Industry leaders take on key issues at CRTC’s ‘state of the union’ forum

The CRTC’s “state of the union” forum last week sought to bring together key industry leaders outside of a hearing and gain input on new, broad policy directions, say those who attended. “They made much about having broadcasting and telecom people in one room. That never happens,” John Lawford, counsel with the Public Interest Advocacy Centre (PIAC), who attended the forum, said in an interview. The forum, held March 23-24 at the Canadian Museum of Nature in Ottawa, brought together more than 70 participants from the telecom, broadcasting, and new media sectors, as well as analysts, academics and CRTC officials. “The questions were structured around, what’s going to happen? What are the pressures on regulators?” Lawford said, adding that he did not find the forum “terribly stimulating.” “People were saying things like, ‘Look, consumers are actually paying attention now, with the UBB stuff.’ Or, ‘We’ve got broadcast models that are over-the-top.’ It was a kind of state of the union.” The forum launched Wednesday evening with a keynote presentation from David Hyman, general counsel with Netflix Inc. It continued Thursday morning with a panel discussion about convergence in the communications industry and another on global regulatory trends. In the afternoon, participants took part in two break-out round-table discussions, one on the CRTC’s traditional regulatory approaches followed by another on new regulatory tools. The invitation-only forum was not open to the public. The consultation was intended to inform the commission’s next “navigating convergence” report. Its last report, released in February 2010, made headlines for a suggestion that the CRTC would have to review its “hands off approach” to regulating the wireless sector. In a speech at the forum last Thursday, Leonard Katz, the commission’s vice-chairman of telecommunications, noted the success of last year’s report, the interest in which took the CRTC by surprise. “It turned out to be very useful as a collection point for the industry's concerns and ideas about convergence,” he said. Katz said the next 12 months will be hectic as the CRTC deals with convergence in the communications industry and heads into major hearings such as one on vertical integration in June. “We need to redraw our roadmap in light of the developments that took place over the last year and what we see ahead of us,” Katz said. He said in his speech that questions for exploration at the forum were: how to ensure that everyone has access to the Internet on fair and reasonable terms at affordable rates; how to ensure the availability and efficient use of spectrum given “a tremendous swing” towards mobile devices; the implications of consumers’ growing power in the marketplace, including social network activism; how to achieve cultural objectives in a digital era in which Canadian-content requirements on licensees are “becoming less and less sustainable”; and the role of public broadcasting. Steve Anderson, executive director of advocacy group OpenMedia.ca, said the CRTC did well to bring a broad range of people together. “It was to get people out of the immediacy of hearings, because all these groups have a point to make at a hearing,” Anderson said. “In talking with someone from the CRTC at our table, it seemed like one thing they’re trying to figure out is what kind of tools they should be adding to their tool set in a digital environment. Like, should they be doing transparency audits of ISPs ?” Anderson said the digital environment and convergence have left the CRTC without a clear policy direction. Although the government should clarify the CRTC’s direction, he said, he saw the forum as a way for the commission to develop its own roadmap given its statutory flexibilities. CRTC chair Konrad von Finckenstein, in a forum message posted on the commission website, said the forum was an opportunity to look at the implications of trends in the communications industry and explore alternative, more effective regulatory approaches. “For example, will a licensing regime in broadcasting that creates a regulatory ‘bargain’ continue to be the most appropriate way to achieve public policy objectives in that field, or is a reliance on market forces to be preferred?” von Finckenstein said. The chairman noted that since 2006 the commission has worked within a cabinet direction to rely as much as possible on market forces. Von Finckenstein added that consolidation in the broadcasting industry could have an impact on the commission’s tangible benefits policy, under which companies acquiring broadcasting assets contribute about 10 per cent of the value of the transaction to support the Canadian broadcasting system. But in “a highly consolidated industry, tangible benefits may become less effective if the pace of transactions slows,” von Finckenstein said. Lawford said he took away a few key ideas from the forum, including one person who calculated the cost of transmitting a gigabyte of data on wireline Internet services at 10 to 30 cents. The same person calculated the cost of transmitting a gigabyte of data on fourth-generation LTE mobile services as $3 to $4, Lawford said. The value of transmitting data is an important point as wireline and wireless Internet users increasingly pay for their usage and the CRTC revisits its usage-based billing policy for wholesale Internet access. One of the major new challenges facing the CRTC has been the emergence of unregulated, online content services like Netflix. Some sources have suggested that there is some level of industry consensus for services like Netflix to make contributions to the Canadian broadcasting system. But Anderson said he did not get that sense at the forum. He said groups that broke away to discuss the issue did not come back in agreement. “For that, I think there was not a consensus,” he said. Michael Geist, the Canada research chair in Internet and e-commerce law at the University of Ottawa, who also attended the meeting, agreed there was disagreement about the issue. “It’s no surprise that over-the-top and Netflix would be a point of discussion,” he said, noting the company’s keynote speech on the forum’s opening evening. “In some ways, it seems like the CRTC tried to encourage that by setting this up the way they did.” Duncan Stewart, director of technology research at Deloitte Canada, also attended the forum and wrote about it in The Globe and Mail this week. Stewart said he made a point at the forum that there are real costs to carriers for the transmission of data and that an “unmetered data pricing scheme will eventually force a network into congestion.” He also said that regulators must look at the role of social network services like Facebook, which is becoming “a ‘platform’ technology.” He said Facebook “sits on top of the Internet” and encourages users to consume content, communicate with each other, and use the company’s virtual currency. “I didn’t say that the CRTC should try to regulate Facebook: but I did say that not factoring social networks into a regulatory framework would be ignoring one of the most profound technological shifts occurring today.” sdoyle@thewirereport.ca

Industry leaders take on key issues at CRTC’s ‘state of the union’ forum

Broadcast | April 1, 2011

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