09/08/2014 05:00 EDT

CRTC's Jean-Pierre Blais On Netflix, Shomi And The Future Of TV

GATINEAU, Que. — Canada’s television regulator, the Canadian Radio-television and Telecommunications Commission, starts public hearings today about the future of broadcasting in this country. The Huffington Post Canada sat down with the head of the CRTC, Jean-Pierre Blais, last week to discuss the agency’s controversial proposals, regulating the Internet and why he’s concerned that technology is isolating Canadians rather than bringing them together.

This interview has been edited and condensed for clarity.

Q: Why is the CRTC rethinking television delivery?

A: While technology has changed, and consumer habits have changed, the framework that supports the creation and the distribution of Canadian content and content from around the world has not. It used to be that, back in the 1960s, the aggregator was the local television station that would offer you a schedule of programs. The framework assumed a set schedule. Now people are consuming audiovisual content on their time frame, and the rules need to be updated to reflect that.

I’m looking forward to asking questions of people like Google and Netflix on how they see the future over the next five, 10 years. They have put their finger on something that is quite successful and I think there is a lot for us to learn. We also wanted Amazon to come, but they turned us down, so we are a bit disappointed by that.

Q: When I look at the CRTC’s discussion paper, you seem focused on traditional television. You are not really talking about Netflix and programming coming from the Internet – why limit the discussion?

A: I don’t think we are limiting it. There are some folks who think that we should impose pecuniary obligations on people like Netflix. All those discussions will occur. We set out to renew our framework; our framework focuses on that traditional television system, so obviously, if we are going to change anything, we are only going to change what we already have, so it is not surprising that the sorts of questions that we are asking are what parts of the framework we have to change to precisely adapt to the new realities of technology and consumer demands.

The fact that we have the exemption order on digital media is part of the context, but we haven’t proposed to tighten that in any way, shape or form.

Q: Why not? Why shouldn’t Netflix, a content creator, an aggregator and a distributor, be regulated?

A: Some people have suggested they should participate more in the funding of Canadian content programming. It is something that we will hear about – the argument being that it would create an equal playing field. On the other hand, the test the commission has to apply is: Would requiring a licence from Netflix attain the objectives of the Broadcasting Act as it is stated now? And frankly, since we haven’t put that question, it probably shows where we are leaning in terms of seeing Netflix going forward.

I’ll be very hesitant, personally, about taking old means of achieving public policy objectives and applying them to new realities. That is why I talk more about promotion. How do you encourage the Canadian content on these new platforms? There are Canadian companies that have invested a great deal of money to provide online made-in-Canada solutions, and I think that is a much more constructive approach than to try to find tools that are appropriate in a world of scheduled programming – like quotas, or hours of broadcast – which make sense when you are talking about schedules of programs, but don’t align as well when you are talking about the consumption or viewing of individual programs in this new reality.

Q: I assume you are talking about Rogers’ and Shaw’s Shomi service. Couldn’t you have quotas directing Netflix to say, produce two Canadian programs a year?

A: You could. As I said, some people have made that case. We are still in discussion, but we are a long way from having made final decisions on this. So we will very much hear parties that are advocating for that, and ask them what are the pros and cons, and to what end, and for what benefits. And what kinds of measures have we been able to put in place so far, to build the Canadian presence on the new platform.

I’m more interested in the how we adapt to this new reality and make sure that there are Canadian choices out there along with great international choices. I’d much rather have a competitive free market solution to some of these issues rather than having regulatory intervention.

Q: So I assume you’re saying that Rogers and Shaw did not consult you on their pledge for 30 per cent Canadian content on Shomi?

A: No, no. That was their business decision. The digital exemption order does not require a certain percentage of Canadian content.

Everybody who operates and benefits from the digital exemption order is treated exactly the same way. They may have made a business decision, however.

(The CRTC’s discussion paper suggests including revenues from programming offered online and counting original online-only programming towards their Canadian programming expenditures).

Q: I want to go through some of the proposals that are being discussed. The first, is a proposal to offer a small only-Canadian basic cable offering, which could be capped at $20, $25 or $30. Why take the American stations out?

