I am retired staff of Unifor, the union representing 300,000 Canadians in twenty different sectors of the economy, including 10,000 journalists and media workers. As the former Director of the Media Sector and as an unapologetic cultural nationalist, I have an abiding passion for public policy in Canadian media.
On the cusp of the federal government’s introduction of an Online News Bill in the House of Commons, the Public Policy Forum of Canada has published its sequel to the 2017 Shattered Mirror report documenting the crisis in Canadian journalism.
The report “The Shattered Mirror – Five Years On” written by Ed Greenspon and Katie Davey arrives at conclusions about funding solutions similar to where I landed in my post two weeks ago, only with far greater insights, details, and ideas.
With any luck, it’s not too late for Heritage Minister Pablo Rodriguez to incorporate them into the Bill.
While the Bill is about refereeing the commercial relationships between the digital distribution platforms Meta and Google and the media organizations that supply news content to their audiences, the government’s role as regulator allows it to put some public interest conditions into the legislation.
Media organizations seeking better compensation for news content under the Bill must deliver original journalism that “better informs our democracy,” rebuilding news coverage of public institutions, especially at the local level.
News outlets that distribute on any media platform —not just mainstream news organizations— should be eligible for this compensation regime so long as they meet the professional standards established in 2019 by federal aid to journalism program, as Qualified Canadian Journalism Organizations (QCJO).
There must be public reporting of the final compensation arrangements and a guarantee of non-discriminatory negotiating practices. Transparency will verify that Meta and Google aren’t playing favourites among news organizations and that audiences are aware of the commercial relationship between the Big Tech and news organizations when reporters are doing beat coverage on them.
As part of their recommendations, the authors of the Report point to the importance of establishing an independent governance body —arm’s length from Big Tech, the media, and the government—- responsible for eligibility and to superintend the overall arrangements.
The constitution of a governance structure provides a useful pivot to the other focus of the Report, the federal government’s Local Journalism Initiative (LJI).
The $10 million per year LJI is the less well known of the federal Liberals’ various aid to journalism programs such as the $100 million per year QCJO subsidy to editorial coverage. Both the LJI and QCJO have a five-year expiry date and the LJI program is coming up for reconsideration first. (I have posted asummary of the various federal programs).
The LJI program has been focussed on funding one-year journalist internships in community newspapers and small cable stations, favouring rural communities that have become news deserts and also in underserviced Indigenous and racialized communities.
The Report says the LJI program has passed its probationary period and it’s time to graduate from an experimental to a permanent program with more money, simpler application procedures, longer funding commitments, and independent governance (it’s currently administered by news industry associationswhose own members apply for its grants).
This independent body might also be confirmed by the Canada Revenue Agency as a “qualified donee” eligible to accept tax-sheltered philanthropic donations for re-distribution to non-profit and, with some flexibility from the federal government, for-profit news organizations as well. (The Report observes that philanthropic support for journalism has been minimal in Canada and, even in the US with its longer tradition of supporting journalism, has hardly made a dent in the overall loss of news coverage.)
As I observed in my previous post, there is a golden opportunity to establish a single and independent governance body to administer both public and private contributions to journalism, whether the funding source is the federal government, Big Tech, other industry levies, or philanthropic donors. That improves the chances of a coherent national program of supporting news journalism on all distribution platforms.
There remains a fly in the ointment, and it’s a big fly. To be blunt, it’s the Postmedia problem.
That $1.1 billion debt (and the workforce) has steadily dwindled since 2009. Still, Postmedia owes $67 million to its first lien Canadian investor Canso and $189 million to second-lien American hedge fund Chatham Assets. The share price is comatose and the company doesn’t pay dividends. The executive compensation has been extravagant, although mostly a rounding error compared to the debt payments.
Although it should be irrelevant to good public policy, there is the slavishly Conservative editorial stance and edgy right-wing opinion writing that fuels popular enmity in at least half the voting population: people who vote for MPs who will vote on the Online News Bill.
The policy problem is this: why should federal legislators help Postmedia if every dollar of aid to journalism, including Big Tech contributions, gives Postmedia a windfall opportunity to pay off another dollar of improvidently acquired debt instead of hiring journalists?
It’s difficult to design a policy solution to this problem, whether it’s the Online News Bill or the LJI and QCJO programs (neither of which address this issue).
The government could impose draconian measures that go against the grain of regulatory traditions, but are not unknown in government-sponsored bailouts: imposing limitations on debt-repayments, dividends and executive compensation in order to be eligible for any of these funding supports.
Another more technical mechanism could be borrowed from the CRTC’s regulation of television local news which sets an 11% baseline of minimum editorial spending as a percentage of overall revenue, even if that revenue is falling. The baseline became useful when the CRTC established a second, supplementary source of funding for news coverage. That additional funding has to be spent on “incremental” news coverage —meaning the opportunity for a public accounting documenting additional reporters covering more stories.
A comparable model might be designed to prevent Postmedia’s bondholders from pocketing new funding earmarked for journalism.
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The merger proposal that never stops feeding the news cycle had a big week.
Federal Innovation Minister François-Philippe Champagne announced he would not approve the “wholesale” transfer of radio spectrum licenses from Shaw’s mobility business in Ontario and western provinces to Rogers. The Parliamentary Industry committee chimed in today with its non-binding opposition to the overall merger, especially the wireless assets.
