Last week, 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.
At stake 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). 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.
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 per cent of subscribers and the “Big Six” (Bell, Shaw, Rogers, Telus, Quebecor, Cogeco) alone accounting for three quarters of the market.
My own data shows that concentration climbed sharply between 1996 and 2004, and has stayed remarkably flat ever since, with more than 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.
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 per cent) of Internet access revenue ($6.5-billion), for instance, goes straight to the incumbents’ bottom-line.
