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Posts Tagged ‘UBB’

Dream Bıg: Some Modest Reforms for the Telecom-Medıa-Internet (TMI) Industries in Canada

I’m taking a break for a few weeks, but before here ıs a slightly extended versıon of my column ,ın te Globe and Mail yesterday.

It’s time to step back for a bit from trying to explain, first, that the telecom-media-Internet (TMI) industries in Canada are concentrated, second that they are poorly regulated and, lastly, that this is problematic, not from the perspective of utopian ideals, but of a digital free press in a liberal capitalist democracy like ours.

 

When I come back I’ll write about other things, I promise (maybe). Before I leave, though, a few thoughts for your consideration.

 

We live in what Ron Diebert and Rohan Rohozinski of the Citizen’s Lab at the University of Toronto call a ‘constitutive moment’. This means that actions taken now will help lock in the structure, look and feel of the digital, networked mediaspace for years ahead.

 

Three matters are coming to a head as they wind their way through the CRTC and body politic:

 

  • The CRTC will decide the fate of the pay-per model of the Internet (UBB and bandwidth caps) (starting at CRTC hearings July 11) imposed by the ‘big six’ ISPs on Canadians while they were sleepwalking until all hell broke lose last January when the incumbents got regulatory approval to pin their hated pay-per model on the independent ISPs that serve the five percent of Internet users not served by the incumbents.
  • We will see if the CRTC has the wisdom and courage to pick the right tools to effectively deal with vertical integration and concentration across the TMI sectors as a whole.
  • a CRTC “fact finding inquiry” will examine whether online video distributors such as Netflix, YouTube, AppleTV and so on will be freely accessible in Canada or regulated like broadcasters.

 

By my estimation, each hearing involves about a hundred submissions of thirty or so pages each. That’s nearly 10,000 pages. It would be great if you could keep up to speed on these matters while I’m away by bumbling your way through the “truly primitive” website of the CRTC, as Cardozo Law School Professor Susan Crawford refers to it.

 

But who has the time and resources to do this? The incumbents and their well-heeled lobbyists, that’s who! I am on sabbatical, but still exhausted tracking this stuff day after day.

 

Others such as the Public Interest Advocacy Centre also take part in these processes as much as they can. For PIAC it’s a real problem, because late in the game it just learned that the CRTC’s fast-tracked “fact finding” expedition on new media isn’t a real hearing, so no funding for them.

 

The rabble-rousing group, Open Media, is marshalling its resources for this week’s UBB Hearings. Rightly so, since it put the issue of the pay per Internet model on the public radar to begin with. They are boycotting the OTT ‘fact finding’ mission, though, because their resources are stretched thin and to protest the fact that the CRTC buckled to vested interests’ pleadings to have the proceeding advanced from 2014 to now, even though similar examinations occurred just two years ago.

 

Google and Apple also scolded the CRTC for allowing matters to get all bungled up in a kind of regulatory trench warfare. The CBC and NFB want to deliver their content to as many people, anywhere, anytime and across as many platforms and devices as possible, as well, not new regulations. Mirko Bibic, Bell’s regulatory front man, called this idea “preposterous” at the vertical integration hearings two weeks ago.

 

This battle over the future of media is not the result of new industrial arrangements, digitization, or newfangled economic theory, but endemic to situations where those who control the medium also control the messages (content).

 

In the 1900s, for example, the Canadian Pacific Telegraph Co. and Great Northwestern Telegraph Co. (the latter owned by the New York-based goliath, Western Union) had exclusive distribution rights for the Associated Press news wire service in Canada. To fortify their dominant position in the lucrative telegraph business against smaller rivals (e.g. the Dominion Telegraph Co in Canada and Postal Telegraph Co. in the US), the Canadian Pacific Tel. Co. and Great Northwestern Tel. Co. gave away the AP’s news service to the dominant daily newspaper in each town across the country for free.

 

AP’s service was so cheap because instead of paying the cost for the news service and the telegraph charges for delivering it, the companies only charged for the ‘transmission costs’. This was a boon to established members of the press and AP and a useful tool for the companies’ own efforts to stitch up their lock on the telegraph business. It was also a menace to network competition, rival news services and a diverse press.

 

Any rival news service that tried to enter the market was at a disadvantage because its subscribers had to pay the ‘transmission costs’ plus the cost of the news service. When the Winnipeg-based Western Associated Press set up a news service in 1907, it found its opportunities blocked because there was no way its subscribers could afford to pay two costs — transmission and for the news service — and stay in business, while AP’s new service was given away free to competitors.

 

Leveraging control over the wires, the telegraph companies choked the messages flowing through them. As one muckraking journalist, W. F. Maclean, wrote in the Toronto World,

 

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

 

The matter was brought to a head by one of the first regulatory bodies in Canada, the Board of Railway Commissioners in 1910. Canadian Pacific Tel. Co. came out swinging, arguing that the BRC had no authority over news services or to compel them to separate the costs of the news service from their transmission costs.

