Connectivity, not content, is king, Carleton study says

A report issued by a Carleton University professor asserts that revenue from communications and internet access services and subscription services far surpass advertising revenues. They outstrip the ads by a 4.3:1 ratio. “The upshot of these developments is that, in an increasingly internet- and mobile wireless-centric world, it is network connectivity and subscriber fees, not advertising-supported media, that are king,” said the study, titled Growth and Upheaval in the Network Media Economy in Canada 1984-2021. The November report, by Carleton journalism professor Dwayne Winseck, looked at three sectors: telecoms and internet infrastructure, digital and traditional audiovisual media and publishing, and core internet applications and services. It found growth among newer technologies such as mobile wireless, IPTV, ISPs and internet advertising. Wireline telecoms, household spending on media content and live entertainment, and spending on home media equipment all stagnated. Registering a decline were cable, satellite, broadcast and pay TV, music, radio, newspapers and magazines. While the study looked at hundreds of companies, it found that 91 per cent of the network media economy in 2021 was made up of revenues from the largest 20 communications firms. That list includes BCE Inc., Telus Corp., Rogers Communications Inc., Meta Platforms Inc.’s Facebook and Alphabet Inc.’s Google. The report hopes to add to the discussion about internet giants like Facebook, Google and Amazon. Nations across the world are currently debating how to handle the power of the tech titans and proposing legislation to regulate them. In Canada, the Online News Act just came out of committee. “That Amazon, Facebook or Google could be broken up just like AT&T was in 1984–or, way back in 1913–is no longer a far-fetched idea,” Winseck writes. “In fact, such remedies are actively being considered in the U.S., U.K., E.U. and Australia.” The professor is skeptical of claims that the tech giants are making their profits by cannibalizing revenues from traditional media. Care must be taken that the internet technologies of today are regulated in such a way as to prop up the industries of the past, he wrote. The debate tends to be simplistic, he says, with cultural nationalists lined up alongside the media conglomerates on one side and open internet advocates siding with the interests of Google, Amazon, Facebook, Apple and Microsoft (the GAFAM group). In fact, the issue is quite complex. “The rigidity, indeed, orthodoxy on both sides, is stultifying,” Winseck concludes. Canada has the ninth largest media economy in the world, the study says. It discovered that revenues for most communication, internet and media sectors flat-lined or fell during 2020 due to the pandemic, before rebounding last year. Wireless technology continues to grow, not surprisingly. In 2009, mobile services overtook wireline in terms of revenue while by 2014, the number of Canadians relying on wireless for all their voice needs surpassed those only using wireline. Revenues have increased from $5.4 billion in 2000 to $29.3 billion in 2021. “Interestingly, the revenue declines in this sector during the early pandemic were specific to Bell, Rogers and Telus–the three national incumbent mobile operators–while the regional competitors Videotron, Freedom Mobile, Sasktel, Tbaytel, and Eastlink each continued to grow,” the report notes. In spite of mobile growth, adoption of mobile broadband is low by international standards. Only 75 per cent of Canadians have a mobile broadband subscription. A chart in the report shows that of 38 nations in the Organization for Economic Cooperation and Development surveyed, Canada comes in second last, just ahead of Colombia. CRTC chair Ian Scott comes under attack for his supposed favoritism toward the incumbent telecoms. Winseck spreads the blame around. “The fact of the matter is: the Trudeau government appointed Ian Scott to lead the CRTC, knowing full well that he had been a Telus executive and industry lobbyist,” he writes. “It is also the Liberal government that has refused to correct the direction he has taken the CRTC in.” Despite rhetoric about competition from politicians and regulators, we are facing a future of growth for the incumbents and decay of small independent carriers. Much will be determined by the outcome of the Competition Bureau’s opposition to the merger of Rogers with Shaw Communications Inc. That proceeding is currently before the Competition Tribunal. The study also faults the allocation of money from broadcast distribution undertakings (BDUs) to smaller national players. “Whereas fees for independent television services such as APTN, OUTtv, Blue Ant, etc. that are carried by the BDUs are measured in dimes, revenue from online video subscription-based and download services like Amazon and Apple are measured in dollars,” the report notes. For independent Canadian producers, the focus is on international sales as domestic carriers like Bell, Rogers and Shaw concentrate on finding foreign (chiefly American) programming for their channels. Winseck is wary of the future of journalism as the market shrinks. “Early on, the intersection between journalism and the internet led some–including me–to be hopeful that we were seeing the emergence of a vibrant ‘network free press’ that would help to shake democracy out of its long-term stupor,” the professor writes. “Such hopeful optimism, however, has not come to pass, and in many ways the situation is now far worse than it was a decade ago.” Still, he says possibilities to foster a more diverse industry have not been totally destroyed. Companies must find a way to make up for the revenue lost to tech giants. He dismisses concerns about subsidies from government, pointing out that governments do not determine who qualifies under the Qualified Canadian Journalism Organization accreditation. Crowdfunding is rejected as a solution because it is wishful thinking, Winseck states. –Reporting by Paul Park at ppark@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca.

Connectivity, not content, is king, Carleton study says

Broadcast | December 14, 2022

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