A: The cost of basic cable has skyrocketed – it’s outpaced inflation. Some basic offerings have 50-plus channels. So we have lost sight of what basic is. And we’ve received a lot of comments from Canadians about affordability. And that is one of the objectives of the Broadcasting Act as well. So, the two options. The skinny basic would include local stations and protected stations that serve at-risk communities, like minority language communities, the deaf, the blind, and some other things, like public alerts. The idea is that by limiting the number of channels that are on basic, you have a downward pressure on the cost. The other option is capping the fee of a basic backpage, which is sort of going backwards in time when in the 1990s the commission would approve rates on the cable side.

Channels want to be on basic cable because that they get a guaranteed penetration and a wholesale fee by the cable or broadcast company based on that distribution, but it has inflated the cost of basic.

We’ll see how people react to the proposals. Most of those American channels, all the programming that Canadians watch are largely already purchased by Canadian broadcasters. All you are getting in addition on those channels is maybe a bit of local news, about the local fire in downtown Buffalo that is no doubt very interesting to people in Buffalo, but I’m not sure is very interesting to people who live in other parts.

Q. Why is the CRTC suggesting getting rid of simultaneous substitution? Should the desire of Canadians to watch American Superbowl ads outweigh the financial advantages Canadian broadcasters receive?

A: Simultaneous substitution was created at time of scheduled programming, so it is absolutely normal that we should ask ourselves does it still make sense in a world driven by choice and on demand. It is the subject of most complaints the CRTC receives. It’s true that it is particularly heated around the Superbowl and the availability of ads. I get that – there is so much promotion of those ads that everybody wants to see them. But we’ve had other complaints that sometimes you don’t see the end of a live event because it has been switched too quickly or wrongly. So it is a regulatory construct of the 1970s, and I think it is one of the oldest rules and it was created at a time when the world was very different – fewer channels, scheduled programming – and perhaps it is time to at least have a second look.

Q: So are you concerned that the networks will be able to afford a hit like this? Two hundred million is a substantial sum of money.

A: You’re assuming that the number that you’ve cited is the right number.

Q: You think it’s not?

A: I don’t know. That’s one of the questions based on the evidence that we’ll have at the hearing. The $200 million dollar number was created at a time when viewing to specialty channels was quite different. I have doubts as to the numbers and will want to enquire as to what the value of it is. It’s not a phenomenon at all in the French language market, and yet the French market has been very successful.

And there are some people who are asking – and these are not necessarily my words – but people are questioning how come we have a Canadian English language system that relies on content being produced in Hollywood and scheduled in New York. And why aren’t we thinking of scheduling Canadian-made content by people who create employment and economic activity right here in Canada. We constantly move Canadian content around in the schedule to accommodate changes that have been made by the big U.S. networks. There have been case studies of Canadian programs that had large budgets and good stars, but moved around in the schedule 16 times over a season. How are you going to find a Canadian audience for a Canadian show when you keep moving it around? It is a question that we are going to ask. Has simultaneous substitution created a disincentive to creating successful Canadian shows?

Q: Pick and pay. People seem to want it and fear it at the same time. You mentioned a price cap on the skinny basic. There is no mention of a price cap on the pick and pay option, why?

A: Everyone wants pick but they seem to forget it’s called pick and pay. It’s like anything, whether at McDonald’s or Tim Horton’s, if you buy a trio, it generally costs less than individual items. So I can see someone who is not a great consumer of television might be happy with a basic offering, and a theme pack and another on top of that because they have a particular interest in whatever that specialty channel might be. That may be a good value proposition for some people. But I think that the vast majority of Canadians will keep exactly what they have because they are satisfied.

People complain about costs and say there are a number of channels there that they would rather not have. Well the reality is, they cost probably pennies or nothing because they are bundled.

Q: So what you’re saying is that pick and pay may cost more and consumers should go in there with their eyes open.

A: They should! And they should play the role of a good consumer, and that is, ask questions and negotiate. There are perhaps people out there who think they can sit back and hope that there is a paternalistic institution like the CRTC that will go and do the negotiations for them. We are in a competitive marketplace. We are going to give them more choices, but with choices comes responsibility.