Champagne’s clipping of Rogers’ wings on the wireless end of the $26 billion deal could impact the anticipated ruling of the Competition Bureau on whether the merging of wireless, ISP, cable and satellite assets “substantially lessen competition.”
The CRTC also holds a veto on the merger of the broadcasting cable and satellite assets (the Global News chain of television stations operated by the Shaw-controlled Corus Broadcasting is not part of the merger). The Commission held hearings in November and Rogers is hoping for a decision before its targeted closing in the second quarter of the year.
The hearings are mostly political theatre. As a Parliamentary committee CHPC has no authority to block the merger that results in the Global stations being cut adrift from Shaw Cable’s $13 million supplementary funding of Global stations that has existed under a CRTC mandate since 2017.
MPs on the Committee mercilessly grilled Rogers Broadcasting VP Colette Watson on the elimination of that $13 million from Global’s $102 million budget.
Watson declined to offer the too candid answer: Rogers would violate its cable license if it didn’t spend the $13 million on its own City-TV stations.
Instead Watson suggested Global stations should absorb the 13% budget cut to their news resources and —in a gob smacking statement— suggested there was “no proof” that Global ever spent the $13 million on local news since 2017. The proof of course is a matter of public record posted on the CRTC website.
More helpfully, Watson’s colleague from Rogers Cable Pam Dinsmore suggested MPs consider bigger solutions to the crisis of local news in Canada’s television networks when deliberating Bill C-11. A good analysis of that crisis was published earlier in the week by the Toronto Star’s Christine Dobby.
Speaking of political theatre, the CHPC has yet to schedule its hearings on the Online Streaming Bill C-11 but early indications are it will be a replay of the C-10 drama from last spring.
In a recent blog post on Senate hearings considering Bill S-210, Internet activist Michael Geist gleefully turned the bombast meter up full blast and claimed that a CRTC official testifying before the Committee had inadvertently disclosed the Commission’s broad ambition to censor Internet content if it gets more regulatory authority under Bill C-11. The CRTC witness in question civil servant Scott Hutton is the Commission’s Research Director, not a Commissioner, and he was referring to the CRTC’s current lack of regulatory authority over “this issue” under discussion in the Senate Bill: age verification requirements to deter minors accessing pornography on the Internet.
The international efforts to regulate online harm took another twist in Germany. Google, Meta and Twitter persuaded a lower court judge that a new law requiring the Big Tech platforms to inform police of posts that reveal threats of criminal activity —and provide supporting persona data— is unconstitutional until a crime is committed. The ruling is being appealed.
My latest blog post digs into the story behind the notorious photo of CRTC Chair Ian Scott having a beer with Bell executive Mirko Bibic in December 2019 and the now iconic status of the picture amid allegations from Internet service re-sellers of regulatory capture.
Mostly I think it’s nonsense as you can probably tell from the blog, but there was another chapter in the ISP saga this week when Bell acquired Quebec’s biggest independent ISP re-seller EBox. Former CRTC Chair and still federal civil servant Jean-Pierre Blais –never one to hide his light under a bushel– publicly criticized the deal as a blow to ISP competition.
from Linked-In
Speaking of acquisitions: the Rogers/Shaw merger needs approvals from the CRTC (for cable and satellite assets), the Competition Bureau, and finally from ISED Minister François-Philippe Champagne for the wireless spectrum. The Globe’s Alexandra Posadzki reported that the MPs on the INDU Parliamentary committee are pushing Champagne to make his approval conditional on Rogers divesting the Shaw mobility operations. Industry analyst Mark Goldberg, ever the deflator of populist dreams, tweeted a previous blog with another perspective: maybe a merger of Rogers and Shaw wireless operations will intensify competition between Telus and Rogers.
Fair-Pay-for-News: Heritage Minister Pablo Rodriguez revealed that the long awaited Online News Bill will be tabled in the Commons soon and covers not only written journalism but also television news posted on Facebook NewsFeed, Google Search, and YouTube.
This “Australian model” of realigning the bargaining power between the Silicon Valley giants and news outlets is picking up traction internationally: the UK government is committing to an even stronger version while there is a weaker version (no binding arbitration) in US Congress.
All of this coincides with the publication of a Press Gazette interview with the architect of the Australian “Media Bargaining Code” Rod Sims on the first anniversary of the legislation. Unfortunately key details of the series of deals struck with Australian news outlets remain shrouded in non-disclosure secrecy. An interesting tid-bit: he refutes the notion that large media organizations have elbowed smaller publications aside at the waterhole.
The New York Times in Canada: Canada’s number two (so it’s said) and least edited newspaper the New York Times has ticked off some Canadian subscribers with controversial coverage of the Convoy Occupations. That drew a rebuttal worth reading from the National Observer’s Max Fawcett.
On December 19, 2019 Bell Canada’s second-ranking executive Mirko Bibic went for a beer at McGee’s pub, two blocks from Parliament Hill. Someone took his picture. His table companion with his back to the camera was CRTC Chair Ian Scott.
A meme was born.