 

The BRC didn’t wilt for a moment but shot-back that the law compelled it to insure that rates were ”just and reasonable”. Unless transmission rates were separate, explicit and equitable, “telegraph companies could put out of business every newsgathering agency that dared to enter the field of competition with them”, it declared matter-of-factly.

 

The regulator had all the authority in the world it needed to break up the ‘double headed news monopoly’, and it did.

 

To be sure, the modalities of communication have changed tremendously since and we now live in an age when information is plentiful, not scarce. Yet, as Tim Wu’s Master Switch, and the mounting evidence before us attests, the basic logic of leveraging content and networks to confer advantages on one’s own services whilst driving others into submission, if not out of business altogether, is alive and well.

 

Australia, Argentina, Belgium, Brazil, Britain, New Zealand and many others are dealing with their own contemporary experiences of networks being used to trample competition and diminish the range of voices and expression available. Australia created the National Broadband Company in 2009 with $43 billion in funding to spur competition and open networks, for instance.

 

We have the publicly-owned and financed CANARIE with its ultra fast networks serving hospitals, schools, universities and researchers across the country. However, its modest funding ($30 million/year, roughly), uncertainty about funding levels after March 2012, and its executives’ squeamish view of how little they should compete with the incumbent commercial providers all limit CANARIE’s ability to offer much by way of an alternative network.

 

In Belgium and Britain, respectively, Belgacom and British Telecom have been forced to give more generous access to their facilities to speed the development of next generation networks. The level of functional separation adopted in the UK is unmatched elsewhere and depended heavily a strong regulator to force it upon a kicking and screaming BT in 2006. It has already led to more telecoms competition, broadband Internet services with greater speeds and capabilities, and lower prices relative to most countries, including Canada.

 

As an academic, I can dream big, but between my dreams and reality, there is a middle ground represented by measures that the FCC and Department of Justice in the U.S. put in place when they approved Comcast’s take-over of NBC-Universal earlier this year. In return for their blessing, Comcast must meet four fairly tough demands:

 

  • its television and film content must be available to Internet competitors and online video distributors (OVDs), a new category designed to cover Netflix, Hulu, AppleTV, etc.;
  • adopt open Internet principles generally;
  • “offer broadband services to low-income Americans at reduced monthly prices;
  • provide high-speed broadband to schools, libraries and underserved communities, among other benefits”.

 

These are practical measures that the CRTC could implement. It is a middle of the road choice, not a radical one. It does force the market to deliver a minimum level of social justice, but first and foremost it tries to foster a digital free press fit for a liberal capitalist democracy, rather than striving for abstract utopian ideals or bowing to the status quo.

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source:

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

Will Bill C-51 turn ISPS into Internet Gatekeepers?

My most recent column for the online technology section of Globe &Mail came out Tuesday. It is available here.

The article builds on some recent posts that I have done considering the mounting pressures being put on Internet Service Providers to act more like gatekeepers rather than gateways to the Internet. Four such forces, I suggest, are pushing in this direction:

  • a strong push from the ‘copryight’ industries, especially the music industries, to make ISPs and search engines extensions of the copyright enforcement regime. This has become especially strong since 2008, when the International Federation of Phonographic Industries (IFPI) and the Recording Industry Association of America (RIAA) turned to such measures more forcefully, while backing off somewhat from Digital Rights Management (DRM) (see page 3 of the IFPI’s Digital Music Report, 2008);
  • the near universal adoption of usage based billing and bandwidth caps by Canada’s ‘big six’ ISPs — Bell, Rogers, Shaw, Quebecor, Telus and Cogeco — and now the mid-sized Atlantic region player, Bragg/Eastlink (although with some recent significant developments from Shaw).
  • the fact that all of the major ISPs, except Telus, are vertically integrated and appear to be using usage based billing and bandwidth caps as a kind of ‘television business protection plan’ for their interests in the television industry.
  • and finally, the focus of yesterday’s column in the Globe and Mail, the push from national security and law enforcement agencies to build in increasing monitoring and surveillance capacities into their networks, and to conduct ‘warrantless searches’ if proposed new legislation is passed.
A fuller treatment of the issues covered in Tuesday’s column can be found in my earlier post here, and another that places things in a larger, global context here.

Shaw’s ‘New New’ Internet Pricing Regime — Raising the Bar?

Whew, I’m just coming back from blogosphere, and sheesh can things sometimes get tough out there. I’ve been thinking the last few days about an idea based on these forays into blogs, columns for newspapers, and stuff like that: Blogoslama, or what happens when the trolls of cyberspace get nasty.

That’s the title I have for people like Know Your Facts, RightTruth, TheFactCorrector, TheCorrectOpinion, SeektheTruth and, well, you get the picture, that run around blustering and puffing up their chest in umbrage over something or other that you’ve wrote.

Now don’t get me wrong, and sometimes these strange combinations yield fruit. I enjoy the to and fro of online conversations and generally think highly of them, for reasons that I’ve attributed in previous posts to scholars like Yochai Benkler, Nancy Baym, and others who see these activities of valuable forms of ‘sociality’ and public communication.

