the other 100-plus television channels they own between them.

QMI’s CEO and majority owner, Pierre Karl Péladeau, scoffed at the idea that exclusive content agreements were a problem. Bell’s chief regulatory front man, Mirko Bibic called the idea that audiences should be able to access content on any device from any provider, anytime, “preposterous”.

Brad Shaw, the CEO and part of the family that controls Shaw Media, bristled when I intervened in a journalistic softball scrum to ask him to respond to the possibility that concerns with vertical integration and media concentration are not based on speculation and fear mongering but current evidence and recurring historical patterns. After shrinking back into my shoes, he returned to typical patter about how vital it is for Shaw to be “consumer centric”.

Over the course of the three days, Netflix was set up as a formidable threat to the Canadian broadcasting system. This may be a shock to some, but I got the sense that the CRTC is not all that eager to assume this role, despite enormous pressure from Bell, Shaw, QMI and (less so) Rogers, the Over-the-Top Working Group, media unions, arts and culture groups, the Senate Committee on Canadian Heritage as well as a pending Supreme Court case.

When I spoke with Michael Hennessy, Telus’s Senior Vice-President, Regulatory and Government Affairs, he came across as a thoughtful man and seemed to better understand the idea that just because a company owns the medium does mean that it should control the messages flowing through them. Telus’ primary focus is on connectivity, he told me, not content.

Telus’ periodic work with Google, amongst other things has taught the company, he also said, that it is better to grant as much access to outside content sources as possible and push control out to the edges of the network and into the hands of Internet users. One doesn’t have to be a dyed-in-the-wool Telus fan to accept everything that he claimed, but in my view Telus is on the side of angels on this question – even if this has not always been the case.

Telus’ launch of IPTV services over the past few years has been a success by Canadian standards, but obtaining content rights for its IPTV and mobile video services has been a real obstacle, with Bell standing out in this respect since its acquisition of CTV earlier this year. According to a recent OECD study, Canada ranks 19th out of 27 in terms of the percentage of subscribers to IPTV, while rates in Sweden, Belgium and France are four- to ten-times higher (p. 223). One wonders if this low ranking is related to the problems just described and regulatory rules not up to the task of curbing market power across a number of telecom, media and Internet industries?

Commercial broadcasters have been slow to develop online video services, doing so only around the end of 2007, early 2008. It was the CBC, instead, that blazed the way, only to find one of its early attempts to use BitTorrent to distribute an episode of Canada’s Next Great Prime Minister thwarted by Bell’s ‘network throttling’ practices. The big four have accelerated their efforts in the past year, mainly as Bell, Shaw, Rogers, and QMI import the “tv everywhere” from the US so that existing subscribers can access the companies’ own content anywhere, anytime.

Reflecting the fact that commercial broadcasters have been slow on the uptake, Konrad von Finckenstein asked Péladeau why QMI hadn’t launched an online video downloading service to compete with Netflix? The activities of the “state broadcaster” (the CBC), he responded, excessive regulation, and nervous investors were holding it back. The head of the CRTC also asked for evidence that Netflix was a threat to the television system, but was told by Péladeau that he had none.

Smaller players, in sharp contrast, piled anecdote upon anecdote to show that vertical integration is, in fact, a significant problem. Telus, MTS, SaskTel and Cogeco submitted a “joint proposal” as well that sets out a handful of principles that they want enshrined in a sturdy regulatory framework:

• Access to content by television program distributors and carriers should be on fair and reasonable terms.
• Subscribers should be able to access the content they want from the device they want anywhere, anytime.
• Block booking — tying the rights to purchase one television channel to buying several others, among other things – should not be allowed (a stance consistent with CRTC’s favourable view of “skinny basic”, i.e. a minimalist basic cable tv service).
• A tough regulatory regime is needed before-hand and not after the fact, as the big four would like.
• The regulator must assume a tough stance toward vertically-integrated telecom-media-Internet conglomerates that possess substantial market power.

Most independent broadcasters more or less agree with these ideas, with some minor tweaks. Despite their merit, however, the evidence to support these principles, was not convincingly demonstrated by anyone.

The fact that evidence was probably never going to carry the day anyway, however, struck me hard on Day Three when von Finckenstein called Telus’s proposal “over the top”. Newly-appointed Vice Chair of the CRTC, Tom Pentefountas, added to this sense when he asked Michael Hennessy if Telus’ “proposals essentially take the ‘free’ out of the ‘free market’?”

Across the aisle from me, Bibic, the regulatory pitbull from Bell who had made more than one CRTC commissioner wince and waiver during his presentation a day earlier, smiled broadly like The Cheshire Cat. Day 3, and the endgame was coming clearly into view.

Day 3 and the endgame was coming clearly into view.

Media Concentration in Canada and the Internet

Over the course of the last fifteen years, the Internet Access market has grown into a $6.5 billion dollar industry. That is roughly the same size as the cable and satellite television distribution industry.

There are nearly 500 ISPs in Canada, but according to the CRTC’s own annual Communications Monitoring Reportfor each of the last few years, about 95% of Internet subscribers obtain service from one of two players: the ‘old’ phone company or their traditional cable provider. The ‘big six players’, according the CRTC’s own data, account for about three quarters of the market.

My own data collected as part of the International Media Concentration Research Project shows that the Internet access market is not quite as concentrated as the CRTC suggests, but still high, with just over two-thirds of Internet access revenues going to the ‘big six’: Bell, Telus, Shaw, Rogers, Quebecor and Cogeco. Some jockeying in terms of market share does, of course, occur between the major players, but levels of concentration over time have stayed remarkably flat. The upshot is that a small number of dominant players compete in tightly oligopolistic markets (see below for evidence).

Small and independent ISPs, online video providers (Netflix) and others, however, have consistently claimed since the rising popularity of the Internet in the mid-1990s that the big players have used their dominant market power to hobble competition. The CRTC, despite its own analysis, however, has been reluctant to deal with the problem of media concentration head-on. Government directives to rely on “market forces to the maximum extent” further disarms the regulator. The Government’s injunction that the CRTC must also take heed of the incumbents’ plans to invest in new networks and content services all but turns the agency into a toothless laptog unable to effectively regulate.

In contrast, when faced with similar obstructions to competition and the development of an open, broadband network in Australia by the dominant telecoms provider, Telstra, the government there created the National Broadband Network Company in 2009. The aim is to bring a ‘next generation’ ultra fast fibre-to-the-home Internet capable to 93 percent of Australian homes. The network will deliver speeds of between 100Mbps and 1 Gbps and the plan is to offer several different tiers of service, priced between $30 and $130 (Cdn). Total cost: $35.7 billion. Initial service began in a small number of homes in 2010.

Australia is not alone. A dozen-and-a-half governments, including Korea, France, the UK, the US, etc. – have committed to spending roughly $71 billion on similar initiatives over the next few years (Benkler report, pp. 162-164). Some of these projects are state-centric, others are not. In many countries, from Romania to the Netherlands, municipal and even neighbourhood-based broadband Internet development projects are underway. Despite the opposition within industry in North America, these efforts are considered to have been a huge boon to developing and improving affordable access to open-broadband Internet for residential subscribers, community centres, and businesses alike. Some of these are commercial ventures, others are joint public-private initiatives, and yet others involve incumbent players.

In 2005, the UK also adopted an approach that has been called for in Canada for years: ‘structural separation’. At this time, the regulator, Ofcom, required British Telecom, the dominant provider, to break itself into two parts: one for wholesale, and one for retail. BT did so the following year. BT can operate in both the “network” and “services” areas, but its wholesale operations cannot discriminate between the company’s own Internet services and anyone elses.

The ‘open reach’ model now in place in the UK requires maximum access to BT’s facilities in addition to the separation of its wholesale (network) and retail (content, Internet and services). This includes “improved access to the engineering . . . books used by BT to enable Communications Providers to provide their End-User customers with . . . better and faster” service (para 3.5). This a strong, pro-competitive, pro-innovation, pro-user and pro-open media arrangement.

The ‘big six’ in Canada, of course, chafe at ideas of ‘alternative carriers’, ‘structural separation’ and a maximalist approach to open networks. They also scoff at any claims that telecoms, media and Internet markets in Canada are concentrated, arguing instead that they are fiercely competitive. Indeed, Bell and Shaw emphasized just this point the other day in their testimony to the Standing Committee on Industry, Science and Technology (listen around the 1hr, 50min point).

Whether or not the telecoms, media and Internet industries have become more or less concentrated is, of course, a debatable issue. It one made all the more difficult by the fact that there has not been a consistent body of evidence to help inform the debate either. As a result, fiery debates have taken place in a vacuum, with positions closely tracking ideology rather than evidence.

As I indicated above, the CRTC’s own evidence tends to corroborate the view that media concentration does exist in many sectors. The problem with its evidence, though, is that its manner of presentation is inconsistent over time, focuses only on the top 4 or 5 players, and based on underlying data that it refuses to disclose. In the past year, I have filed a dozen Access to Information Policy (ATIPS) to gain access to this data, but have been refused each step of the way, and further denied on appeal.

I’ve done this as the lead Canadian participant on the International Media Concentration Project, which is led by Eli Noam, a well-known Professor of economics and finance, as well as a media and telecoms expert, at Columbia University (NY). The project has no axes to grind and includes 40 researchers from around the world who are systematically collecting data on concentration trends for every significant telecom, media and Internet industry since 1984: ISPs, search engines, newspapers, cable and satellite tv distribution, wired and wireless telecoms, film, conventional and specialty tv channels, and so on.

Here are the figures that I have done so far: CANADA Internet Services Provider DRAFT(1), CANADA Video Distribution TV DRAFT(1), CANADA Wired Telecoms DRAFT(1), CANADA Wireless Telecom DRAFT(1), Canada Total Television Universe, Canada Search Engines, Canadian Radio Mrkt Share, 1984-2009, and Canada Newspapers. The figure below shows the trends for all sectors over time:

Please feel free to use, criticize, suggest additions, or revisions to, etc. but when you do use it, cite it as follows: D. Winseck (2011). Media Ownership and Concentration in Canada. The International Media Concentration Research Project, Columbia University, New York.

So, what does the evidence show?  Several things stand out. First, each sector of the media is concentrated by standard measures (e.g. CR and HHI scores). Second, that patterns generally follow a U-shape, with concentration falling in the 1980s, rising sharply from the mid-1990s, and staying relatively flat since then. Concentration levels in Canada are high by global standards, in fact about two and a half times higher than the US (see Noam’s 2009, Media Ownership and Concentration in America, Oxford University Press, 2009).

The telecoms, media and Internet policy and regulatory frameworks in Canada have encouraged these trends for several reasons. First, on the grounds that with so many media outlets available, there’s no need to worry about concentration in terms of who owns those outlets. Fragmentation, not concentration, is the defining feature of the Internet and our times, so the argument goes.

To my mind, however, fewer owners holding more outlets is an important development that needs to be curbed rather than encouraged. Some limits were adopted in 2008 by the CRTC. This was an advance insofar that it was better than no formal rules at all. However, by using the same standards as the ones used to regulate the banking industry in Canada, grandfathering existing circumstances, permiting Shaw to take over the remnants of the bankrupt Canwest at firesale prices, and allowing the already weak rules to be breeched whenever expedient (i.e. Cogeco’s acquisition of Shaw/Corus radio stations in Quebec), the CRTC’s media ownership and concentration rules are toothless.

Second, there has been too much deference to claims that the ‘traditional media’ are being decimated by the ‘new media’. Claims that the ‘traditional media’ are ‘in crisis’ are generally false (see here and here). In fact, ‘old media’ markets like television have not shrunk, but grown. New media have opened up vast new markets for ‘old’ and ‘upstart’ players alike.

That this has been a boon to well-established interests, a case that is most obvious with respect to Internet Access. The vast majority (95%) of this enormous new source of revenue ($6.5 billion) has gone straight to the bottom line of the incumbents telephone and cable companies. Yet, this new source of revenue has occurred with no corresponding upswing in investment in networks and services by the ‘big six’, as I showed in one of my posts a few days ago.

Third, underpinning consolidation in Canada is the myth that in the global scheme of things, we possess a small media market.  It is then argued that this condition requires the cultivation and protection of well-heeled players with deep pockets to invest in infrastructure, Cancon and cultural survival.  It is an easy story. It makes sense, or so it seems.

However, the ‘network media industries’ in Canada are not small by global standards. In fact, we have the eighth largest network media economy in the world, based on PriceWaterhouseCooper’s Global Media and Entertainment Outlook. Here’s a snapshot of the ten largest media economies in the world between 1998 and 2010: 10 Largest National Network Media Economies.

The combination of these myths, misguided policies and missing evidence is that we now have one of the most concentrated telecom, media and Internet markets in the world. The result has been the creation of a handful of media conglomerates with a reach across the media landscape and a decisive influence over the future of the Internet: Bell (CTV), Rogers (CityTV), Shaw (Global), Quebecor (TVA), Telus, and Cogeco (Radio) are the “big six”.

If ‘the medium is the message’, as Marshall McLuhan once stated, than the dominant players’ ability to shape the speed, capacity, price and technical and economic characteristics of the Internet give them considerable influence over creativity, innovation, experience, and expression. Tinkering with the medium — speed, bandwidth, memory/storage, capabilities — alters the meaning of our experience, and the message of the Internet.

The CRTC, however, refuses to see things this way. Instead, it relies on an exceptionally narrow conception of editorial influence over content. In fact, it has seemed bent on severing far-reaching and principled debates over Net Neutrality”, “Open Networks”, “Open Media”, etc. by using the sterile language of “Internet Traffic Management Practices”. It is a foul, unmoving language for digital gearheads. Reading the CRTC’s many documents on these issues is more likely to make your eyes glaze over rather than make you perk up and want to pay attention. The choices being made. nonetheless, will shape the future of the Internet for decades ahead.

In this constrained view of the world, the CRTC has fully-endorsed the use of economic measures like Bandwidth Caps and UBB to “discipline” what it and the industry vilifies as bandwidth hogs. It registers a vague preference for network investment to deal with congestion issues, but insists on nothing concrete to ensure that this hierarchy of priorities will translate into real world practices. Technical measures to throttle and block Internet applications are also given the green light, but supposedly only as a last resort. The fact that the use of such practices is left up to the discretion of the ISPs and for Internet subscribers to discover and challenge on their own, however, makes one wonder if these so-called ‘technical ITMPS’ actually sit as low down the totem pole as the CRTC suggests. This is regulation by machine and by impenetrable technocratic language.

All of these things add up to something that looks much more like an “Investment and Business Model Protection Plan” for the telephone and cable companies than a set of policies designed to further develop an open, broadband Internet in Canada. Indeed, it is not just the subtle ways in which tinkering with speed, capabilities, price and traffic that ever so slowly alter the Internet, but rather several instances whereby control over the medium as been translated into direct efforts to control the content flowing over it.

The CBC found this out in 2008 when its attempt to use BitTorrent to distribute an episode of Canada’s Next Great Prime Minister was thwarted by Bell’s network management practices.  The ‘big six’ have also been at the forefront of efforts to throw regulatory hurdles in the way of alternative OVDs (online video distributors) trying to enter Canada, such as Apple, Google, Netflix, etc. Indeed, they have called for these entities to be regulated just like the old broadcasters. As Netflix explains, it has had a difficult time in the US, but in Canada matters have been worse. Bandwidth Caps and UBB serve this end too by making it more expensive to download television, film and music from them. The effect is once again to preserve the big six media conglomerates’ main business.

Such practices have become even stronger since these companies began offering their own broadband video portals since 2009. In my reading, the rules governing bandwidth caps and UBB allow the incumbents to exclude their own video services from these constraints. A straight-forward reading of the Telecoms Act (sec. 27) would suggest that doing this would violate the ‘non-discrimination’ and ‘undue preference’ clauses, although that is not the view that has prevailed so far.

In a stunning moment of frankness the other day, Bell’s chief of regulatory affairs, Mirko Bibic, told the House of Commons committee meeting that the company’s own IPTV service would not be covered by the UBB and bandwidth caps (listen around the 2hr, 7min. mark). He offered a bunch of convoluted reasons why IPTV is misnamed and that, even though it rides on the same wires that the Internet and telephone do, it is ‘cable’ tv, not Internet TV.  How convenient. While Bell and the cable guys throw obstacles in the path of others, their own services get a free ride.

Bad News: Proposed Online News Act Trades on Myths and Misconceptions

Last week, the Liberal Government introduced the Online News Act. The Act’s main aim is to redress the dominant market power that Google and Facebook have amassed by building an online advertising system around third-party content, including news, and people’s online activities.

Canada is not alone in taking steps to rein in “big tech”. In fact, this bill is modeled on the News Media Bargaining Code adopted in Australia last year. In addition, public inquiries and regulators in Australia, the European Commission, France, Germany, the United Kingdom, the United States and elsewhere have all concluded that Google and Facebook have monopoly power: the long-term ability to set the prices and terms of trade in the online advertising marketplace (for a running tally of such efforts, see Winseck & Puppis).

This is especially true of Google, which dominates the buying and selling of Internet advertising while also controlling its own online advertising exchange through which much of the buying and selling of advertising online takes place. Those inquiries have also found that the online advertising system is inscrutable to businesses and Internet users alike, coursing with dirty and unreliable data, at odds with European and UK data and privacy protection laws, and free of democratic regulatory oversight (UK ICO, 2019; Belgium DPA, 2022).

As a result of their stranglehold on the key elements of the online advertising system, by 2020, the Google and Facebook had carved out an 80% share of the $9.7 billion online advertising market in Canada.

This is the reality to which the Online News Act, ostensibly, responds. Other governments are taking similar steps to do counteract this state of affairs.

In an ideal world, the Online News Act could help give news media a bigger cut of the dollars and help improve the terms of trade upon which the future of the news media and journalism depend. It could also help give us all a clearer view of the complex black box technical systems upon which the online advertising marketplace is built. Doing so could improve not just journalism but also help to repair the “broken Internet”, an Internet that a small number of international Internet giants have colonized and remade in their image.

In sum, there are good reasons why digital platform regulation could be a good thing. Here’s some of the highlights of what the Online News Act could do well, followed by a list of the ugly parts of the bill that lead me to conclude that it falls far short of its potential.

One, the Online News Act does not impose a link tax on Google and Facebook for linking to news. While France and Spain, for example, have pursued this option, the link tax is a bad idea because it relies on untenable and undesirable changes to copyright law, strikes at a basic technical building block of the Internet (hyperlinks), and rests on the faulty premise that it is possible to attach a clear price to the news. This latter idea has never been possible, and is why we are struggling to find a viable framework to support journalism in the first place.

Second, the Online News Act bill contains a powerful set of tools to strike at the heart of dominant market and gatekeeping power drawn from over a century of antitrust and telecoms regulation history: measures that prohibit Google and Facebook from giving one news provider undue preference over another (or to unjustly discriminate between different services) and a code of conduct that is tantamount to a “fair carriage” regime for all news media services made available over the platforms.

Not only are these measures amongst the best bits of this bill, the Government would do well to put similar measures in the Online Streaming Act, which currently does nothing to deal with these issues of dominant market and gatekeeping power (as I have written elsewhere).

Third, unlike the Australian model which gives a government minister the power to designate which digital platforms will be covered, the Online News Act bill gives the Canadian Radio-television and Telecommunications Commission (CRTC) the power to make the call. The has the obvious advantage of creating a shield against direct political interference by the Minister in charge (i.e. Heritage Minister Pablo Rodriguez, at the moment).

Fourth, the Online News Act opens two options for platforms to strike deals with news media providers operating in Canada, either individually or collectively: the first option encourages voluntary deals; the second imposes final offer arbitration overseen by the CRTC.

In Australia, Google and Facebook have avoided being designated under the News Code altogether by striking voluntary, multi-year deals with the three biggest commercial media conglomerates, one of the country’s two public service media outlets (the Australian Broadcasting Corporation but not SBS), and some smaller regional and local news sources.

The problem, however, is that nobody knows anything about these deals because the Code does not apply to voluntary deals. Did Rupert Murdoch’s media empire (News Corp/Sky) and the country’s two other biggest media groups—Seven West Media and Fairfax Media-Nine—do better than one another or the ABC or any of the smaller media groups? How much of the money agreed upon will be used to hire journalists, expand newsrooms and support international news bureaus versus padding corporate profits? Who knows! 

The drafters of Online News Act have wisely made sure that even voluntary deals struck between platforms and news publishers/broadcasters will be subject to review to ensure they are fair and support original journalism versus lining investors’ pockets. 

Fifth, that process of review is also a key part of one of the bill’s other potential strengths: its information disclosure and audit requirements. The premise is simple: effective regulation hinges on knowing about the entities to be regulated.

That we have got this far already without Google, Facebook, Amazon, Netflix, Apple, etc. not being subject to such minimal requirements speaks volumes about how much power they have obtained without any real public responsibilities.  The Online News Act would help fix that. Furthermore, the idea that regulated companies have an obligation to disclose information to regulators has been a bare minimum part of the regulatory tradition in Canada since the creation of the Board of Railway Commissioners way back in 1903.

So, if there’s all this good stuff in the Online News Act, why should we still put a stake through its heart? Let me count the ways.

For one, rather than trying to counteract the source of Google and Facebook’s market dominance and gatekeeping power, the Online News Act tries to leverage their market dominance for public policy ends: saving journalism. In so doing, if adopted, the act ties the future of journalism to a steady flow of money from Google and Facebook, thereby increasing the dependence of journalism on both firms. It also fails to include one of the best parts of early drafts of Australian Code: a requirement that the US tech giants give news outlets advance-notice of big changes that could up-end the latters’ operations.  

Second, the Online News Act mechanics are all about transferring dollars from Google and Facebook to news media operating in Canada through corporatist bargaining arrangements with no seat at the table for rivals, advertisers, experts, academics or anybody else to articulate the “public’s interests” in these matters. In contrast, the public has had a seat in CRTC telecoms and broadcasting proceedings since 1976! Freezing the public out in this way is a profound act of depoliticizing platform regulation and is anti-democratic.

Third, the Online News Act does not tackle the taproots of Google and Facebook’s dominance: i.e. control of the online advertising system, cross-market consolidation of activities across digital markets, and business models driven by the unlimited harvesting of personal information. The last of these points reveals a major reason why Canada has such weak privacy and data protection laws: the big international digital platforms and domestic communications and media firms such as BCE, Rogers, Postmedia, Quebecor, Shaw, Telus, etc. are all joined at the hip in wanting to expand their intensive harvesting of people’s data.

In the context of the Online News Act, and just like in Australia, domestic news media companies don’t want strong privacy and data protection rules for just that reason. Instead, they want a bigger slice of the big data pie. The Trudeau Government is helping to give them what they want with this bill–at the expense of protecting Canadians’ privacy and personal information.