Bell is of course Canada’s biggest communications company. The CRTC regulates telecommunications and broadcasting. The “telco” side of the house includes Internet, wireless, and telephone networks; the broadcast side includes cable and satellite distribution, television and radio. As a vertically integrated (“VI”) communications company along with Rogers and Québecor, Bell has a finger in every pie.
The photo didn’t get much traction in the media. But Bell’s industry adversaries, allied with numerous consumer groups and academics who regard Bell as their foil and nemesis, had better luck recycling the photo into social media with conspiratorial suggestions of clandestine lobbying. It lives online today, reposted at moments of regulatory controversy. The punch-line is that the meeting occurred around the time Bell and other VIs launched appeals against the CRTC’s slashing of the wholesale Internet prices paid by ISP re-sellers like Distributel and TekSavvy to access the VIs’ fibre networks.
Over two years later the CRTC’s rate setting for Wholesale Internet rates is still on the boil: Distributel recently revived the McGee’s photo as smoking gun evidence of Scott’s conflict of interest, demanding he recuse himself from the file.
Earlier this month Scott probably decided he could ignore the photo no longer. He gave an interview to the Toronto Star’s Tony Wong and explained that he and Bibic are old friends (Scott spent years working for Telus in regulatory affairs) and were meeting socially in Ottawa’s best known pub for a beer.
According to Scott, Bibic raised a regulatory issue, of which the many-fingered Bell has plenty. So Bibic had to file the standard report with the federal lobbying registry, coincidentally around the time he ascended to the top of the corporate ladder as Bell’s CEO. Significantly, the registry identifies the subject of the McGee meeting as “broadcasting” (Internet Wholesale is a telco matter, not broadcasting).
Scott told the Star that “no rules were broken” which while true hardly mollified his critics, especially the re-seller representatives (who can also found many times on the lobby registry).
This is no longer breaking news of course. I write about it to get a better understanding of the photo behind the recusal request and the meme’s success in igniting popular opinion about the inside game in Ottawa in general, and the CRTC in particular.
Heated public criticism of the CRTC and its chair —appointed by the ruling government to a five-year term— is a time-honoured Canadian tradition.
The CRTC regulates which itself assures it many enemies.
It regulates big things: Internet and wireless networks, television and radio, and if Bill C-11 is passed it will regulate online streaming.
All that regulation impacts monthly household bills and —depending on your point of view— freedom of speech and Canadian cultural sovereignty. Cue the photo meme, and it’s no wonder that Ian Scott has become another Ottawa piñata.
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So what’s up with the CRTC’s Wholesale Internet regulation?
Most Canadians have something to say about their monthly ISP bills and the corporate power of VIs like Bell and Rogers usually animates those opinions.
The CRTC knows this and has been working on it a long time.
For the better part of two decades the VIs have ploughed billions (yes, many billions) of dollars into expanding and upgrading wireline networks across the country while ISP re-sellers have entered the market to apply downward pressure on retail prices. The CRTC’s rulings that force the VIs to sell network access to their own competitors at wholesale rates has been described in 2019 by the federal Competition Bureau as a success story for consumers in terms of provider-choice, lower prices, and customer experience.
Still, VIs and re-sellers have fought bitter regulatory battles for the better part of a decade over setting a fair wholesale rate (retail rates for consumers are not regulated).
The master plan designed by the CRTC goes back 15 years including the terms of at least three Commissioners appointed by two different governments. In forcing the VIs to provide re-sellers access to their fibre networks and setting wholesale rates, the CRTC has been searching for the sweet spot between increasing competition to push down retail prices without dampening investment incentives for the VIs to keep up with the exponential growth in consumer demands for more data and higher speeds.
According to the Competition Bureau, as detached and pro-consumer a body as you will find in this heated debate, the CRTC’s wholesale plan has allowed re-seller services grow with retail prices often 10% to 15% lower than those charged by the VIs.
Neither side is satisfied.
The VIs —Facilities Based Carriers (FBC) in CRTC lingo— remain irked at being forced to give a leg up to their competitors. They are particularly irked that the CRTC has slashed wholesale rates to the point that the FBCs say they are not recovering their capital costs; that it’s a drag on further capital investment in a network that increases every year in traffic, consumer expectations of download speeds; and (thorniest of all) that is struggling to connect rural Canadians.
The re-sellers and their consumer allies rail against the FBCs’ foot-dragging in opening up their networks and, most of all, that the CRTC is not cutting wholesale prices far enough.
If this was all a televised drama series, an episode recap would be in order.
Let’s wind it back to 2015.
In a ruling by the previous Chair Jean-Pierre Blais (appointed in 2012 by Prime Minister Stephen Harper), the Commission mapped out a consensus plan for how the Wholesale Code would help the resellers grow without discouraging network investments by the FBCs.
The philosophy behind the plan was explicit: the re-sellers were not going to be wards of the state propped up by the CRTC setting retail rates to ensure their success. Entrepreneurial risk was a given. The CRTC was offering wholesale rate regulation as far as necessary to recognize that while re-sellers could plausibly build their own hardware plants, they could not reasonably be expected to raise billions in capital to build their own “last mile to the home” fibre networks. Access to those last-mile networks would continue on a wholesale basis, but piggy-backing on the FBCs’ “backbone” networks would be phased out.