I also like the interesting characters like Strunk&White and UseYourSpellCheck who politely remind people how important a tidy sentence is to a civil conversation. And there’s others like Grumpy Scientist, TvWorker, and Old Green who speak wisely, although maybe somewhat slower than others in these sometimes rough and tumble places do. Amidst these different voices are some that really make you think, and sometimes to do a rethink.

Sometimes, though, I must admit, I can feel my skin growing thicker. In some wierd way, the old ‘blender theory of truth’ espoused by great liberals is alive and well. This is the theory that if we throw enough ideas into the mix, the truth, or at least the possibility of understanding, will rise to the top. Some say the Internet, and the blogosphere in particular, functions as a giant ‘echo chamber’, hardening opinions and throwing a monkey-wrench in the ‘blender theory of understanding’. In broad brush terms, I disagree.

So there I was just checking in on my recent contribution to The Mark, a piece that takes a blog entry I did on May 27th about cable media conglomerate Shaw’s new Internet pricing polices. A reworked, shorter and much polished version of that appeared this week as “We”ll Lift Your Internet Cap — If you Buy Our Cable TV” on The Mark. Between now and then, little did I know, Shaw had replaced its first new plan with a new, new one — each a ‘better response’ to ‘public consultation’ than the one before.

The story was a response to Shaw’s announcement last month that it would be doubling the bandwidth of its High Speed Internet services, while maintaining the same price and speeds for these services. Even more importantly, it announced that it would be offering two new tiers of High Speed Internet Services that offered even higher speeds and more voluminous bandwidth caps, up to 1TB in some cases and in others no caps at all. Shaw made a big deal of this, splashing about the news that it had made these ‘radical’ changes in light of recently held consultations with its subscribers.

This is and was a pretty big deal, especially in Canada where the user-centric and open Internet has been transformed step by step into a pay model where bandwidth caps are nearly universal and costs out of line with relevant global comparative standards. We have been drifting steadily toward the pay per Internet model, with Usage Based Billing and Bandwidth Caps leading the way.  I am opposed generally and strongly to the direction of events.

One fly in the ointment, however, with the big splashy announcement was that the you can only get the high end Internet capabilities by purchasing one of two of Shaw’s television services . . . as they become available over the next 16 months.
As a quote from Shaw’s official site stated: “These broadband packages will come bundled with TV and will roll out in two phases.”

In other words, this was ‘tied selling’, which is a big problem with vertically integrated media conglomerates. It also looked like a Business Protection Plan for Shaws vast television interests, from cables, to DTH satellite service, the Global network and a vast stable of television and radio broadcast stations.  And in this regard, Shaw is symptomatic of a broader problem in Canada: the extent that such integrated media conglomerates continue to roam the earth. Elsewhere, such beasts are generally on the wane, although Comcast’s acquisition of NBC earlier this year is an important exception.

Otherwise, in the US, media behemoths such as AOL Time Warner and ATT fell apart (although Comcast NBC is making a comeback), Vivendi in Europe exploded, and the story is similar from one country to the next. The main point for here, though, is that Shaw appeared to be merely tinkering generously with the ‘pay-per Internet’ model and then using it to defend other elements of its media stable. I was also circumspect of its claims about all of this coming from the good graces of the company after a series of consultations with subscribers. I think it had more to do with the intent politics of the Internet that have been at a steady and high boil for at least the past six months — a kind of late realization of the gravity of the stakes at hand, after years of slumber.

Anyway, to make a long story short, as soon as you start talking about concentrations of corporate power and the Internet being bent to private interests, people get their backs up, and in cyberspace, where anonymity is the lubricant of choice, they let you have it

Know Your Facts, who I introduced to you above, blasted me, stating that I should, umm, in his very own words, “No your facts before you write a objective review”. I don’t think that I ever claimed to be objective, but I do claim to be thorough and honest and good with the evidence at hand and that I produce, interpret and put in context. But before I could talk to KYF about the production and interpretation of facts, and how that renders notions of ‘objectivity’ problematic, he wound up and smacked me, FULL CAPS ON.

High Speed Internet services from Shaw are available from Shaw. He sent me a link that went to a Shaw page that required me to tell them where I lived so that Emma, or whatever their silly ‘agent’ is called, could tell me what’s on offer. It was a dead-end.

But I was wondering, had I made a mistake, lost the plot? Was it true, as WordUp said (slinking into the saloon), that by just referring to the ‘big 5’ other media behemoths alongside Shaw that I had blinded myself to reality?

Umm, no. I checked again. And again. The document I was relying on was still there. It clearly said everything I said above. Here it is again for your reference.

But then Craig arrived. Craig, you see, is from Shaw. He seems like a nice guy. He posted something to The Mark, in the comments section under my article. Everything now makes sense.

Shaw changed its pricing again on June 6th. The source I had been relying on had been superceded. The new page is here.