Fourth, while the crisis of journalism that the Online News Act tries to solve is real, the bill is built on a severe misdiagnosis of the problems we face and incessant pleading by Canadian media groups, think tanks, lobbyists as well as the platforms themselves. In fact, the crisis of journalism is the result of a confluence of events that have unfolded for decades, and years before either Google and Facebook had consolidated their dominance in the last ten years. We have reported on these factors for years as part of our research at the Canadian Media Concentration Research Project:

• declining per capita and per household circulation since the early 1970s;
• an orgy of debt-addled consolidation from the mid-1990s until 2010 that put some media firms into bankruptcy (e.g. Canwest, whose broadcasting and newspaper assets were acquired by Shaw and Postmedia, respectively) while leaving many others on shaky financial grounds ever since;
• wild swings in journalist employment levels over the same period and a precipitous drop since 2013;
• revenues for newspapers and broadcast news media companies that peaked in the mid-2000s but which have collapsed since, especially after the bottom fell out for advertising spending across the economy after the financial crisis of 2008. 

While casting Google at Facebook as the main villains in the piece might make for a good story, it does not reflect an accurate or holistic view of the problems and is misleading. Having fundamentally misdiagnosed the issues, the idea that the Online News Act will solve the problems is wishful thinking.

Fifth, the Online News Act also anticipates a role for the CRTC as a kind of super-regulator. To do that, however, is to ignore the reality that the Commission has proven itself to be ill-equipped to handle its existing mandate, especially under its current leadership. Furthermore, while the bill is said to be about redressing market power imbalances, the CRTC has been extremely timid about tackling such issues in telecoms & broadcasting. Its approval of the Rogers’ blockbuster bid to acquire Shaw’s broadcasting assets—the sixth largest acquisition in Canadian history—last month is just the latest example of this. For it to now turn around and turn the screws on Google and Facebook would be seen as anomalous, even unjust. This is especially so, given that a combined Rogers-Shaw, if approved by the Competition Bureau and ISED, would become Canada’s largest communications and media conglomerate with revenues that would be single-handedly more than three times Google and Facebook’s revenue from Canada, combined.

Finally, while the CRTC’s newfound powers to review deals made under the Online News Act, compel information disclosure and conduct annual audits would be improvements on the “Australian model”, those measures are vague and the details punted to the Commission itself to work out. That problem also plagues the government’s Online Streaming Act (for my analysis of that bill, see here). In both cases, this puts too much trust in the CRTC that it does not deserve and also moves the issues out of the public spotlight and Parliament into the bowels of an agency that has a spotty track record on these matters.

In sum, while the Online News Act has been wrapped in noble cloth, from conception to now, it stands as a massive missed opportunity. Instead of a model to embrace it offers valuable lessons of how not to regulate digital platforms and Internet-based services. Time to go back to the drawing board.

Still not dead: Why we need to kill Bill C-11, the Online Streaming Act, and start over

How fitting that the day after groundhog day, here we are once again assessing whether Bill C-11, the Online Streaming Act (or Broadcasting Act reform bill) introduced yesterday, is any better than the one that failed to become law last year? The short answer is, there have been some important improvements to address critics’ concerns, but there is still a long way to go.

The biggest problem stems from the fact that the bill’s drafters and backers are still trying to see the Internet-centric communications and media environment through yesteryear’s broadcasting prism. Moreover, the bill is all about content, and says nothing at all, really, about concentration in digital markets or the surveillance capitalism model that has, in essence, wrecked the Internet.

The Good

On the surface, the aim of Bill C-11, the Online Streaming Act, is to bring influential streaming television, film and music services such as Netflix, Crave, Disney+ and Spotify under the Broadcasting Act and the authority of Canada’s communication and media regulator, the Canadian Radio-television and Telecommunications Commission (CRTC). That was the stated goal of C-10 and it is still the stated goal of this year’s version. In some ways, it would be easy to say that not much has changed between the new bill and previous versions of it, i.e. Bill C-10. And if that was the case, then I could just send you off to read what I wrote about the last version (see here and here). That would be too easy, not least because there are three important improvements to what was previously on offer but also a basketful of problems held-over from the last bill and with some new ones thrown in just to make things interesting.

First, the headline change is that the bill restores the explicit exemption for people who use social media services from it—and the CRTC’s—reach (sec. 2.1) and for the content (redefined as programs) that they upload to such a service (sec. 4.1). On the surface, this responds to the firestorm of criticism ignited around questions of free speech when a similar clause was removed midway through debates over C-10 (also see Michael Geist on this point).

The technical briefing notes distributed by Canadian Heritage emphasize the point, “Regulation will not apply to individual creators, streamers or influencers or social media services themselves in respect of the amateur programs posted by their users” (DCH, 2022, p. 8, emphasis in original).

Second, the bill does not make social media services responsible for the content people make available through online services (but see the exceptions below) (sec. 2.2). Bill C-10 had no such measure and some groups like Friends of Canadian Broadcasting, amongst others, have been pushing the idea that platforms’ should be responsible for people’s expressions on their services just like broadcasters are responsible for the editorial choices they make and the content they commission. In other words, while social media companies might be media companies—rather than just ‘mere conduits’ or platforms—they are not broadcasters, with all the means with respect to exercising control and responsibility over what people do and say on their services.

This is a good thing. It is an important improvement because it minimizes concerns that making Facebook, Twitter, Tiktok, Youtube, etc. responsible for what people do or say on their service could have a chilling effect because such services, keen to avoid liability for users’ speech, would have legal and business incentives to quickly take down risky speech rather than just speech that is not protected by the Charter. Doing so would not just minimize their risk, it would also minimize costs and be good for business.

Online streaming services such as Netflix, Crave, Amazon, Disney+ and Spotify, however, as online broadcasting undertakings (see below), will be responsible for programs commissioned by and/or distributed on their services. Conceivably, this would give the CRTC a role vis-à-vis Spotify and the current, red-hot controversy over its hosting of rightwing provocateur Joe Rogan (sec. 4a). This follows from, as we will see in a moment, the fact that Spotify would fit the definition of an online broadcasting undertaking. The upshot is that speech would be regulated in such instances but within an explicitly articulated legal and regulatory framework and against the backdrop of the Charter protections for freedom of expression and the press.

I believe that this will be helpful. It democratizes decisions that are now the exclusive prerogative of massive, international businesses who, in many cases, have no ties or particular obligations to the citizens and people that live in the countries they serve and feel the brunt of decisions they make.

This points to the third major improvement in the new bill over its predecessors, namely that Bill C-11 now gives pride of place to freedom of expression and values of the free press by putting it at the top of the list of the Broadcasting Act reform bill’s objectives (sec. 3(a)). Given the case just outlined—and the realities of the world around us at this fraught time in the history of democracy in general as well as Canadian democracy in particular–I believe that this is a very good thing.  

The Bad and Ugly

These are significant improvements. However, there’s much more than first meets the eye. The upshot of these limitations, as we will see momentarily, is that this bill still falls far short of what is needed from the get-go in terms of creating a new set of public interest-based Internet services regulation fit for a democracy. This is largely because the regulatory framework the bill proposes still tries to force-fit issues arising from the Internet, streaming services and social media platforms into the broadcasting mold. It’s a cramped and poor fit.

The first indicator of this arises in the definitions set out at the top of the bill. First up in this regard is the addition of “online undertakings . . . for the transmission or retransmission of programs over the Internet for reception by the public” as a new and distinct class of broadcasting undertakings (sec 2.1). As a result, instead of flexibly tailoring a legislative response to the rise of new and influential streaming audio, television and film services such as Netflix, Crave, Disney+ and Spotify in a manner that reflects developments over the past three decades, the Bill tries to bend these new entities and ways of organizing the media business backwards into the definition of broadcasting.

It is also worth noting that, like its predecessor, the bill sweeps a whole new category of media into its ambit: music services. Sure, radio broadcasting is where broadcasting regulation started back in the 1920s and 1930s, but stand-alone music services, record companies and music stores were never covered. This bill would change that.

Second, while the Bill, to its credit, as we saw earlier, explicitly excludes people who use social media from its reach, the Act redefines all forms of expression/content/speech that people upload and make available over an online streaming service or social media platform as a “program”. So, while individual social media users will not be directly regulated (but see below), their expressions, pictures, messages, life history, etc. will now be defined as a broadcasting program and in some cases regulated as such (see DCH, 2022, p. 11). In other words, while individual users (speakers) are out, it appears that the content of their expressions are within the reach of the Broadcasting Reform Act while whether or not they will be specifically regulated by the CRTC will turn on a number of criteria set out in the bill.

The problems in this respect are two-fold: first, this exercise in redefining a wide range of human expression in the confined box of “broadcasting programs” threatens to smuggle in through the backdoor what the bill explicitly says is being excluded: expressions/content that people upload to a social media service. The slippage in the technical briefing notes handed out yesterday, and Minister Rodriguez’s comments in the media between a clear and emphatic emphasis on how social media users will be excluded from the bill—and the CRTC’s—reach without a consistent and similar emphasis on how their expressions/speech/content, and the re-labelling of such as “programs, will be treated further muddies the waters on this issue.

Philosophically, recasting the entire range of human expression and activity now conducted online through the digital platforms as “programs” seems technocratic. Doing so, wittingly or unwittingly, strips the questions of speech and expression of the normative values that flow out of the long-standing discourse over freedom of expression and democracy. Moreover, and in simple terms, it is unclear what purposes redefining speech and expression in this stunted, technocratic way will ultimately serve. It is worth noting that such efforts to confine the full range of expression into the cramped confines connoted by the concept of a “broadcasting progam” is new and seems wrong on the face of it.

In other words, while individual users (speakers) are not covered by the proposed law, it appears that the content of their expressions—redefined as programs—are within the reach of the Broadcasting Reform Act but whether or not they will be specifically regulated by the CRTC will turn on three specific criteria set out in the bill. In fact, the new version of Broadcasting Act reform bill strives to limit the potentially far sweeping reach of this new definition by being explicit that only programs—that is, all kinds of expression uploaded to a platform—that meet the following three criteria will fall under the reach of the CRTC:

1. generate revenue;
2. are broadcast or made available on more than one service that is either licensed by or registered with the CRTC;
3. have some kind of an international service identifier tied to it, such as ISO number (sec 4.2(2).

The intent of these criteria is to give the CRTC the tools that it needs to distinguish between the programs that will fall under its authority versus those that will not. The goal is to distinguish between professional, commercially-driven media content and content creators versus everybody else who will be left untouched. The distinction itself is consistent with the European Union’s Audiovisual Media Services Directive, which much of this bill’s design and justification rests on, but both, these specific criteria and the line that they are supposedly meant to drawn between professional, commercial programs versus people’s everyday online activities, are muddled. Too many conceptual contortions are required just to follow the plot and to serve as a steady guide.

To help assuage such concerns, CRTC chairman Ian Scott has repeatedly said that the Commission has no interest in regulating social media, but he has also prevaricated by pointing to just how broad the existing definition of broadcast program already is. In other words, Scott is saying that Commission could already do what this bill contemplates but won’t because it does not want to. That is not good enough. His assurances, moreover, rings hollow given statements made by the Executive Director, Broadcasting, at the CRTC, Scott Hutton, to the ETHI committee in 2018 that suggest otherwise.

Once a “program” delivered over Internet meets those three criteria, the specific obligations that an online platform service (online broadcasting undertaking) would have to meet are, as with the last bill, left to the CRTC to decide. Things that it would be able to decide on include:

• the amount of Canadian content in an online streaming services catalogue.
• the amount of money they would have to invest in Canadian programming.
• promote the accessibility of programming in English and French and in terms of accessibility for people with disabilities (see sec 3(4).

C-11 also extend the CRTC’s order making power to these online content services (sec. 7(7). It would also give it the power to imposed “administrative monetary penalties” (AMPs) (Part II.2).

The major problem in all of this is that Bill C-10, like its predecessor, punts far too much power and rule-making authority to the CRTC. Moreover, it does so precisely at a moment in time when neither the current chair or the Commission writ large seem to have the resources, inclination or leadership to cover the existing mandate to effectively regulate telecoms and broadcasting in the public interest. Adding additional matters on to the CRTC’s remit in this context is inappropriate.

In fact, just as the liberal government was setting up to reintroduce the new bill and extend the CRTC’s regulatory authority over online video and music services, as Fenwich Mckelvey, Brenda McPhail and Reza Rajabuin observe, in a recent decision that could have opened the door for greater public oversight of algorithms and artificial intelligence capabilities being deployed by Canada’s telecoms operators, the CRTC slammed the door shut on that prospect while also making it next-to-impossible for independent scholars to effectively know the crux of the issues at stake and, thus, to effectively participate in the proceeding, period.

Moreover, the CRTC’s ability to take on new tasks is compromised by the fact that its own data on online content services over the past several years has been badly flawed and based on cherry-picked evidence that, in hindsight, has been revealed to be grossly over-stated, seemingly as part of its own ongoing campaign to expand its turf in exactly the way Bill C—11 contemplates. The Commission has acknowledged as much by restating previous year’s data for several years running now (see CMCR Project, 2021, for example). In short, the Commission now lacks the credibility and trust upon which the successful execution of the tasks that Bill C-11 assigns to it depends.

The Neglected/Ignored

Crucially, we must also ask what is missing from this bill? Five things stand out.

First, this bill lacks clear thresholds for determining what’s in and outside its scope. This is unfortunate because establishing clear thresholds based on revenue, the size of the user base and market capitalization, for example, are headline features of the European Union’s Digital Markets Act and Digital Services Act as well as a suite of platform regulation bills now before the U.S. Congress (see here). In the EU, the proposed legislation is very clear that it only covers a well targeted set of “very large online platforms” (VLOPs), while in the U.S., current bills before Congress speak of “covered platforms”.

This is low hanging fruit and should have been included in Bill C-11. Not only would it have clarified some of the muddled line drawing exercises and definitions outlined above, it would put the CRTC on a shorter leash and hold it more accountable to Parliament—a formal requirement in terms of democratic legitimacy.

Second, the bill maintains no clear and robust information disclosure obligations that would apply to the services brought under the Act and CRTC authority. Doing so would help us—the public, academics, parliamentarians, journalists, and regulators—to better understand the streaming services & online platforms activities that now operate in Canada and their decision-making processes. Without such obligations, these services remain a blackbox.

Third, and relatedly, Bill C-11 continues to feature a stunted view of “discovery” that is primarily about pushing more Canadian content (Cancon) in front of more Canadians’ eyeballs. Instead, it should have looked toward a more progressive view of “discoverability” along the lines that, for example, Fenwick McKelvey, communication studies professor at Concordia University, has articulated. In this more progressive view, instead of forcing CanCon to rise to the top, as the broadcasting-driven Bill C-11 does, discoverability would focus on opening the complex technical communication and media systems that increasingly influence access to and the presentation of expression online to greater public scrutiny and regulatory oversight. Instead, C-11 retains the stunted Cancon view of discoverability and, worse, the bill back-peddles on the issues of greater algorithmic transparency and information disclosure by introducing new limits on the CRTC’s access to the algorithms and source code at the heart of the online streaming and platform services (sec. 10(8)).

Fourth, the flipside of the lack of accountability and robust information disclosure obligations, C-11 does nothing to establish privacy and data protection rules. As such, the legislation not only neglects a critical moment in which it could begin to lay down strong data and privacy protection rules across the many different aspects of the online digital environment, it effectively puts its thumbs on the scale in favour of the surveillance capitalism model upon which these services are based.

Fifth, not only does C-11 add further momentum to the surveillance capitalism imperatives that are the taproot of so many of the problems that now characterize the digital online environment, it does nothing to address issues of market dominance and anti-competitive conduct. In other words, by fixing its eyes on content issues, the bill accepts the status quo and leaves problems of digital market dominance where it does exist unscathed.

Take, for example, the recent contretemps in the U.S. that saw a classic goliath versus goliath battle between Google’s Youtube subscription service and Disney (Bloomberg, 2021). The battle had all the hallmarks of a classic cable industry fight over the terms of retransmission, including a black out on programming when Disney withdrew its content from the service. The case raised critically important issues about the conditions of carriage that are at the heart of what all “broadcasting distribution undertaking” (aka, BDUs, or in simple language, cable television, in everyday parlance) are obligated to do and how disputes between them and programs rights holders are to be handled. The Broadcasting Act reform bill, however, is completely silent and seemingly oblivious to such issues.

As app stores, such as Google Play and Apple’s App Store, as well as digital platforms, such as Amazon Prime Video, Crave, Netflix and Apple TV and iTunes, operating in a way similar to cable television, IPTV (internet protocol television) and direct-to-home satellite providers (all BDUs in official CRTC-speak), these issues will become more important. That they are ignored here is, while not surprising, is a big mistake and a fatal weakness of C-11, like its predecessor. In sum, just as the previous bill did, C-11 leaves the problematic system of market power & surveillance capitalism intact.

These issues were, in fact, taken up in the Broadcasting and Telecommunications Legislative Review Panel’s Canada’s Communication Future (2020) (see chapter 2, in particular). The fact that they are absent from C-11, to my eyes, stands as an index of just how one-sidedly fixated on broadcasting and content issues this bill is, and the extent to which the Canadian cultural policy community continues to have a strangehold on the government’s policy and regulatory agenda. That the drafters of C-11 have ignored these issues is an index of a bill that still, for the most part, has its head stuck in the sand.

To sum up, the Liberal government had an opportunity to go back to the drawing board & really get this opening plan in its emerging Internet services regulation right. It had/has a huge opportunity to align this agenda with what a new generation of public interest, Internet regulation fit for a democracy should look like. It made some baby steps in this direction, as we saw above, but it did not engage in thorough-going overhaul that is needed. As a result, C-11 stands as another missed opportunity.

Australia’s New Internet Regulation Bill: A Model for Canada?

A new bill being before the Australian parliament would require Google and Facebook to pay news media organizations for the news content they use as part of their online search and social media services. Australia’s proposed “News Media and Digital Platforms Mandatory Bargaining Code” would also establish a new code of conduct to address the digital power imbalances between Australian news media and American platform corporations such as Google and Facebook.

On first blush, Australia’s proposed bill can be read as response to Google and Facebook’s outsized foothold in the country’s Internet market. According to the ACCC’s recent Digital Platforms Inquiry Report that underpins the bill, Google accounted for 95% of search queries in Australia in 2019, while it and Facebook combined took in 61% of the country’s USD $9.1 billion online ad market. Nearly two-fifths of the time Australians spent on the Internet in that year was on Google and Facebook.

Australia’s bill has far-reaching implications for search and social media platform regulation around the world. It makes for a popular “David vs Goliath” tale of a small nation-state using its sovereignty to curb the power of big American platform giants, and it is now being held up in Canada and elsewhere as a viable model of what a new generation of Internet regulation for the public interest and democracy might look like.

But is it?

Some believe that the bill would let Australia impose a “link tax” on Google and Facebook, but that’s not the case. Instead, the real ‘crown jewel’ in the bill is a new code of conduct that would enable the ACCC to compel Google and Facebook to carry designated Australian news services for a yet-to-be specified fee, make these American companies give Australian news outlets fourteen days advance-notice of big changes that could up-end their operations, and get them to share more monetizable audience data with national news providers. Also, the bill would let the ACCC gain greater insight into how Google and Facebook’s business models and algorithms actually work, and let the Minister of the Treasury in charge of the ACCC to expand its remit to cover other platform players, with hints that Apple’s App Store may be next in line.

There is much to commend about Australia’s bill, as it seeks to ensure that the country’s news media system is governed not just by laissez-faire global market interests, but by public interest policy and regulation. The bill also highlights how Google and Facebook will fight such moves tooth-and-nail, despite their pretense of welcoming public interest Internet regulation. Two weeks ago, they threatened to withdraw some services from Australia if the government went ahead with the bill. Google also recently ran “experiments” that effectively made certain Australian news stories vanish from its search results. The government, however, has shown no signs of backing down.

Nonetheless, Australia’s bill is deeply flawed.

For one, rather than trying to undo the power wielded by Google and Facebook in Australia, the bill seeks to create a corporatist-style arrangement between them and Australian media companies, with no room for public participation in such processes. Also, instead of trying to disrupt Google and Facebook’s data surveillance business model with stronger data protection and personal privacy rules for citizens, the bill aims to give big Australian news media companies a bigger slice of the country’s ‘big data’ pie. Consequently, it reinforces the surveillance capitalism model at the heart of the global online advertising market with the aim of spreading its ill-gotten benefits to a few more Australian industry players. 

Furthermore, the analysis behind the bill also ignores the fact that the problems faced by some ad-funded Australian media companies go far beyond blaming the “vampire squids” from Silicon Valley. For instance, Australian ad-supported news media revenues peaked in 2006, long before Google and Facebook’s online ad market duopoly. In fact, the ACCC’s own evidence showed that ad spending across all media collapsed after the 2008 financial crisis and remains below 2008 levels even now. As a result, for over a decade, traditional ad-based media in Australia have been competing with the global Internet giants over stagnant/shrinking pool of advertising revenue.

Likewise, while highlighting how much time Australians spend using Google and Facebook’s services, the ACCC’s Digital Platform Inquiry Report ignores how they spend the rest of their time online and the fact that they still spend twice as much time watching television and listening to the radio than they do using the Internet. The overall effect of such blind-spots and cherry-picked evidence is to inflate the perception of just how much the digital duopoly dominates people’s lives while neglecting alternative (and better) explanations of why some advertising-funded media are in crisis in favour of placing the blame entirely on the vampire squids of Silicon Valley.

Crucially, the ACCC’s report ignores the effects that the recurring bouts of media consolidation that have led to Australia having one of the most concentrated media markets in the world and commercial media enterprises saddled with crippling debt loads. Moreover, the Digital Platforms Inquiry itself was born out of a dubious deal in 2016 between the right wing Liberal National government and Rupert Murdoch, the Australian media mogul behind News Corp Australia, Sky News and the largest chain of newspapers in the country (and Fox News in the US, amongst other media outlets). Murdoch blessed the government’s bill to loosen media ownership rules in return for a pledge from the government to examine the impact of the global Internet giants and public service Australian Broadcasting Corporation (ABC) and SBS, respectively, on Australia’s commercial media companies.

In fact, Murdoch’s media empire and Australia’s two other biggest media groups—Seven West Media and Fairfax Media-Nine Entertainment—have driven Australia’s platform regulation agenda from the get-go, although recent changes have brought the ABC and SBS into the fold. While the news code bill skirts such issues, Australia’s two most recent Prime Ministers, Kevin Rudd (Labour) and Malcolm Turnbull (Liberal), are pushing hard for a new inquiry into media concentration and Murdoch’s News Corp in particular on the grounds that both factors are having a more devastating impact on Australia’s news media system, society and democracy than anything that Google and Facebook are currently up to.

As much as Australia’s new platform governance effort flags the possibility of designing sovereign Internet policy and regulation that serves the public interest and democracy, it falls short of reaching that high bar. That said, neither Australia nor Canada should bend over backwards for Google or Facebook. But instead of being a model that Canada should follow, the Australian case teaches us that the pursuit of Internet regulation for the public interest and democracy must be more ambitious in its goals and more circumspect of who has the power to define them.

* I would also like to thank my friend and colleague, Dr. Tanner Mirrlees, a critical political economist of digital media technologies at Ontario Tech University (Toronto), for lending a firm but smooth editorial hand on this post.

Information Laundering, Economists and Ajit Pai’s Race to Roll-Back the Obama-era FCC’s Net Neutrality Rules

Today, the International Journal of Communication published my reply (co-authored with Jeff Pooley) to a recent paper in the same journal by economists Gerald Faulhaber, Hal Singer and Augustus Urschel. That paper has become especially influential after the Federal Communication Commission’s Chairman Ajit Pai repeatedly called on its “independent” evidence to justify his plan to roll-back common carriage (net neutrality) rules for internet access providers and to create an Office of Economics and Data. As our reply shows, the paper contains undisclosed ties to the telecommunications industry and is riddled with factual errors. Most importantly, its central claim that economics and economists have been “curiously absent” at the FCC in recent years is simply incorrect.

