CRTC hearings are not just about pick-and-pay channels

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The federal broadcasting regulator has now heard from everybody at its Let's Talk TV hearings, and has retreated to its Gatineau headquarters to ponder the future. Should the Canadian Radio-television and Telecommunications Commission (CRTC) force cable and satellite companies to unbundle channels, offering consumers so-called pick-and-pay options? Should it force Netflix and YouTube to contribute to Canadian-content funds? These won't be easy questions to answer, and the CRTC's responses are not expected until after Christmas.

But Stephen Harper has already made up his mind. In a speech delivered last Monday, the Prime Minister said his government was helping Canadians by letting them pay only for the channels they want, and stated he would oppose any "tax" on services such as Netflix and YouTube. Those are popular positions, which is presumably why an election-ready Harper is taking them without first letting the CRTC finish its work. But they are also self-contradictory, and based on ignorance of the TV business.

On the one hand, Harper opposes a cultural levy on new media – and seals its political fate by labelling it a tax. That position might seem consistent with a free-enterprise stance, but it doesn't seem fair to old-media companies that currently pay such levies. On the other hand, he seems to believe his government, through the arm's-length CRTC, should impose a more consumer-friendly business model on cable and satellite providers. If you believe in free enterprise, shouldn't you let them pick their own business models?

There is a reason the distributors pick bundling, and it is not to annoy their customers. The cultural industries are hit-driven: Producers back a bunch of projects, gambling that a few "tent poles" will be popular enough to fund the capital costs of the whole business. That model is passed on to distributors; it's the reason the corner store has to stock bundles of magazine titles, and the movie exhibitor has to take a package of movies that include blockbusters as well as flicks few people want to see.

Think of your house as a mini cineplex: You aren't paying the cable company for each one of those channels, you are paying to get a variety of TV content into the house. What you watch is up to you.

That's why, as a few voices keep warning, pick-and-pay is unlikely to bring the cable bill down. Tired of paying $75 a month for dozens of channels you don't watch? Okay, instead your provider can sell you the Chess Channel, the Frisbee Channel and the Sushi Chef Channel for $25 each.

Of course, you may just cut the cord in exasperation, but perhaps the government should let cable companies decide at what point they might need to repackage their offerings to reduce that risk.

Rules governing the number of Canadian-owned channels in a bundle have been used by the CRTC to ensure the distribution of Canadian content, but bundling is a business practice that extends beyond Canada, and is considered essential by the U.S. TV industry.

The more direct way the system supports Canadian content is through the on-air requirements imposed on broadcasters and the levies to support TV production that are paid by cable and satellite distributors. As the distinction between the Internet and television becomes narrower, it becomes less fair to make these demands only of the old players. You can't regulate the Internet, critics cry, conveniently ignoring that both copyright and obscenity laws are already doing that. You could ask Netflix to ensure it has a certain percentage of Canadian titles on offer in Canada. You could also ask Netflix to contribute to production funds. Or you could place a tiny levy on Canadian Internet service providers and raise millions to produce more Canadian content for all platforms.

Why are ideas like these so quickly denounced by Harper? The stated purpose of the Canadian broadcasting system is not to enrich Rogers and Bell, let alone Netflix or Google; nor is it to give Canadian viewers access to Breaking Bad at a better price. The Broadcasting Act states that everyone in the system should contribute appropriately to the creation and distribution of Canadian programming.

If you argue that Canada cannot maintain this walled garden in an age of globally distributed digital content, then you will have to jettison regulations that have built up a $4-billion-a-year television production industry that produces lots of shows, including Orphan Black and Murdoch Mysteries, that are popular in Canada but are also exported around the world.

The alternative is to bring new media into the garden: Canadian regulators have a long history of figuring out how to repatriate money lost to disruptive technologies and American media.

Today, the big question facing our broadcasting system is whether the regulations that have nurtured television programming since the 1970s can be sustained. Canadians need to have a real debate about the implications of expanding them to include some new media, or just letting them wither. Politicians who make hollow, pocket-book promises are only delaying that conversation.