The Blais plan was to reconfigure the network design from the “aggregated access” of each re-seller hooking into the FBCs’ networks at central “points of interconnection (POI)” and instead linking into those network tentacles closer to the “last mile” at numerous local POIs, a “disaggregated model” of re-seller access.
The disaggregated model —-which the re-sellers supported— meant several knock-on changes in wholesale rates and business risk for the re-sellers.
First, the resellers were going to have to invest in their own “transport” hardware at each POI on the FBCs’ premises, either by renting from the FBCs, buying their own, or forming a cooperative with other re-sellers at the same POI premises.
Next, to give the re-sellers a firm push out the door of the aggregated house, the CRTC sunset the re-sellers’ access to the FBCs’ central POIs and capped the network speeds that they could purchase wholesale in the aggregated set-up.
Lastly, the CRTC announced it would set wholesale rates for both aggregated and disaggregated networks over a three-year transition period. Crucially the Commission deferred the disaggregated rate decision until later and first reviewed the aggregated wholesale rates.
And that’s when the trouble began.
On October 6th, 2016 the CRTC cut the wholesale aggregated rates for what the re-sellers had to pay the FBCs: by 90% on the “usage” rates covering the “backbone” portion of the FCBs’ networks and 40% for the “access” rates covering the last-mile of the network. Blais described them as interim rates, pending a more detailed review of FBC capital costs.
The carriers, including Bell, didn’t take it too well. They said Blais had just killed off the the re-sellers’ incentive to wean themselves off of the aggregated model and start building POI transport in a disaggregated system. The FBCs filed appeals to the federal court, the federal cabinet, and asked the CRTC to reconsider its decision. They lost all of them and the rate cuts stood.
In July 2017 Ian Scott was appointed by the Liberal cabinet to succeed Blais who had not asked for a second term. His appointment was immediately criticized by consumer-group Open Media for being selected from the telco industry instead of the consumer community. Scott had indeed worked for both Telesat and Telus, as well as a short tour of duty in 2007 as senior policy advisor to then-CRTC Chair Konrad Von Finckenstein who was widely seen as a pro-consumer Chair (as was Blais).
Among many regulatory files, the new Chair continued with the laborious study of the FBCs’ capital costs to finalize aggregated wholesale rates, which both sides in the dispute predictably wanted to move up or down.
The Commission released its decision in August 15, 2019 and to the delight of the re-sellers and the horror of the FBCs, the Commission cut the aggregated wholesale rates even further.
And the cuts were retroactive to 2016 so the carriers owed the re-sellers $325 million in rebates. Yes millions, Dr. Evil.
Again, the FBCs launched appeals to federal court and cabinet, as well as requesting the Commission reconsider its decision which they said was riddled with costing errors. In October 2019 they caught a break when a federal judge stayed the CRTC’s order to change rates and make retroactive payments pending appeal proceedings.
And six days before Christmas, Scott and Bibic had that beer.
Tek Savvy and Distributel spokespersons raised hell in press releases and Twitter. The consumer group Open Media, which counts both re-sellers as major financial backers, did the same. Other consumer advocates piled on.
Bell and the other FCBs eventually lost their court challenges. But the wind was shifting in their favour anyway.
Two things happened.
First, in June 2020, the Commission convened another proceeding in the long saga of transition from aggregated to disaggregated rates, this time to design the system of POIs in the disaggregated model which was now informed by Distributel’s request to reverse course from disaggregated and go back to a highly aggregated model.
Distributel, no doubt elated by the double cuts to rates under the aggregated model in 2016 and 2019, told the Commission that the capital costs of building their transport equipment in a disaggregated wholesale regime were astronomical (it might take “centuries”) and the Commission should reverse its 2015 decision.
The FBCs including Bell told the Commission that Distributel’s 180 degree turnabout on the Commissions’ transition plan was a smokescreen for cashing in their winning lottery ticket of deeply reduced aggregated rates. They pointed out that Distributel had originally advocated for the disaggregated system (and neither Distributel nor Bell suggested that transport capital costs had changed in the interim). They also pointed out that the largest reseller Tek Savvy wasn’t complaining about transition to disaggregated and was already building its own hardwired network in southern Ontario.
The winds of change really picked up in August 2020 when the federal cabinet answered Bell’s appeal by stating the Commission’s 2019 rate cuts had missed the sweet spot and showed insufficient consideration to the FBCs’ capital costs and therefore the Commission must review its second rate cut.
So the Commission began its months-long do-over of the aggregated rates review, which resulted in its decision on May 27, 2021. In a unanimous decision by nine commissioners including Scott, the Commission reversed its 2019 rate cut, agreeing with all 14 arguments raised by the FBCs identifying errors the Commission had made in reviewing costing models and its own guidelines. The 2016 interim rates, which had included the initial rate reduction in favour of the re-sellers, were confirmed as final.
Not only that, the Commission said it was carrying on with the transition from aggregated to disaggregated model which meant those reduced aggregated rates would soon be a thing of the past. Distributel and other ISP re-sellers were going to have to build those multiple transport nodes throughout the FBCs’ networks. Their 2019 lottery ticket was in shreds: no second rate cut, no $325 million payment.