Faulhaber, Singer and Urschel’s “The Curious Absence of Economic Analysis at the Federal Communications Commission” is a prominent example of how industry-friendly think tanks have commissioned academic economists, legal scholars and others to flood the ‘marketplace of ideas’ with dubious ideas and ‘white papers’, often without disclosing these origins. These efforts, in turn, give a veneer of academic legitimacy to Pai’s sprint to reverse not just the net neutrality rules adopted two years ago, but a raft of measures that deal with concentration in the broadband, mobile wireless, cable TV and broadcasting markets, broadband privacy and pricing, and on and on. If the rollback is successful, Pai’s FCC will deliver a regulatory agenda beyond the biggest telecom-ISP and media companies’ wildest dreams.

In their paper, Faulhaber, Singer and Urschel purport to tell the story of the rise and fall of economic analysis at the FCC. They hold up the Commission’s landmark 2015 decision to reclassify broadband internet access services as “common carriers”—the bedrock historical principle underpinning what most people call “net neutrality”—as Exhibit A in support of their “curious absence” allegation. The authors also point to the FCC’s alleged failure to conduct cost-benefit analyses as further evidence of the agency’s supposed indifference to economics. Finally, the authors singled out John Oliver’s 2014 late-night rant on net neutrality for triggering “four million angry letters”. The episode exemplified, in their telling, the triumph of unruly populism over economic expertise—a gaping wound that needs to be redressed, and fast, they urge.

Straight away, however, the article’s main claim that economists have next to no influence at the FCC struck us as preposterous. This must be, we thought, the first article ever published to claim that economists don’t have enough influence on federal policy making. The story of social science and U.S. policy since World War II just is the story of economics (see, for example, Bernstein, 2004 and Franklin, 2016). More to the point, economists have been extensively—and disproportionately—involved in FCC rule-making for decades, this one included. What could the authors possibly mean?

Adding to our doubts, we quickly discovered that a longer version of the same paper had been submitted to the FCC’s official docket last summer, not once but twice, by CALinnovates—an “advocacy” group with deep ties to the telecommunications industry (see the submissions to Broadband Privacy and Business Data Services proceedings). In other words, the paper published in the IJoC originated as a white paper commissioned by a telecommunications industry advocacy group but without disclosing any of this background do the journal’s editors or readers.

Digging deeper, it soon became evident that the paper’s authors have been especially active in many hot-button issues before the FCC in recent years, including its landmark Open Internet Order in 2015—the main object of their criticism. They have also cast doubts on how the FCC has dealt with blockbuster mergers and acquisitions and sky-high levels of concentration in the mobile wireless market, backed an unsuccessful legal appeal of those 2015 net neutrality rules, and lent their work to a volley of actions now underway by the Trump administration’s new FCC Chair, Ajit Pai (see here and here).

In April—just five days after the peer-reviewed article appeared—Pai gave a major speech at the Hudson Institute lamenting that the views of economists “have become an afterthought.” Citing the paper (but with no mention of its provenance), Pai announced a new FCC Office of Economics and Data (OED). The authors’ “curious absence” claim supplied the warrant for creating the OED. Pai soon issued his fateful plan to roll back net neutrality regulations—set to take effect in a matter of weeks—and again invoked the authors’ work as a warrant for taking the course that he has (see here and here).

In short, an industry front group commissioned and funded research that was put on the public record in two FCC proceedings and then published in a leading academic journal. Soon it was cited by the country’s top policy-maker to justify his industry-friendly regulatory rollback. We contend that this is a clear case of information laundering.

Murky origins aside, does Faulhaber, Singer and Urschel’s core claim that the FCC has “abandon[ed] the dismal science” (p. 1215) hold water? Our reply argues an emphatic “no”. Our review of FCC workshops, roundtables, working papers, seminars, reports, dockets and rulings—including during its landmark 2015 Open Internet Order and several blockbuster mergers and acquisitions—provides detailed evidence to refute the paper’s core “curious absence” charge. Indeed, the public record is stuffed full with economists’ contributions—including those of the authors, though they mention none of it. As we show, the agency has actually been working in earnest to bolster, not sideline, economic analysis in recent years—a conclusion in line with other researchers’ findings (e.g., Copeland, 2013).

Moreover, while the authors charge that the FCC’s cavalier disregard for sound economic judgement is revealed by the fact that it does not do proper cost benefit analyses, the truth is that there are nineteen federal, independent regulatory agencies and none of them does such analyses along the lines they call for—except the Consumer Financial Protection Bureau (and for reasons specific to its own creation in 2011 in the aftermath of the financial crisis of 2008). While there have been calls since at least the Reagan Administration for things to be otherwise, those calls have been rejected because to concede to them would undercut regulators’ independence. In short, despite the authors’ misleading suggestion to the contrary, the FCC is not unique in this regard and as a matter of fact all federal independent regulatory agencies except the CFPB report to Congress (see Breger & Edles, 2015; Sunstein, 2013).

When Faulhaber, Singer and Urschel bemoan the “curious absence” of economists at the FCC in the IJOC paper, what they’re really objecting to is their own string of policy losses across several high-profile issues in recent years. What they want, in effect, is an across-the-board do-over on these issues. Their paper—with its serial non-disclosure—is already helping that effort. Indeed, the authors have been fighting on this project’s front-lines for years and their IJOC paper and its undisclosed precursors have been weaponized for this campaign.

The stakes couldn’t be higher. Pai is sprinting to reverse the most prominent accomplishments of the Obama-era FCC—and leaning on Faulhaber, Singer and Urschel’s paper to legitimate his efforts. The IJOC paper, and its undisclosed predecessors, also serve as the touchstone for op-eds across think tanks and their blogs as well as the business and popular press. The authors’ appeal to the authority of economics, in short, cloaks a full-throated political project designed to remake communications markets along the lines that incumbent telecommunications, broadband internet, and media industries have desired all along.

If the lessons of the last century are a guide, the outcomes of these battles could shape the emergent internet- and mobile wireless-centric communications universe for many decades to come. Moreover, the fact that much the same charges are being lobbed at regulators in Canada, the EU, India and other countries underscores the point that while the specifics of the US situation—and the FCC—are unique, the lessons to be learned are far more global in scope.

Legal Threats

We plainly struck a nerve. After a draft of our reply was shared with the article’s authors in late May, the journal’s editor received a barrage of letters from attorneys representing CALinnovates, the telco-linked group. The legal threats—explicit and implied—ramped up in each letter.

We will address more of the substance of these letters in a subsequent post in short order but for the time being we’ll close by saying that, to its credit, the International Journal of Communication stood its ground, asking us to furnish documentation on just those errors of fact claimed by the lawyers. We replied with a point-by-point accounting. And on their claim that we ourselves had written the “hit piece” under hire to either Free Press, Open Media, Mozilla or Google, we had a blunt response of our own: “Neither of us has ever received a single cent of funding for this reply or for work whatsoever from any parties.”

Bluster aside, the innuendo and legal threats had the opposite effect, strengthening our resolve to publish the reply. As a general matter, sponsored surrogacy like the “Curious Absence” paper needs ummasking because it tries to harness the academic credibility of scholarly, peer-reviewed publishing for private gain—typically without disclosing either the interests or processes in the information laundering behind such efforts. And if such critiques are necessary in general they are acutely so now before the Pai-led FCC recasts the evermore internet-centric communications universe in an industry-serving mold. If Pai succeeds, it will be hard to go back—hard, that is, to get the regulatory toothpaste back in the tube. At that point, exposing the industry scholar-lobbyist network’s campaign would be (merely) academic.

CRTC Zero-Rating Rulings are a Significant Win for the Open Internet: Bolster Common Carriage, Competition and Cultural Policy

Two rulings by the CRTC the other day constitute a significant win for common carriage (aka ‘net neutrality’), competition, Canadians and cultural policy.

The second of the two rulings found that Videotron’s Unlimited Music program runs afoul of Canada’s telecoms law. It does so by giving an undue preference to subscribers of the company’s highest tier data plans over the rest of its customers and to the music services included in its offering such as Apple Music, Google Play, Spotify versus those left out but available over the internet, e.g. the CBC and commercial radio stations.

Combining the lessons of that decision with its 2015 Mobile TV decision (upheld by the Federal Court of Appeal last year), the CRTC took the additional step of developing a general framework that in most cases prohibits carriers from acting like publishers or broadcasters that pick and choose content-based services that don’t count towards your data caps while everything else you use the internet or your mobile phone for does. The framework also banishes pay-to-play schemes like the one in the US wherein content providers or in-house affiliates like DirecTV ‘sponsor data’ so that internet traffic from the use of their content does not count, in this case, against AT&T subscribers’ monthly data allotments.

That particular example (and a few others) had caught the eye of the FCC’s previous chairman Tom Wheeler as a potential violation of common carrier rules but has since been waived away by Trump appointment, Ajit Pai – by fiat rather than any formal proceeding. The CRTC’s new Differential Pricing Framework strikes a hard stance against pay-to-play schemes because they essentially treat the internet like a glorified cable TV system rather than the public internet where access is governed by common carrier principles.

Lastly, the CRTC’s new Differential Pricing Framework leaves some wiggle room for making decisions on the margins with respect to services that escape the Commission’s general ban on zero-rated plans. It will base its judgements on whether or not to grant an exemption to such services when they offer exceptional public interest benefits, are open to any content, app or service provider, are ‘content agnostic’, have minimal to no impact on the interoperability of all of the internet’s interlocking parts, and are not based on payola schemes (paras 126-129).

Broadband Internet Access and Mobile Wireless Providers are Common Carriers not Publishers (or Broadcasters)

The practices at issue are known as “zero-rating” and are the most recent frontier in the battle over “network neutrality”, but which I prefer to refer to as common carriage in line with the more formal terms of telecoms law and history. The decisions by the CRTC last week firm up ISPs and wireless services’ status as carriers rather than broadcasters or publishers, meaning that control and choice should be in subscribers’ hands to the greatest extent possible versus those of the companies. In this sense, the rulings are all about power and control, and the fact that the CRTC decided that more power and control should rest with subscribers, content providers and would-be rivals has the incumbents and their cheerleaders up in a ruckus.

The decisions mean that ISPs and mobile wireless providers like Bell, Telus, Videotron, Shaw, Teksavvy and Rogers generally cannot pick and choose which services, content and apps won’t count toward your monthly data caps and which will. While the rulings do not add much that is new to the landscape, they do clarify the rules-of-the-road and aim to head off a regulatory game of whack-a-mole as ISPs and wireless companies try to skirt the principle of common carriage that those who control the medium should not control the messages that flow through them. Put this all together with the Telecommunications Act’s rules outlawing unreasonable discrimination between both users and services, the CRTC’s network neutrality rules, and last year’s Federal Court of Appeal ruling that upheld the Commission’s 2015 Bell’s Mobile TV ruling, yesterday’s decisions strengthen as well as clarify the net neutrality regime in Canada.

No Such Thing as a Free Lunch

All the big incumbent telcos and ISPs, except Rogers, and their hangers-on from the consultancy world, argued that banning zero-rating denies consumers access to ‘free stuff’ that they like a lot while undercutting a useful tool that can encourage affordability and adoption of the internet. It also, they say, removes a key source of innovation and competitive rivalry (see, for example, Trump’s FCC Chair appointment, Ajit Pai, Mark Goldberg, Roslyn Layton).

Such advocacy, however, is better seen as an attempt to wrap commercial aims in noble public interest garb. The commission gave short shrift to their claims, and for good reason: programs like Videotron’s Unlimited Music and Bell’s Mobile TV target subscribers for their most expensive data plans rather than promote affordable internet access and wireless services for those most likely to need the help. Moreover, there are better ways to deal with the issues including fostering more competition and defining broadband internet access as a basic service so that more forceful regulatory and policy steps can be taken to meet such goals if “the market” fails to do so. The CRTC did just that late last year when it defined broadband access at speeds of 50 Mbps down and 10 Mbps up a basic service, and thus this decision needs to be seen in that context (paras 68-70).

The Peculiar Structure of the Communications and Media Industries in Canada Require Strong Common Carrier Rules

The claim that zero-rated services give people ‘free internet’ also collides with the fact that ISPs and mobile wireless operators that do not use zero-rating have subscription prices that tend to be significantly more affordable and with data allowances that are twice as high on average as those which do use zero-rating (Rewheel, 2016).

Prices also tend to be even higher and data caps even lower where vertical integration and diagonal integration are extensive (i.e. vertical integration is when a firm owns the network as well as content services that rely on it, while diagonal integration is when a firm that owns a wireline network also owns a wireless network). This is of special importance to Canada given the very peculiar structure of its communication markets.

Concentration levels in broadband internet access and mobile wireless markets around the world tend to be “astonishingly high”. This is true in Canada too.

The extraordinarily high levels of vertical and diagonal integration in Canada, however, is what puts us in a league of our own and, crucially, begets the need for especially tough common carrier rules. Take, for example, the fact that Bell, Rogers, Shaw and Quebecor’s Videotron own all the main commercial TV services in Canada (185 in total). Add in Telus, which is not vertically-integrated, and the top five players in Canada account for nearly three-quarters of the broadly drawn network media economy (see here and here).

In addition, the last stand-alone mobile wireless operator in Canada, Wind, was acquired by Shaw last year, and made a branch of this vertically- and diagonally-integrated giant. This is of great importance because where there are stand-alone or wireless-centric operators like T-Mobile and Sprint in the US, or 3, Free, Tele2 and Play in Europe, data plans tend to be more affordable and have data allowances that can be six- to ten-times as high as their vertically- and/or diagonally-integrated counterparts!

In short, the market in Canada is structurally biased toward carrier control, high subscription prices and low data caps. We need especially tough rules to deal with these exceptional conditions. The CRTC’s general ban on content-based zero-rating services addresses these realities head on – and pushes back against them but stops short of addressing the issue of data caps directly, as some groups like Open Media advocated (paras 40, 56-58).

The CRTC Just Says No to ‘Balkanizing the Net’

As the CRTC’s rulings also observe, zero-rated services can impose significant costs on other content, app and service providers who must meet the technical design specs and other administrative criteria of zero-rating platforms (paras 41-43). Even Facebook has experienced long delays in designing its service for T-Mobile’s Binge On service in the US. News media have had similar experiences with respect to Google’s AMP and Facebook’s Instant Article platforms. The lesson of those experiences is clear: while theoretically open to all, only the biggest players tend to be able to incur the substantial expense needed to design their services for these platforms — and walk away if things don’t work out as they hoped.

Facebook’s Instant Articles platform illustrates the point. It is chock-a-block full of the biggest news organizations in Canada and the world, such as the CBC, Postmedia, the New York Times, Wall Street Journal, Financial Times, Guardian, etc. New ventures like Canadaland, iPolitics, the Tyee, etc. are conspicuously absent (see here and here). Yet, even after expending much time, money and expertise, the New York Times, Vice, the Los Angeles Times, Forbes, the Chicago Tribune, and several Hearst publications have walked away from Facebook’s Instant Articles platform due to lackluster results and the perceived loss of control over their content, audience data and revenue (see here). In short, while advocates tout zero-rated plans as being pro-innovation, competition and consumer – and basically “free” – they are nothing but. The fact that they feature the biggest brands suggests that they reinforce the power and control of both blockbuster brands and the platforms that host them.

As the CRTC’s ruling observes, having to negotiate deals with and design services to meet the technical requirements of multiple ISPs’ zero-rated platforms across Canada would impose heavy burdens on content creators. It would also insert a new gatekeeper between them and audiences, using the seduction of “free stuff” to influence people’s selection of content, apps and services in ways that steer them away from the general internet towards the companies’ own offerings.

The lure of free, in other words, would tilt the field in favour of walled gardens built around proprietary standards and against the public internet based on common protocols (e.g. TCP/IP, HTML, etc.). Indeed, this is why some of the cultural groups took a stance against zero-rated plans, including, and unusually, l’Association Québécoise de l’Industrie du Disque, Du spectacle et de la Vidéo (ADISQ), and the Independent Broadcast Group (paras 37, 43, 53-58).

Common Carriage is Good for Culture (Policy)

The ruling is not just good for common carriage and competition but for Canadians and culture policy. While the Canadian Media Producers Association and CBC called upon the CRTC to use zero-rating to promote Canadian content, its swift rejection of that idea is based on the principle that communication networks should not be tied to the pursuit of such goals. The ruling’s hat-tip to people’s privacy and the concerns it raises with respect to how zero-rated plans could discourage the use of virtual privacy networks further points to values and uses of the internet that are rooted in the culture of people’s everyday lives versus the ‘systems-control’ and cable TV-centric model of cultural policy that has prevailed for much of the past century (paras 106-113).

Competition Should Be Based on Substantive Factors vs Marketing Gimmicks

While the strict limits on content-based zero-rated plans applies to all ISPs and wireless carriers, the decision’s biggest loser in all this is likely Videotron. It was the complaints filed by Jean-Francois Mezei and PIAC against its Unlimited Music program that kicked off the review to begin with, and to them we can be thankful. Some, however, worry that this outcome could undermine the more competitive wireless market its presence has fostered in Quebec.

That Videotron has spurred on greater competition in the province, there is no doubt. However, as the CRTC’s decision makes clear, rather than using marketing gimmicks like zero-rating, Videotron and its competitors should compete based on price, speed, data cap size, quality of service, network security and privacy. Marketing gimmicks like zero-rating, in contrast, obscure the fact that, operating in highly consolidated markets, the big telcos and ISPs don’t like to compete on price so that they can maintain fat profit margins in the 20-40% range (with Videotron and Wind, now renamed “Freedom”, at the low end and Rogers, Bell and TELUS at the other end). Either way, their profits are two- to four-times more than the average for Canadian industry – which in itself is a proxy for their dominant market power (paras 47-59).

Moreover, the CRTC and government policy has already developed a regulatory framework in the companies’ favour by refusing to mandate wholesale access to their mobile networks for MVNOs (mobile virtual network operators) and, some fear, in the details of the wholesale access regimes that are currently being cobbled together for fibre-to-the-doorstep internet access and mobile wireless. Why should policy makers put their thumbs on the scales even further by sacrificing essential principles like common carriage, freedom of expression, privacy and a new approach to cultural policy to the incumbents’ desire to skirmish with one another on the margins using marketing gimmicks like zero-rating rather than in a full-out battle for minds and market share?

Some also worry that the CRTC’s decision throws Videotron’s customers under the bus. Yet, as the decision makes clear, it is only its high-end subscribers with access to the Unlimited Music program who will feel the pain. Moreover, the bottom line is that unduly discriminating between customers is against the law. The CRTC not only found Videotron to be offside with respect to the long-standing undue preference rules of the Telecommunications Act and the other underpinnings that have come to define network neutrality in Canada, it also held up Videotron Unlimited Music service as precisely the kind of content-specific zero-rating service that will be a non-starter from here on out. The company has until July 19^th of this year to remove the service.

Ultimately, it is Videotron that played chicken with the Commission, and thus with the interests of its subscribers. Well acquainted with the law and having been at the heart of the Mobile TV rulings that have clarified the rules-of-the-road over the past few years, Videotron chose to roll the dice anyway in the hope that its gamble would pay-off. It didn’t, and it lost. In short, it has nobody to blame but itself for the consequences that befell its customers.

Yet, while this valuable subset of Videotron’s subscribers might indeed suffer, the alternative course of action – blessing zero-rating — would cause more collateral damage for Canadians in general, to competition across the internet- and wireless-centric communications and media economy (over-and-above its effects within the communications industry), and to content and cultural creators. The latter would have to shoulder additional costs and other burdens while ceding yet more power to ISPs and ‘platforms’ at precisely the moment in time when they need as much good fortune as they can manage to muster to chart a course through the turbulent waters that the content media industries now face.

While Videotron and others suggest that the company might yet find a way out of its predicament – perhaps by creatively rejigging its offering yet again (although there does not seem much hope for that), or perhaps by appealing to Cabinet or the Courts – a victory by either of the first two of these options would constitute a serious blow to a good decision that has been a long time in the making. It would also look bad in the context of the whole of the situation as well, a situation in which current chairman J. P. Blais has distinguished himself from his predecessors since the Commission’s first big decision under his leadership in 2012 when BCE’s bid to acquire Astral was spiked. Last week’s zero-rating ruling could be the last of the Commission’s big rulings under Blais direction. In this sense, the two decisions could ultimately constitute book-ends to his tenure at the Commission. For Cabinet to force the Commission to revisit, revise or repeal the ruling would send a signal that when the stakes are down no matter what the independent regulator does, the Government – whether Conservative or Liberal – will swoop in to protect the interests of Canada’s incumbent telco and ISP giants while throwing the interests of independent regulators and the Canadian public under the bus.

On this score, the current Liberal Government’s track-record so far is mixed. It’s decision to reject Bell’s appeals to reverse the wholesale fibre-to-the-doorstep regime and the CRTC’s decision to suspend the rules that reserve the Canadian advertising market during the Super Bowl to Canadian broadcasters (i.e. Bell’s CTV has the rights at present), have been steps in the right direction. It’s lackluster response to the CRTC and others’ entreaties to take an active role in making sure that affordable broadband access is available to all Canadians and its decision to bless BCE’s take-over of one of the last significant telco-ISP, Manitoba’s MTS, have been deeply disappointing.

These are political calculations that the government will have to make, but a sober review of the facts on the ground in the zero-rating case suggests there’s no reason for rash judgements, the screams of bloody murder by the incumbents’ defense league notwithstanding. Dial back the hyperbole, and the reality is that the Commission’s zero-rating decision does not establish a lot of new facts on the ground but clarifies the rules of the road while firmly rebuffing the incumbents’ strident efforts that aim to remake the internet more like Cable TV. The sign posts that zero-rated plans are a non-starter have been there all along but the incumbents have tried to run roughshod over them only to be turned back each time – by the CRTC and by the Courts who have reaffirmed its authority to take the steps it has. This decision warns them of the consequences once again.

Exceptions to the Rule and Bolting the Barn Door After the Horse is Gone?

While tough, the new framework is also flexible and balanced insofar that the general ban on content specific zero-rating services like Videotron’s Music Unlimited or Bell’s Mobile TV services will not apply to managed services like IPTV services and Internet-of-Things uses such as telemedicine applications or Microsoft’s Xbox and Sony’s Play Station (para 9). That adds much upside for the telcos and is line with the kinds of things that the Commission heard both from them as well as internet and mobile wireless equipment makers like Sandvine and Cisco during the hearings. However, it is also the case that managed services will now likely emerge as the next frontier of battles over common carriage (net neutrality).

This is because managed services are not hardwired into networks with clearly drawn lines between them on the one side and ‘the public internet’ on the other. Instead, they are a function of software drawn lines in the sand whose precise location only the telco-ISPs really know. There is room for must mischief here, and the track-record of telecom history for over 150 years almost certainly guarantees that we will have it.

