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Dream big: some modest reforms for Canada's media landscape

We live in a special time, a time that Ron Diebert and Rohan Rohozinski of the Citizen's Lab at the University of Toronto call a constitutive moment. Actions taken now will lock in the look, feel, security parameters and market structure of the media space for years to come.

We need to pay attention because we have peculiar arrangements for the telecom-media-Internet (TMI) industries in Canada. They are concentrated by historical standards and by those of liberal capitalist democracies in general.

Unlike elsewhere, eight of the biggest companies in Canada, which account for three quarters of all TMI revenues, are family-owned and controlled: Thomson Reuters (Globe & Mail), Shaw, Rogers, Quebecor (QMI), Cogeco, Astral, Toronto Star and Transcontinental. And unlike most modern firms, just a few are shareholder-controlled: Bell, Telus, MTS Allstream, Post Media. The rest are public service media, or state-owned outlets, as QMI owner Pıerre Karl Peladeau likes to deride them: the CBC, NFB, SaskTel and CANARIE. Our regulator is weak, hedged about by Cabinet Directives, and unwilling to act (at least not much).

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We are amongst the most wired citizens of the world, but the arrangement of TMI facilities in Canada are substandard; not from the vantage point of utopian ideals, but of a digital free press in a liberal capitalist democracy. Ours is a kind of backward media capitalism, and that must change.

While I sleep in the days ahead, three issues will come to a head:

  1. On July 11, the CRTC hearings will decide the fate of the pay-per model of the Internet (UBB and bandwidth caps) pioneered and imposed by the big six ISPs. All hell broke loose last January when the incumbents got regulatory approval to pin their hated pay-per model on the independent ISPs that connect the five per cent of Internet users not served by the incumbents.
  2. We will see if the CRTC has the wisdom and courage to pick the right tools to effectively deal with vertical integration and concentration in the TMI industries.
  3. The CRTC "fact finding inquiry" will examine whether online video distributors such as Netflix, YouTube, AppleTV will be freely accessible or regulated like broadcasters.

By my estimation, each hearing involves about a hundred submissions of about 30 pages each. That's nearly 10,000 pages altogether. Sadly, the CTRC's "truly primitive" website - as New York City's Cardozo Law School Professor Susan Crawford refers to it - will make it nearly impossible for the average Canadian to stay on top of all these reports.

So who has time for this? The incumbents and their well-heeled lobbyists, that's who! I've been on sabbatical for the last year and I'm exhausted tracking this stuff day after day.

Others, such as the Public Interest Advocacy Centre, participate 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 fact finding expedition on new media isn't a real hearing, so there goes their funding

The rabble-rousing group, Open Media, is holding its fire 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. It's boycotting the fact-finding mission not only because resources are stretched thin, but also 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 in a kind of regulatory trench warfare. Rather than calling for expanded regulations, the CBC and NFB stated that they just want to be able to deliver their content to as many people, anywhere, any time and across as many platforms and devices as possible. Mirko Bibic, Bell's regulatory front man, called this idea "preposterous" at the vertical integration hearings two weeks ago.

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The 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.

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 for free to the dominant daily newspaper in each town across the country.

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. It was also a useful tool for the companies' own efforts to stitch up their lock on the telegraph business. Crucially, however, it was a menace to network competition, rival news services and a diverse press.

Any rival news service that dared 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.

Leveraging their control over the wires, the telegraph companies choked the messages flowing through them. As one muckraking journalist, W. F. Maclean, wrote in The World, "attempts on the part of public service [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.

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The BRC didn't wilt for a moment but shot back, saying it was compelled by law to ensure the 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."

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 and we now live in an age of information abundance, not scarcity. Yet, as Tim Wu's Master Switch, and the mounting evidence before us, attests, the logic of leveraging content and networks to confer advantages on one's own services is as strong as ever.

Australia, Argentina, Belgium, Brazil, Britain, New Zealand and many other countries are dealing with their own contemporary experiences of networks being used to trample competition competition and diminishing the range of voices as a result. Australia created the National Broadband Company in 2009 with $43-billion in funding to spur competition and open networks, for instance.

In Canada, 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 of roughly $30-million per year, 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 the organization'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 on a strong regulator to bring BT, kicking and screaming, into the new regime 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 think big, but between my dreams and reality, there is a middleground 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 and involve a middle-of-the-road choice, not a radical one. They force the market to deliver a minimum level of social justice, but their primary aim is to cultivate a free press fit for a liberal capitalist democracy, rather than chasing after abstract utopian ideals or bowing to the status quo.

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