The improvements are considerable and I am glad that Shaw has seen fit to go further than the initial scheme announced to much fanfare.  There are still some quibbles that one might gnaw on, but the broad principle that access to the highest end Internet capabilities should not be tied to a subscription to any of Shaw’s television services.

To be sure, Shaw has raised the bar and it is to be applauded for doing so.  If it can just get rid of the bandwidth caps altogether and make sure pricing is in line with relevant global comparisons, then, at least when it comes to Shaw, we will be able to rest at ease.

Yet, one thing that also is crucial to this is that the bar set by Shaw should also become the minimum baseline standard adopted by the rest of the ‘big 5’: Bell, Rogers, Quebecor, Telus and Cogeco. Moreover, and to repeat from an earlier post, these must not be seen as a diversion from the central issues that remain core to the upcoming CRTC hearings on vertical integration and UBB.

Ooops, I did it again. Did that screw it all up for you?

Shaws’ New High Speed Internet Regime: Iron Fist vs the Velvet Glove

Shaw announced plans to implement a new regime for its Internet Access services this week. There is much in the announcement to be commended, and much still to rail against.

First, the much welcomed headline news is that Shaw’s new plans basically double the bandwidth caps for its Lite and High Speed services, while the caps for the Extreme service will be increased from a 100 GB cap to 250. The prices and the speed for each service will remain the same. Nice start!

Second, Shaw is promising much needed investment in broadband networks over the next year and a half and to convert all of its television channels to digital. As the company notes,

In making this move we will triple the capacity of our network, freeing up space for more Internet, HD and On Demand programming.

Third, the new pricing regime makes available some of the fastest and most generous high-speed Internet services in North America. It will most certainly, as Michael Geist, Peter Novak and others have noted, put pressure on the rest of the ‘big 5 ISPs’ – Bell, Rogers, Quebecor, Telus and Cogeco – to fall in line.

Shaw’s new bandwidth caps will be between two (vs Rogers) and five (Bell) times as great as those of the other dominant ISPs, as the following table illustrates.

The commitment to invest heavily in a “major upgrade of our network”, and to convert all its channels to digital, in order triple the capabilities of its networks is good news.  It would seem to bring Shaw closer into line with global trends (and ahead of standards in most of the United States).

The emphasis on network upgrades dovetails with ‘hierarchy of priorities’ set by the CRTC in its Network Neutrality decision too, or as it prefers to call it, the Internet Traffic Management Practices decision. Regardless of terminology, the basic idea is that Network Investment is the preferred method to deal with any congestion that exists. Shaw’s proposal appears to be in line with that idea.

If it acts as a spur for greater investment by the other major telecom and ISP providers, all the better, but we should not hold our breath. Their feet will have to be held to the fire.

Iron Fist Replaced by the Velvet Glove?

But now for the odious bits of Shaw’s intended course of action.

First, the highest speed services with the most generous bandwidth caps, or no caps at all, are only available bundled with either of Shaw’s Legacy TV or its Personal TV model. And these services will also only become available over the next 18 months as its networks are upgraded.

The bundled, highest performance Internet offerings offer speeds of between 50 and 250 Mbps and genereous bandwidth caps of between 250 GB per month and a voluminous 1 Terrabit (TB), as well. The caps are removed altogether in some cases. This is a good thing and appears to bring Shaw’s offerings closer into line with ‘global best practices’.

But tying the highest-performance Internet service to its ‘legacy’ television services is a blatantly protectionist bid — a first line of defense for Shaw’s Global television network, massive cable and satellite distribution system, and big suite of cable and satellite television channels. Enrolling you in its Internet services enrolls you unwittingly into the Shaw Business Projection Plan for all these other services. Your tail wagging its corporate dog.

The fact that Shaw is able to leverage control over its networks to influence the channels of communication flowing through them is not surprising. It is a problem as old as Roman Roads and Venetian Canals. It is a problem of the first order, for all that, and to be resisted now as much as in the past.

In 1910, the long lost precursor to the CRTC, the Board of Railway Commissioners came to a conclusion that would be startling if it happened today. As the BRC found in the ‘double-headed telegraph news monopoly’ case, Cdn Pacific Telegraph Co. and Great North Western Telegraph Co (the latter under ownership control of Western Union) had exclusive distribution rights for Associated Press news services in Canada. Cdn Pacific Telegraph was charging its

. . . subscribers for the commodity, viz., the news, delivered at a flat rate; . . . while in the case of rivals [Western Asssociated Press] the payment . . . was for the transmission, and not the commodity. . . . [T]elegraph companies could put out of business every newsgathering agency that dared to enter the field of competition with them” (BRC, 1910, pp. 274-275).

The bundling of ‘connectivity’ and ‘content’, as Shaw does in its new plans under one corporate umbrella is one of the biggest problems with vertical integration. Always has been, always will be.