At this point raging public controversy was a given. Needless to say the ruling gave new life to the resellers’ public campaign and the juiciest orange in the campaign was the McGee’s photo. (Visits to the Tek Savvy, Open Media or CNOC websites illustrate that, but the most acidic commentary might be Tek Savvy exec Peter Nowak’s twitter account).
Open Media newspaper ad from July 2021
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Whatever one thinks is the right answer on wholesale internet rates, there’s the matter of lobbying.
Lobbying on matters of public interest under controlled conditions including a federal registry is expressly allowed in all democracies including this one: not only to the CRTC, but to all federal administrative bodies, politicians and their senior staff (and carried on with gusto by representatives of VIs and resellers alike).
There are no rules against one-on-one meetings either. Before I retired, I lobbied federal politicians countless times on media issues, both one-on-one or by committee.
I even lobbied Ian Scott on February 12, 2018 (you can look it up on the registry) although truth be told it was a meet-and-greet in a bar following his appointment the previous July (I am guessing Bell didn’t have to wait that long, but I’m over it).
It was a two-on-two meeting and very pleasant. We filled his ear about the history of the CRTC’s failures on local news and he nodded a lot. At the time, there were no open CRTC files dealing with local news but I hope we educated him for the next time it comes up. I think regulation works better with more information.
Still. Scott —and Bibic— were very naive to think that they could just be regular guys going to a pub that’s located within 100 metres of offices housing the Parliament Hill press corps. Next time maybe they’ll bring chaperones, even if it’s Christmas.
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The Liberals’ Online Streaming Act C-11 passed second reading in the House of Commons on February 16th, setting the stage for the expected political drama of Heritage Committee proceedings in the coming weeks.
Heritage Minister Pablo Rodriguez took to the floor of the House to speak about the importance of cultural sovereignty and kept his messaging on the content of the Bill simple.
The revisions to the Broadcasting Act, he said, are to compel the mostly American streamers serving the Canadian market to platform their fair share of Canadian programming or else contribute cash to the Canada Media Fund.
As for social media uploads, Rodriguez’s sound byte “platforms are in, users are out” was shorthand for saying that the regulation of upload-based streamers like YouTube would be restricted to professional rather than amateur videos and music.
While the Minister has yet to spell it out, presumably the “regulation” of professional content —-does he mean “significantly monetized”?—- is relevant to the streaming platform’s in-kind or in-cash contribution to Canadian programming and also to its obligation to bring that content to the audience’s attention through “discoverability” functions that do not include algorithms (which are expressly excluded under the section 9(8) of C-11).
No fire-breather, Conservative Heritage critic John Nater struck a moderate pose in reply. He cited the Conservative election platform’s commitment to regulate “large” American streamers “like Netflix, Disney Plus and Amazon Prime” but left the demarcation point between large and not-large unspecified.
As expected most of Nater’s comments were directed at section 4.2 of C-11 which states the general principle of distinguishing professional from amateur social media uploads. He served notice the Conservatives don’t think it’s clear enough and are opposed to leaving the fine print for the CRTC or federal cabinet to fill in after the Bill passes.
Nater also seems to think the Bill contemplates regulating the streaming platforms’ discoverability algorithms, but they are explicitly excluded (leading NDP MP Alexander Boulerice to ask how the discoverability of a platform’s Canadian programming was going to be tracked if not by algorithm design).
Nater also said the Conservatives want the definition of Canadian content changed “to ensure that real Canadian stories are captured within CanCon rules,” a criticism of the long standing “point-system” that measures Canadian content by counting heads of leading creative staff (directors, writers, and actors) rather than a film’s intrinsic Canadian expression (for more on this, have a read of George Carothers’ 2020 study).
When asked by other MPs whether the House could expect a repeat of last year’s filibuster of C-10, Nater responded with a sober “I will work constructively with my colleagues” and “we will table reasonable amendments.”
We’ll soon see.
Conservative MP Pierre Poilievre took the occasion of Second Reading (before his Heritage Critic Nater had a chance to get on this feet) to tell the House that Liberals have “abused the freedoms of Canadians. Why should Canadians now trust that same abusive government with the power to censor what Canadians see and say online?”
There are no scheduled dates for the Heritage Committee but after next week’s short break Parliament is in session for 12 out of 17 weeks to the end of June.
Canada’s media advertising market bounced back in 2021 from pandemic lows for digital and TV, but remains mired in a downturn for news publishers and radio stations.
According to CARTT Magazine and based on data from Standard Media Index, the advertising spend on “traditional” (non-digital) media improved 19% in 2021 but remains 15% below pre-pandemic 2019.
Within traditional media, television recovered by 25% over 2020 but newspapers and radio merely plateaued at 2020 numbers which were a 40% to 45% drop from 2019.
The 2021 digital growth helped some TV companies combining conventional and digital broadcasting but not all.
CBC (41% growth) and Rogers (38%) had the best results suggesting they are growing ad revenue post-2019, but Bell (18%), Quebecor (22%) and Corus (14%) are still below 2019 levels.
Pierre Poilievre accuses the mainstream media of “insulting Canadians.”
February 7, 2022
No news round-up of Canadian media policy can begin without first remarking on the quantum leap in the vilification and attempts to intimidate the Press during the last two weeks.