That this is so was on full display in the Federal Court of Appeal’s ruling that rejected Bell’s appeal of the CRTC’s decision in the Mobile TV case. The case was precisely about drawing lines between telecommunications on one side and broadcasting on the other. Bell sought to exploit such ambiguities to offer its Mobile TV service to subscribers in a way that was clearly off-side according to telecoms rules but just fine if its activities could be shoe-horned into the broadcasting mold. As the court stated,

. . . Technology has evolved to the point where television programs are transmitted using the same network as voice and other data communications (para 22) . . . . [I]t was reasonable for the CRTC to determine that Bell Mobility, when it was transmitting programs as part of a network that simultaneously transmits voice and other data content, was merely providing the mode of transmission thereof – regardless of the type of content – and, in carrying on this function, was not engaging the policy objectives of the Broadcasting Act. The activity in question in this case related to the delivery of the programs – not the content of the programs – and therefore, the policy objectives of the Telecommunications Act (para 53).

That the CRTC has exempted ‘managed services’ form its zero-rating framework and decided to take an ‘ex post’, case-by-case review of cases as they arise is a potential weakness of the decision precisely because it greatly increases the chances that battles on these new frontiers will continue apace (paras 122-125). Ex post rules favour those with the deepest pockets, as well, and this too skews the field in the favour of Bell, Rogers, Shaw, Videotron, Telus, et. al. In other words, any claims that the Commission has not given due consideration to their concerns is blind to these realities.

The fact that the ruling also permits a small number of content-agnostic zero-rated applications, such as when an ISP does not count internet usage against your data caps when used during off-peak hours or to manage your bill and subscriber account, is another example of common sense and flexibility being built into the decision (paras 98-100).

Lastly, the Commission held the door open ever so slightly to the possibility that a new service or application might arise that offers exceptional public interest benefits that deserves to be zero-rated. To this end, it opened a path for anyone considering such an option to consult with Commission staff before launching (paras 126-129). It also adopted a case-by-case approach to ruling on complaints. Anyone who thinks a zero-rated offer crosses the bright line rules restricting such offerings could bring a case to the CRTC.

Some see this as a slippery slope at odds with the general ban on zero-rating, but the Commission’s recent track-record on the Mobile TV, illicoTV and now Videotron’s Unlimited Music services stand as firm markers that it is willing to stand firm. Yet, whether that will continue after the present Chair, however, is another matter to which the government should be attentive, yet even then, the Differential Pricing Framework does seem to limit the scope for exceptions to the general rule. Once again, however, there is also no denying that the ‘after-the-fact’ (ex post) approach favours incumbents while putting the burden on individuals – whether deep-pocketed industry rivals or the proverbial David battling the Telecom Goliaths for justice and a communications system fit for Canadian citizens in the ‘internet age’.

Where Things Stand: Canada and the Rest of the World

The debate over zero-rating has constituted the frontlines in the battle over common carriage and the internet for the past three- or four-years. That terrain has shifted in this time and is shifting fast now. More than forty countries have addressed the issues, in a wide variety of ways, including the US, the EU28, the Netherlands, Slovenia, Chile and India. So, this begs the question, are the new Canadian zero-rating rules – and common carriage principles more generally – at the strong or weak end of the spectrum?

Relative to conditions in the US under the Obama-era FCC, it is hard to say definitively one way or another: both the Obama-era FCC’s and CRTC’s rules lay towards the strong end of the scale. However, just as President Trump has been ruling by Executive Order, the newly appointed FCC chair, Ajit Pai, has been ruling by fiat to dismantle the strong common carrier rules put into place by his predecessor. Prior to this recent turn, however, zero-rating practices had been banned in a few specific cases as a condition of ownership change approvals but were mostly still under review, but with a proposed regulatory framework put on the table just before the change in administrations.

At first blush, the new CRTC Differential Pricing Framework appears to be tougher than what had held sway in the US even before the Trump Administration arrived in town. Yet, a few things temper that view.

First, constraints on zero-rating in the US that were put into place after broadband internet access was reclassified as a common carrier service in 2015 were just one part of a still-developing picture that also included a ban or limits on the use of data caps as a condition of merger and acquisition approvals (e.g. Charter Communications acquisition of Time Warner Cable and Brighthouse Cable last year). Without data caps, zero-rated plans are redundant.

Second, they were also the focus of ongoing study by a working group dedicated to the task within the FCC but led by well-known internet economist Shane Greenstein and a variety of others from within the telecoms industry and across the media and economy more broadly (claims that the FCC has been an economic free zone are complete bunk in light of these and many other basic facts). The totality of these efforts and the longer evolution of attention to the issues at hand are strengths not present in the Canadian context.

The most decisive point, however, is that conditions in the US are different than those in Canada, and those differences arguably justify the tougher rules that at least now exist on paper in this country. Unlike Canada where vertical and diagonal integration is the norm at Bell, Rogers, Quebecor and Shaw in the US it is the exception and there is only one US company that stands close to them in terms of size and structure: Comcast, but then again, even it doesn’t really have a mobile wireless operation, although it has just recently announced the launch of a MVNO – which is very different than the large-scale, facilities based operations of its Canadian counterparts. It’s share of the total telecoms-internet and media market is 11%; Bell’s share of the Canadian market is two-and-a-half times that amount (28%).

Vertical and diagonal integration are not the pivot upon which these questions about carriers’ undue control over content and consumers turn but the more prominent those phenomena are the more pronounced the problems are (e.g. high rates, low data caps, punishing overage charges, excessive control, privacy, etc.) and the greater the need for strong rules. In this respect, the CRTC is on the mark, while its soft stance toward managed services, potential exceptions and ex post review may turn out to be weak points, the exploitation of which will need to be aggressively defended against in the time ahead.

Relative to the EU28, developments are too new and evolving to say with any certainty. But there, too, the adoption of new guidelines on net neutrality last year also put those who would use zero-rating on notice that such efforts would be closely monitored, much like the FCC was doing in the US. However, unlike the US, the EU rules are weaker than those of the late-Obama era FCC because they stand all on their own without the FCC’s working groups and merger & acquisition reviews. They also lack the general applicability of the CRTC’s framework.

Lastly, the CRTC’s rules are also similar in style and strength to those adopted by the Telecommunications Regulatory Authority of India, which banned zero-rating across the board but on an ex ante basis. TRAI did so in the face of the staunchest of opposition from some of the world’s biggest digital giants, notably Facebook, which led the charge, flanked by the same ideological warriors that have also led the defense of Bell, Telus and Videotron in Canada, e.g. Jeff Eisenach, who wrote a brief commissioned and submitted to TRAI in India by Facebook and which Telus wheeled into action largely unchanged within the Canadian context (see comparisons of both documents here and here). And so too did Roslyn Layton make the case for why advertising supported mobile phone and internet access was a “good thing” in both cases (see here).

Avoiding Getting Sucked into Trump’s Vortex

Their contributions are especially important in this context because Eisenach and Layton are two of three members of President Trump’s Telecom Policy Team (the other is Mark Jamison). They have been leading the charge in the US and worldwide to roll back the successes that have been chalked up in recent years for common carriage, competition and people’s rights as citizens and consumers to use the phone and internet connections they subscribe to as they damn well please, and without the distraction of ‘free baubles’ getting in the way and threatening that freedom at every turn. Their efforts are backed by a dubious President and conservative, business-beholden think tanks like the American Enterprise Institute, Technology Liberation Front, Free State Foundation, Information Technology and Innovation Fund, Mercatus Centre, and other such groups. On the scholar/corporate lobbyist connection in which Eisenach looms large, see the New York Times piece here.

As indicated above, their ideas have been imported into Canada and put onto the public record of CRTC proceeding by Telus and Bell, and made part of the broader discussion by the same and other industry cheer-leading consultants. Their ideas are worthwhile reading but ought to be given short shrift and generally have been – unless following a Trump-like agenda appeals to you. Yet, as they take their cues from Ayn Rand it is time that we take ours from those like Hannah Arendt, who raised questions about how want to live and tailor the institutional arrangements of society so that people’s freedom, dignity and capacity to live in a democratic and just society can flourish.

The Battles Ahead

As per my usual, this is once again way too long for a blog post. I’m sorry. But, to paraphrase Mark Twain, I wanted to write you a short letter but I didn’t have enough time so I wrote you a long one instead.

That said, where do things stand? They stand in a good spot, generally speaking. The CRTC has adopted rules that are well in line with the Telecommunications Act’s long-standing provisions with respect to no undue discrimination between subscribers and services — a cornerstone of common carriage. It is also of a piece with developments in the last three years in which efforts by the carriers to act like publishers choosing which content, apps and service their customers will get for free and which will be discouraged by dint of counting against people’s data caps have been thwarted by the Commission and the Courts each step of the way.

That was the lesson of the Mobile TV case, and it is the lesson from last week’s decision that put the kibosh on Videotron’s Unlimited Music service. There are no surprises here. Things follow a logic and a well-lit path.

There is also reasonable recognition of the incumbent providers’ interests and flexibility with respect to managed services and the exceptions for administrative type services, etc., while the door has been kept ajar to new services that might come along and where zero-rating them makes sense. Whether the managed services exception and the ex post approach that the Commission has adopted, however, emerge as major battle zones in which the incumbent telcos and ISPs continue their efforts to remake the internet in the image of Cable TV, only time will tell. The openings afforded by this aspect of the decision are its weakest links, so we must be very alert to such prospects.

Crucially, the CRTC’s bright line rules on zero-rating also conform to the peculiar realities of the Canadian communications market, characterized as it is by extremely high levels of vertical and diagonal integration in which all of the biggest wireline and wireless networks are owned by Telus, Rogers, Bell, Videotron and Shaw, all of which – except Telus – own all of the main TV services (except the CBC and Netflix) and several of the most important sports teams (e.g. the Montreal Canadians, Maple Leafs, Raptors, etc.) in the country. This is without parallel and thus it is entirely appropriate that the CRTC’s rules have taken the particularly tough form they have.

Underneath all of this is just common sense: common carriage is essential to ensure that those who own and control the medium and who have all the incentives and ability in the world to control and influence the content, activities, services and interactions that take place through their networks don’t make good on those potentials. In short, that potential needs to be constrained by tough rules, enforced by a regulator with a spine. The CRTC has shown that spine, but will no doubt experience incredible blow back for doing so. It already is.

The question is, will the current Liberal Government have the spine to back the independent regulator, or will it cave in the face of the immense pressure that it will no doubt face? That pressure will come from the biggest industrial interests in the land, who have been adding ideological winds to their sails from the gusts now blowing North from the Trump Administration, an administration that appears to relish ruling by Executive Order and administrative fiat, with nary a care for the conventions, culture and values of democracy. This is not a model to emulate.

Communications are the lifeblood of a democratic society and culture, and so these things matter. Now is the time for steps to be taken to ensure that competitive realities as well as the needs of citizens, consumers and cultural creators are embedded within the institutions and rules-of-the road that will define the increasingly internet- and mobile wireless-centric communications and media universe of the 21^st Century.

The CRTC has taken steps to do just that, for which Canadians can and should be thankful. Now it’s time for the Liberal Government to step up to the plate. Will it? Time will tell.

The CBC’s Place and Role in the Networked Media Universe

Today I participated in a panel debate at the Manning Centre’s annual conference. It’s a big conflab that attracts a whose who list of the Conservative Party and party faithful.

The question we debated was, “Is it time to pull the plug on the CBC?” I debated the question with James Baxter from iPolitics and Brian Lilley, a co-founder of Rebel Media and all about town commentator for various conservative-type talk shows, publications, etc.

So, should we pull the plug on the CBC? I said no! What follows is a slightly tidied up copy of my talking notes.

Main Arguments for how to think about the CBC, and why we need it:

1. Over the last three decades, the CBC has become a much dimmer star in a much larger internet- and mobile wireless-centric media universe;
2. it is still important — just a lot smaller than it once was;
3. the CBC should be put on better footings with respect to funding, its mandate and independence from the government of the day;
4. However, I also wonder if focusing on the CBC is like looking at things through the wrong end of the telescope?
   • Broadband internet and mobile wireless are now central to our whole way of life, economy and society, including the media, the CBC and journalism.
   • We can no longer talk about the CBC, journalism or ‘the media’ without talking about internet & mobile phones.
   • Mobile phone rates, data caps, broadband access, fibre-to-the-doorstep, and common carriage are as important as the CBC to most CDNs – in personal terms (intimacy @ a distance), social terms (access to knowledge, entertainment, opportunities, others), and $ terms (CDNs spend $5 on bandwidth for every $1 on media content).

I leaned on two main sources for my talk: Noam (2016). Who Owns the World’s Media. New York: Oxford University Press and, of course, the data sets and reports from the Canadian Media Concentration Research Project that I direct.

Argument #1: CBC is a small fish and a vastly bigger pond

It has shrunk greatly over time against the backdrop of a vastly larger media landscape, as Figure 1 below illustrates. 

Figure 1: CBC vs Network Media Economy, 1984-2015, (Total $ millions)

Source: Canadian Media Concentration Research Project (2016).

The role of the CBC has been dwarfed by a handful of developments:

1. Wholly new media have been added to the media universe: e.g. mobile phones, broadband internet access, pay TV, OTT, online gaming, social media, search engines, the hosting, buying and selling of stuff – ebay, Amazon, kijijji.

2. The media universe is becoming ever more internet- and mobile wireless-centric, hence why I talk about the “network media economy” — carriage is king, not content;

3. The size of the network media economy quadrupled from $19 billion in 1984 to $75 billion today;

4. Canada’s media economy is not small but one of the twelve biggest in the world;

5. The Canadian media economy has not only become much bigger and more complex but also become more concentrated since the turn-of-the-21st Century (although with important exceptions, such as, and crucially, internet news sources, radio and magazines). Among other things, Figure 2 below shows how the CBC’s place within the Canadian media economy shrunk between 1992 and 2015.

Figure 2: CBC place in the Network Media Universe, 1992 vs 2015

 1992 2015

The CBC is now a pygmy amongst giants. It’s share of the total media economy dropped from 5% in 1980s and early 1990s to less than half that amount today.

Based on revenues in Canada, Google is now bigger than the CBC, while Facebook is about half its size.

What also stands out is the extent to which a handful of companies stand at the apex of the internet and media landscape: Bell, Rogers, Telus, Shaw, Quebecor. Bell dominates with nearly 30% of all revenue, while the big five account for just under three-quarters of all revenue; that figure was 64% in 2000 and 60% in 1996.

High levels of media concentration are not unusual, however. Summarizing the results of a thirty-country study, Eli Noam observes that media concentration is often “astonishingly high” around the world. Canada is no exception.

Canada does stand out, however, in terms of the extent to which telephone companies and ISPs own all the main TV services and most radio services in Canada, except for the CBC. The “Big 5’s” share of the total TV market — Bell, Rogers, Telus, Shaw and Quebecor — has grown from 54% in 2008 to just under 80% in 2015 (78%). This combination of carriage and content is called vertical integration; Canada has some of the highest levels of vertical integration in the world, and this is not a good thing. It matters because:

1. Having come to own content, telcos increasingly want to act as gatekeepers (publishers) to the internet rather than as gateways (common carriers). CBC has been excluded from Videotron’s Unlimited Music offering, for example, where wireless subscribers get access to a selected catalogue of streaming music services without the use of them counting against your monthly data caps. All telcos would like to do this. Bell’s Mobile TV offering tried to do much the same before being slapped down by the CRTC and the Federal Court of Appeals;
2. Telcos’ content holdings in TV, radio, online and print are trinkets on their much larger corporate edifices. They don’t care much about media, content or journalism other than that they hope this “content” stuff will help them sell mobile phone and internet subscriptions – the real engines and profit centres of their operations;
3. Signing up for mobile wireless and broadband internet services in Canada is very expensive relative to the forty countries that make up the EU and OECD, as is the price of data. Data caps are also used widely and set at low levels after which punishing ‘overage charges’ kick in – as if we are using ‘too much internet’.
4. As a result, markets for fibre-based internet access are underdeveloped while mobile wireless and broadband internet uptake is lower than it could be;
5. Regulatory capture – governments have been unwilling to steal their spine to deal with such realities. The revolving door between industry and government does not help. The Harper Government went part way down the path needed to bring about more competition but the Liberal’s approval of Bell’s takeover of MTS last week effectively throws the last government’s pro-telecoms competition policy under the bus. CPC leadership candidate Maxime Bernier probably knows this file best amongst all of the party’s leadership candidates, but his plans are uninspired and too closely linked to those of the telcos.

Instead of railing against the CBC, these kinds of issues should be higher up on our list of priorities. The industrial media age of the 19^th and 20^th centuries is giving way to the internet-based society of the 21^st Century. The choices we make now will shape what happens for decades, and perhaps longer. We need to get this right.

Besides getting a better measure of the CBC’s diminished place within the digital media marketplace, we also need to realize that the CBC is kept on a very short leash by a several political constraints, four to be specific:

1. Funding levels for the CBC are low by international standards – less than half the average and about a sixth of the high-end of the scale. The figure below illustrates funding levels per person in Canada versus other OECD countries, using 2014 data from all of the other countries but 2016 data for Canada to capture the increased funding put into the CBC by the Trudeau Government.

Figure 3: Public Service Media Funding/Person: Canada vs Select OECD Countries, 2014

Source: Nordicity (2016). Analysis of Government Support for Public Broadcasting. London, UK & Ottawa: Nordicity.

2. Short-term annual funding cycles opens the CBC up to political influence through budgeting – should have five- or ten-year cycles instead;

3. Lack of independence from the government-of-the-day in terms how the CEO and Board is appointed – Conservative or Liberal;

4. As a recent article by DeCillia and McCurdy shows, the 467 instances of media coverage of the CBC that they examined between 2009 and 2014 highlights the extent to which the CBC faces an overwhelmingly hostile press that typically casts it as threat to commercial interests rather than taking up its place within a democratic society.

However, despite being hemmed in by business interests on one side and political constraints on the other, the CBC still manages to do some things remarkably well:

1. Investment in original journalism and Canadian content. While the CBC accounts for just a fifth of all TV and radio revenue, it is accounts for a third of investment in original TV/radio journalism, news and information programs and a quarter of all spending on TV and radio content production in Canada. It also maintains 9 foreign news bureaus while the private sector has cut to a bare minimum.
2. The CBC TV audience has declined but still garners 10% audience share and is still a significant TV news source (8% in English regions, 18% in QC).
3. CBC radio services are much loved (national audience share of ~20%), and its streaming music services are popular;
4. Trust for the CBC is high and has stayed fairly steady over time (CBC Annual Rpt, p. 34) whereas trust for traditional media has fallen (e.g. ¾ of Anglophones and 4-out-of-5 Francophones see it as fair and balanced, and reasonably diverse while trust levels for traditional media fell from 71% in 2012 to 58% at start of this year) (Edelman Trust Barometer);
5. The CBC has been an early adopter of digital technologies, the internet and mobile apps. Well before 2008, the CBC was making its archive of programs, streaming services, TV episodes, print and audiovisual news and commentary available via its website, apps, and on iTunes, YouTube, etc. – all for $33 a year (3^rd lowest amongst 18 comparable OECD countries) (Nordicity, 2016, p. 44). The commercial companies did not start in earnest until 2010, but they are still dragging their feet to this day.
6. The results show — the CBC is the #1 source of online news for Canadians, as the Figure below illustrates.

Figure 4: Top Internet News Sources in Canada, 2015

Source: ComScore Long Term Trend, September 2012 — September 2015, Total Canada, News and Information Category.

While the CBC is the number 1 internet news source in Canada, it is crucial to stress that it does not dominate the internet news environment. People get their news from many internet news sources — old (e.g. CBC, Postmedia, Toronto Star, CTV) and new (e.g. iPolitics, Huffington Post, Buzzfeed), domestic and foreign (e.g. BBC, Yahoo!-ABC, the Guardian, New York Times).

But before adopting a rose-tinted vision of things, however, there are several reasons for caution:

1. Most news organizations are short on money, trust and full-time journalists. New internet news ventures like iPolitics are groping their way to survival. The “crisis of journalism” is real, as the Public Policy Forum’s recent report The Shattered Mirror: News, Trust and Democracy states – but not of the magnitude or for the reasons it suggests. Against the backdrop of a heightened state of flux, the CBC offers a steady, reliable and well-trusted source of news.
2. New online journalistic ventures like iPolitics, Canadaland, The Tyee, Ricochet Media, etc. are important to their own niche audiences, but none of them crack the top 60 most popular internet news sources.
3. While trust in traditional media is weak and declining it is lower yet for ‘internet-based’ media (sometimes undeservedly so). In contrast, a large majority of Canadians — 75-80% — trust the CBC. As such, it helps fill the ‘trust gap’ and since democracy rests on trust, we can say that the CBC’s makes a positive contribution to democracy.
4. The economic base of the media no longer depends on advertising revenue but subscription fees: broadband internet, mobile phones, cable TV, Netflix, Spotify, etc. Subscription revenue now outstrips advertising revenue by a 5:1 ratio.
   • Advertising spending has flat-lined since 2008 and fallen on a per capita basis in the last three years This is not because of the rise of the internet, Google and Facebook but the sluggish economy. What’s left is increasingly going to the internet. Google and Facebook, in turn, dominate internet advertising not because they are vampire squids sucking the lifeblood out of journalism and ‘old’ media but because they are better at doing what the mass media used to do best: delivering audiences to advertisers. Figure 5 shows how advertising revenue tumbled for most media after 2008, and even slowed for internet advertising.

Figure 5: The Impact of the Financial Crisis on Advertising Across Media, 2004-2015

Source: Canadian Media Concentration Research Project.

• Advertising-funded mass media are in trouble not because of the CBC, but because (a) total advertising $ are stagnating or in decline; (b) pay-per media are expanding; and (c) the internet is better at delivering audiences to advertisers. The general public has never paid the full cost of general news services, and likely never will. Consequently, journalism and ‘general media services’ have always been subsidized by either advertising, wealthy patrons, propaganda in authoritarian regimes or the public purse in democratic countries.

• Given this baseline reality (i.e. unwillingness to pay), the market does not and cannot fully support the kinds of general journalism and media services that Canadians want and democracy needs. This is not to denigrate the market, but recognize its limits. Filling in the gap between what the market offers and what people want and democracy needs is the raison d’être of the CBC. As the bottom of the advertising subsidy falls out from under some media and journalism, what kind of subsidy will rush in to fill the void: (1) rich sponsors; (2) propaganda; or (3) the public purse? My vote is for the CBC.

What is to be done?

1. Stop looking through the wrong end of the telescope; the CBC plays a smaller role in a larger and more internet- and mobile wireless centric media universe;

2. The CBC needs to be put on a stronger footing by:

• Clarifying that its mandate includes offering services across all digital media;
• More than doubling its budget to bring it into line with the average of the OECD countries and eliminate advertising from its TV and online services;
• replace current annual funding cycles in favour of five- or ten-year cycles to help shield it from political influence and allow it to plan appropriately;
• make the appointment of its President and Board more independent from the government-of-the-day;
• dial-down the anti-CBC hyperbole in the press and some political quarters.

Valuing journalism and quality media is not a zero-sum game but a virtuous circle that benefits all: strong spending on PSM occurs alongside greater personal willingness to pay for news (Norway, Sweden, Denmark, Finland & the Netherlands), and is positively tied to very high rankings on free press indexes and strong democracies.