Theoretically, the CRTC can do something about this after its upcoming vertical integration hearings next month. It can be taken for granted, however, that Hell will freeze over before anyone seriously considers divestiture of Canada’s big 5 integrated telecom-media behemoths — Shaw/Global (Corus), Bell/CTV, Rogers/CityTv, Quebecor (TVA), Cogeco (Radio).

The government could set up a competitor entity, the Canadian National Broadband Co (CNBC), just like the Australians. That’s not likely to happen either, the price tag of $40 plus billion being only one among many economic and ideological deterrents.

The CRTC should give serious consideration to imposing ‘functional separation’ requirements on the big 5; it would be a good compromise. Not to hot, not too cold — the Goldilocks solution to vexed Internet policy issues.

Just to be churlish, we can also note that Shaw’s plan to convert analog tv channels to digital ones is not a bright, new idea. It is long overdue and coincides with the mandatory switch over to digital broadcasting for the rest of the broadcasting system in August 2011. Shaw’s acceptable use policies are also just as abhorent as they have always been, setting out

  • restrictions on what people can and cannot do with their Internet connections.
  • broad assertions of its authority to act on behalf of copyright claims a
  • its right to make ‘editorial judgments’ about all kinds of content hosted on and moving through its pipes.
  • and to own user created content.

Shaw has moved the ball forward and we should not only hope, but push to have at least the minimum bar it has set met by the remaining ‘big five’ ISPs in Canada that control access to roughly 95 percent of Canadian subscribers: Bell, Rogers, Quebecor, Telus and Cogeco.

The advances so far did not come from the good graces of Shaw. They came from an extraordinary confluence of pressure that has been put on Shaw and all of Canada’s ISPs with greater and greater intensity over the past four to five years.

The three most significant pressures shaping the flow of events are probably:

  • Open Media and the massive public that it helped to mobilize;
  • the ‘tweet’ in the night by then Industry Minister Tony Clement scolding the CRTC for its UBB decision in January of this year and the upcoming hearings to be held by the CRTC this July into the matter which have ensued partially as a result;
  • and crucially, the pressure from investment bankers, who saw mounting public anger and the threat of regulation as a potential danger to Shaw and the others’ bottom line and their ability to raise capital.

Ultimately, while we should appreciate what Shaw’s announcement has put on the table, this should not divert our attention from the fact that much remains. Nor should it give Shaw a free pass when it comes to the CRTC’s upcoming hearings on vertical integration.

Canada in the Minority on Vertical Integration, UBB

My second column for the online edition of the Globe and Mail, was just published tonight. 

The article picks up on recent trends with respect to media and Internet concentration in Canada and which came to head last week as Bell, Shaw, Quebecor, Rogers, Netflix, the Canadian Media Production Association, Open Media and hundreds of others filed documents detailing the stance they will take at crucial CRTC hearings on vertical integration and Usage-Based Billing in June and July.

This entry repeats the story with a few additional links and two additional figures to fill out the picture presented in the Globe and Mail version: the first illustrates the growth of the ‘network media economy’ over the past quarter of a century and the second shows concentration trends across eight segments of the media, telecoms and Internet industries between 1984 and 2008.

At stake in the upcoming hearings is control over a set of industries – what I call the ‘network media industries’ – that have grown immensely from $42.3 billion in revenue to nearly $74 billion between 1996 and 2009 (adjusted for inflation), as the following figure shows:

Figure 1: The Growth of the Network Media Economy in Canada, 1984-2009*

Also at stake is whether the ‘business models’ of the dominant telecom and media giants or the open and decentralized principles of the Internet and digital media will set the course of development in the decades ahead.

Lastly, the issues are also fundamentally about media concentration, a hotly contested subject that is as important as it has ever been, but one that is usually compromised by a lack of evidence. Consequently, fiery debates typically take place in a vacuum and closely track ideology rather than evidence.

To take one example, the existence of 500 ISPs suggests a highly competitive market. CRTC data, however, point in the opposite direction, with the ‘old’ telephone or cable providers serving 95% of subscribers and the ‘big six’ alone accounting for three quarters of the market: Bell, Shaw, Rogers, Telus, Quebecor, Cogeco.

My own data shows that concentration climbed sharply between 1996 and 2004, and has stayed remarkably flat ever since, with over two-thirds of Internet access revenues going to the ‘big six’. While not quite as high as the CRTC’s figures, the upshot is still a few players competing in oligopolistic markets.

The problem with the CRTC’s data is three-fold: it focuses only on the top four or five players. It is presented inconsistently from one year to the next. It relies on information that it refuses to disclose. Last year, I filed several Access to Information requests to obtain this data, but was refused each step of the way.

I did so as the lead Canadian participant on the International Media Concentration Research Project – a project led by Eli Noam, a renowned Professor of Economics and Finance, and media expert, at Columbia University. The project includes more than forty researchers from across the political spectrum who are systematically collecting data for every sector of the telecom, media and Internet industries since 1984.

So, what does the evidence for Canada show?