Pierre Poilievre’s viral video tweeted January 29th in solidarity with Convoy protesters accuses “the media” of “insulting Canadians.” His most recent video road-testing his leadership narrative goes full Trump, weaving in attacks on the mainstream media as a member of the establishment cabal plotting against freedom.
The bile spewed at journalists both on social media and during live news stand-ups is daily fare now, seemingly a Scouts-badge for Convoy militants.
Right-wing efforts to foster the Trump formula in Canada are in full swing: malign the integrity of all political institutions including the mainstream media, leaving only faith in the Leader.
We are about to find out what kind of country we are.
…
Poilievre’s video briefly alludes to a Liberal attempt to repress political speech through its Internet legislation. With the Liberals re-tabling C-10 amendments to the Broadcasting Act, we can expect the Conservatives to re-boot their political opposition from 2021 focussing on the regulation of social media posts.
The new Online Streaming Bill C-11 was drafted to smooth the rough edges from last year’s Bill C-10 aimed at ending the 20-year regulatory exemption of Internet-based broadcasting. The main thrust of the legislation is to require foreign streamers Netflix, Disney, DAZN, Amazon, Spotify and YouTube to make the same in-kind or in-cash contributions to Canadian content as regulated Canadian TV and radio broadcasters do.
The distraction –-and opportunity for critics— is the Bill’s provision for regulating the streaming of programming on social media platforms; programming that mimics conventional broadcasting but distributes content on social media platforms instead of (or mostly in addition to) Internet apps or TV channels. The Bill delegates to the CRTC the rule-making on what kind of program uploads will be regulated and provides Parliamentary criteria for the Commission to follow. The chief criterion is whether the programming is commercially monetized.
Critics immediately pointed out that despite Parliament’s guidance the CRTC could regulate a huge array of amateur and start-ups creators trying to monetize their uploads.
Given its past history of foregoing regulation of small cable operators and broadcasters, the CRTC will almost certainly grant a widespread exemption for nascent commercial activity.
But given the Liberals are trying to dodge controversy in C-11, it’s a bit of a head-scratcher they didn’t write in a more specific exemption for programming uploaded by small scale content creators.
The political weak link in C-11 has little to do with the fine print of the legislation: its vulnerability is that a common front of opponents and critics of communications regulation have kept up a years-long campaign against the CRTC and lately have been personally targeting Chair Ian Scott.
We can expect the anti-C11 sound bites will be that Scott can’t be trusted with new powers over social media and the Bill is part of a power-hungry Prime Minister’s plot to shut down free speech.
Unlike C-11, an Online Harms bill is a free speech and censorship issue. It also raises compelling harm issues that we never had to confront before: ask any journalist, especially female, Muslim or POC journalists about the threats and abuse in their social media feeds.
Minister Pablo Rodriguez released an interim report on Heritage’s public consultation, the now-standard “what we heard” summary of public submissions, so it’s going to be some time before we see a Bill.
At this point I make only one observation: the ill-advised decision of the Minister not to publish the 422 submissions Heritage received from various Internet companies, academics, civil society organizations, victim’s groups, and ordinary Canadians.
The reason given by Heritage for this secrecy is that some submissions came from victims of online abuse who understandably want their traumas and identities kept private. But Heritage could easily have offered confidentiality to those Canadians without shielding all submissions from public view.
This is more than just a question of principle.
The Minister’s summary of “what we heard” repeatedly quantifies specific critiques of its proposed model of regulation. The Report is replete with “most people said” and “some said” and “few said.”
Without knowing who is saying what —is it a commercial entity, a known political advocate, or an ordinary Canadian— how are we to adequately judge their arguments ?
For instance, what has Facebook said to the government? Are we not allowed to know? We only know what Google has to say (some important things as it turns out) because its submission is posted voluntarily on Michael Geist’s website.
The Minister could do us all a favour by being more transparent.
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Update on an Update! On February 8, 2022 Competition Commissioner Matthew Boswell released his submission to Senator Wetston’s anti-trust review, a day after ISED Minister François-Philippe Champagne announced a government review of the Competition Act. As befits a submission from the chief enforcer of competition law, Commissioner Boswell recommends a laundry list of amendments intended to strengthen competition outcomes, especially in the digital economy. His recommendations overlap with the various reform proposals discussed in this blog. Where they do, I have made bolded annotations.
Updated: On February 7, 2022 the federal government announced a comprehensive review of the Competition Act will be undertaken, including “potential ways [to adapt] the law to today’s digital reality to better tackle emerging forms of harmful behaviour in the digital economy.”
The debate over whether Big is Bad or Beautiful is back.
US Congress is engaged in daily debates on legislation aimed at taking Big Tech down a peg, joining a global trend.
Here in Canada we have yet another communications merger on the front burner: the proposed $26 Billion Rogers-Shaw conglomerate. Decisions from both the Competition Bureau (telco assets) and the CRTC (broadcasting assets) are pending.
What Canadians may not realize is that the CRTC review of whether broadcasting mergers are “in the public interest” is an anomaly: all other corporate mergers and abuse of market power are governed by the little-known Competition Act—Canada’s “anti-trust” legislation— that is very much designed to protect the private interest of big business in the name of economic growth.