3. Deal with the reality of high levels of media concentration and sky high levels of vertical integration in Canada because:

• telcos don’t care about content;
• telco-ISPs are pushing hard to become gatekeepers (publishers) in relation to the open internet rather than gateways (common carriers).
• lower the high prices for mobile wireless and broadband internet services and data and curb the use of data caps, as if somehow people use “too much internet”. Taking these steps will help increase the adoption and use of mobile wireless and broadband internet services;
• will help to decrease the problem of regulatory capture stop the spinning revolving door between industry and government – regardless of who or which party is in power.

Shattered Mirror, Stunted Vision and Squandered Opportunities

Two weeks ago, the Public Policy Forum published its report on the state of the news media in Canada: The Shattered Mirror: News, Democracy and Trust in the Digital Age. It’s an important report, and needs to be taken seriously.

The report’s portrait of the state of journalism in Canada is grim: advertising revenue has plunged in the past decade – due, it claims, to the internet, and to Facebook and Google especially; daily newspapers have been closed, merged or pared back during the same period; many local TV stations face a similar fate; well over 12,000 journalism jobs have vanished; fake news is pouring in to fill the void; and the social ties that bind us together are fraying. All of this adds up not just to a crisis of journalism but a potential catastrophe for democracy writ large, the report intones.

In the report’s view, throughout the 20^th Century advertisers, audiences and news organizations shared a mutually beneficial three-way relationship: advertisers got cheap access to large audiences, journalists got paid, and we got our news for next to free because advertisers footed the bill. This literally was the “free press”, and by lucky happenstance, democracy was the better for it.

That’s all coming undone now, though, say the wise counsel of mostly senior journalists and journalism professors huddled around the Public Policy Forum’s new CEO, Edward Greenspon (and former Globe and Mail and Bloomberg News senior editor) who led the development of this report. They conclude with a dozen recommendations designed to turn back the tide. The cornerstones of their policy proposals aim to redirect advertising revenue that is currently flowing into the coffers of Silicon Valley-based internet giants like Google and Facebook back to Canada. Another group of policy recommendations aims to use a proposed new Future of Journalism and Democracy Fund to boost the capacity of professional journalism taking root in emerging digital news ventures and First Nations journalism organizations.

I think that the exercise is potentially useful, and that there’s no need to shy away from the idea that the federal government can adopt supportive policies to bolster journalism and help a democratic culture to thrive. However, this report is badly flawed. All along the way it cherry-picks evidence and gooses the numbers that it does use to make its case. There is also an acute sense of threat inflation that hangs about it. The extent to which Google, Facebook, Silicon Valley and “the Internet” are made the villains of the piece is both symptomatic of how the report tries to harness such threats to preordained policy ends and a framing that undermines the report’s credibility.

The Shattered Mirror also dodges four fundamental issues that hobble both its analysis and policy recommendations:

1. Media concentration and the unique structure of the communication and media industries in Canada;
2. The impact of the financial crisis of 2008 which, even though its epicentre lay elsewhere, has resulted in a lacklustre Canadian economy ever since. This resulted in a sharp drop in advertising that slammed ad-funded news media and from which they have never recovered, and likely won’t;
3. Advertising is no longer the centre of the media economy, and receding ever further from that role by the day, so hinging a policy rescue on recovering so-called lost advertising is out of step with reality and likely to fail;
4. The general public has never paid full freight for a general news service and likely never will. Thus, it has always been subsidized, and as the bottom on advertising revenue falls out that source of subsidy will have to be replaced by another if we really are concerned about getting the news we deserve – trying to wrestle money out of Google and Facebook (the report’s central policy proposal) won’t cut it. The proposal to apply the GST/HST to them, with some tweaks, so as to make it apply to all forms of advertising and to earmark these newfound tax revenues to original Canadian content, could help and is, thus, one I support.

Finally, I am skeptical about the “real news versus fake news” frame that girds the report. The language about “vampire economics” is overwrought. Such things give a tinge of moral panic to the report, and taints the analysis and policy proposals. Unless otherwise cited or linked to, the data sets underlying the discussion can be downloaded under Creative Commons principles from the Canadian Media Concentration Research Project’s Media Industries Database. A PDF version of this post is available here.

Chronicling the Crisis: the Public Policy Forum Makes its Case

As the Public Policy Forum documents, advertising revenue has plunged for daily newspapers, and is beginning to fall for television. Addressing “classified advertising” specifically the report states that “three-quarters of a billion dollars a year in reliable revenue vaporized in a decade” (i.e. 2005-2015). Daily newspaper display advertising revenue totaled $1.8 billion in 2006; a decade later it had been cut in half. Altogether, total daily newspaper advertising revenue has plunged by 40% — from $3.3 billion in 2006 to an estimated $2 billion this year. Community newspaper revenue has fallen by $407 million since 2012 (pp. 17-19). Will the last journalist please turn out the lights?

According to The Shattered Mirror, a similar fate is beginning to beset TV. Profits have plunged from 11% for “private stations” in 2011 to -8% last year, for instance (p. 24). Another study by Peter Miller and the Friends of Canadian Broadcasting that hangs about The Shattered Mirror report but which is not cited, worries that, economic trends, and what it sees as a series of wrong-headed decisions by the CRTC, could lead to another 30 local TV stations going dark by 2020.

Newspaper circulation has also been cut four-fold from just over 100 newspapers per 100 households to half that amount in the mid-1990s, to just eighteen last year. The paid daily newspaper as we have known it for the past century could be extinct in five years, the Public Policy Forum report warns (p. 15). And as those implications come to pass, fake news is pouring in to fill the void, desiccating the social bonds that tie us together as a nation, as a people, and as a democracy.

Figure 1 below illustrates the point with respect to declining circulation.

Figure 1: The Vanishing Newspaper: Newspapers sold per 100 households in Canada, 1950-2015, projected to 2025

Source: Public Policy Forum (2017), The Shattered Mirror, p. 15.

In addition, twelve thousand journalists and editorial positions have been lost in recent decades, according to figures cited from the Canadian Media Guild. Unifor and the Communications Workers of America also report another 2000 or so positions lost as the massive shift in advertising revenue to the internet guts Canada’s news rooms.

The lost revenue at the root of this carnage, however, the report argues, has not vanished but migrated to the internet. In fact, internet advertising has sky-rocketed from half-a-billion dollars a decade ago to $5.6 billion last year, states the report. This ‘shift’ has benefitted a small number of internet giants based in Silicon Valley, while depriving Canadian news media of the money they need to survive.

The report is emphatic that the free-wheeling early days of the internet have been eclipsed by the rise of a few foreign digital media giants and a process of “vampire economics” whereby those giants, and Facebook and Google in particular, are sucking the lifeblood out of “real news”. As the report states, the internet giants are getting an incredibly “sweet deal”: “leverage the news others finance and grab the advertising that used to finance that news” (p. 31). But as Facebook and Google get rich, journalists, news organizations and, yes, us and democracy are being robbed blind. The report is explicit that only once this lost advertising revenue is brought home, will all be well: the so-called crisis of journalism will be solved and democracy saved.

Some of that money flowing south needs to be clawed back and the two behemoths need to learn to show more respect for the news content that they have used to build their empires, the report stresses. Not only do we need to do this, we can do it if policy-makers gather up the political will needed to change the Income Tax Act to make advertising on Canadian internet news sites tax deductible but not foreign websites (as has been done for newspapers and broadcasting since 1965 and 1971, respectively). GST/HST should also be applied to foreign internet companies that sell advertising and subscriptions in Canada, e.g. Google, Facebook and Netflix. These measures would cost little and raise $300-400 million that could be used to fund public policy initiatives to strengthen professional journalism (p. 84). In addition, Facebook and Google must be made to play an active role in stemming the tide of “fake news” flooding into our country while giving priority to Canadian news sources. In other words, they must be made to act more like responsible publishers (p. 97).

Tunnel Vision, Goosing the Numbers, and “Off Limits”

Advertising-supported journalism is not the ‘natural order of things’.

The case that the authors of The Shattered Mirror make about the severity of the crisis of journalism is impressive at first blush. Ultimately, however, it is neither convincing nor credible.

Its fixation on advertising revenue, for instance, assumes that it has always been an integral part of the natural journalistic order of things. It has not. Advertising revenue soared from being less than half of all revenue to account for between two-thirds and 90% of revenue at big city newspapers in the US and parts of Europe between 1880 and 1910, and in Canada two decades after that (Sotiron, 1997, pp. 4-7). While the advertising-supported model of journalism carried the day during the ‘industrial media age’ for much of the 20^th Century thereafter, there is little reason to believe that it will or even should have an eternal lock on being the economic base of the media forever into the future – the Public Policy Forum report’s wishful thinking notwithstanding.

Moreover, while advertisers tied their fortunes to the commercial media model for close to a century, they had no special love for the media or the journalistic functions they perform, per se. Instead, they did so because it was the most cost-effective way to meet their needs. New and better means to deliver up audiences to advertisers at a much lower price have been developed since and, unsurprisingly, businesses have reached for the newest tool in their toolbox: the internet. This is an uncomfortable truth that the report refuses to acknowledge, and thus to engage with. Not even King Canute could turn back that tide, and nor should we want him to even if it was possible. We have to find a better way to pay for the news for just this reason and also because, for the most part, Nasreen Q Public never has been willing to pay for a general news service.

Advertising is being eclipsed by “Pay-per” media.

Advertising is also becoming a smaller and smaller part of a bigger and bigger media economy. It has long been eclipsed by the “pay-per model”, or subscriber fees, where people pay directly for the communications and media they use. Subscriber revenue outstripped advertising by a 5:1 margin for the ‘network media economy’ in 2015 (see here for a definition of the ‘network media economy”, p. 1). “Pay-per media” are now the economic engine of the media economy. The Shattered Mirror, however, does not seem to recognize this and thus examines the problems facing journalism through the wrong end of the telescope, e.g. advertising.

Take TV specifically. The report states that “TV revenue is start[ing] to drop”. The statement is true for advertising-supported broadcast TV, but not for TV as a whole. Subscription revenue for specialty and pay channels, OTT services like Crave TV and Netflix as well as and cable TV now account for three-quarters of all revenue, and for the most part continue to grow. Annual funding for the CBC makes up the rest, i.e. just over 5%. The Shattered Mirror draws general conclusions about the supposedly sorry state-of-affairs for TV writ large based on a small as well as diminishing part of a larger vista. The advertising-supported part of TV accounted for less than half of all revenue in 2015 (e.g. 42.6%). It is in trouble, but again this is a fraction of the whole picture.

In addition, blaming “the internet” ignores other potential explanations for the problems that do exist. Why, for example, is broadcast TV not in dire straits, and in some cases making a bit of a comeback in the US and some other countries (see FCC and Ofcom, for example)? The report does not bother to ask, let alone explore such realities, for reasons that will become clear in a moment (hint, it has to do with media concentration and the unique structure of the media and communication industries in Canada, issues that the report explicitly eschews).

Having left out the fastest growing and biggest segments of the media economy – the ‘pay-per’ segments – and painted a picture of rapacious foreign internet giants stealing away advertising revenue from Canadian news media organizations, the report ignores another fundamental fact that does not fit the story it wants to tell: advertising revenue across the entire economy has stagnated for close to a decade. Moreover, per capita advertising spending dropped from $371 per person in 2008 to $354 in 2015 – the last year for which a complete set of data is available. TV advertising specifically has stayed flat in absolute terms while falling from $102 per person in 2008 to $94 last year (see here). That said, however, and unlike the report’s claim to the contrary, total TV revenue continues to grow, and indeed revenues for specialty and pay TV as well as OTT services have soared over the years based on subscriber revenues, albeit with slow growth in some aspects of some of these services in the last year or two.

In addition, the report’s claims regarding the steep decline in “private station” profits from 7.3% to -8% between 2011 and 2015 is misleading (p. 16). The statement implies that it applies to TV in general but in fact refers only to the smallest and shrinking part of the TV landscape: commercial broadcast TV. Operating profits for pay and specialty TV — the biggest and still growing segment of the TV landscape — were 20.8% in 2015, however. For cable TV and radio, they were 19% (see CRTC here, here and here). Meanwhile, operating profits at Bell Canada Enterprises’ media arm were 25% in 2015 and an eye-popping 40% for the company as a whole – four times the average for Canadian industry (Statistics Canada). Figure 2 below illustrates the point.

Figure 2: Bell Media Operating Profits, 2015

Source: BCE, 2015 Annual Report, p. 130.

Parenthetically, it is also important to note that Bell is the biggest, vertically-integrated TV operator in Canada by far, accounting for roughly 30% of all TV revenues and 28% of total revenue across the network media economy. Ignoring conditions at a company with this clout across the media economy is negligent, but also part of a tendency in this report to selectively invoke a small part of the picture to fill in a portrait of catastrophe of a larger kind. In terms of the rules of rational argument, this pattern is a type of spurious reasoning called an “indexical error”. The report is chock-a-block full of such examples, which lends to the impression that the report’s authors are goosing the numbers.

Let’s consider a few other claims made about collapsing circulation and the “vanishing newspaper” and the scale of journalistic job losses, before turning to its willful refusal to deal with fundamental considerations about how the unique structure of communication and media industries in Canada directly bear on its topic but which are wholly ignored.

The Vanishing Newspaper?

These examples are not innocent. They are part of a process of “threat inflation” with the aim of buttressing the case for the policy recommendations on offer. Much the same pattern can be seen in the report’s depiction of circulation trends for daily newspapers. Now, make no mistake about it, the picture cannot be spun as a good news story. That is not my point. Looking at the issues from different angles and a more measured and nuanced view reveals that that things are far from rosy, but they are not the catastrophe that The Shattered Mirror makes them out to be. The reasons why things are as bad as they are also demands a richer and more multidimensional explanation than the ‘single-bullet’ explanation the report offers: blame the internet (and Facebook and Google). To illustrate the point, let’s return to Figure 1 above, which is repeated below to make the job easier.

Figure 3: The Vanishing Newspaper: Newspapers sold per 100 households in Canada, 1950-2015, projected to 2025

The message of the Figure 3 is clear: newspapers have undergone a precipitous decline, and could vanish altogether soon. Indeed, already by 2015, the number of newspapers sold per 100 households was one-quarter of what it was in 1975. By this measure, the relentless decline and seemingly inevitable outcome look really, really bad – catastrophic even.

Now, let’s expand our measures to look at things from four additional angles: (1) total number of newspapers sold per week per person; (2) total number of newspapers sold per week per household; (3) total circulation; and (4) by revenue – shown for both total revenue and just advertising revenue. My numbers start in 1971 because that is the earliest date for which I could gather data fit for the task, but as far as I can tell that has no impact on the main point. And just to make my main point clear, it is that the Public Policy Forum’s Shattered Mirror report has selectively chosen a measure that paints the worst-case scenario rather than a nuanced, multidimensional picture of a situation that is bad enough that it doesn’t need to be exaggerated. In other words, I am depicting a strategy of policy argumentation that I call “threat inflation”.

Figure 4, presents two sets of data, one for the number of newspapers sold per week per person and another for the number of newspapers sold per week per household – both for the period from 1971 to 2015 (the latest year for which figures are available).

Figure 4: Per Household and Per Capita Decline of Daily Newspapers Circulation in Canada, 1971-2015

Sources: Newspaper Canada; Statistics Canada.

Figure 4 confirms that newspaper circulation has been in long-term decline and there appears to be nothing on the horizon to turn that around. If we care about newspapers because they are one of the main sources of original journalism – as I emphatically do – this is a ‘bad news’ story. Yet, while the decline shown in Figure 4 is obvious – indeed, circulation was cut in half over the period covered on the basis of total copies per week per household – that is half the rate depicted by The Shattered Mirror. The difference is likely due to the fact that the number of people per household has declined over time, so fewer people per household means fewer newspapers in each house even before we take declining circulation into account — versus the “vanishing newspaper” scenario.

Now, let’s look again from the vantage point of circulation per capita shown in Figure 4 above. It also shows that circulation levels have declined steadily since 1971, but by only about 35% versus the four-fold collapse The Shattered Mirror depicts. This is what I mean by threat inflation: choosing methods and numbers that inexorably lead to the worst-case conclusion.

Now let’s look at things from the vantage point of total newspaper circulation because if you’re in the journalism business, a key consideration has got to be not how many daily newspapers you can sell per person or per household but in total. Figure 5 depicts the trend over time.

Figure 5: The Rise and Fall of Newspapers Circulation in Canada, 1971-2015

Sources: Newspaper Canada; Statistics Canada.

Figure 5 shows that, in terms of sheer volume, newspaper circulation continued to rise until 1990 (versus falling steadily from 1950). It has fallen since, albeit in fits and starts. And obviously, against a population that has swelled from 22 million to nearly 36 million over the timeframe covered, circulation is shrinking in relative terms, which is the point of the earlier figures. Yet, the point is once again that this is a ‘bad news’ story but not a catastrophic one, and the fact that circulation peaks in 1990 and then goes down in fits and starts thereafter also raises interesting questions about timing that are ignored by the Public Policy Forum report, again likely because they don’t fit the tale of doom and gloom that it is mobilizing, but which I will return to below.

Now let’s turn from circulation to revenue data to see what things look like from this vantage point. Figure 6 does that based on stand-alone advertising revenue and all sources of revenue (advertising, subscription and other, including digital/internet).

Figure 6: The Rise and Fall of Newspapers Revenue in Canada, 2000-2015

Sources: Newspaper Canada; Statistics Canada.

As Figure 6 shows, advertising as well as subscription and other sources of revenue continued to rise for newspapers into the 21^st Century. Indeed, while circulation was in decline regardless of the measure used, revenue continued to climb. Revenue peaked in 2008 at $3.9 billion and $4.7 billion, respectively, for advertising and ‘total’ revenue measures — a crucial point in time for reasons that will emerge in a moment. Revenue has plunged since, with newspaper advertising revenue falling to $2.3 billion (a drop of 40%) and total revenue to $3.2 billion (a drop of 32%) in 2015. This is bad.

Thus far, none of the measures reviewed leads to a ‘good news story’, but each of them in their own way change the magnitude, timing and potential causes of the problem. Of utmost importance is that there is no downward spike in the fortunes of the press on any of these measures that coincides with when the internet takes off, either in its dial-up phase in the mid- to late-1990s or when broadband internet took centre stage in the early-2000s. Given this, the internet – and Facebook and Google – cannot be the villain of the piece that The Shattered Mirror (and so many lobbying the government from the “creator” and “cultural policy” groups) makes it out to be.

In fact, this is not news. While such claims are common, that they are wide of the mark is well known. One of the world’s top media economists, Robert Picard of the Reuters Institute of Journalism at Oxford University, for instance, has made this point for much of the last decade. I have too with respect to Canada and across the world. That neither circulation nor revenue dives downward with the arrival of the internet cuts to the heart of the central claim in The Shattered Mirror. Yet, like so much of the evidence that does not fit its “sky-is-falling-because-foreign-internet-giants-ate-Canadian-news-media’s-lunch” rhetoric, this evidence doesn’t make the cut. If all of this is correct, we must also change our diagnosis and policy proposals accordingly.

Alternative Explanations: Stagnating Advertising Revenue and Vanishing Jobs

Not only does newspaper revenue not spike downwards with the advent of the internet, the onset of economic woes for advertising supported media do not coincide with the time frames that the Public Policy Forum report identifies, typically 2005 or 2006 for newspapers and ‘recently’ for TV. The upshot of its misdiagnosis is to effectively carry on with the ill-fated case its authors want to make while avoiding another possible – and I believe far better — explanation for the woes they describe: the impact of the financial crisis in 2008 and economic instability that has followed ever since.

Figure 7 below illustrates the point by showing a sharp downward kink in revenue for nearly all the media sectors it covers since 2008. This reflects the impact of the global financial crisis on the media economy. At this point in time, advertising revenue falls for total TV advertising revenue, broadcast TV, newspapers, radio, out-of-home advertising and magazines. The impact even hits internet advertising and pay TV services, as their revenue growth flattens temporarily before rising again a year or two later.

Figure 7: The Impact of the Financial Crisis and Economic Stability on Media Revenue (millions$), 2004-2015

Sources: IAB.canada 2015 Actual + 2016 Estimated Internet Ad Revenue; TVB (2016). Net Advertising Volume, CRTC Communications Monitoring Report.

Total advertising revenue fell by 7% from $11.6 billion to $10.8 billion. It rose again the next year to recover the lost ground but unevenly. Tellingly, however, advertising revenue has fallen from $371 per person in 2008 to $354 on a per capita basis in 2015, and from $102 per Canadian to around $94 for TV– as indicated earlier.

The recovery that has occurred has taken place in fits and starts and has been very uneven across different media sectors. The long-term effects of that appear to be three-fold. First, it has gutted newspaper advertising revenue. Second, it has propelled the shift of the economic base of TV from advertising to subscriber fees. Third, amidst the upheaval, the internet has consolidated its place at the centre of advertising revenue. It now accounts for more than a third of all advertising revenue (36.2%) in a stagnating pool of advertising money.

Again, none of this is a mystery, except to those who work the policy apparatus here in Canada, and there is no mention of it in The Shattered Mirror or indeed in any of the policy reports being wheeled into action by the myriad of groups vying to shape the outcomes of Heritage Minister Melanie Joly’s Canadian Content in a Digital Age review. Beyond this cloistered community, however, the fact that the fate of advertising-based media turns tightly on the state of the economy – and indeed, is something of a canary in the coal shaft for it – is reasonably well known and discussed by media economists from across the political spectrum. This has been the case for many, many years (see, for example Picard, Garnham, Miege, Vogel but also any media economics text). That the subject is not even broached by the Public Policy Forum’s report is a measure of the extent to which it ignores evidence and ideas that don’t fit the story it wants to tell, and of a piece with its methodological tactics throughout the report.

In sum, it is a mistake to focus on a ‘silver bullet’ explanation of complex issues like the one before us. The fixation on the negative impact of the internet and the two villains of the piece, i.e. Google and Facebook, is misplaced. In short, advertising revenue has taken a nose dive because the economy has been shattered not because Tyrannosaurus Digital Media Rex Google and Facebook ate the news media’s lunch.

A Catastrophic Loss of Journalists?

Just as the data with respect to declining circulation and lost revenues in The Shattered Report is circumspect, so too are the figures that it cites for the number of journalist and editorial positions lost over the years partial and incomplete. The report says that between 12,000 and 14,000 such positions have been lost over an indefinite period that sometimes stretches back to the 1990s but with a stress on recent events. The figures cited are based on a tally of headlines announcing such cuts and more systematic record-keeping by the Canadian Media Guild, Unifor and the Communications Workers of America. I have no doubt that the human impact of the losses they document are real and severe.

However, there are two short-comings of the data presented. For one, it is based on headlines and record keeping that do a great job chronicling jobs lost but a poor one at keeping track of those gained. Second, Statistics Canada data depicts a wholly different picture. The report needs to at least explain why the Statistics Canada data offers a less satisfying account of the conditions than the sources it relies on. It does no such thing. In fact, and once again consistent with a pattern, the authors ignore this data completely.

According to Statistics Canada data the number of full-time journalists in Canada has not plummeted. In fact, it has crawled (stumbled?) upwards from 10,000 in 1987 to 11,631 in 2015. Figure 8 below illustrates the point.