First, that each sector of the media is concentrated by standard measures. Second, that patterns follow a U-shape, with concentration falling in the 1980s, rising sharply from the mid-1990s until peaking in the early 2000s, and staying relatively flat since then. Third, that concentration is high by global standards and more than twice as high than in the US. The trends are shown in the figure below:

Figure 2: Media, Telecom and Internet Concentration, 1984-2008 (Concentration Ratios)

These trends have been encouraged for several reasons. First, there can be no doubt that the Internet has vastly expanded the range of expression available, but this reality often overshadows the fact that several core aspects of the Internet are prone to concentration (e.g. ISPs, search, social networking sites, etc.) and that the biggest players now control an ever-expanding stable of outlets.

Formal rules on media concentration were adopted for the first time in 2008 by the CRTC and this is a far cry better than none at all. However, by using the same criteria used to regulate banking and granting frequent exceptions, the rules are weak and detached from the values of free speech and democracy.

Second, there is too much deference to claims that the traditional media are ‘in crisis’. Such claims are generally false (see here).

In fact, ‘old media’ such as television have grown impressively and new media markets have been a boon for established players. The vast majority (95%) of Internet access revenue ($6.5 billion), for instance, goes straight to the incumbents’ bottom-line.

Companies that have crashed and burned, notably Canwest, were actually profitable. However, saddled with debt, it could not weather the short-term decline in revenues caused by the global financial crisis and forced into bankruptcy in 2009-2010.

Third, the myth that Canada’s small media market requires big players with deep pockets further underpins consolidation. However, Canada has the eighth largest network media economy in the world, after France and Italy and just ahead of South Korea and Spain.

Independent ISPs, tv channel owners (the Weather Channel), online video providers (Netflix) and others have consistently claimed that the big players use their dominant positions to crush competition. The CRTC, despite its own analysis, however, has failed to deal with media concentration head-on. The Harper Government’s directives to rely on “market forces to the maximum extent feasible” have further disarmed the regulator.

These issues will no doubt come to a head during the vertical integration and Usage-Based Billing hearings. Yet, there is every reason to be skeptical about what can be accomplished given that this is a classic case of “bolting the barn door after the horse has already left the stable”. Industry Minister Tony Clement’s recent declaration that vertical integration is the way of the future further reinforces the perception.

This is not the way of the future, however, but of a discredited past. In the U.S., for instance, the fully integrated multimedia conglomerate has become the exception (e.g. Comcast/NBC-Universal) after the disastrous AOL Time Warner merger, the break-up of Viacom-CBS, and collapse of the ‘old’ AT&T. Indeed, the reign of sprawling media conglomerates is in retreat in almost every other developed capitalist democracy.

With events in Canada running counter to trends elsewhere, it is time to think about breaking-up Bell/CTV, Shaw/Global (Corus), Rogers/City-TV and Quebecor/TVA (Sun TV) into two separate parts: network infrastructure and content services. This is called ‘structural separation’ and under this scenario these entities would become wholesalers of network facilities and retailers of their own content and services.

They would sell access to their networks to other content providers and ISPs on equal terms. This would give them an incentive to increase revenues by intensifying the use of their networks by others instead of by prioritizing services and content they own. Over a century of experience teaches a simple rule: when allowed to combine network ownership with the content delivered over them, incumbents will always confer advantages on themselves that they deny to others.

Steps to address this reality are already in place in the U.K., Australia, New Zealand, Singapore, and Sweden. There may be circumstances in Canada that require unique adaptations of the separations principle. However, only by hiving off control over the medium (networks) from control over the message (content) will innovation, competition, free speech and an open network media ecology trump the incumbents’ vested interests and dogma.

Two Open Broadband Internet Proposals vs the Pay-per Internet Model

Two new research papers released in the past week add insight into the Usage-Based Billing (UBB) debate in Canada, or what I have been calling the evolution of the pay-per Internet model. The papers are by Michael Geist, the University of Ottawa law professor, and by Bill St. Arnaud, the Chief Research Officer for CANARIE for 15 years (until 2010) and a telecoms engineer. Geist’s paper can be found here, while St. Arnaud’s paper is here.

Both papers were commissioned by Netflix, in light of the fact that developments in Canada are sucking it and others such as Google, Apple, and so forth deeper and deeper into digital media policy issues. All are becoming fixtures in CRTC proceedings. Both papers bear one significant subtle influence of this sponsorship (as I will discuss briefly below), but other than that provide extremely valuable help wading through the technological, economic and regulatory issues surrounding the UBB debates.

Geist and St. Arnaud are both convinced that the CRTC’s plan to revisit it’s January 25th UBB decision that ignited the firestorm over the pay-per Internet model in Canada is far from sufficient. As Geist indicates, a whole series of decisions over the past few years will have to be revisited and the regulator and policy-makers are going to have to deal head-on with the fact that underlying these problems is a heavily concentrated market for Internet access in Canada. I feel similarly, and have laid out the ‘long march’ to the pay-per Internet model in an earlier post.

