Speech Article from  Canadian Radio-television and Telecommunications Commission

Archived - Jean-Pierre Blais to the London Chamber of Commerce on Let's Talk TV and the future of television

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London, Ontario
January 29, 2015

Jean-Pierre Blais, Chairman
Canadian Radio-television and Telecommunications Commission

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Good morning.

A little more than 15 months ago, the CRTC launched Let’s Talk TV: A Conversation with Canadians. Our goal was to use this national conversation to help design a new forward-looking framework for Canada’s television system.

A framework that not only accounts for today’s realities, but also prepares us for the changes that are already here and those that are sure to come. Television, as you know, is evolving. The tried and true method of delivering programming that we have known for the past six decades is changing with the emergence of a highly individualized and deeply customized model. And I use the word “television” in the broadest sense.

Now, more than ever, we’re migrating away from scheduled and packaged programming services to on-demand and tailored programs. We’re becoming more active viewers who want greater control over the programs we watch. We’re consuming television on all kinds of different devices, and we’re demanding new and innovative approaches to programming that excite us and make us want more.

Yet amid such frenetic change, television continues to play vital roles in society. Although most may think of it as a medium for entertainment, it’s more. Much more.

Television is a tool for providing us with up-to-the-minute news and information programming that keeps us current on local, national and international events, and challenges the way we think about the world around us. In this way, it is a pillar that supports our democracy.

Television is a conduit for providing us with emergency alerts. It offers information on everything from dangerous weather systems to police notifications such as the shootings in Moncton or Ottawa. In this way, it helps keep us safe and secure.

Television is a window through which we view and better understand our neighbourhood, our country and now even the far reaches of our universe. It brings people, places and things we may never have otherwise seen – and may never see firsthand ­– into our homes. In this way, it connects us to our world.

Television is a major industry that creates jobs. It helps businesses promote their services, and it entices consumers to buy goods. In this way, it contributes to economic growth.

Television is a springboard for developing talent. It introduced Canadian personalities such as Mike Holmes, Peter Jennings, Anne Dorval and Pierre Lapointe – and countless others – to Canada and to the world. In this way, it is a foundation for Canadian creative talent that thrives here in Canada and abroad.

It’s because television plays these vital roles that we launched our Let’s Talk TV conversation. We knew we needed to create a new framework for the television system that maintained its best elements while responding to viewers’ changing demands. This framework had to not only respond to the challenges and opportunities presented to the industry in the digital age, but also put Canadians directly at the centre of a world-class broadcasting system.

Television is, after all, something that we all value.

I’m pleased to say that over the three phases of our conversation, Canadians thoughtfully responded to the questions we asked and the issues we raised. More than 13,000 told us that they want access to high-quality content, that they want value and choice, and that they want to understand what they’re paying for and how they can settle disputes with their service providers. The opinions they shared and the insight they offered enriched the public record and deepened our understanding of the role played by television in the nation’s households.

Change today – and in the months ahead

One of the key lessons we at the Commission learned is that all of us need to re-think the way we look at the communication industry. Ideas must be adapted, attitudes changed, new tools introduced. Yet not everyone readily accepts such change. Change requires adaptation by everyone, and those that previously enjoyed entitlements under the old system often make the loudest objections to the new system, set up the strongest roadblocks, and dig in their heels deepest.

Max Planck – the German physicist who invented quantum theory – once remarked that, “an important scientific innovation rarely makes it by gradually winning over and converting its opponents: it rarely happens that Saul becomes Paul. What does happen is that its opponents gradually die out and the growing generation is familiarized with the idea from the beginning.”

Now television and quantum physics don’t share many parallels, but Mr. Planck’s suggestion that change in the ways Canadians watch television will really only take root when its opponents finally give up their fight is valid. More and more Canadians today watch television in different ways and use different technologies than they did even five years ago. Better than 40% of adults viewed television content online in 2013. They are embracing the notion that the viewer, rather than the television executive, is in charge.

Some broadcasters get this idea. They are taking baby steps and dipping their feet in these waters by experimenting with new delivery options. The regulatory framework – which we are transforming – must foster true innovation if Canadian broadcasters want to successfully compete for Canadian and international audiences over the long term.

Building a bridge

We at the CRTC are bridge builders. Years ago, we built a bridge to carry analog television programming. This bridge served Canadians well for decades. Occasionally, it required renovations: rivets tightened, a new deck laid, lighting upgraded. When it did, we took action in the form of targeted regulation to ensure that the traffic kept flowing smoothly on the communications bridge.

