SPEECH BY KONRAD VON FINCKENSTEIN Chairman, Canadian Radio-television and Telecommunications Commission to the 2007 Broadcasting Invitational Summit, Jackson’s Point, Ontario CRTC Release Thank you very much, Ian [Greenberg, President and CEO, Astral Media Inc.]. I am delighted to take part in this meeting of minds. We are here to share our ideas at a dramatic and critical time in the history of broadcasting, not only for Canada but also for the whole world.
New technologies have created new media. And the new media are creating an upheaval that we are only just beginning to face. Or to put it another way – they are creating an opportunity that we are only just beginning to recognize.
The only comparable moment I can think of in the history of broadcasting – a moment of comparable upheaval and opportunity – came more than half a century ago with the introduction of television.
So I think this is just the right time for us to convene here at this first Broadcasting Summit. And I’m very pleased when I look around and see that all the right people are here. Not only broadcasters but also representatives from broadcasting distribution undertakings; from telecommunications and from the content providers; from government and public agencies; from media, and from the law.
I congratulate the organizers for having brought us all together. The impact of new technologies affects all of us in the most fundamental and far-reaching ways. How we respond to that impact for the benefit of Canadians and the Canadian broadcasting system will influence the Canadian cultural landscape for years to come. I am convinced that a productive and successful response can only be achieved if all the players are talking to each other and contributing to the solution.
As we all know the CRTC regulates two different sectors – broadcasting and telecommunications – which fall under the responsibility of two different government departments. And yet today, as technologies converge, these two sectors are competing in each other’s traditional lines of business. Old boundaries are being erased. The old business and economic models are being questioned. The old relationships between those who create and deliver content and those who consume it are evolving into more of a two-way street.
What will replace the old ways is very much up in the air at the moment. We will need all the resources and all the creativity of the people gathered here to start working this out.
In my view, the arrival of new media is the defining challenge of our time in broadcasting. There is no more important matter facing the Commission, nor does any other matter have such long-term consequences. So this evening I would like to tell you about the major project that we have launched to help us chart our course.
Other key projects
But before I get into that, I would just like to offer you a brief overview of some other key matters that we are pursuing in the background and that will influence our new media project.
First, we have commissioned renowned communications lawyers Laurence Dunbar and Christian Leblanc to conduct an independent re-examination of all our broadcasting rules and regulations. This review is designed to help us in our new approach that features smarter and lighter regulation with more free play for market forces – an approach that I have been emphasizing since I took up my appointment in January.
This approach must be applied in a different way to broadcasting than it is to telecommunications. The Commission has the responsibility to guide the broadcasting system toward the social and cultural goals set out in the Broadcasting Act. Since market forces recognize only economic goals, it is clear that there must always be regulation of broadcasting in order to ensure the creation of Canadian content in programming, and to ensure access to the system for all Canadians. They must be able to see themselves reflected in that system, and to know that the system is open to their own participation.
Market forces, of course, show their own forms of creativity: they create employment, innovation and prosperity. So we need to regulate with as light a touch as we can, while still ensuring that the system fulfills the objectives of the Broadcasting Act.
This is why we have asked Dunbar and Leblanc, with their long experience with communications, to look at each of our regulations.
What is its purpose?
Is it still relevant?
Can it be eliminated without negative consequences?
Can it be streamlined, lightened, made more efficient, less intrusive?
We expect that their recommendations – though we are not bound to accept them – will be very useful in helping us consider what changes need to be made.
Second, we have two major policy reviews coming up. In September we will begin public hearings on the issue of ownership consolidation and on maintaining a diversity of voices in broadcasting. Later in the fiscal year, we will conduct a review on the regulation of pay, specialty and video-on-demand services, and of the broadcasting distribution undertakings.
The Dunbar/Leblanc report will feed into our review on discretionary services and BDUs. Depending upon its findings, it may also lead us to revisit some aspects of the radio policy and conventional television policy reviews at some time in the future.
New media
And now I would like to turn to my main subject for this evening: the emergence of new media and the launch of our New Media Project Initiative at the CRTC.
For us at the Commission, the challenge of new media comes in three parts; the first two being mostly in the background and for information purposes.
