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CRTC Chairman Konrad von Finckenstein pauses while speaking to the Canadian Press in an interview at the CRTC headquarters in Hull, Quebec on Monday, March 22, 2010. The CRTC is blocking companies from offering television programs exclusively to their mobile or Internet subscribers in new rules for cable and telecom operators that also own TV networks. (Pawel Dwulit/Pawel Dwulit/THE CANADIAN PRESS)
CRTC Chairman Konrad von Finckenstein pauses while speaking to the Canadian Press in an interview at the CRTC headquarters in Hull, Quebec on Monday, March 22, 2010. The CRTC is blocking companies from offering television programs exclusively to their mobile or Internet subscribers in new rules for cable and telecom operators that also own TV networks. (Pawel Dwulit/Pawel Dwulit/THE CANADIAN PRESS)

Winners, losers and opportunities lost in the CRTC vertical-integration ruling Add to ...

A lot was at stake in the CRTC’s hearings on vertical integration in the telecom-media-Internet industries held in June. The big four vertically integrated media companies in Canada — Bell, Rogers, Shaw and Quebecor Media (QMI) — said there was no problem, and proposed that, at most, the CRTC should accept some amalgamation of their proposed code. Everybody else disagreed: Telus, CBC, Access Communications, public interest groups, Channel Zero, the Weather Channel, and in a qualified way, Astral.

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The commission came out with its new rules on the subject Tuesday. You can see the Globe story here, the press release here or the full decision here.

Arguments were made about small markets needing big media players, and that argument front-ended the CRTC’s press release today. As I’ve said in previous posts, Canada’s total media economy is not small, but the eighth largest in the world, and growing fast. We don’t need “big media” to coddle small outfits, but rather the carriers provide clear channels and the most open media set-up possible, full stop.

Rogers carved out a somewhat distinct position given that with its CityTV network being the smallest of the big four’s holdings (QMI/TVA, Bell/CTV, Shaw/Global (Corus), suggesting a code with a bit of teeth so that it could feed its own mobile and Internet operations. A complete list of positions is available here.

So, what did we get? The CRTC announced six key measures, but there’s at least two big elephants in the room that we need to consider, too. Here’s the six headline items:

  1. The big four — Bell, Shaw, Rogers, QMI — cannot offer TV programs exclusively to their own mobile or Internet subscribers. They must make them available to Telus, Wind, Access Communications, MTS Allstream, etc. Score: Good (para 22).
  2. Programs created specifically for Internet or mobile distribution by the big four can be exclusive. Score: Umm, I suppose it’s a good one (para 23).
  3. No disrupting people’s experience in front of the telly. In other words, no black outs like the kinds that have bedevilled relationships between Bell and Quebecor in the past and which have periodically erupted in the U.S. between, for example, Time Warner and Comcast on the distribution side of the business and Disney, Fox (NewsCorp) and Scripps Howard on the content side, when things get nasty over carriage (transmission) and programming rights. Score: Good (para 104).
  4. Status quo maintained with respect to independent television producers access to schedules of the big four’s specialty channels (25 per cent) and broadcast schedule. Score: Just satisfactory.
  5. End of “block-booking,” the practice of tied selling in which access to one channel is tied to taking a block of several channels. It was outlawed in the U.S. for Hollywood in 1948 (United States v. Paramount Pictures Inc, 334 US 131), and it came to television in Canada today. Score: Win (para 63).
  6. CRTC admonished the vertically integrated companies to come up with a broader range of “pick and pay” models within six months allowing people to order television and programming services à la carte. And what happens if they don’t? Another round of hearings, that’s what. Score: Pass with room for improvement. I don’t know, this one just seems to punt the issue down the line.

So, on points one, two, three and five, some clear “wins” for competitors and consumers. Point four holds the line, while point six will require us to wait and see if the different players can sort things out amongst themselves. Otherwise, well, more consultations, hearings and decisions. Indeed, the CRTC points to many instances where additional consultations, hearings and decisions might be needed if the parties can’t sort things out by themselves.

One particular issue worthy of mention here is the CRTC’s efforts to push Bell, Rogers, Shaw and QMI to share subscriber info collected and stored in their set-top boxes with independent programmers (para 141), albeit with due deference to privacy laws and concerns. The threat of yet another round of consultations on just this issue also now hangs in the air if the two sides are unable to work things out themselves.

And how about those elephants-in-the-room, you ask? There’s two, I’d suggest, and they’re inter-related.

First, references to the existing provisions in the Telecommunications Act (1993) – the common carrier sections 27, 28 and 36, and specifically so when it comes to broadcast programming – are completely ignored, referenced only in passing. Vertical integration has rendered these a bit of a fiction, but the CRTC has enormous powers under these sections. That it has not leaned on them at all shows how far the common carrier/network neutrality principle and the rule of law have been eclipsed by a “cobbling-things-together-as-we-go-along” approach. Even from the perspective of “the market,” I don’t think that can be a good thing.

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