As television started to change, as consumers began to embrace on-demand viewing, mobile platforms and online video services, it became apparent that the old bridge was ill suited to carry modern digital traffic. More than just renovations were required to ensure traffic continued to flow smoothly into your home and onto your mobile devices. We needed a new bridge.

And unlike the London Bridge, made famous in the traditional nursery rhyme, we need to make sure that neither of our bridges falls down.

Our construction work began in October 2013 when we launched the Let’s Talk TV conversation. Through it, we learned about the goods that needed to cross the bridge, and the materials and techniques we needed to construct an enduring structure. We also learned that, for all the new bridge will be the way of the future, and some people are eager to use it now, others prefer the old bridge. They like to consume content on traditional platforms and in the same ways and quantities that they have for years.

One of the fundamental lessons we took away from our conversation was that we could not simply stop traffic on the old bridge while we built the new one. We have to maintain the existing asset. This is why we are making decisions today that will enable Canadians to continue to use the old bridge.

As these viewers change their habits – as providers innovate – traffic will migrate away from the old bridge and onto the new one. Eventually, it will stop flowing altogether over the old bridge, and we can tear that structure down. But for the next few years, we will need both.

Recent decisions: renovating the bridge

This morning, the CRTC published three important decisions that will greatly contribute to our work of building the framework for tomorrow’s bridge while at the same time performing overdue repairs on the existing structure. Let me start with our decision on over-the-air – or OTA – television. Today, we reaffirmed that free OTA is a competitive alternative to cable and satellite television and must be maintained for now.

Over-the-air television

I have with me today some special items. You could call them magic items. After all, they can make television service bills disappear into thin air.

What’s more, when you install them in your home or on your roof here in downtown London, they can give you access to eight Canadian television signals with a picture quality superior to anything delivered by a satellite or cable provider. Channels that show all the best local and national information, American entertainment and educational programming – for the low monthly rate of zero dollars.

Across Canada, 76% of the population has access to at least five channels thanks to these items, and in some cities that number rises to 15 or more.

What are these ingenious devices?

Digital television antennas such as these bring OTA television signals into our homes at a cost that beats even the best packages offered by the major service providers. But let me say that our decision is not about just affordability. It is about the importance of local and regional news and information programming.

It’s natural in an era of such fundamental change that old-style technologies get left behind. As we increasingly look to new television delivery models, we must be mindful not to forget about the essential public service provided by over-the-air television, the critical connection it forges with audiences. We should also keep in mind that 97% of Canadians live within range of a transmitter.

During our consultations, we had proposed that local stations be allowed to shut down their transmitters. Canadians reacted and told us that the time had not yet come. Ninety-five percent of participants told us that access to OTA stations is of great importance. This is not surprising when you consider that over 40% of viewing between 7 and 11 p.m. in the English-language market and over 50% in the French-language market is to local television stations.

What’s more, news programming aired by local stations boasts a 40% viewing share. And the vast majority of Canadians that responded to our public opinion survey considered local news to be important. While these statistics do not make a distinction between content watched over-the-air or through a cable or satellite company, they show us that Canadians rely on the television stations in their communities.

Holding a licence to operate a local television station comes with certain privileges. For example, cable and satellite companies must include the station in their basic package of channels and stations can request simultaneous substitution. Our decision sends a strong message to anyone thinking of shutting down their transmitters that, in doing so, they would be forfeiting these privileges. Canadians don’t want to start paying for free TV. And we heard you.

One might argue that OTA is a relic. Certainly, it harkens back to the early 1950s when rabbit ears stood atop unwieldy floor-model televisions. Yet much has changed about OTA as a broadcasting medium, including a wholesale transition three years ago to digital service. The next few years could yield renewed interest for OTA broadcasting, especially in urban areas where eye-popping image quality, channel selection and, of course, the absence of cost, could convince more consumers that they need not be enslaved to cable and satellite service providers if they want to enjoy high-quality television programming.

Long term, however, the format must change. The future of television lies more toward viewer-centric, on-demand models than the scheduled broadcasts such as those provided by OTA.

Simultaneous substitution

One of the irritants associated with over-the-air television is simultaneous substitution. Simsub, as it’s known, gives Canadian distributors permission to temporarily replace the signal of an OTA TV channel (for instance, a Wednesday night Survivor broadcast from CBS) with that of another channel showing the same program at the same time (such as Global).

This is an exception to the requirement that distributors not interfere with the signals of the programming services they carry. They are “common carriers” in legal jargon. An exception is granted so that Canadian broadcasters can protect the rights of the popular foreign programs – mostly American – they have purchased and sell their own advertising during these programs.