These are all very big questions. We have to address them soon. I don’t know what the answers are. But there is one thing I do know. For us at the CRTC, the guiding principle in our approach to new media will be exactly the same one that we have followed in our approach to traditional media: to regulate as effectively as we can to further the two primary goals of the Broadcasting Act – Canadian content and access to the system for all Canadians, whether as audiences or as participants.
Technology & regulation
The CRTC issued its first policy on new media in 1999. At that time, it defined new media broadcasting undertakings as those that provided broadcasting services delivered and accessed over the Internet. In 1999, it was considered that such services would not offer any serious competition for traditional broadcasters – at least not until it became feasible to deliver high-quality video over the Internet. Also, it was considered unnecessary at that time to stimulate their carriage of Canadian content. So they were made exempt from regulation.
Obviously a lot has changed since then. Just how much has changed can be seen in the report that the Commission prepared at the request of the government last year on the future environment facing the Canadian broadcasting system.
The landscape has changed completely. High-quality video over the Internet is not just feasible today – it is here, thanks to the expansion of broadband capacity.
In the last six months alone, well-financed television content aggregators like Joost and Babelgum have been launching their services, with global ambitions. Over five million Canadian homes now have high-speed broadband that can be used to access to these streaming video sources.
In fact, it is this new ability of the Internet to deliver streaming video and audio at improving levels of quality (in effect, in real time) that poses some very tough questions for us as the regulator. More and more Canadians are going to be accessing these sources of entertainment and information. The sources originate from all over the world as well in our own country. Are these new media going to bypass our system of regulation? In short, will they complement, undermine or replace our current broadcasting system?
As we all know, the Canadian broadcasting system is a complex and constantly evolving web of balances, trade-offs, benefits and obligations – involving broadcasters, distributors, creators, producers, regulators and the people of Canada – all governed by the terms of the Broadcasting Act. What is going to happen to that system and its social and cultural dimensions when increasing amounts of programming – including innovative new forms of programming – become accessible outside of that system?
What will be the economic impact? The new means of distribution are introducing a variety of business models to the Internet – like pay-per-view, subscription, and free programming for the viewer supported by advertising.
Speaking of advertising, Internet advertising grew significantly in Canada last year – it surpassed a billion dollars for the first time, and reached a third of the amount spent on TV advertising. What will be the effect on the revenues of those who supply and deliver programming in traditional ways? How much of a share can they carve out for themselves in the new media marketplace?
Meanwhile the very nature of the viewer’s experience is changing. Audiences no longer have to be passive receivers of content. They are interactive participants, forming themselves into online communities. Everyone can be a critic, rating the shows and the sites. In fact, everyone can be a producer, creating and uploading their own content and downloading everybody else’s. And it’s the young people who are leading the way – with obvious implications for the future.
In fact, they’re leading the way right out of the house. The traditional couch potatoes may still be planted in front of the big screen at home, but their kids will be watching video on a laptop at Starbucks or on a cellphone in the hallway at school. A single device can carry TV, radio, games, stored video and audio, serve as a communications platform and can be used anywhere. In short, these devices represent a union of radio, TV, music, movies, Internet and wireless.
There are great opportunities as well as challenges. The industry can use interactivity to engage with its audiences, finding out what they like and what they don’t. Markets are opening up for direct buying online, combined with targeted and measurable advertising.
Broadcasters may be able to make better use of their content inventory, monetizing the long tail of programs with small audiences individually that add up to big audiences overall.
So it is clear that we are all moving into a new world. What is not so clear is what it’s going to be like to live there. And what form of regulation will be necessary, appropriate and effective in this new world?
The CRTC report last December surveyed the new landscape. With respect to regulation, it expressed the view that circumstances didn’t warrant an immediate review of the new media exemption order. However, it also noted that the Commission would continue to monitor the situation closely.
New Media Project Initiative
We have now decided to do more than monitor it closely. We cannot afford to err. In my view there is great urgency here; we have to be prepared, because these changes cannot be stopped. They are upon us now, and now is the time for us to conduct a searching inquiry into the nature of new media so as to assess their impact on our regulatory system and, specifically, the objectives of the Broadcasting Act.
Consequently, we have established within the CRTC the Policy Development and Research Sector. We have assigned to it, as its highest-priority mission, the creation and management of the New Media Project Initiative.
