CRTC misses the local TV mark, and then some

CRTC Chair Jean-Pierre Blais had every opportunity to wow an audience gathered in a London, Ontario hotel to hear the first of a number of planned announcements on the future of local television in Canada.

What attendees, members of London’s Chamber of Commerce as well as representatives from the local and regional business and media community, heard was decidedly less impressive. Call it Canada’s regulatory version of Deflategate.

Blais announced three key decisions, and each one of them reinforced the difficulties the CRTC faces in dragging Canada’s television landscape into the 21st century without destroying a still-functioning legacy industry.

1 - Local television stations must continue to maintain their over-the-air broadcast capability

Despite broadcaster complaints that maintaining their transmitters has become prohibitively expensive just as advertising revenues continue to trend downward amid a wholesale shift to online media, the CRTC refused to budge on this issue. While local outlets would generally love to shut their transmitters down and redirect the money saved into local programming, the CRTC is forcing them to keep them powered up.

Blais made it clear that the local stations are still stuck broadcasting free signals to the shrinking minority of digital antenna-wielding consumers - the CRTC’s 2013 Communications Monitoring Report pegged it at 6 per cent - who don’t wish to pay for cable or satellite television subscriptions or get their content online.

The decision leaves local stations between the proverbial rock and hard place, forced to maintain obsolete and expensive infrastructure to service a declining audience while they struggle to fund programming and staffing. Expect further job and content cuts in the months to come as more stations finally run out of runway thanks to the CRTC’s refusal to push the timeline for transmitter shutdowns.

2 - Super Bowl fans will get to see American ads - starting in 2017 - but SimSub stays

Every Canadian hates being forced to watch homegrown commercials on shows that are simultaneously broadcast on both American and Canadian channels on their cable or satellite grid. Because Canadian distributors must use the Canadian feed for both Canadian and American channels, viewers north of the border are stuck watching Canadian ads. The reason is known as simultaneous substitution, or SimSub, a rule that’s been in place for decades to protect Canadian broadcasters by maximizing their opportunity to sell ad inventory and not lose audience attention to dominant American broadcasters.

SimSub also benefits Canadian advertisers, as it delivers a larger potential audience over a wider range of channels. While most of us spend the rest of the year fast-forwarding our PVRs through the typically forgettable commercials, the Super Bowl is different. It’s the one day every year when viewers actually want to watch the ads, which thanks to a massive global television audience are more like high-concept mini-movies than the usual TV spot.

The move appeases Canadian consumers, but comes off as another classic Canadian compromise that fails to give local stations any differential advantage.

3 - Telecom companies must stop giving their content preferential treatment via apps

Blais had a rather pointed message for carriers who use their mobile apps to charge customers by the hour for viewing televised content instead of by the megabyte or gigabyte: Stop it.

“In our opinion, providers such as Bell and Vidéotron that offer linear content via their mobile TV apps cannot provide undue preferences or advantages,” Blais said in his speech. “We therefore ordered Bell and Vidéotron to eliminate their unlawful practices.”

As video content is data-intensive, the pay-by-the-hour arrangement lets consumers watch as much as they want within those timelines without worrying about using up all their data. Blais said Bell’s and Vdotron’s mobile apps that bypass normal usage limits give them an unfair advantage over other carriers, as customers of competing operators would be forced to pay by the amount of data consumed.

At first glance, the move may not seem all that notable, but it is seismic in its own way because it’s the CRTC’s first real indication of where it stands on net neutrality. By striking down carriers’ attempts to implement a preferential payment system, the regulator has made it clear it has no intention of allowing anything less than equitable access to all Internet resources. For now, at least, Canada’s Internet has no user-pay high-speed lanes, and observers say they’re pleased.

“This is a big win for wireless users across Canada,” Josh Tabish, Campaigns Manager for OpenMedia.ca said in a statement. “We’re very happy to see the CRTC taking steps to stop Big Telecom unfairly charging people more to access alternative content and services. Let’s be clear on one thing: the telecom companies were fighting for new tools to squeeze even more money out of mobile users in Canada – but today, they lost that power.”

Not far enough

As refreshing as it is to see the CRTC finally wade into the net neutrality debate with an actionable response, it doesn’t do enough to make up for the fact that it hasn’t taken the concrete, decisive action necessary for local stations to survive and thrive.

Expectations were high, after all, in the leadup to today’s presentation. Local television stations have been screaming for years that advertising revenues are no longer sufficient to support them. While the CRTC planned, listened and planned some more, Internet-based competitors have siphoned ever larger slices of an advertising pie that once belonged almost exclusively to conventional media.

Harder decisions to come

Local operators have asked for - and been denied time and again - the right to charge cable and satellite distributors a so-called “fee for carriage” for the right to broadcast their signals to their subscribers. Unlike specialty channels, which receive substantial portions of their revenues in the form of carriage fees, local stations are stuck giving it away for free. At the same time, demands for an improved funding formula for local programming - which would allow stations to deliver more community-based programming such as news and public affairs - are still being met with silence. As the CRTC gets set for the next in an expected series of similar presentations, its inaction on the truly fundamental issues facing Canadian broadcasters is deafening.

The CRTC may have gotten away with placating the masses with U.S. Super Bowl ads and an extension of free over-the-air television access, but it failed to deal with the elephants in the room. As Canadians increasingly seek their content fix online, the CRTC may find itself in the unenviable position of eventually delivering the goods, only to find that that they’re simply too late.