The obscure rules of competition law will be vital if Canada follows the global movement to trim the size and power of Big Tech.
The picture often painted by news coverage of Canadian corporate mergers is that our Competition Act is toothless and its agent of enforcement, the Competition Bureau, is ineffective. Certainly, the business community likes it that way (more on that later).
Indignant questions about the Bureau are frequently asked: how could Postmedia get away with buying the Sun Media tabloid chain in 2015? How could Postmedia and Torstar trade 41 community papers like baseball cards in 2017 and then close 36 of them on the same day because they competed with each other in local markets? How could Bell buy rival Astral Media in 2012 (though only with divestments) and the telco MTS in 2017 (again with divestments)? How was Telus able to buy cell phone start-up Public Mobile in 2013 ?
When our Competition Bureau picked up one of its earliest Big Tech files in 2013 —-a review of whether Google’s 95% control of the Search Engine market has resulted in the abuse of market power—- it issued Google a clean bill of health in 2016. When Facebook snapped up Instagram (2012) and WhatsApp (2014) our Competition Bureau did nothing (although to be fair, neither did US authorities). Our Bureau’s results in policing Big Tech are inferior to the US and the EU, other than “me-too” settlements after the larger jurisdictions have levied fines.
But popular tolerance of Big Tech’s size and might has worn thin around the world. Most importantly, it has worn thin in US Congress. Debate on the diverse raft of proposed regulatory Bills, matching the diverse holdings of Big Tech, is now a daily event on Capitol Hill.
With all of this public attention on whether Big Tech is bad or beautiful, our own Senator Howard Wetston has given the debate a Canadian focus by kicking off his own consultation on whether clipping the wings of Big Tech first requires an overhaul of the Competition Act.
While a lone Senator taking up an arcane policy issue hardly constitutes legislative momentum, Wetston enjoys special credibility as the former Director of Competition Enforcement, ex-Chair of the Ontario Securities Commission and a stint as a federal judge (he’s also a Senior Fellow at the C.D. Howe Institute). Depending on what he has to say, his report could be the spark to tinder here in Canada if the US Congress moves the needle on anti-trust.
The submissions to the Senator’s consultation address the technical features of competition law but mostly they offer some very readable (and philosophical) debates over the role of government in distributing economic opportunity and wealth.
The bread and butter of the Act is the index of criminal offences that Canadians take for granted like corporate collusion in price and output fixing, bid rigging, and deceptive marketing practices.
The more controversial stuff is about mergers, acquisitions, and the abuse of market power by big business.
The Competition Act is explicit: market dominance is perfectly fine. Even an air-tight monopoly is legal. If a dominant company keeps its nose clean it’s free to grow, merge and acquire its way to market dominance. It only runs afoul of competition regulators by committing acts that substantially lessen competition through sharp practices designed to harm competitors, such as:
exploiting its dominant market position to put out cheaper quality goods;
a conglomerate charging lower prices to its own retailing divisions;
selling at prices lower than the acquisition cost;
demanding a supplier refrain from selling to competitors; or
buying up and stockpiling scarce resources.
Otherwise, big is not bad. It’s not even suspect.
And that’s the way the Competition Act ought to remain according to its chief defenders which include the big business lobbyists C.D. Howe Institute and the Montreal Economic Institute, as well as the Bay Street merger and acquisition lawyers speaking through the Canadian Bar Association. All of them have advised Senator Wetston to leave the Competition Act alone or make it even more favourable to big business.
As they accurately point out, the Act’s purpose clause makes “efficiency” the trump card in all matters of abuse of market dominance and, notably, mergers and acquisitions. [Commissioner Boswell rejects a proposal to strengthen further the “efficiency trump card” ].
By “efficiency” these acolytes of Chicago School economist Milton Freidman mean an unfettered market economy increasing total wealth and output without regard to the impact on workers, the environment, or the distribution of wealth among the rich and poor.
Our Canadian legislation even sports the notorious section 96 “efficiencies defense” when reviewing mergers, unique among OECD nations. That provision forgives a merging company for committing anti-competitive harms (for example using market dominance to raise prices) so long as the gains from economies of scale outweigh the harms. [Boswell recommends abolishing section 96, noting that in the US and other major jurisdictions the only justification for sanctioning anti-competitive mergers is if consumers benefit.]
The triumphalism of the Chicago School’s gang goes so far that the Montreal Economic Institute suggested to Senator Wetston that Canadian judges ought to just overrule any Canadian law or regulation that conflicts with their definition of “efficiency,” as rogue a statement by the business community as you are going to find.
The Bay Street view expressed to the Senator in various submissions is simple: don’t mess with our much-loved competition law just to get at Big Tech through anti-trust.
On the other side of the policy ledger, the Senator has received a number of submissions from reformers (Vass Bednar, Keldon Bester, Public Interest Advocacy Centre, Jennifer Quaid) which in aggregate propose several amendments to the Act, some fundamentally challenging the Chicago School status quo:
Give the Bureau clear authority to retroactively review mergers and acquisitions that later develop unanticipated market dominance, an obvious allusion to Facebook’s successful acquisitions of Instagram and WhatsApp. [Boswell has a similar recommendation and would also apply it to abuse of dominance enforcement.]