Playing on earlier decisions regarding the incumbent telecom and cable companies use of technical measures to ‘throttle’ different types of Internet uses that they argue put excessive strain on their networks — the so-called Internet Traffic Management Practices — Geist’s first proposal is for a series of what he brands IBUMPs (Internet Billing Usage Management Practices). The basic gist of which is to make the incumbents’ billing practices for Internet services easy to understand and reasonable when it comes to so-called excess usage charges.

His second set of proposals aim to promote greater competition in the Internet access market. This includes allowing more foreign competitors to enter Canada.

It also involves allowing smaller ISPS and Content Distribution Networks (see below) more scope to interconnect with the incumbents’ networks much deeper in the network and closer to subscribers’ homes (especially the cable companies, who have dragged their heels on this matter for more than a decade). Finally, it means cultivating a greater role for alternative Internet access providers, from city-owned networks, to cooperatively run ISPS, as well as expanding the role of provincial and federal broadband development programs.

As an interesting aside, the Liberal Party’s platform announced on April 2nd as part of the current federal election campaign effectively doubled the commitment that the Liberals would put into expanding broadband networks in remote and rural areas compared to the modest $225 million announced by the Conservatives in 2009. The Quebec Government went even further in the 2011-12 budget passed in March, where it announced that it will invest around $900 million in bringing very high speed Internet access to all Quebecois (see here at pages E.93-96; also see St. Arnaud).

It did not specify the exact capacities of the network, but its references to similar plans in Australia, France, Finland and the US suggest that the bar is high, probably around 100 MBps. Neither the Liberal Party’s election platform nor even the much more ambitious Quebec Government’s scheme are equivalent to or the same as Australia’s National Broadband Company initiative, and nor should they be.

However, they do underscore (1) the under-development of broadband Internet in Canada, (2) the lack of competition offered by the current market, and (c) a willingness to rely on a variety of providers, from the traditional incumbents, to municipalities and provincial governments to improve on the situation at hand. They also suggest that Geist’s proposals, far from pie-in-the-sky, are grounded and with some real, even if tentative support in some crucial quarters.

Bill St. Arnaud’s paper also offers much food for thought and complements Geist’s paper very well. He makes three key points.

First, the massive growth of video online is not necessarily causing congestion. Huh?  How could this be, with clear evidence that the growth of video traffic has been stupendous, ranging from 50 to 100 percent per year and with continued high rates of growth expected in the next few years ahead?

This is because sources responsible for this massive increase are increasingly turning to Content Distribution Networks that, basically, bypass the public Internet and deliver their content as close to their subscribers as possible. These so-called Content Distribution Networks are not only being deployed by outfits such as Netflix, but other large Internet content and service providers, from Amazon, to Google and Facebook. The basic point is that they take traffic off the network for much of the distance a message has to travel.

Second, to the extent that congestion is a problem, this is an outcome of decisions made by the incumbent telecom and cable companies about how to apportion the capacity of their network. As Geist quips in his paper, the ‘chicken roasting channel’ recently introduced by Rogers, for instance, is just so much bandwidth allocated to that ‘service’ rather than to the Internet.

Third, and this is where I think St. Arnaud has an amazingly powerful and clear point, the incumbent telecom and cable companies — the ‘big six’, as I have called them: Bell, Rogers, Shaw, Telus, Videotron and Cogeco — appear to have no problem with congestion when it comes to launching their own video content services delivered over the internet, e.g. CTV.ca, globaltv.ca, TVA.ca, etc. Congestion is only caused by other providers’ video services.

Lurking in the background of all this is that we’ve seen this all before. A few years ago, P2P/file-sharing and music downloading sites were the culprit; now the target is online video services. The cable companies have been especially remiss in dragging their feet for a dozen years or more on allowing independent ISPs to access their distribution infrastructure. Despite being required to do so before the turn-of-the-century, the cable cos have thrown one obstacle after another in the path of ISPs requiring last mile access through cable facilities to gain access to subscribers.

All said and done, Geist and St. Arnaud’s paper respectively do a great service. They are timely interventions that help us understand the issues at hand and, if successful, they may help to frame the debates that take place at the hearings that the CRTC has scheduled to revisit the UBB decision in June.

However, we should not hold our breadth on that, and in that regard these papers do a real good job at holding the regulator’s feet to the fire (see my earlier post on this point). The CRTC has a very broad remit to regulate in these matters, as the Telecommunications Act (1993) (sec. 27 (5)) makes clear, but has chosen to draw the proverbial camel through the eye of the needle. With the magnitude of the issues at stake, this is unacceptable.

However, I also think that both papers need to go even further in at least four ways. First, both papers make claims about the highly concentrated state of the telecom, cable and Internet access markets in Canada, but offer little to no data to illustrate and support these claims. Good quality data is now available on these points and they should use it.

