Times are tough in Canada's broadcasting sector. One of the country's major networks, CanWest Global, recently filed for bankruptcy protection; cable companies and broadcasters are taking out full-page ads in their ongoing dispute about who pays for programming; and the federal government recently negotiated a reduction in the regulatory fees paid by both groups.
The pressure on the broadcasting sector isn't surprising. The recession has spared few sectors, and advertising dollars have dried up.
These temporary factors, however, are not the most worrisome influences. The communications business is also being affected profoundly by the Internet, in a way that is not only undermining current business models but is also calling into question the traditional tools to encourage the creation of Canadian news and entertainment programming.
Recent tracking reports by Pew Research Center in the United States suggest that a growing number of people actively seek TV shows and movies online and turn increasingly to the Internet as their main source of news.
While the Canadian Radio-television and Telecommunications Commission recently characterized the Internet as a complement to traditional broadcasting, rather than a substitute, the U.S. trends suggest a different reality is on the horizon, one that will render ineffective many of the CRTC's tools.
Air time quotas for both domestic and local programming become meaningless in an Internet environment, where consumers can find whatever they want, whenever they want. When they can be easily bypassed, rules obliging cable companies to distribute particular broadcasters to all subscribers, or restricting the supply of certain categories of programming services, lose credibility as a means of promoting Canadian content.
In years past, each new wave of technology, including the arrival of cable and satellite broadcasting, spurred similar concerns about the effectiveness of the regulatory framework. Each time, the government generally responded with more regulations.
Of course, it is possible for Canada to continue to deal with the many challenging broadcasting issues on a piecemeal basis. But the disruptive effects of the Internet on virtually all sectors suggests the time has come for a comprehensive review of the objectives of our regulatory framework, in the broader context of a strategy for a digital economy.
A central feature of this strategy should be to set aggressive targets for universal deployment of next-generation broadband, which is vital for Canada's economic future. A 2009 study by the World Bank suggests that an increase of 10 per cent in broadband penetration in high-income countries correlates with GDP growth increases of 1.2 per cent.
Many countries with which Canada regularly compares itself have developed comprehensive strategies to reap the benefits of a digital economy. Australia, for example, has committed to invest up to $43-billion (Australian) to provide its citizens with next-generation broadband services, with 90 per cent of the population looking forward to speeds up to 100 times faster than current standards.
As the Internet inserts itself into all parts of Canada's social and economic fabric, the justification for such government intervention becomes more and more compelling.
This is not the time to exhibit our normal "passion for bronze" by taking comfort in our progress to date. Rather, we should focus our collective abilities on finding ways to be at the top of the podium in this critical race for economic prosperity.
Accelerating the deployment of next-generation broadband will put further pressure on the broadcasting sector. That's why a Canadian strategy must find forward-looking ways to finance and distribute domestic content that serves a broad public service and might not exist in market-based systems.
The strategy should harness the energy of our creative sector through copyright reform; it should also find ways to make the transition from current forms of market intervention to less intrusive, targeted tools that will be effective in an Internet-dominated communications environment.
It is crucial that Canada co-ordinate changes to broadcasting regulations with a broader strategy of meeting the challenges of the digital economy.
In both Britain and Australia, changes to the mandate of the regulatory agency are part and parcel of the strategy to build out of the next-generation infrastructure. As well, the governments have identified a host of emerging issues, such as the need to ensure digital-media literacy and the means for dealing with harmful content on the Internet (for which additional regulatory mandates may be appropriate).
In Britain, long-standing issues about the role of the public broadcaster, the future of local broadcasting and the need for domestic dramas are being considered holistically, rather than on a fragmented basis.
It is easy to be distracted by the immediate, pressing needs of the Canadian broadcasting industry. But addressing them in too narrow a context will only delay the inevitable re-evaluation of our overall regulatory framework and may divert our attention from a more significant challenge - implementing a Canadian strategy for the digital economy.
Sheridan Scott is a partner at Bennett Jones LLP in Ottawa. Previously, she was the federal Commissioner of Competition, and held executive positions at Bell Canada and the CBC.