Today, simsub presents a dilemma for the CRTC. Viewers dislike it, particularly when it is exercised during major live broadcasts such as the Super Bowl or the Academy Awards. They tell the CRTC – and we receive many complaints – that they want to see the newest American commercials as and when they are broadcast. And they rightly resent the fact that simsub is often mis-timed, causing viewers to miss, for example, key plays during a big game.

This is one of the busiest times in terms of the number of complaints we receive. It’s been that way for years. What’s different now, however, is that Canadians are voicing their displeasure in real-time on social media platforms like Twitter.

Yet for all viewers dislike simsub, broadcasters adore it. Annually, simsub is worth about $250 million to the industry. And occasionally, the revenue it draws – the addiction it creates – causes broadcasters to lose sight of simsub’s negative effects on Canadian programming. Too often, Canadian programs are shuffled around the television grid – relegated to less attractive time slots or secondary networks – to accommodate the scheduling whims of American network executives. Why must our creators take second-class seats?

Whether you love simsub or hate it, it’s unfortunately here to stay. At our hearing last fall, the evidence clearly showed that the revenue it generates helps broadcasters create jobs and develop Canadian creative talent. In other words, it’s too intertwined to remove entirely without upsetting the existing business model. But that is not to say that the Commission is maintaining the status quo.

First, broadcasters will be banned from using simsub during the Super Bowl starting with the one that will be broadcast at the end of the 2016 NFL season – and for all future broadcasts of the game thereafter. The 8 million Canadian football fans that watched last year’s Super Bowl will be happy to hear that. Because as many of you know, and as Canadians have told us loud and clear: advertising is part of the spectacle associated with this event.

Keeping simsub for all broadcasts other than the Super Bowl may rankle more than a few viewers, and I understand their concerns. That’s why, as a second measure, the CRTC is introducing a zero-tolerance approach to substantial mistakes. If, for example, a Canadian broadcaster cuts back to an NFL game late and causes viewers to miss a play, it could be forced to pay rebates to viewers for its mistake. If an OTA station makes the same error, it could lose the privilege to request simsub for future broadcasts of major live events, such as other football games, for a period of time.

When an NFL game is aired in Canada, for instance, our expectation is that viewers will see the entire game, from start to finish.

The CRTC is doing its part to reduce the irritants of simsub mistakes, but we can’t solve this problem alone. We need Canadians to be ever vigilant about simsub errors. If you see a mistake, let us know. And if we are convinced over the long term that broadcasters are unable to execute simsub flawlessly, we will revoke that privilege.

It’s as simple as that. In this day and age when technology allows us to wear computers, put a Canadarm in space and land a satellite on a comet, I cannot believe that every broadcaster does not have the wherewithal to execute simsub flawlessly. There will be no more sleeping at the switch.

Canadians asked us to fix simsub. And we heard you.

Renovating today’s bridge; building tomorrow’s

I mentioned that the existing bridge structure requires renovations even as the new one is being built. What we’ve done in the OTA and simsub decisions is renovate the bridge that we already have. We’re ensuring that the current system continues to meet viewers’ needs. Yet in both cases, we’re aware that these are short-term repairs only. Neither model will survive in the long term. Both rely on the delivery of television programs on traditional formats: as and when the major networks see fit to air them.

Exciting as they are, new paradigms are seldom initially perfect. They require tweaking at the edges – tightened rivets, repaved decks, new lane markers – or even occasionally wholesale overhauls to be truly successful. And they require creativity from all parties – broadcasters, viewers and regulators – to ensure smooth adoption.

Some of Canada’s major broadcasters are experimenting with new ways to enrich viewers’ experiences on new platforms. It’s regrettable, however, that English Canada still lacks a true Canadian Internet streaming video-on-demand service that does not require a cable subscription. And I look forward to the day when broadcasters do finally offer such a service, they use clips from productions made by Canadians – rather than Americans – to promote it. We make award-winning productions. Let’s be proud of them and promote them.

The CRTC supports innovation on new platforms. But in the next decision I want to talk about, individual Canadians challenged two wireless service providers that were giving certain unlawful preferences to their mobile TV services.

In November 2013, the CRTC received an application – filed by a University of Manitoba graduate student named Ben Klass – complaining about an alleged undue preference on the part of Bell Mobility. A similar application, filed against Vidéotron, followed a few weeks later.

The problem in these cases was that Bell and Vidéotron exempted these services from their customers’ standard monthly data caps and data charges. But if a subscriber watched YouTube videos, that data would count against his or her cap.