Q: With regards to this à la carte, some people are suggesting some channels won’t be able to survive without bundling, Discovery and Treehouse, among them. Is that a concern?

A: It would be overstating that we would be concerned about any individual company going under. I don't want to sound heartless, but we are not there to protect the business model of any individual company. It is sad if a company does go bankrupt ’cause people who work there lose their jobs, people who watch that channel may not have the choices that they used to, but the commission cannot be in the business of guaranteeing financial success for everybody who wants to launch a broadcasting undertaking.

The commission’s concerns end up being more systemic: Are we putting a framework in place that gives a fair chance for somebody who wants to give it a go? We have questions about the vertically integrated companies: Are they acting fairly in the market place? That is something that will be a concern from a framework perspective.

There may very well be companies that will go under, that to me is not necessarily an indication of failure, it is an indication of a competitive marketplace. If they haven’t managed to connect with an audience, maybe there was no need for that service.

Q: You’re pretty tough with this sink or swim stuff.

A: I’m not about protection, I’m about promotion. If Canadians are making great content, they have to figure out in this new world, where people have more choice and can select any individual program, that they have to market their program to show how good it is. Nobody is going to throw in a lifeline to protect them. They have to adapt. And unfortunately, yeah, it’s harsh. It may be strong medicine, but it’s medicine that’s needed if we want to keep Canadian content we need to modernize our regulation system.

Q: Still the CRTC cannot be blind to the financial health of the broadcasters, distributors and the producers of content.

A: We have to make sure that the business model works, that the Canadian-made content still gets produced, that it is of quality, that Canadian news and information still has support and is available, and is of quality and actually has reporters reporting and not just reading rip and tear news services. And so there are a lot of aspects to that, we have to make sure that it works. By the same token, our objective is not to ensure the economic health of the companies, our outcome is ultimately achieving the public policy objectives. It may be, however, that to obtain the public policy objectives, we need to well-financed Canadian operators. But I’m not there to protect the interest of the shareholders in those companies; I’m there to achieve the public policy outcomes Parliament has told me to be concerned about.

Q: You mentioned the possibility the CRTC would cap basic cable. When some people think of cap fees, they assume it’s for essential services. Are you saying basic cable is an essential service?

A: My mind is still open about that. I think that some people do see it as an essential service, and in a sense there are aspects of basic cable that is very important to a democracy. There is a public service that is associated with news, education and information about public discourse on matters of politics in this country and public affairs. So I think that there is a public interest aspects that we need to apply in terms of what are basic services. That is why it is important that it becomes affordable. Because otherwise you exclude a portion of the population that won’t have access to local news and information, that won’t have access to public affairs programming or educational programming when it is provided by provincial governments.

Q: What is your biggest worry with regards to the hearings?

A: My biggest worry, and it’s more a philosophical concern, it sort of shows itself even in the branding that people use for the new devices. It’s iTunes, it’s iPhones, it’s Shomi, it’s YouTube, it’s very much an individual conversation, it’s about me, me, me. And on a philosophic level, when we are trying to have people have a conversation together, about an important public policy, I’m not seeing a lot of the “we” conversation about what we need in our society and the importance that media play in creating social cohesion, an informed electorate and entertained electorate from a Canadian perspective, and that to me is in a sense a bit of the disappointment I’ve had in this process, where individualism has overtaken the need and the opportunity, in a very public process, to have a debate, a societal debate together as a we conversation.

The irony of the new technology, and all these network, is that you can have a crowd of people in a public bus not talking to their neighbours. It is almost a contradiction, that what should have brought us more together, more plugged in and having more interactions has actually created little bubbles for everybody to be in their own space.

We’ve gone out of our way to draw Canadians into our hearings, to encourage them to participate and contribute to the outcome. But I can only invite them. I can’t force them to participate.

Follow this link to find out how you can participate. Comments will be accepted by the CRTC until Sept. 19, 2014. The CRTC hopes to have a new framework in place on Dec. 15, 2015.


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