The purpose of this Initiative is to provide a solid basis for policy development in the new environment. It will build on the foundation of our December report entitled “The Future Environment Facing the Canadian Broadcasting System.”
The Initiative is operating with a definition of “new media” that’s a little different from the one used in 1999. Today, we say that new media consists of the provision of audiovisual services delivered and accessed over the Internet or other non-traditional networks.
To guide the progress of the Initiative, we have set up a New Media Advisory Committee. This is a steering group that brings together senior representatives of the government organizations that are directly concerned with these issues. The members are:
I will also serve on the Committee, along with two of my CRTC colleagues:
Issues
The issues to be explored by the New Media Project Initiative affect a number of different policy areas, and the Advisory Committee will provide a very useful exchange of viewpoints and information at a senior level.
To better understand all the aspects of new media the Initiative will focus on subjects for research such as:
But our primary focus will be on the emerging regulatory issues regarding content and access.
Content issues include:
Access issues include:
This New Media Initiative will be carried out in three phases:
First, we have the research phase, which is already well underway. We are consulting with a wide range of stakeholders in the industry, with members of the academic world, our international partners and industry. We are doing consumer analysis and we’ve contracted outside consultants to conduct research. This research is taking place internationally as well as in Canada.
We do not intend to re-invent the wheel: we are giving ourselves the opportunities to learn from others. Our Initiative is a collaborative effort. I would like to thank all those who have been participating in our work so far, and those who will be participating in it over the next couple of years.
The second phase is a validation phase of discussion and analysis about the research conducted. This will include panels and workshops at industry conferences, exchanges with other government departments and extensive analysis within the Commission. We’ll determine the impact of new media on our regulatory regime in both broadcasting and telecom. And we’ll try to build understanding from all points of view – including those of consumers and the industry.
The third phase will consist of public hearings.
This process hopefully will lead us to:
It is very difficult to set a timetable for these matters, given the speed of developments. For planning purposes we have targeted the following. The first major output from the New Media Project Initiative will come in March of 2008, with the release of a report on the regulatory impacts of new media. A year later, in March of 2009, we expect the release of a report on the new policy decisions that will emerge from the process. Both of these reports will cover both broadcasting and telecommunications. Depending on developments, this timetable may have to be compressed.
I am expecting great things from this process, because everybody will be involved, and everybody has the strongest motivations for finding the right approach. It’s not just us at the CRTC. A couple of weeks ago at the Telecom Summit in Montreal, Michael Sabia [CEO of Bell Canada], expressed the challenge in five questions that I found very much to the point.
Michael acknowledged, as we all must, that there are no simple answers to these questions. But we have to find the answers anyway.
I think a sense of urgency is in order as we all prepare ourselves to deal with the technological changes that are already happening. It is true that at the moment their impact on our regulated system appears to be minimal. Peter S. Grant recently presented a paper to the Law Society of Upper Canada on the new economics of production and distribution in Canada. After looking at the numbers, he considers it highly unlikely that TV broadcasters will be cannibalized by the Internet or mobile TV in the next few years. I can only wish that he is correct in his assessment, but as I said before we cannot afford to be wrong.
I would add that at the rate things are developing, years are much shorter than they used to be. And the urgency for Canada to get moving is all the greater, because others are moving already. Earlier this month at the Banff World Television Festival, the Minister of Canadian Heritage pledged a $29-million renewal of the Canada New Media Fund. She said, "The rate and speed at which Canadians are moving into the new era seems to be lagging behind those in some other countries."
I feel our commitment to the New Media Project Initiative demonstrates that this is a major concern for the Commission as well as for the government.
The challenge of new media is a challenge to both the Canadian broadcasting and telecommunications industries as well as CRTC. In the past, as technology has advanced, you have shown great ingenuity and ideas and a willingness to invest to bring those ideas into reality.
As long as we share the same goals, namely to foster Canadian content and access to the system for all Canadians, we will assist and support you in the realization of your plans through the appropriate regulation. This is what we have done and are continuing to do in traditional broadcasting. Our Initiative is designed to achieve that goal in the world of new media as well.
Simply put, regardless of the form that the communication/broadcasting system takes in a world of convergence and new media, we have to ensure that Canadians see themselves reflected in such a system and know that the system is open to their participation whether as audiences or as participants.
Thank you very much for your attention. |