That, said the applicants, was unfair.

We agreed. In our opinion, providers such as Bell and Vidéotron that offer linear content via their mobile TV apps cannot provide undue preferences or advantages. We therefore ordered Bell and Vidéotron to eliminate their unlawful practices.

That may sound to some like a small issue to be bothered about. I respectfully disagree. Here’s why. At its core, this decision isn’t so much about Bell or Vidéotron. It’s about all of us and our ability to access content equally and fairly, in an open market that favours innovation and choice. The CRTC always wants to ensure ­– and this decision supports this goal ­– that Canadians have fair and reasonable access to content. That everyone can access the bridges without restrictions. We also want to ensure that abuses of power in the system do not go unchecked.

It may be tempting for large vertically integrated companies to offer certain perks to their customers, and innovation in its purest form is to be applauded. By all means, we at the CRTC want broadcasters to move television forward by creating new and exciting ways to view content. But when the impetus to innovate steps on the toes of the principle of fair and open access to content, we will intervene. We’ve got to keep the lanes of our bridges unobstructed so that everyone can cross.

In the same way, we will defend and support an open Internet. Canadians want an open communication system. And we heard you.

Freedom of expression

If there is an overarching message to be extracted from these three decisions, it’s that the CRTC has an ongoing role to play in enabling fair and open communications.

We also have an ongoing role to play in ensuring that broadcasters live up to their responsibilities. Broadcasters are custodians of the television system as a public service. They therefore have a special obligation to ensure that the system reflects our identity, contributes to our democracy and enhances our safety and security. Broadcasting can’t only be a purely commercial undertaking whose sole focus is to increase profits.

Much has been said over the past weeks on the subject of freedom of expression. Part of our explicit statutory mandate at the CRTC is to apply the Broadcasting Act in a manner that is consistent with freedom of expression and journalistic independence.

Earlier this year, we saw insidious attacks on freedom of expression in Paris. Sadly, such incidents are far from isolated. In 2014 alone, 61 journalists were killed while practicing their profession around the world. Others are imprisoned or tortured.

Although it grabs fewer headlines, the reduction in funding of local television stations by major broadcasters also gives me cause for concern. Media moguls are indeed allowed to be worried about profits, but both the public and private shareholders of broadcasting assets have a duty to ensure that news reporting and analysis continues to be properly funded. This is to ensure that Canadians, as citizens, understand events occurring around them every day. An informed citizenry cannot be the sacrificial offering on the altar of corporate profits or deficit reduction.

Some would argue that new Internet devices help quickly relay information about events and international facts and factoids. I agree, but they have yet to demonstrate a similar capacity for delivering accurate and timely information about local and municipal events to media consumers in smaller communities. Moreover, I have yet to be convinced that the Web provides quality news analysis at a level of journalistic rigour advanced by professional codes of conduct that were developed and refined over the past 300 years.

In any event, I am not aware of any cap on the amount of news and information that Canadians should be able to read, watch or listen to. If the Internet does enrich our knowledge of events across the street and around the world, broadcasters are no less required to meet their obligations commensurate with the considerable privilege of holding a broadcasting licence. And one of these is to continue to deliver quality news and information to the communities they serve.

Conclusion

So in conclusion, ladies and gentlemen, let me say this: We ended 2014 by embarking on an ambitious period of regulatory review. In September, we held the latest phase of Let’s Talk TV: the public hearing. A few weeks later we held a hearing on the wholesale mobile wireless services market. And in November, our hearing reviewing the regulatory framework for wholesale telecommunications services took place.

The theme carried through each of these proceedings is choice and sustainable competition. We at the CRTC are updating our regulations to ensure the creation of the conditions that help Canadians benefit from a world-class communication system. Now and for years to come.

That future is the new bridge we’re building. But I’ll be frank: this construction project is incremental work. It can’t be done overnight. This is why the old bridge has to remain in place. Issues like OTA and simsub will periodically require our attention in the years ahead. But once we have our new bridge in place – a new and responsive framework – more people will drive over it, their cars filled with ideas, information, creative dreams and stories.

As Max Planck observed, the old bridge will eventually be torn down as more Canadians become familiar with the new bridge.

In the weeks and months ahead, we will issue a series of decisions on issues that touch on fundamental matters relating to television: content, distribution and tools for consumer empowerment. Each will respond to ideas raised during our Let’s Talk TV conversation. They will reinforce our vision of a future television system founded on ideas such as consumer choice and on-demand content.

These decisions are the rivets, concrete and steel that we need to build our shared bridge for the future.

Thank you.

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