Write into the legislation that the common denominator creating a single “market” that can be dominated by Big Tech (and policed by the Bureau) is the accrual of data, rather than maintain the fiction of a siloed array of digital products and platforms.
Impose a “reverse onus” on companies doing the merging or acquisitions to prove affirmatively there is no anti-competitive harm. [Boswell has a similar recommendation].
Lower the dollar value of the “notification threshold” which requires companies to report mergers and acquisitions to the Bureau so that strategic acquisitions of startup firms don’t fly under the enforcement radar. [Boswell has a more elaborate recommendation].
Require explicit consumer consent to having one’s individual data handed over to another Big Tech company in a merger or acquisition.
Make sure the Bureau has sufficient remedial tools like break-up powers and segregation of operating divisions rather than relying on fines which, even if they are increased significantly, are unlikely to deter Big Tech companies that have already racked up billions in fines around the world. [Boswell has a long list of improvements to the Bureau’s remedial powers.]
Give the Bureau stronger administrative powers to review the Big Tech sector without launching a formal investigation, including compelling data disclosure.[Boswell definitely agrees with this one!]
Give the Bureau the human resources it needs to analyze Big Tech.
And most radical of all reforms, amend the purpose clause to remove the trump-card status of “efficiency” by adding other public interest considerations when reviewing market dominance or mergers. [Boswell rejects pro-business changes to the Purpose clause, but also ignores this reform proposal.]
It’s a compelling policy debate. Could it lead to change?
One thing that is missing in all of the Wetston submissions is the taboo subject of political power.
The popular will to limit corporate power is not just about curbing market dominance and rebalancing the distribution of wealth.
It’s also about big business’ acquisition of so much economic power that it becomes political power: Exhibit A is Facebook’s one-week capital strike in Australia which was an unsuccessful effort to intimidate a sovereign government into not regulating (note that the C.D. Howe Institute thinks Facebook’s move was just fine).
When big business thinks it can boss around sovereign governments it suggests that even if big isn’t always bad it always remains dangerous.
But any political movement to reform Canadian competition law in a significant way has more to fear than just the opposition of Big Tech.
For Canada to exercise its sovereignty over large US-based companies always brings the possibility of trade complications.
And here at home there should be no doubt that reform of competition law means taking on a fight against a tight and influential establishment of big business, its policy think tanks, Bay Street law firms, university economics departments, and Competition Tribunal members themselves. A brief web search of curriculum vitae and policy statements points in the direction of group think on competition principles of wealth maximization. Reform would be no small political battle.
Even Wetston’s consultation may be hedged to vindicate the status quo. Leaving aside the Senator’s impressive but impeccable Bay Street credentials, his choice of former law school Dean Edward Iacobucci to write a consultation paper (to which participants respond) on reform options is interesting.
Iacobucci’s paper is a well-crafted and temperate defense of the Chicago School principle of efficiency trumping all other societal goals and supports the central tenet of competition law in that regard.
He does offer the expected solace to those left behind by wealth maximization: the continued importance of progressive taxation and government social programs. But that still excludes employee, consumer, or environmental concerns about specific occasions of market domination.
Iacobucci also goes further than big business might prefer (by the way he sits on the C.D. Howe Competition Law Council) in conceding that government can always regulate a specific sector like Big Tech through special legislation so long as it leaves competition law alone.
That might be a reasonable approach but demands naivety about the likelihood of legislative action addressing market dominance in any given industrial sector.
As a former lobbyist and current advocate for news media funding and broadcasting regulation reform, I can tell you that Parliamentary regulatory measures in any given sector of the economy can take years to accomplish and most of the time the efforts are unsuccessful.
If you got this far reading this overly lengthy blog, thanks for hanging in. I am looking forward to the Senator’s report.
Public broadcasting is about to claim a front row seat in politics…but in the United Kingdom, not Canada. Britain’s Conservative government has served notice to the ad-free BBC —which boasts the most popular news site in the world— that six years hence it will not renew the BBC’s main funding mechanism established in 1946, the “TV tax,” a mandatory licence fee on every TV set. The current annual fee is $270.
None of which has escaped the attention of media commentators here in Canada.
We live in a world in which #defundcbc routinely trends on Twitter and Conservative Opposition Leader Erin O’Toole has promised to do just that (except in Quebec where it would kill him politically).
Loving, hating and reimagining the CBC is the birthright of every Canadian it seems. Globe columnist Andrew Coyne was first off the mark, touting a voluntary subscription fee on ad-free broadcasting with the goal of reducing or eliminating the parliamentary appropriation.
The regulatory future of Big Tech continues as a daily show in US Congress as different bills (none of which directly impact media) make their way through various committees. Microsoft gave it some unexpected immediacy by purchasing the world’s number three video game company, ActivisionBlizzard, (Call of Duty, Candy Crush) for $USD 69 Billion. Microsoft already owns the “pipe” to that gaming content, the ubiquitous Xbox streaming device.
Up until now, Big Tech mergers have been mostly buy-outs of future competitors or the acquisition of media products that fit snuggly into a multi-product ecosystem fed on consumer data. We’ll see what Activision turns out to be for Microsoft.
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