Figure 8: Journalists vs the PR, Advertising and Marketing Professions,
1987-2015

Sources: Statistics Canada (2016) Employment by occupation: 1123 Professional occupations in advertising, marketing and public relations and Statistics Canada (2016). Employment in Journalism occupation, by province. Custom LFS tabulation. File on record with author.

While this is a small increase, it is an increase all the same, and counter-intuitive as well. Things that are counterintuitive beg you to explore why they are so. Also consider that after years of a sluggish economy in the early-1990s, and extensive consolidation and cut backs in the latter part of the decade, the number of working journalists fell to a little over 6,000 (1998). If we take that as our base, the number of working journalists has nearly doubled since and, consequently, the period looks more like one of modest growth rather than a catastrophe.

Of course, this small increase should not be over-played. It has occurred against the backdrop of a media economy that has quadrupled in size. Even if the number of journalists has stayed relatively steady rather than collapsed, this still means that their numbers have shrunk relative to the size of the media economy. In other words, similar amounts of journalistic resources in a much bigger media pie constitutes a relative decline. This is cause enough for concern without the hyperbolic rhetoric that The Shattered Mirror leans on.

In addition, whatever modest growth has taken place has been vastly out-paced by the number of people working in the PR, advertising and marketing professions. Whereas there were four people of the latter type for every journalist in 1987, by last year, the imbalance had swelled to 10:1 — a triumph of the persuasion professions over journalism, which again is cause enough for commentary and concern. Yet again, the Public Policy Forum’s report is silent on the point.

My point, once again, is not to assert that the Statistics Canada data is definitive on the matter of journalistic and editorial job losses. Instead, it is to highlight how selective The Shattered Mirror report is. The pattern is one where evidence that fits its grim vision of the current state of journalism in Canada is highlighted while that which cuts across the grain is either downplayed or ignored completely.

Blindspot: the Media Concentration Problem

The Shattered Mirror also gives short shrift to the idea that media concentration and the structure of the communication and media industries might be a significant factor giving rise to the woes besetting the news media, except for the highly concentrated nature of internet advertising. As Greenspon told J-Source, media concentration is just not “the existential risk to media that it was for a number of years”. However, the report is more than willing to turn the screws on Facebook and Google’s dominance in the one market — online advertising – where they undoubtedly and overwhelmingly do dominate, while simultaneously turning a blind eye to high levels of concentration in several media markets and in terms of vertical- and diagonal-integration across the telecoms-internet and media landscape in Canada.

By The Shattered Mirror estimation Facebook and Google account for two-thirds of all internet advertising spending in Canada. It also shows that internet advertising has become more concentrated over time, not less: the top ten companies took 77% of all internet and mobile advertising revenue in 2009, but by 2015 that number was 86%. The top twenty companies accounted for 90% (pp. 31-32). There is evidence that these levels are growing. I agree with this part of the report’s analysis, not surprisingly since it draws heavily on data and estimates from the Canadian Media Concentration Research Project that I direct.

The same claims have been circulated by those who have advised or influenced the direction of The Shattered Mirror. Ian Morrison, the head of the Friends of Canadian Broadcasting, summarized the key claims being made as follows, for example:

Based on data from the Canadian Media Concentration Project [sic] at Carleton University we estimate $5 billion of Canadian advertising goes to foreign-owned internet companies such as Google and Facebook . . . . With the Interactive advertising Bureau projecting $5.55 billion in overall internet advertising revenue . . . for 2016, we estimate that almost 90 percent of what Canadian advertisers spend on digital ads will leave the country.

In an interview with the Globe and Mail’s Simon Houpt, Greenspon asserted that Google and Facebook alone “take in about 85% of digital ad dollars” – although that number conflicts with others elsewhere in the report. However, the numbers do seem to regularly get mixed up, so that it is not quite clear if we are talking about just Facebook and Google or some ‘other’ foreign internet giants as well.

My main concern is that claims that foreign-owned internet companies will take $5 billion in projected internet advertising revenue for 2016 – or 90%, and that Google and Facebook alone account for up to 85% of the total — out of Canada are stretching the available data beyond what can be reasonably supported. They build estimate upon estimate, jump through hoops, and draw questionable inferences to come up with these figures (see pp. 30-31).

The CMCR Project data estimates with reasonable confidence that, combined, Google and Facebook accounted for about $3.1 billion, or two-thirds, of a total of $4.6 billion in internet advertising revenue in 2015 – the last year for which final figures are available. There’s some room for adjustment either way. Based on what we do know the figures touted in The Shattered Report and elsewhere do not seem credible, even if repeating them in one venue after another seems to have given them an aura of holy writ.

This is especially troubling because the estimates offered not only extrapolate from the limited base of what we do know but serve as a springboard to The Shattered Mirror’s #1 Policy Recommendation:

Policy Recommendation 1: Change the Income Tax Act to make advertising on Canadian internet news sites tax deductible (as has been the case for newspapers and broadcasting since 1965 and 1971, respectively) while applying a ten percent withholding tax for advertising on foreign websites. The key aim is to open a new “revenue stream of $300 to $400 million that would be used to finance a special fund” much along the same lines as the existing levy on cable TV companies is used to fund Canadian content (pp. 83-84).

At a bare minimum, if their numbers are off, so too are these estimates.

Overall, the path to this policy recommendation and the proposal itself is flawed for a handful of reasons. For one, as just indicated, the available evidence is insufficient to support the report’s #1 policy proposal. Second, even if the numbers were right (or close), both the analysis and the policy proposal ignore the structural shift in the economic base of the media from advertising to the pay-per model described earlier, while assuming advertising has and should forever form an integral part of the natural order of the news media. Third, it appears to swap the bad idea of an ISP tax levied against wireline- and mobile wireless internet access providers (which, not coincidentally, are Canadian) for a “platform levy” applied against ‘foreign digital platforms’, e.g. Google and Facebook. If this is correct, the bait and switch on nationalistic grounds is objectionable on its own.

The bigger problem, however, is that the recommendation seeks to take an approach that has been applied to limited (single) purpose broadcasting distribution systems for the past half-century and apply it to general purpose internet platforms that host, store and facilitate a dizzying and ever expanding array of content, applications, services and uses. And it does so in the name of supporting a narrow range of content – “real news”, as the report calls it – that constitutes a tiny sliver of what people use and enjoy these platforms for. Whether applied to ISPs or digital platforms, the idea that the multitude of uses that people make of the internet should be harnessed to promoting journalism (or Canadian content generally) – no matter how important – is objectionable. In terms of a common test applied to free speech cases, while the goal being sought is legitimate, the means being promoted to achieve it is akin to a sledge hammer when what we need is a scalpel.

Finally, while the report does a good job of documenting the extent of the internet giants’ dominance of the online advertising market, both the analysis and proposal exaggerate the extent to which Google, Facebook and other ‘foreign internet giants’ influence reaches across the media landscape in Canada. By ignoring the latter, the effect is to minimize the extent to which media concentration and the uniquely high levels of vertical and diagonal integration between telecoms-internet service providers and other key areas of the media, especially television, have given rise to homegrown problems rather than the debilitating “vampire economics” imported from afar (the following paragraphs draws heavily from a series of CMCR Project reports: see here, here and here for more details and elaboration).

How to Look at Media Concentration

Using what I have learned as the “scaffolding method”, it is essential to look at the state of competition and/or concentration in one media sector at a time, group the different sectors together into reasonable clusters such as “content media” (e.g. newspapers, TV, radio, magazines, etc.), “connectivity media” (e.g. internet access, mobile wireless, etc.) and “internet media” (e.g. search, internet advertising, social media, browsers, etc), and then group everything together so as  to get a view of the network media economy in its entirety. One must also look at trends over time, and in comparison to other parts of the world.

The Shattered Mirror report does nothing of the sort, and so it paints a picture sloppily with a broad brush, declaring that media concentration is not a problem when it feels fit to do so, but a worrying concern where that suits its purposes, i.e. in the areas that Google and Facebook dominate. Ultimately, there is no overarching sense of how everything fits together, and so the image drawn is arbitrary, and wholly dependent on the whims of the observer.

So, let’s try to get things straight in a minimal amount of space in what is already a long post. Google and Facebook do dominate internet advertising and the general trend with respect to concentration in this specific media market is up – as stated above. However, once we scaffold upwards from there to get a sense of how internet advertising fits into the whole media economy, we can see that it accounts for just 5.9% of a total $78 billion in revenue in 2015. Google and Facebook were the 6^th and 14^th biggest media operators in Canada in 2015, and had estimated Canadian revenues of $2.3 billion and $757.5 million, respectively. They accounted for 3% and 1% of all revenue across the media economy.

By comparison, the biggest player, Bell Canada, had $21 billion in revenue from its telecoms and TV operations in 2015. This was 28% of all revenue across the whole media economy, and nearly twice the size of its largest rivals: Rogers and Telus. It ten times that of Google and more than 25 times the revenue of Facebook. Thus, while certainly impressive, Google and Facebook don’t quite cut the imposing figure that The Shattered Mirror makes them out to be once placed in context.

When we look at specific media sectors and across the media economy as a whole, four observations about concentration levels in Canada stand out:

1. They are generally high (with the exception of radio and magazines);
2. They have gone up since the turn-of-the-21^st Century (except modest dips from still high levels in the past five years for mobile wireless and cable/IPTV TV);
3. They are not unusually high by comparative international standards but that’s mostly because, as one of the most authoritative sources on the subject states, media concentration around the world is “astonishingly high” (Noam, 2016, p. 25 and especially chapter 38, pp. 1307-1316);
4. Canada is unique, however, in its high levels of vertical and diagonal integration.

In terms of vertical integration, Canada stands unique amongst countries insofar that telecoms operators own all the main television services, except the CBC. The scale of vertical integration more than doubled between 2008 and 2015, as the “big 4” – Bell, Rogers, Shaw (Corus) and QMI – expanded their stakes into mobile wireless, internet access, television distribution and more traditional areas of the media such as TV and radio. The “big 5” television groups – Bell, Shaw (Corus), Rogers, Quebecor and the CBC – collectively owned 217 television services in 2015. They accounted for 86.2% of total television revenue, up from three-quarters in 2008. Their TV operations include Canada’s major TV news outlets, from broadcast TV networks like CTV, Global, CityTV and TVA, as well as cable news outlets such as CTV, BNN, the Canadian franchise for the BBC, CablePulse 24, and so forth. The big four vertically-integrated telecoms giants are central to the news ecology in Canada. The Shattered Mirror gives no sense of this.

Beyond this, there are three other reasons why the unique structure of the media and communications industries in Canada are not peripheral, or anachronistic, but central to the study of news.

Lush Profits, Thin Journalistic Gruel

First, similar to the conditions at Bell that we saw earlier, Shaw, Rogers and Quebecor had operating profits of 42%, 38% and 37%, respectively in 2015 — roughly four times the average for Canadian industry. Shaw’s operating profits for its media division (including Corus, which is jointly-owned and controlled by the Shaw family) of 33% — even higher than those of Bell (25%). Operating profits at Rogers and Quebecor’s media divisions were a more modest 8.3% and 7.3%, respectively – a little lower than the average for Canadian industry. These observations are at odds with the story of doom and gloom that permeates The Shattered Mirror. The situation ranges from ho-hum at the media divisions of Rogers and Quebecor to fantastic at Bell and Shaw. While there is a difference between their focus on television news versus newspapers, which are increasingly ‘sticking to their knitting’, the fact that they are among the top news sources for Canadians furthers the point that they should be at the heart of the matters before us rather than pretty much excluded altogether.

Journalism and Data Caps: Reducing Dependence on the ‘Vampire Squids’ (i.e. Google and Facebook)

Second, these vertically-integrated companies also own all the main distribution networks (e.g. mobile wireless, wireline, ISPs and BDUs). Consequently, instead of wireline cable and telephone companies competing with wireless companies for control of customers’ access to the internet, TV and beyond, they have dominant stake on both sides: e.g. wireline and wireless. This is known as diagonal integration.

The last stand-alone mobile wireless company in Canada – Wind Mobile – was acquired by Shaw in 2016. By contrast, in many countries there are stand-alone, ‘maverick’ mobile network operators such as T-Mobile or Sprint in the US, or 3 in the UK.

Diagonal integration is important because it dampens competition between rival networks. Where it looms large, subscription prices for internet access and mobile phones tend to be a lot higher, data caps much lower, the application of zero-rating to some content and services but not others is more extensive, and ‘excess use’ charges very steep. Recent studies show that the cost of mobile wireless data plans is very high and data caps low in Canada relative to the EU28 and OECD countries (see Tefficient, 2016, p. 12; Rewheel, 2016, The state of 4G pricing – 1st half 2016 DFMonitor 5th Release).

These structures of ownership and the practices they engender can also transform carriers into editors, or gatekeepers. In doing so, it makes them more like broadcasters and publishers rather than common carriers (an idea that is similar to but not the same as what is now commonly referred to as Net Neutrality). The heavy reliance on relatively low data caps and expensive overage fees by all the telecoms-internet and media giants – Bell, Rogers, Shaw and Quebecor — in Canada constrains what and how people consume the news, watch TV, listen to music, communicate with one another over the internet and mobile devices, buy stuff, consult online health and education resources, and work.

As an integral part of human experience, and the critical infrastructure of the economy, society and journalism, this is an enormous issue. Many of those pushing for a renewed sense of cultural policy have called on the government to leverage these conditions by zero-rating Canadian content (i.e. exempting it from data caps) while applying data caps to everything else. Doing so is an explicit call to gerrymander control over the pipes to tilt the field against ‘foreign content’ in favour of Canadian content. Imagine, however, if data caps were far more generous and prices more affordable. Then, Canadians could freely access content of their choice, including news which, as The Shattered Mirror shows they value greatly (even if unwilling to pay for it), without worrying about going over their restrictive monthly data caps and paying a punishing price because of that.

This would have great value for news organizations as well. They would benefit in two ways. First, news organizations would enjoy a less obstructed pathway to where their audiences increasingly get their news from: their smartphones. Second, they would avoid the non-negligible costs of designing their online news offerings for platforms such as Google’s AMP and Facebook Pages.

Google AMP and the news sites that use it are explicitly designed for mobile wireless access, for example, where the cost of data is high and the use of data caps by mobile wireless operators prevalent and a lot lower than the desktop Internet. Based on this, Google’s AMP strips down webpages and services so that results load nearly ten times as fast, thereby saving on data charges.

The costs of designing for Google AMP, however, are considerable and a whole new sub-industry of designers with specialized technical and journalistic skills is being called into existence to service the need, and charging accordingly. The roster of the ‘big brand’ news organizations that have signed up to these efforts speaks volumes about who can afford the additional burdens, financial, technical, human or otherwise: eg. the CBC, Postmedia, New York Times, Wall Street Journal, the Guardian, Financial Times, Vox, Atlantic.com, to name the most prominent.

At the end of the day, the central question remains: does any of this work? Nobody knows.

Nonetheless, these platforms are fast becoming an integral part of the news ecology, and they are also part of the problem of news providers having to give up control of their content and operations to internet companies. By dealing with the high-levels of vertical and diagonal integration in Canada that are at the root of restrictively low data caps that magnify the cost of uniting audiences with journalism to begin with, the happy upshot could be to lessen journalism’s excessive dependence on the ‘vampire squid’ internet giants like Facebook and Google that the Public Policy report rails against.

Blowing up the Bottom Line: The High (Social) Cost of Media Concentration

Perhaps one of the most important reasons that it is folly to willingly turn a blind eye to high levels of media concentration and the peculiar structure of the media industries in Canada is because the costs of bulking up have had devastating impacts. The cost of bulking up that have led to where we are have not been negligible and were built atop dreamy-eyed visions of convergence from the late-1990s until the turn of the century. At the time, the valuations of media assets soared but such visions of the future failed while saddling media enterprises with unsustainable debt levels that were payable at interest rates that sometimes ran as high as 18% in the case of Canwest, for example. This took place precisely when all-hands-on-deck were needed to deal with the rise of the internet and changing audiences’ behaviour. Many of these ventures failed and wiped out billions in capital. A few highlights will help to illustrate the point.

Sun Media, for example, was acquired by Paul Godfrey at a total value of just under $400 million in 1996, with a few small papers added in exchange for the Financial Post the next year, and then flipped to Quebecor in 1998 for $983 million – double the original value in two years. Quebecor then acquired regional newspaper publisher Osprey for $517 million in 2007. All-in-all, the combined value of Sun and Osprey was nearly $1.5 billion. They were sold back to Godfrey and Postmedia in 2015 for $316 million — $1.2 billion in the value of the capital behind the newspapers wiped out, while onerous debt payments continue to hang like an albatross around the biggest chain of newspapers in the country until the present day.

So, too, with the Southam newspaper chain. Conrad Black consolidated ownership over the chain in 1996 for around $1.2 billion, then sold them to Canwest four years later for $3.2 billion. However, Canwest went bankrupt and the papers were sold to Postmedia in 2010 in a highly leveraged deal for $1.1 billion — the same as when Black gained control decade-and-a-half earlier. Last year, Postmedia was worth $56 million — a loss of a billion dollars in market capitalization in five years (also see Bruce Livesey’s National Observer article and Marc Edge’s new book on the meltdown of journalism within the Postmedia empire, and more broadly).

At the height of the turn-of-the-21^st Century convergence craze, Bell acquired CTV and the Globe and Mail. Together with the Thomson family it created Bell Globemedia, with Bell holding a 70% ownership stake in the entity and the Thomson family the rest. The capitalization of the new company was $4 billion. Bell Globemedia floundered from the beginning, however, and Bell exited the business in 2006. The venture was renamed CTV Globemedia and recapitalized at a value of $1.2 billion – a loss of nearly $3 billion (BCE AR 2006, p. 84). Of course, Bell reacquiring CTV in 2011 for $1.3 billion.

Collectively, roughly $6 billion in market capitalization was destroyed and precisely when the country’s biggest media companies should have been focusing attention, investment and whatever other resources they could muster on dealing with the rise of the internet and, somewhat later, the smartphone, and changes in how people were using the media. This is to say nothing of the extraordinary wave of lay-offs and job cuts at these outlets, and the labour strife that accompanied such processes. The Public Policy Forum’s report gives us a whiff of the costs in terms of journalistic and editorial jobs lost, but nowhere does it connect the dots. Of course, having ruled these issues “off-limits”, what should we expect?

Inner Circles, Cloistered Views and Missed Opportunities

That The Shattered Mirror, as it’s lead author’s post release comments indicate, willingly walked away from these issues is stunning, and naïve. In doing so, it walks away from an impressive body of research from around the world that says that these issues are important, extraordinarily complex, and foundational to understanding the emerging digital media environment.

While I am happy that the authors plucked from some of our flagship reports (see here and here), I am disappointed that they only picked the juicy parts that fit into their vilification of Facebook and Google and the “vampire economics” that they say rules the highly concentrated internet advertising market in Canada while turning a blind-eye to all the other data and discussion in our report. Interested readers will also find much value in the work Eli Noam, a Professor of Finance and Economics at Columbia University and editor, most recently, of Who Owns the World’s Media, a thirty-country survey done by as many research teams covering three decades that looks at the issues in front of us with an open mind, and some stunningly important conclusions – many of which are counter-intuitive and at times seems to run at cross-purposes to one another. Robert Picard of the Reuters Institute of Journalism at Oxford University is another excellent media economist who looks at these issues with an open mind, as is Gillian Doyle, among many others.

That the report refuses to engage with media concentration and the peculiar structure of the media is not surprising given that many of those surrounding its lead author, Edward Greenspon, in the development of this report have not just sat back and taken arm chair academic views on these matters but have been leading cheerleaders for the processes of consolidation in Canada that have got us to where we are. So why look in the mirror? The industrious reader can consult the list of acknowledgements to sort out who is who and draw their own conclusions.

Given all this, that media concentration wasn’t on the agenda is not surprising. It’s still a pity, though, because the issues are serious. By taking the course that it has, the report has also squandered an opportunity to build on the momentum that has been building in regulatory circles at the CRTC, Industry Canada and even the Competition Bureau. For the past several years, each of them have been using many of the policy levers at their disposal to address media concentration and counter some of the abuses of dominant market power present in several media markets – abuses that are no longer mere allegations but established legal facts. That the Public Policy Forum has taken the stance it has is a missed opportunity, not just in terms of building on the momentum that already exists amongst regulators and policy makers, but also the incredible amount of research and writing that many scholars, public interest and consumer groups, citizens and others have poured into these activities.

Final Thoughts and a Few Policy Proposals

The effort fails in terms of the analysis conducted for all the reasons set out above, and because the prescriptions counselled draw from the past and will be a drag on the future. Its analysis fixates on a dwindling part of the media, namely media that are subsidized by advertising, as if they are a part of the natural order of things and should be so forever. As both an empirical and a normative matter, this is simply not the case.

In the real world, however and as we have seen, the media economy is increasingly internet- and mobile wireless centric. For better or worse, subscriber fees and the “pay-per model” have become the driving force. The report fails to deal squarely with the idea that the underlying subsidy that has been provided by advertising for a good part of the 20^th Century is stagnating, and by some measures in decline (per capita), and that the part of the advertising revenue that does remain is going to Facebook and Google not because they are venal but because they are more efficient at doing what the ‘legacy media’ used to do best: deliver audiences to advertisers.

That was always a bit of a Faustian bargain, and still is. There is no reason why we should pull out all the stops to try to bring it back. It won’t happen, and advertising subsidized media raise their own prickly problems, not least of which is it is never really the audience – us – that are the main parties calling the shots. Given the extent to which it is wedded to advertising, it is also not surprising that the report acknowledges but shies away from another undeniable fact that is inseparable from the points raised here and which is key to understanding journalism: the general public has never paid for a general news service. This has not changed (see here and here, for example).

Forgetting also that there has never been any true love between business and the advertising-supported media model — just a marriage of convenience — the report keeps alive the innocent fable of how the mutually beneficial relationship between advertisers, journalism and audience brought us “the free press” and how we must wrestle this back from the “vampire economics” of Silicon Valley. No, that won’t work, no matter how much the report gooses the numbers and argues in favour of its proposal to impose a withholding tax on the advertising and subscriber fees of ‘foreign digital platforms’. Nor should it. The invidious distinctions between Canadian media versus those from the world beyond our borders that it draws is based on warmed over cultural nationalism from the 1960s and 1970s, and this, too, should also raise an eyebrow.

The idea that we should harness society’s whole communication infrastructure – increasingly the internet – to foster a small sliver of activities that people use it for is also backwards. As said earlier, in the past, this may have been an acceptable idea because a limited purpose broadcasting distribution network was leveraged to support a single activity: broadcasting. Means were directly related to ends, and this made sense, even against the tough standards of free speech. Yet, today, we are in a different place where Canadians are being asked – incessantly – to harness a multi-purpose and general communication infrastructure (the internet) that already supports a vast array of activities that continue to expand in terms of diversity to a narrow, albeit incredibly important, range of activities.

