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Broadcasting Notice of Consultation CRTC 2017-359

The Internet Society, Canada Chapter responds to the CRTC’s questions as follows.

Q1. How is the growth in online audio and video consumption changing the business models of program creators and distributors? What are the new models?

The business model of broadcasting implies that there is such a function as a broadcaster. The broadcaster held and still holds important legal privileges predicated on a licence, and that licence was originally justified on the ground that the broadcaster used an important public resource, the airwaves.

The Internet is an alternative technical system that has bypassed most of the limitations of the preceding technical systems, such as broadcasting. From its inception the Internet was designed around the attributes of computers, in contrast to telephony and broadcasting. It has enabled people to reach resources on the Internet through an addressing system that combines a very large number of IP addresses and a very large number of domain names that allow people to find those resources, and with search engines that efficiently locate those resources even if the name and address have been forgotten or are unknown.

The ability of anyone to reach those resources, audio, video, or of any nature whatever has displaced the centrality of the broadcaster, and the distribution system that was assimilated to broadcasting, such as cable television, know to the CRTC as the BDU.

Q2. Content is generally monetized through advertising, subscription and/or transaction revenues. How are new business models shaping the evolution of these revenue sources?

The Internet has allowed a direct relationship between customers and producers of cultural content. It is amazing to watch the improvement of “television” – as it used to be known – once people started paying for it directly, rather than through advertizers. Better budgets, the ability to watch consecutive programs at times of one’s choosing, better quality writing: all these and more characterize video entertainment through the Internet. The intelligence built into computers allows for the distributors of net-based video to calculate precisely how many people are watching what programs. The accuracy of the feed-back leads to television people want to watch, and the diversity of styles of story-telling is leading us into a great age of “television”. In Canada we had record-setting levels of scripted television under development in 2016. In the United States, the peak of scripted television under development was achieved in 2015, and production continues at high levels. Clearly the Internet has stimulated rather than suppressed artistic production.

Q3. Many new business models are global. How will the growth of a global content rights market affect business models?

The Internet Society Canada Chapter has no views on this matter.

Q4. Given Canadians’ ever-increasing demand for data to stream audio and video content on fixed and mobile broadband networks, how will these networks keep pace with future capacity requirements, particularly in rural and remote areas?

The carriers will build out networks to serve their customers, as they always have. 99% of Canadians are already reached by wireless networks. It is important not to use the remaining one percent as an excuse to inhibit competition in the markets which are already served. This might occur if resale of underlying capacity were inhibited, for instance. If subsidies are needed for the remote and hard-to-serve regions of Canada, the ISCC would have no objection to government funding such efforts.

It is vital that Canada not engage in the policy that characterized the age of telephony, where a monopoly was preserved in long distance calling on the ground that inter-company transfers of consumer surplus would subsidize certain regions and classes of calling. The same arguments have been resurrected in relation to resale of wireless capacity by the incumbent wireless carriers. It is the same old story: virtually any policy governments and regulators might devise in the public interest will, in their terms, “inhibit investment”.

Q5. Canadians currently enjoy audio and video content through a combination of traditional broadcast and Internet-based services. How will consumer behaviour evolve in the next five years? What factors will influence this evolution?

Consumer behaviour will evolve as it has been doing for the past ten years: towards the price, choice, ubiquity and convenience of Internet -based services and applications. There is no reason to believe that this migration will diminish, nor could it be stopped at any price Canadians would be ready to pay, politically or economically.

Q6. From whom will Canadians access programming in the future?  For instance, will Canadians look to traditional or online providers? Global or domestic providers? Content aggregators or multiple distributors?

The same answer to Question 5 applies here with equal strength. Therefore, Canadians will look to Internet-based suppliers of anything and everything. The devices they hold in their hands will determine the outcomes. Consequently, the idea of ‘domestic production’ (of what exactly?) needs clarification. If we are talking about video entertainment, it is apparent we will receive it through the Internet.

The cost of what is called “cable television” will eventually prove to be unsupportable by the majority of the Canadian population. Cable TV will become like the rotary-dial telephone.

Thus, if the CRTC is asking a question about how Canadian video production will reach Canadian and foreign viewers, the answer is in one sense already obvious: through services like Netflix, CraveTV, and equivalent suppliers/aggregators.

Q7. What are the characteristics of a vibrant domestic content creation and distribution market?

That people freely choose to consume it, in competition with cultural productions of other countries and cultures.

It is a matter of policy whether Canada subsidizes content creation; it is highly unlikely that Canada would cease to do so.

 

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