Second, both papers focus on the UBB issue, or what in regulatory parlance is now called an economic measure for managing congestion on the Internet. However, the CRTC’s Internet Traffic Management Practices decision (2008) sets out a hierarchy of preferences for dealing with such problems when they can be shown to exist: (1) network investment, (2) economic measures such as UBB, and (3) technological measures, aka throttling.

Neither paper says much, if anything, about the top priority: network investment. Why? At between 15-18 percent of revenues, current levels of investment in their networks by the big six is low by historical and global comparative standards (although in line with similarly low levels in the U.S.). And this despite the fact that the Internet represents a massive new source of revenue ($6.5 billion in 2010).

Third, neither paper pushes as hard as they might on how the use of UBB and the allocation of network capabilities by the incumbents to their own services may constitute a form of “unjust discrimination”. The issue is not totally ignored by any means, but I think it could be pushed further and that doing so is important not just to the question of whether or not we’re going to be stuck with a highly concentrated Internet market and the pay-per Internet model in Canada, but concentration across the whole sweep of the network media ecology, from traditional media to the Internet.  Let me explain. I’ll conclude by returning to my fourth point.

Insofar that these papers deal with ‘unjust discrimination’ they seem to have in mind section 27 of the Telecommunications Act that specifically outlaws such practices. It is a good victory to be had, if it can be had. And the CRTC has, as I stated above, much discretion in how it goes about making such determinations. To the extent that it has chosen to blinker itself is a problem of the first order.

However, it may be possible to go even further and look to the next clause of the Telecommunications Act, section 28, that specifically makes the issue of discriminating between video services, or broadcasting as such things were known when the act was written nearly 20 years ago, a matter of potential concern. Indeed, the CRTC has enormous authority under this section to deal with the issue of discrimination while meeting other objectives of the Broadcasting Act.

Herein, however, may lay the rub, given that both of the papers being discussed here were funded by Netflix, and the last thing that it and other services like it (read: Google, Apple, etc.) want is to be defined as broadcasting services, which could happen if we were to assign the ‘online video distributor’ label on them like the FCC and Dept of Justice did recently in the US in relation to the Comcast/NBC merger.

I, too, am very leery about slapping the label of broadcaster on such entities because of all that would mean with respect to CanCon rules and the like. The CRTC has always indicated that it believes that it has the authority to regulate online video distributors under the Broadcasting Act (see its seminal 1999 new media decision here), but up to now has not seen Internet television services as being significant enough and too experimental to actually do so.

The question of whether ISPs could also be brought under the purview of broadcasting regulations so that, just like cable and Direct-to-Home satellite providers, they too could be required to contribute to funding and displaying CanCon has also been hotly contested. That route seemed to be foreclosed by a Federal Court of Appeal decision in 2010, but that too has now been appealed to the Supreme Court of Canada.

Now, the incumbents en masse are pushing hard to have OVDs like Netflix, Apple and Google regulated as broadcasters just like their own broadcasting-related services. The irony here is that for Netflix to push its case on UBB as hard as possible, adding some water to its wine by accepting some such designation could go a very long way to putting a stop to the discriminatory practices that are now hobbling its access to Canadian subscribers.

While this is far beyond the scope of what I can say here, perhaps a new designation along the OVD line devised in the US might be imported into Canada for just such purposes. That would mean distinct treatment from broadcast television in general, but also some obligations to open up their services to Canadian media creators.

It might also allow a much more forceful push against the anti-discrimination rules of not just one section of the Telecommunications Act, but both sections 27 and 28. Done right, this need not ‘trap’ new players like Netflix in the maw of outmoded aspects of the Broadcasting Act. Instead, it could potentially help to usher in an entirely new media model where all of the bits and pieces that make up the traditional media model are disassembled and reassembled anew in light of the realities of the digital network media industries in the 21st century.

And finally to return to my fourth critique of the Geist and St. Arnaud papers. Both papers target the upcoming UBB decision. This is great, but I think it might be helpful to try and kill two birds with one stone by putting another potentially even more important upcoming regulatory review in their sights: namely, the CRTC’s hearings scheduled for June 2011 on vertical integration.

The ‘vertical integration’ hearings were scheduled late last year but given added impetus when the CRTC approved Bell’s acquisition of CTV last month. The idea of holding such hearings reflects the fact that Canada now also has the dubious honour of standing alone in the extent to which fully-integrated media conglomerates have become the norm. In the U.S., the fully integrated media conglomerate has become the exception (e.g. Comcast/NBC-Universal) after the disastrous AOL Time Warner merger and is pretty much in retreat in almost every other developed capitalist democracy.

There is indeed every reason to be very skeptical about these hearings given that they are a classic case of “bolting the barn door after the horse has already left the stable”. However, given that the use of UBB is completely tangled up with the crucial question of whether or not the “big six” media conglomerates in Canada — Bell, Shaw, Videotron, Rogers, Shaw, Telus (the latter to a lesser extent) — are using the pay-per Internet model to disadvantage competitors and to protect their own traditional television services, as well as their recently-minted internet video services, we must keep our eyes on the full range of big issues before us.

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