The Shattered Mirror is not a forward looking report in these regards. It largely ignores questions about how the availability and control of distribution infrastructure (rather than just “digital platforms”) fundamentally effects the shape of the news media overall. To the extent that it does, the recommendations trot out the familiar calls for an ‘ISP tax’ to fund journalism that is so beloved by resurgent cultural nationalist groups (rather than the capacious language of “general intelligence” and “the people’s correspondence” that informed the universal postal system during the founding days of American democracy). They seem to see Minister Joly’s review of Canadian Content in the Digital Age as a once in a lifetime chance to entrench policy tools designed a half-a-century ago for ‘the industrial media age’ forever by applying them holus bolus to the emergent internet and mobile wireless-centric communications and media universe of the 21^st Century. Nothing could be less helpful.

As I have tried to make clear above and every time I write on these matters, I am an enthusiastic supporter of the idea that a viable democracy needs good journalism, and that the culture of a democratic society needs arts, knowledge, media, public libraries, schools, science, archives, and a whole bunch of other things. We need a big view of culture, and we need to pay for it accordingly. So here are a few of my big ideas:

1. Bite the bullet and accept that the general public has never paid full freight for a general news service and that, consequently, it has always been subsidized by advertising, “the state” or rich patrons. The question is how to do that today in a way that is fair, independent, effective, and accountable? The report goes part way in this direction with its Policy Recommendation #3 to change tax laws to encourage charities and philanthropists to step into the breach and invest in original news. I agree, but also think we need to dig deeper along the lines suggested below.

2. Apply the HST/GST to all advertising expenses and subscription fees without discrimination based on medium or nationality, and earmark the funds generated for a “Future of Journalism and Democracy Fund” of the type the Public Policy Forum envisions (Policy Recommendation #5), but make the fund even broader to support other kinds of original Canadian content creation, from films, TV drama, video games, music, archives, etc. Consolidate the CanCon funds I say, and take a very big view of what CanCon is.

3. Bolster the CBC across its mandate to inform, enlighten and entertain versus The Shattered Mirror’s emphasis on the first function (its Policy Recommendation #10). Do this because a ‘platform agnostic’ public media service not only informs people but plays a key role in cultivating new talent across the arts, and exposing artists to the audiences they need to go on to become bigger commercial successes. In line with these ideas, unshackle the CBC from any suggestion that its sails have been forever tied to the listing mast of the broadcasting ship. It should also be funded accordingly and in line with median levels of government support for public media in OECD countries (versus at the lower ends of the scale) (a modified version of the Public Policy Forum’s Recommendations 11 and 12, but without the restrictive focus on the CBC’s “informing” function).

4. We can no longer think about journalism and the media without thinking about broadband internet and mobile wireless. In an ever more internet- and mobile wireless-centric media universe, this is essential. The “founding fathers” in the US stressed the essential role of a free press to democracy (as The Shattered Mirror notes), but they also went much further by subsidizing a universal postal system to bring “general intelligence to every man’s [sic] doorstep” to the tune of tens of billions of (current) dollars a year in the 19^th Century to achieve that aim. So, too, must we integrate our thinking about broadband and mobile wireless policy with content, journalism and news together today (on postal history and news, see John).

5. This means emphasizing the importance of common carriage and universal broadband internet. It is essential to not impose the publishing or broadcasting models on society’s communication infrastructure. Mobile wireless and internet access providers should be gateways not gatekeepers. This will help ensure that news organizations and all forms of media, cultural and personal expression can have unfettered access to those with whom they’d like to share an experience, an idea, a story. It will also help to reduce journalists and news organizations from their growing dependence on Google, Facebook, Apple, etc. for the reasons outlined above. Universal broadband internet service should also be funded accordingly by raising the subsidy from its current level of roughly $2 per person per year to a figure, by way of suggestion, between the $5 per person per year that Sweden invests to promote universal broadband internet uptake and the $33 per person per year that we currently invest in the CBC. The report is silent on these issues but by implication, it is hostile to them.

6. Crush the idea that appears from time-to-time in the report that Facebook and Google should be treated like publishers. They are not. Similar to how the development of modern capitalism depended on the creation of the limited liability corporation so too do broadband internet and digital platforms that host, store and distribute huge amounts of other people’s content require the concept of the limited liability ‘digital intermediary’ to operate at scale. Google, Facebook, and the others that facilitate commercial and cultural intercourse over the internet are already treated this way by the law, and they should continue to be treated as such, without being ‘above the law’, or worse enrolled by governments using beyond the rule-of-law tactics to tackle a myriad of evils, whether stamping out child pornography, mass piracy, terrorist propaganda, counterfeit goods, etc. Where the interest is great, the law needs to swing in behind the power that these intermediaries have by dint of the fact that they stand mid-stream amidst the torrent of internet traffic.

The fact that intermediaries are increasingly being enrolled by governments to undertake these tasks without proper legal underpinnings, however, has already created problems enough (here, here and here). Calling, as this report does, to enroll ‘digital intermediaries’ like Facebook and Google to suppress “Fake News” is similarly fraught with problems. That this is so is readily evident in Facebook’s ham-fisted approach to enforcing its “community standards” that have led it to censor, for example, the Pulitzer Prize winning “napalm girl” photo of Kim Phuc running naked away from a village just after it was bombed by the US during the Vietnam War and when it has taken down or otherwise blocked access to images of, for instance, the famed Statue of Neptune in Bologna, the Little Mermaid Statue in Copenhagen, Evelyne Axell’s Ice Cream and Gustave Courbet’s Origin of the World. Illma Gore’s sketch of Donald Trump in the nude has also been banned from the site (see here).

While the desire to stamp out ‘fake news’ may seem especially appealing at the moment, there is good evidence that despite the fact that “fake news stories” were plentiful in the 2016 US election, the effects are probably not as strong as many seem to think. As the new “Social Media and Fake News in the 2016 Election” study by Hunt Allcott and Matthew Gentzkow from New York University and Stanford University, respectively, finds, this is because even though Americans use social media a lot, only a small portion of them – 14% — relied on social media as their “most important source of news” during the election. Instead, TV was the main source of political news by far. Even those who did get their news from social media, and were therefore exposed to fake news that favoured Trump over Clinton by a wide margin, very few could remember “the specifics of the stories and fewer still believed them”, observes a Poynter Institute summary and commentary on the study being recited here.

Ultimately, we need to see this report for what it is: the latest in an unending firehose of reports from well-heeled think tanks across the country, including the Friends of Canadian Broadcasting (here, here, here), the Fraser Institute, the MacDonald Laurier Institute and the C.D. Howe Institute that cover much the same ground. All of them respond to and in one way or another try to influence Heritage Minister Melanie Joly’s call for a top-to-bottom review of cultural policy, dubbed Canadian Content in a Digital World. That she has stimulated such interest is to her credit. However, the extent to which these reports are flooding the ‘marketplace of ideas’ with tired old ideas is a problem that I hope she and the good folks at the Department of Canadian Heritage – the cultural policy sausage factory, if you will – recognize them for what they are, and deal with them accordingly.

The Shattered Mirror also complements the Canadian Heritage Parliamentary Committee’s unfinished survey of similar terrain, and a series of recent decisions by the CRTC that are intended to shape the future of TV, broadband internet and mobile wireless services in this country: (1) its trilogy of Talk TV decisions; (2) its universal broadband internet service, and (3) several others that go to the core of the increasingly fibre and mobile wireless internet infrastructure that underpin the entire communications and media landscape upon which more and more of our economy, society and our day-to-day lives depend.

This report has nothing to say on the full sweep or specific details of these matters but lines up with those complaining bitterly about the CRTC’s new found willingness to take on media concentration and the perils of vertical and diagonal integration. The extent to which they do so and pine to keep industrial-era media policies — tweaked to bring them up to ‘digital speed’ — forever is a measure of how backwards such stances are and really just how much they see things through a rearview mirror. We deserve better, and let’s hope we get it.

A Radical Broadband Internet & Cultural Policy for Canada

This post responds to last weekend’s announcement by Canadian Heritage Minister Melanie Joly of a top-to-bottom review of Canadian broadcast, arts and culture policy. It’s also informed by the CRTC’s #TalkBroadband review where it is wrestling with the vital question of whether universal, affordable basic telecoms services should be expanded to include broadband internet access and, if so, at what standards of speed, quality and affordability, and who should pay for it all?

Both events offer enormous opportunities for good things to happen, but also for much mischief, especially if those who have been lobbying the new government day and night since it arrived in office last November get their way. Indeed, Bell has lobbied various arms of the new Trudeau government thirty-two times – nearly twice a week! — between the time it took power in November and the end of March (Office of the Commissioner of Lobbying of Canada). In light of this, while careful and considered thought is essential, there is no time to waste.

In this post, I want to do three things:

1. outline the scale of the media economy and the state of concentration and vertical integration across the telecoms, internet and media landscape in Canada – the bedrock upon which all else unfolds;
2. discuss what regulators and policy-makers have done in response to these conditions so far and broader policy issues related to broadband internet, mobile wireless and broadcast policy; and
3. conclude with five modest proposals, one large one and one radical suggestion about what might be done to close the gap between how things are and what we might want them to be.

A Lay of the Land: Bigger Players and A Bigger Pie

While the Canadian media economy is small by US standards, it is amongst the biggest dozen or so in the world. The telecoms, internet and media markets in Canada have nearly quadrupled in size in the past thirty years. Total revenues were $75.4 billion in 2014.

Is media ownership concentration in Canada high?

Yes, based on historical, international and conventional economic measures (see the CMCR Project’s Media and Internet Concentration in Canada, 1984-2014 report).

Is the level of vertical integration in Canada high? Yes. The top 4 Canadian vertically-integrated (VI) companies’ – Bell, Rogers, Shaw, QMI, in that order — share of all telecom, internet and media revenues is 57%.

Figure 1: The “Big 4” VI Companies’ Share of the Media Economy, 2014

Sources: CMCR Project Media Industry Data.

This is significantly higher than the top four VI companies in the US (40%): AT&T (DirecTV), Comcast, Charter (including Time Warner & Bright House) and Cox. Figure 2 below shows the state of affairs before yesterdays amalgamation of Charter, Time Warner and Brighthouse was approved.

Figure 2

 

Sources: Company Annual Reports.

Canada ranks at the very top of the list of 30 countries studied by the IMCRP in terms of vertical integration (see here and here).

The big Canadian telcos – except Telus – all own substantial television operations, sports teams and arenas, and so forth. Other than AT&T’s recent acquisition of DirecTV, most US telcos do not own their own television and film operations: Verizon, Frontier, Centurylink, T-Mobile. Besides AT&T, there are no telcos on the list of four biggest vertically-integrated companies in the US.

But what about Google, Facebook and Netflix? Their combined share of all media revenues in Canada is less than 4 percent – as of 2014 (see CMCR Project Workbook “Top 20 w telecoms” sheet).

Are Canada’s vertically-integrated media companies too big to regulate? No.

Are they being regulated effectively? Not as effectively as they might be.

Do regulators have justifiable reasons to intervene? Yes.

Concentration and vertical integration levels are high and the companies’ abuse of their market power is now a conclusion of fact, not conjecture.

Wireless markets are under-developed; prices per GB on wireless and wireline networks are high; speeds relative to comparable international peers are high for wireless, modest for wireline. Adoption is moderate for the latter, but extremely low for the former (mobile phones) (a series of international price, speed, access, adoption and subsidy comparisons can be found here)

People in Canada are voracious users of the internet and all kinds of media, and have long been so (see Cisco’s Visual Network Index Forecast, 2015-2020, for example). Still, however, they must also measure what they watch and do with these vital tools of modern life because of the high cost of a GB in Canada and the prevalence of relatively low data caps on wireless and wireline networks.

Restrictive data caps reflect the high levels of vertical integration in Canada and serve to protect the VI giant’s broadcast operations from streaming services like Netflix, etc. Just two days ago, in contrast, the FCC in the US approved the take-over of the Time Warner and Brighthouse cable companies by Charter but only on condition that it commit to not using data caps for the next seven years. This was done specifically to remove an barriers to the further development of over-the-top video services like Netflix, Amazon Prime, and unbundled services from CBS, Viacom, HBO, the NLB, and so on (see here, here and the WSJ).

In Canada, the CRTC gave provisional blessing to data caps back in 2009. However, they have gone from being used sparingly to manage internet congestion to become a steady and lucrative new stream of revenue for Bell, Rogers, Telus and Videotron ever since (Shaw advertises data caps but does not apply them). Canadians loathe data caps and the expensive “overage charges” they entail. Data caps send a dumb message as well: that somehow we are using “too much internet”.

While Shaw distinguished itself on this point when appearing before the CRTC on Tuesday, it has been discouraging to listen to Bell, Telus, MTS, SaskTel, Bragg and the small indy telcos talk about the need to scrimp on how much internet people use and the speeds that should be available. Their visions of what Canadians deserve as part of a universal basic broadband service is myopic and wholly uninspiring.

The extensive reliance on relatively low data caps in Canada constrains what and how people watch TV, listen to music, communicate with one another over the internet and mobile devices, and work. As part of human experience, and critical infrastructure for society and economy writ large, this is a problem.

Information and cultural goods are public goods and paying for them out of the public purse is reasonable and ought to be pursued but commercial media stand steadfastly and vocally opposed to any such expansion of public communication. I propose that we amalgamate Canada Post with the CBC to create the Canadian Communications Corporation, the combined result of which could operate as the 4th National Wireless Company, Broadband Provider in remote, rural and under-served urban communities, and Public Broadcaster rolled into one.

Netflix and Google should be able ply the land free as they like within the usual bounds of the rule of law with respect to market power, privacy, copyright, free speech, etc.

It is not unreasonable, however, to talk about levying a “public data resource” royalty on Google in return for giving it a free hand in gathering all the data from our ‘human’ and natural resources that it uses to run Google Search, Android, Google Maps, Google Earth, Google Books, etc. Such a levy could be used to restore some of Statistics Canada’s funding and technical expertise, and the long-form census. At the very least, foreign internet firms operating in Canada should pay taxes like the rest of us. Indeed, rumour has it that Canada is the only country where Netflix doesn’t pay any taxes. Western University Professor Sam Trosow is right: we must think about information policy in a holistic way.

Whereas the Competition Bureau folded in its antitrust investigation of Google last week the day before the European Commission opened up a second prong in its antitrust case against the digital behemoth – the first with respect to its dominance of EU search markets, where it often has a market share over 90%, the latest a new front targeting Google’s leveraging of its Android operating system to gain prime real estate on people’s mobile devices for the its Play Store, Chrome Browser and Search to the exclusion of other competitors and a different range of preloaded functions, capabilities and apps – there is still time to take another look in light of the fuller view being brought into focus by Joly’s DigiCanCon review and the CRTC’s ongoing #TalkBroadband proceeding. We need a “whole of government” approach, and so far, that is missing in action.

What are regulators doing?

They are:

Unbundling the Network: Partially. Hesitantly. . . . Slowly turning from a systems and broadcast-centric view of the world to a lego-land, telecoms-internet-mobile wireless centric view of the world – skinny basic, untied streaming tv services like Shomi and Crave, and pick-and-pay TV are just the start (for an early vision along these lines, see Huber’s The Geodesic Network II).

The CRTC and the previous government have made the high levels of concentration in mobile wireless, broadcast distribution undertakings (DBUs) and television a centre-piece of their proceedings and policies.

They are rediscovering market power

The CRTC called a spade a spade in its Wholesale Mobile Wireless decision last year, for instance:

Bell Mobility, RCP [Rogers], and TCC [Telus] collectively possess market power in the national market for GSM-based wholesale MVNO access (CRTC 2015-177, para 88).

The Competition Bureau’s findings were crucial to this outcome, although its appearance before the CRTC hearing on the matter was abysmal.

They have rediscovered and applied section 27 of the Telecommunications Act in three cases: Wholesale Roaming investigation 2014-398; Wholesale Mobile Wireless Decision 2015-177; Mobile TV 2015-26.

The Wholesale Roaming investigation 2014-398 found that wholesale mobile wireless roaming rates were “clear instances of unjust discrimination and undue preference”; banished exclusivity provisions in wholesale roaming agreements; and opened a wider examination into wholesale mobile wireless services that led to the second-shoe falling, the Wholesale Mobile Wireless Decision 2015-177.

In Wholesale Mobile Wireless Decision 2015-177 the CRTC re-asserted its authority to regulate wholesale mobile wireless facilities and rates, set temporary caps on wholesale roaming rates and called a Phase II costing proceeding upon which it will set out new guidelines for wholesale wireless roaming rates.

The Mobile TV 2015-26 Decision did four things.

1. it found that Bell and Videotron were giving themselves “an undue and unreasonable preference” by “providing the data connectivity and transport required for consumers to access the mobile TV services at substantially lower costs . . . relative to other audiovisual content services”.
2. the CRTC concluded that this was bad for competition, the development and growth of new OTT services, and for consumer-citizens.
3. it drew a sharp line between transmission (common carriage) and broadcasting (content). In so doing, it forced Bell, Shaw and Rogers to bring their Mobile TV offerings into compliance with some of the common carrier principles flowing from section 27 of the Telecommunications Act.
4. it acted on the well-founded and meticulously researched and formulated complaint by a citizen and now Ph.D. student in the School of Journalism and Communication at Carleton University, Ben Klass.

Return of the State and Zombie Free Markets

That the previous government’s actions and ongoing regulatory intervention in the market is substantial in Canada is beyond doubt. At the same time, however, this is not unique. We have seen the “return of the state” in many countries. In the real world, the effective operation of “real markets” depends on the rule of law and the firm hand of independent regulators, back-stopped by, yet independent from, politicians, policy makers and the Ministers whose bailiwick it is to see that good things happen (in this case, this is Minister Navdeep Bains at Innovation, Science and Economic Development and Minister Melanie Joly at Canadian Heritage).

In terms of what has been done in recent years, we have had spectrum auctions aplenty, explicit spectrum set asides for new cellcos, regulated wholesale mobile wireless roaming rates, adoption of the Vertical Integration Code, the stripped down ‘skinny basic’ TV with a price cap, the push to keep over-the-air TV alive in so that the digital switch over of a few years back might bear fruit and become a thorn in the side of cable, satellite and IPTV companies whose rates continue to climb much faster than inflation, and the forced unbundling of tv channels.

All of these steps run counter to some of the companies’ – especially Bell and Shaw, but less so Rogers and QMI — ‘walled garden/information control’ models of operation. Having banked on such a model (and with the banks, especially RBC, holding significant ownership stakes in most of the key players), the push back against these efforts to limit the companies’ ambitions are coming from some of the most powerful forces in the land. Such push back can be seen, for example, in:

• Bell’s recurring editorial interventions in the country’s biggest TV and radio news media outlets;
• litigation (e.g. against the Mobile TV, Wireless Code, Superbowl Simsub rulings from the CRTC);
• a Petition to Cabinet to overturn the CRTC’s forward looking wholesale access to fibre-to-the-X ruling;
• threats of capital investment strikes and a bevy of other efforts to turn back the tide.

So what are the limits to this newly interventionist Regulatory State?

First, while the CRTC has rediscovered section 27 of the Telecommunications Act – the no undue preference clause – we must remember that it is followed immediately by section 28, which those in the know see as saying that carriers cannot give undue preference EXCEPT when doing so advances the objectives of the Broadcasting Act. This puts the best bits of the telecoms act at war with itself and risks subordinating telecommunications – broadband internet, basically – to broadcasting.

Such waffling runs counter to the principles of telecommunications upon which the open internet and mobile phones are built — tried and trued principles that come down to us in section 36 of the Telecommunications Act from Roman Roads, Venetian Canals, and the Taxis family courier service in medieval Europe.

Moreover, while one might argue that section 36 should be the crown jewel of the Telecommunications Act, there has been an extreme reluctance to use it. Why?

Regulatory hesitancy seems greatest on this point. This is evident in its almost complete lack of use during a time when those who own the media have become so inextricably intertwined with the ownership and control of messages. It is also evident in the exception carved out for over-riding this principle if it meets some ill-defined objectives of the Broadcasting Act. It is time to wheel section 36 out of storage and put it back in place as the crown jewel around which the entire set-up of the evermore internet- and mobile wireless-centric universe revolves.

This hesitance was also visible in the Mobile TV, a case in which content — and the carriers’ control of it — is very much front and centre. While drawing a sharp line between carriage and content, however, the CRTC refused to reach for the bedrock of common carriage: section 36. This seems to mark the outer limits of where it seems willing to go and in continuation with the fact that this section has been largely dormant over the years.

While the decision to kick some new life into section 27 is to be applauded, and the increased willingness to constrain the power of vertically integrated companies by loosening their grip over the basic building blocks of the network media ecology – spectrum, wholesale mobile wireless facilities and roaming rates, data transport and content – and sharpening the lines between carriage and content is great, much more is needed.

Like what?

5 Modest Suggestions + 1 Big One + 1 Radical One.

1. Eliminate section 28 of the Telecommunications Act;
2. Eliminate section 4 in the Broadcasting and Telecommunications acts so that both pieces of legislation can talk to one another (we don’t need new legislation and any attempt at such will only ensnare us in interminable delay and special (corporate) interest pleading;
3. Breathe new and vigorous life into section 36 by firmly separating control over the infrastructure from influence over the messages / content flowing through the pipes / ether. Sharpen and harden the line between carriage and content. Any proposals to use a levy on ISPs and mobile phones to fund CanCon should be given a stillbirth. While the entrenched clients of the existing broadcasting system never miss a beat to promote “the ISP tax”, these ideas are out of synch with the times and the tastes of the people. They are anti-internet and prolong “a systems” view of the world that conceals a murky labyrinth of cultural policy funds flowing from one pocket to another, often within the vertically-integrated companies.
4. Impose vertical separation along functional lines between carriage and content, and between wholesale access to passive network infrastructure and network operators and retail telecoms service providers.
5. Transfer authority over spectrum from Industry Canada to CRTC.

1 Big Proposal

1. Eliminate the whole category of broadcast distribution undertakings (BDUs) upon which the cable, satellite and IPTV industry is based. It’s all telecom-internet access and carriage now. Take the funds funneled into the Canadian Media Fund from BDUs directly out of the general treasury.

More generally, we need to think about bringing subsidies for broadband connectivity into line with funding for the CBC and Cancon. Currently, the CBC receives $33 per person per year, with nearly three-quarters of that amount again for the arts and culture at large. Broadband internet subsidies, by contrast, are a comparative pittance at roughly $2 per person per year.

I do not think that Canadian citizens would chafe at upping that amount to somewhere between what Sweden spends on broadband internet access subsidies (an average of $5 per person per year) and the CBC ($33 per person per year) (see sheets 3 & 4 here). Any bid to pare back the CBC and other arts and culture funding should be dismissed out of hand. We are not big spenders when it comes to arts, culture and Cancon, and generally at the lower end of the scale. In short, there’s little room for cutting, although how subsidies are organized, allocated and used are other matters altogether and surely up for grabs under the sweeping review that Minister Joly is spearheading.

1 Radical Proposal: The Canadian Communication Corporation (C3)

Merge Canada Post with the CBC to create the Canadian Communication Corporation (CCC) with a mandate to become the fourth national mobile wireless provider; blanket cities with open access and light up the vast stock of under- and unused municipal dark fibre; extend public wifi; extend broadband internet access to under- and unserved people in rural, remote and poor urban areas; create, disseminate and make public art and culture as accessible and enjoyable as possible, and fund it from the treasury not by an opaque labyrinth of intra- and inter-industry funds overseen by a fragmented cultural policy bureaucracy.

The original goal of the U.S. Post Office was to bring “general intelligence to every man’s [sic] doorstep”, while also serving as a heavily subsidized vehicle for delivering newspapers (John, 2010; Starr, 2004). The CCC could be to the broadband internet and mobile-wireless centric world of the 21^st century what the Post Office was to the print world of times past.

The CCC could repurpose some of the CBC’s existing spectrum holdings and broadcast towers for mobile wireless service coast-to-coast-to-coast, real estate could be combined and used to site towers, local post offices used to sign up cellphone subscribers and sell devices, and Canada Post vehicles given more windshield time making sure that the country’s system of correspondence, communication and parcel delivery run as they should.

Postal workers are giving some thought to renewing the post office for a broader sense of purpose, but have not ventured into this territory — yet; at the same time, informal discussions with some Canada Post senior execs suggest that this isn’t the first time they have heard of such ideas. Equally important, I don’t detect any inherent hostility against them.

Maybe it is time to discuss a #RadicalMediaPolicy4Canada? With two official proceedings underway, maybe we can broaden the terrain with a third?

* This post reworks ideas first presented at the Forum for Research and Policy in Communication’s Rebooting Canada’s Communication Law at the University of Ottawa, May 22, 2015. Thank you to Monica Auer for inviting to present there.

Telus Trifles with Telephone History to Service its Constrained View of Universal, Affordable Broadband Internet Access Today

Setting the Stage

Today, the CRTC enters week two of its major review of affordable basic telecoms service in Canada. The key issue? Whether universal, affordable basic telecoms services should be expanded to include broadband internet access and, if so, at what standards of speed, quality and affordability, and who should pay for it all.

Some of us argue that the goal of affordable, universal broadband service needs to be defined broadly. Others, such as Telus, argue that it should be drawn very narrowly to include only services based on needs not wants. In Telus’ restrictive view of the world, basic broadband internet access should support email, web browsing and maybe a couple of e-commerce activities but not over-the-top video services or H-D two-way interactive gaming. If the CRTC is to adopt a broadband speed target at all, Telus says, it should be no more the 5 Mbps down, 1 Mbps up (see its second intervention, paras 90-91).

To support its view, Telus hired two experts to critique the work submitted by those who argue for the more expansive view, including that of your’s truly. The gist of my submission is that affordable universal service is a concept that is not static but changes with developments in technology and society. I also argue that the politics of universal service involved in working this out are coterminous with the history of general purpose communications networks from the post office to the telephone and now the internet.

In the US, for example, this began with the post office starting with the Postal Act of 1792, and whose mandate was “to bring general intelligence to every man’s [sic] doorstep”, while also serving as a heavily subsidized vehicle for delivering newspapers across the country with the aim of helping the nation’s journalism flourish (John, 2010, p. 20; Starr, 2004). In short, universal postal policy was also about press, information, social and economic policy, all rolled into one.

I then argue that people agitated for such goals in relation to POTs (plain old telephone service), libraries and broadcasting. That they are doing so now in relation to broadband internet access is no surprise.

Indeed, in Canada and the US people pushed hard to transform the telephone from the late-19^th and early 20^th centuries from a luxury good and tool of business and government into a social necessity (Pike & Mosco, 1986), and a popular means of interpersonal communication. In an all-IP world, people are building upon this history by not only bringing intelligence to every citizens’ doorstep but by helping to make that doorstep the perch from which we can see and speak to the world.

Hired Guns, Weird Timeframes and Looking for Keys Under Lampposts

In line with Telus constrained view of basic service, its hired expert, McGill Political Scientist Richard Schultz writes that we need to clear away the many misconceptions and myths that exist about how “universal service became part of Canadian regulatory and policy debates” (para 2). Taking aim at my intervention specifically, Schultz asserts that

. . . perhaps no single statement in the various submissions epitomizes the problems . . . than the following from the Canadian Media Concentration Research Project first intervention: “Policy makers have struggled for over 100 years how best to achieve universal telecommunications service” (para 4).

Purporting to set the historical record right, Schultz argues that we need to do two things: first, to look at the period “from 1906, or more precisely 1912” up to around 1976, followed by another thereafter” and, second, search for explicit statutory statements where universal basic service is set out as a formal legal requirement for basic service, with the assumption being that the absence of such statements means that there’s never been such an idea in Canada and that claims to the contrary are just hollow rhetoric.

After doing what is akin to a text search of the relevant laws and coming up empty handed, Schultz concludes that there never were such politics over, or legal basis for, universal service in the late-19^th or early-20^th centuries and, in fact, that such issues were largely ignored. To the extent that such issues were given attention at all, he argues, the impetus came from enlightened corporate leaders at Bell and other telephone companies rather than politicians, policy makers or the public at large – in other words to the extent that universal service existed at all, it was an act of noblesse oblige (paras 5-9). Moreover, according to Schultz’s telling, to the extent the regulators and policy makers have played a role in bringing it about, universal service is of recent vintage.

Shultz’s arguments are curious for two reasons. First, the date that he begins with ignores vitally important points that predate 1906, while ignoring or giving short shrift to events within his selective timeframe. Second, the idea that a text search for “universal service” in the relevant legislation that comes up empty handed supports the conclusion that the idea was non-existent is like the proverbial drunk looking for their keys under the lamp post.

History Cut Short: Looking Just Outside the Weird Timeframe . . .

Let’s deal with the start date that Schultz selects first, i.e. 1906. This date is plausible because this is when telephone companies were brought under the remit of the Railway Act of 1903 and the purview of the first regulatory board in Canada, the Board of Railway Commissioners. Yet, starting in 1906 is fundamentally wrong for many reasons. For one, if we start just a few years earlier, we see that the adoption of the Railway Act was predicated on the idea that there are certain industries so fundamental to the economic and social life of the nation that they are imbued with a public interest and an “obligation to serve”. Railways came first, telegraphs and telephones next.

Statements aplenty to this effect underpin the legislative history of the Railway Act, and when telegraph and telephone companies were brought under its purview three years after its adoption the same principles automatically applied. Thus, when the Railway Act was expanded to include telephones in 1906, there was no need to be explicit about the “obligation to service” because that was baked into the statutory basis upon which railway, telegraph and telephone regulation was based. In short, there was no need to state the obvious.

The classic text on such matters, Alfred Kahn’s The Economics of Regulation: Principles and Institutions, provides an excellent introduction to businesses cloaked with a public interest, their obligation to serve, and the role regulators play in using the best available knowledge and experience to decide how such matters will be dealt within in any particular instance (see pp. 3-5, for example). These are the guiding rules and principles of regulation, not legislation, although regulators’ authority to do what they do is and must be grounded in laws that give them the authority, mandate and legitimacy to take the steps they do.

Schultz’s start date of 1906 is especially odd given the monumental inquiry into the telephone industry convened just one year earlier – 1905 — by the Liberal Government of Prime Minister Wilfrid Laurier, otherwise known as the Mulock Committee, after its chairperson and Postmaster General at the time William Mulock. The Mulock Committee helps to put the CRTC’s review of the basic service obligation in perspective given that while the Commission will hear from 90+ intervenors over three weeks, the Mulock Committee heard from many more during its forty-three days of hearings and thousands of pages of testimony.

As part of the public record, it received interventions from members of the public, co-operatively run telephone companies, municipal governments, foreign telephone systems and experts, and Bell management, among many others. It was an enormous undertaking, and one that underscored the fact that achieving some measure of public control – i.e. regulation in the public interest — over the telephone network was of the utmost importance.

Contra Schultz and Telus’ claim that issues of universal service were missing in action during this early period of telecommunications history, voices aplenty called for accessible and affordable telephone service at this time, not just for the business classes who were its main users but for all classes of the public. One among many, the Manitoba Government’s submission, for example, highlighted these points as follows:

. . . the telephone is . . . one of the natural monopolies, and yet is one of the most . . . necessary facilities for the despatch of business and for the convenience of the people . . . .[T]he price . . . should be so low that labouring men and artisans can have convenience and advantage of the telephone, as well as the merchant, the professional man and the gentleman of wealth and leisure” (Manitoba Government to Mulock Committee in 1905, quoted in Winseck, 1998, p. 137).

If this is not a call for affordable service, I am not sure what is. The only reason they are missing for Schultz and Telus is because such activities fall outside of their self-selected – and odd — time frame that begins a year after the biggest inquiry into the telephone and public service in the 20^th Century occurred (except maybe the proceedings dealing with the introduction of competition in the last twenty-five years of that century).

We can also go well beyond 1906 and the Railway Act, or 1905 and the Mulock Telephone Inquiry, to the first days of the Bell Telephone Company of Canada’s operations to add further insight into the history of universal telecoms service. Thus, in 1882, Bell’s founding charter was revised to include the touchstone phrase that its operations were to be conducted and overseen by the federal government for “the general advantage of Canada”.

A few years later, and a decade before the United States pursued the same course of action, the federal Patent Commissioner voided Bell patents because Bell was not making enough use of its equipment in Canada and blocking access to those who might (see MacDougall, 2013, p. 43). Municipalities also chafed — and told the Mulock Committee as much – at how their weak powers under the federal government’s authority and the “general advantage of Canada” idea in Bell’s charter constrained their capacity to grant competing franchises, regulate rates and adopt other methods that might help extend the telephone beyond a small number of business users to make it more accessible and affordable.

And when competition did break out, as in Montreal in 1888, for instance, Bell launched a ruthless price war with its rival, the Federal Telephone Company, until the latter capitulated and sold out to Bell three years later. In Winnipeg it created a “dummy company”, the People’s Telephone Company, to give the illusion of competition; while in Peterborough and Dundas, to kill new independent telephone companies, Bell gave away service for free. Yet, all this, too, is ruled out by the self-selected time frame that Schultz imposes on the subject.

When Kingston joined the Ontario Municipal Association in 1903 to adopt a resolution calling for municipal authority to regulate telephone rates, Bell threatened not to renew its franchise and to withhold further capital investment. In the same year, the Mayors of the Montreal suburb of Westmount and Toronto, William Lighthall and Oliver Howland, respectively, spearheaded a drive to gain greater regulatory authority over telephone rates for municipalities while calling on the federal government to take control of the long distance network. By 1905, 195 municipalities had joined the call, with support from the Montreal and Toronto business associations and the farmers’ association, Dominion Grange (also see MacDougall, 2013, pp. 44-46, 125-127; Winseck, 1998).

In an immediate sense, the cities’ calls largely fell on deaf ears at the federal government. As a result of this drift of events, in 1902, 1-in-50 Ottawa citizens had regular telephone service. The upshot, as Bell Canada President Charles Fleetford Side never missed a chance to stress, was that the telephone was treated as a luxury not necessity.

It was against this backdrop, however, that Prime Minister Wilfrid Laurier’s Liberal Government convened the Select Committee on Telephones in 1905. However, none of this even merits a mention in the hired expert report that Professor Schultz has prepared for Telus and submitted to the public record of the CRTC’s current review of basic telecoms service. In short, those parts of the historical record that don’t fit Telus’ restrictive view of universal telecoms service are simply omitted from Schultz’s account.

Inside the Timeframe Things Disappear

Missing, also, is the fact that all three prairie governments effectively nationalized their telephone systems between 1906 and 1909 largely because, as Manitoba had told the Mulock Committee, Bell refused to extend its network in the province or to make the service more affordable for more people. During this time, Bell vacated the field as prairie governments took over telephone service between 1906-1909 in Manitoba and Alberta, although with Saskatchewan following the ‘Scandinavian’ model whereby the government initially owned the long distance networks while cities and cooperatives built up the local networks (MacDougall, 2014, p. 190).

In addition, far from the folding of telegraph and telephone companies into the purview of the Railway Act being an inconsequential gesture, as Telus and Schultz suggest, Canada’s first regulator – the Board of Railway Commissioners — cut its teeth on a wide variety of issues that all had to do with carving out what it means to set public policy and regulate businesses affected with a public interest, to use Alfred Kahn’s terminology. Thus, and for instance, even though some people suspected that the Government had simply shelved the recommendations of the Mulock Committee, the report helped to set the zeitgeist and in the next few years the BRC found its footing on ground made solid by the extensive proceedings that had just transpired.

Thus, between 1908 and 1915, the BRC displayed the will and room for independent action needed to increase the availability of affordable telephone service to business and all classes of people alike. For instance, the BRC nullified the then widespread exclusive contracts that Bell had hitherto sewn up with railway stations – the main centers of commerce and the flow of people – across the country. The provisions in the Railway Act requiring telephone rates that were “just and reasonable” were also given new life; as were those that required that rates and services be offered in a manner that was “not unjustly discriminatory or unduly preferential” (Railway Act, c. R-2).

Standard technical interfaces allowing interconnection between Bell and independent telephone companies were adopted, and telephone companies were required to file their tariffs with the BRC. In 1910, the BRC made a landmark ruling that brought common carriage into the purview of telecommunications in Canada as well, and which remains a defining pillar of the Telecommunications Act (sec 36) to this date.

The BRC also began systematically collecting data on Bell and other telephone companies with respect to rates, miles of telephone line and the number of exchanges in operation, people served, workers employed, and so on and so forth. The first monitoring reports, Telephone Statistics, were published. The number of independent telephone companies soared from 530 in 1912 to 1700 by 1917, accounting for half of all subscribers at the time. To be sure, the exact phrase “universal service” may not appear in these efforts, and the aims of such an objective were not achieved, but its spirit – in bits and pieces and the totality of the record – is undeniable.

To be sure, while Bell struck a tone then that was as parsimonious as the one Telus is striking now, it was not completely tone deaf to the drift of events taking place. Thus, while the Bell Telephone Company of Canada’s long-standing chair, Charles Fleetford Sise was renowned for his penny-pinching ways and emphasis on serving only high-end business users who appreciated the high quality of the company’s networks and didn’t mind paying the price to do so, by 1912 even he seemed to be changing his tune.

Thus, in Bell Canada’s Annual Report of that year, Sise is quoted as follows:

. . . In 1906 the operation of the Company was placed under the supervision of the Railway Commission, which has considered several matters brought before it for adjudication, and has, in its conclusions, acted in an impartial and judicial manner.

Our relations with the Public continue to be very satisfactory, and the general feeling now seems to be that the telephone service to be perfect must be universal, intercommunicating, interdependent, under one control…and that rates must be so adjusted as to make it possible for everyone to be connected who will add to the value of the system to others (emphasis added, Fetherstonhaugh, 1944, pp. 224-225).

This is hugely important because, in Schultz’ words, to the extent that we had universal service at all, it was because the companies gave it to us out of the goodness of their hearts. Yet, here is Sise saying something very different, and in his account, the regulator looms large.

Schultz also draws on Milton Mueller’s (1998) history of universal service in the US to argue that the concept of universal service didn’t really mean what we think it means, but rather was more of a technical concept that referred to a single system (i.e. a monopoly) available everywhere rather than to everyone at affordable rates (see paras 30-31 in Schultz). Again, Sise’s words suggest something different.

The Politics of Telecoms Policy and Universal Service Restored

While Sise was likely singing from the same hymn sheet as the American Bell, the reading that Schultz tries to impose is at odd with a broader reading of Bell and its management’s stance within the context of the politics of the progressive era in the US (circa 1890-1920) when people like AT&T boss Theodore N. Vail worked harder than ever to reconcile a nascent kind of big business capitalism that his company represented, large technical systems of which the telephone system was an example par excellence, and the public interest (see Sklar, 1988, for example). All of these ideas were at play and expressed from a wide variety of positions, from the narrow and technocratic (Walter Lippmann, for example), to the broad and expansive (John Dewey). Even on the face of it, Sise’s invocation of a telephone service that is universally available at rates that “make it possible for everyone to be connected” chime with such views while also resonating strongly with our modern conceptions of universal service.

Suffice it to say that Schultz’s fundamentally flawed account of the history of universal service carries on throughout the period he covers. To be sure, there are times, for example in the post WWII era in which the politics of telecommunications and universal service did fade into the woodwork, but that, I would argue, is due to the “corporatist politics” and social settlements of the era. This meant that such matters were attended by those directly involved: the telephone companies, the regulators, and to an extent the telephone company labour unions. Indeed, when telephone regulation rested with the Board of Transport Commissioners (1938-1967) and then the Canadian Transport Commission (1967-1976), respectively, they did take a particularly technocratic and narrow view of things whereby, rather than hearing from people directly, they believed that the company engineers and economists appearing before them were best placed to deliver insights and results that were in the public interest.

The Public Returns and the Public Interest is Revived

That kind of thinking was also prevalent in the US at the time, as well. Crucially, however, it was also rejected in the landmark United Church of Christ case in 1966 when the Courts scolded the FCC into a new way of thinking by arguing that the only way to know what the public interest is, was to have the public in front of the FCC to tell them what it is. The doors to the FCC swung open and the preceding phase of corporatist politics was jettisoned in favour of public participation as a result.

The CRTC followed course a decade later, in 1976, but on its own accord after its remit was expanded to take over telecommunications from the Canada Transport Commission. Immediately upon taking over telecoms, the CRTC candidly announced the following:

… In a country where essential telecommunications services are provided largely by private enterprise with some degree of protection from competition, the public interest requires that those services should be responsive to public demand over as wide a range of possible, and equally responsive to social and technological change.

The principle of “just and reasonable” rates is neither narrow nor a static concept. As our society has evolved, the idea of what is just and reasonable has also changed . . . . Indeed, the Commission views this principle in the widest possible terms, and considers itself obliged to continually review the level and structure of carrier rates to ensure that telecommunications services are fully responsive to the public interest.[1]

Indeed, these ideas and values stand as a consistent thread between then and now: the Commission sets what constitutes basic service in light of constantly evolving technological, economic, social and political realities. That such ideas were in the air at the CRTC in the mid-1970s was also not anomalous but part and parcel of the times as well. Schultz offers a glimpse of this when he mentions the Department of Communication in passing (see para 46). However, the DOC is more important than he leads on. It articulated a broad vision of the “wired society” that it saw as being on the immediate horizon as broadband networks converged with computing and a cornucopia of information and media services to become the infrastructure of society in the near future. We’re here now, even if Telus hopes that the DOC’s broad vision is not.

Such ideas play little role in Schultz’s account and thus in helping us understand universal service and its evolution over time. They are part of what he thinks is a moment when the politics of universal service does emerge for the first time, but they are not given the gravitas that they probably deserve nor are they stitched into the flow of time – backwards or forwards – in ways that they need to be. As a result, the argument that was the closing decades of the 20th Century there were a watershed moment when the values, ideas and politics of universal telecoms services emerge for the first time is incorrect, for all of the reasons indicated above.

Look Where Things Are Not Where the Light Shines Brightest

Finally, and as I told the Commission last week and in my response to Telus’ questions to me earlier, most countries do not legislate specific affordable broadband service targets. Instead, the normal practice is to pursue broadband targets as a matter of public policy, developed and back-stopped by regulators and policy-makers that have the legal and political mandate to do what they need to do to achieve outcomes that are in the public interest. And this is as it is in Canada as well.

Ultimately, Schultz’s history is fundamentally flawed. Its main function appears to be to marshal scholarly credibility and legitimacy in the service of those who seek a specific, strategic outcome. It is a poor piece of research and hopefully will be given very little attention by the Commission, or anyone else for that matter.

Universal service for an all-IP world is something that we have to arrive at. It will not be easy. But an already difficult task won’t be made easier by those who use and abuse history for their own strategic ends.

 

[1] emphasis added, CRTC (1976). Telecommunications Regulation – Procedures and Practices (prepared statement). Ottawa: Minister of Supply and Services.

Carleton Study Challenges Claims of Big Wireless Players and Promotes Need for Maverick Brands

Cross posted from Carleton University homepage.

Well, this is a bit of a cheat, but Steven Reid at Carleton University did such a great job conveying the central message of a new report that we put out at the Canadian Media Concentration Research Project that I thought I’d just crib the whole thing and re-post it here. Thanks Steve.

Steven’s wordsmithing follows:

Carleton University’s Canadian Media Concentration Research project, directed by Dwayne Winseck of the School of Journalism and Communication, has released a report entitled Mobile Wireless in Canada: Recognizing the Problems and Approaching Solutions. The study outlines the state of wireless competition and concentration in Canada in relation to 57 countries worldwide, covering a period of three decades.

“The deep divide between the wireless industry and the government that has erupted over the latter’s attempt to reduce domestic and international roaming charges and foster more competition is the focus of the study,” said Winseck. “The study challenges the industry’s claim that there is no competition problem in Canada and emphasizes the importance of maverick brands that extend the market to those at the lower end of the income scale – women and others who are otherwise neglected by the well-established wireless players.”

The report supports the assertion that mobile wireless markets in Canada are not competitive. It offers a comprehensive, long-term body of evidence that places trends in Canada in an international context. The study shows that Canada shares a similar condition with almost all countries that were studied: high levels of concentration in mobile wireless markets.

The difference between the wireless situation in Canada and elsewhere is the lack of resolve to do anything about this state of affairs said Winseck. The study concludes that Canada’s situation is not promising, although there are some bright spots on the horizon.

“For the time being, the tendency is to deny reality, even when incontrovertible evidence stares observers in the face,” said Winseck. “This, however, is symptomatic of a bigger problem, namely that in Canada the circles involved in discussing wireless issues are exceedingly small and they like to hear the sound of one another’s voices. Their members do not look kindly on those who might rock the tight oligopoly that has ruled the industry from the get-go.”

The study highlights the importance of emerging maverick brands like T-Mobile in the U.S., Hutchison 3G in the U.K., Hot Mobile and Golan Telecom in Isreal, and Iliad and Free in France.

Maverick brands have many things in common:

• All have faced aggressive incumbents and they tend to disrupt the status quo, pushing down prices, driving massive growth in contract-free wireless plans and unlocking phones.
• They have relied on the state for a fundamental public resource that underpins the entire mobile wireless setup: spectrum.

Incumbents have fought against new wireless companies, challenging governments in an attempt to preserve their domination of the spectrum. In Canada, three companies currently hold 90 per cent of the spectrum: Rogers (41 per cent), Telus (25 per cent) and Bell (24 per cent).

The study shows that compared to the countries included in the study:

• Wireless markets in Canada, regardless of how they are measured, are remarkably concentrated;
• Canadians are first in terms of time the spent on the Internet, GBs of data uploaded and downloaded, smartphone data sent and received etc.;
• Canada is highly ranked when it comes to capital investment in its wireline infrastructure, but lags in wireless investment.

“Whether or not people get the media, wireless and Internet capabilities they need to live, love and thrive in the 21st century depends on making the right choices now,” said Winseck. “Those choices are staring Canadians in the face. How we act, and how our government moves ahead, will set the baseline for how mobile wireless media in this country will evolve for the next two decades – the length of the licences being awarded in the upcoming 700 MHz spectrum auction – and probably for a lot longer than that.”

An executive summary of this study can be found at: http://www.cmcrp.org/2013/11/18/executive-summary-the-cmcr-projects-wireless-report-mobile-wireless-in-canada-recognizing-the-problems-and-approaching-solutions/

The full report can be viewed at: http://www.cmcrp.org/wp-content/uploads/2013/11/Mobile-Wireless-in-Canada2.pdf