The media event of the week was the combustible encounter between Opposition Leader Pierre Poilievre and Global News reporter David Akin at a Parliament Hill press conference, followed by Poilievre fundraising off the incident and doxing Akin.
There’s no need to put in my two cents, Karen Pugliese’s account of what occurred and what it means for Canadian media and politics covers it.
***
One of Poilievre’s least favourite Liberal bills is C-11, the Online Streaming Act.
The controversial “Netflix Bill” broke through the Tory filibuster in June and has now moved on to the Senate Transportation and Communications Committee. As the Orcs of Middle Earth would say, “meat’s back on the menu.”
Except that Senators are taking a different approach than their House colleagues: less partisanship and a real curiosity about the policy issues. The Senators spent two days studying the Bill in June and two more this week, I posted an update that attempts to get at what is feeding the heated “discoverability” debate.
You can get more detailed reports from Cartt.ca here ,here and here.
Also, Marie Woolf of the Globe and Mail writes this morning about the role of “intellectual property” (ownership of exploitation rights) in making Canadian content film and TV. American streamers Disney and Netflix are currently barred from retaining these commercial rights for certified CanCon, so their movies don’t qualify. You will hear a lot more about this issue in the weeks and months to come.
There’s a recently published reflection on Canadian journalism provocatively entitled “Objectivity: What Journalists Hate but the Public Still Craves.”
Former Calgary Herald Editor Peter Menzies is looking at audience data from the American Press Institute suggesting readers are disappointed in how much opinion they believe they are getting in news stories instead of facts and analysis.
Menzies delivers quite a scolding to his fellow journalists. While some of his comments might be considered polemic, the data that he’s looking at is thought provoking.
***
I’ve been following the American version of our Bill C-18, the Online News Act. Democratic Senator Amy Klubachar’sJournalism Competition and Protection Act(JCPA) ran into a major snag in “mark-up” debate at the Senate Judiciary Committee, despite having bipartisan support lined up.
Senator Ted Cruz (R-Tex) tossed in an amendment on platform content moderation that Democrats wouldn’t accept and it was approved in the absence of a Democrat sick with Covid. Klobuchar had to withdraw the Bill and will resubmit it.
The California program will fund 40 local newsroom interns in three consecutive annual cohorts, each internship lasting three years. The program will be administered by Berkeley’s School of Journalism.
***
Minister Pablo Rodriguez has tabled his response to the May report of the Commons Heritage Committee on the Rogers-Shaw merger.
Another CRTC file I am following is the complaint filed by One Soccer (on the CRTC website under its corporate name Timeless Inc.) against Rogers for refusing to put the independent soccer channel into its cable package, even on a pick-and-pay basis.
Rogers has now filed its response, as has Telus as an intervenor. Telus is the only Canadian cable provider that carries One Soccer, which holds programming rights for the Canadian Premier League and several game broadcasts of our national teams.
Based on the filings, One Soccer is a long shot to win cable access under the long standing CRTC rules. Whether those rules are still “in the public interest” may be something to comment upon after we get the Commission’s ruling.
PIAC’s John Lawford braved the cross-fire at Senate hearings on Bill C-11
September 16, 2022
Bill C-11 is back under the microscope this Fall for several days of hearings in the Senate Transportation and Communications committee, with Senators picking up where they left off in June.
Where the debate on the Bill in the Commons Heritage Committee was rife with political theatre and a Conservative filibuster of half its 20 days of hearings, the Senators are exhibiting less partisanship and more curiosity about the policy issues.
Having said that, the discussion is very much a recycling of the Commons debate with mostly the same witnesses from government, industry and advocacy groups.
Supporting the Bill, spokespersons for the large Canadian media companies just want to “get on with it” even if the Bill “isn’t perfect” or doesn’t provide a policy solution for every issue. Smaller stakeholders are asking the Senate to pass amendments the Heritage Committee overlooked, to fix the imperfections which loom large in their futures.
Opposing the Bill, critics still hotly dispute any regulation of broadcasting over the Internet.
Most of that is aimed at the Bill’s business regulation of video and audio content uploaded to YouTube.
The Internet Society’s Tim Denton characterized the Bill’s “discoverability” proposal requiring YouTube to give Canadian content a boost in its recommendation algorithm as feeding Canadians broccoli when they are looking for steak. (To the extent that the best metaphor wins the debate, I would suggest discoverability is more like adding Albertan steak to the recommendations generated by a search enquiry for “steak”).
The critics are driven by the worst-case scenario: an oppressive CRTC that dreams up perverse regulations for what posts get algorithmic priority on hosting platforms like YouTube. As Open Media’s Matt Hatfield summarized, it’s not that C-11 is a Censorship Bill but it provides future governments with censorship tools.
The proponents of the Bill are also driven by their worst fears: that unregulated Internet broadcasting dominated by foreign companies is slowly displacing the regulated legacy system that enables Canadian media companies and Canadian content to succeed. The difference is that their fears reflect ten years of cord-cutting, cord-shaving, and cord-nevering.
Daring to get in between the two sides on the thorny issue of “discoverability” is John Lawford of the Public Interest Advocacy Centre (PIAC).
Lawford suggested to Senators they amend the Bill to restrict regulation of YouTube recommendations to banner ads and links, “static” as opposed to “dynamic” discoverability.
That compromise may satisfy neither the critics’ principled objection to regulating the Internet nor those in the music industry, especially from Québec, who want Canadian radio airplay quotas replicated as far as possible on music streaming platforms.
The reason this is relevant to regulating user-generated uploads is that music streaming giants Spotify and Apple, and conventional radio too, will compete in the same regulatory basket against YouTube which in addition to its own streaming service offers free playlists uploaded by thousands of YouTubers.
There are all sorts of sensible regulatory outcomes that the CRTC could, and probably will, come up with once the Bill passes. But critics are not in the mood to put their trust in the Commission.
With two more days of hearings this week under its belt, the Senate Committee will continue next week on September 20-21.
Last week I posted about something missing in online commentary about Bill C-11 and that is more discussion about what is meant by “telling Canadian stories” as a good reason for passing the Bill.
And then for something completely different…I also posted about a telecom issue. I don’t offer much expertise in this area, but I note that media and telecom policy have some important things in common: the large “vertically integrated (VI)” media companies that dominate the market, the CRTC as their much-maligned regulator, and the same critics and consumer advocates.
If the VIs dominate markets, the critics dominate the public messaging, making their voices heard by politicians, journalists, the Competition Bureau, and the public at large. That messaging, reduced to its essence, is that big is always bad and the CRTC is always wrong. The VIs’ counter-messaging doesn’t get a lot of air play: maybe the 900 pound gorilla doesn’t feel the need to explain itself (except when screwing up over network outages and firing TV anchors).
With all of that in mind, I dug a little deeper into a high-profile telecom file, the CRTC’s setting of wholesale broadband prices paid by “service-based” ISP providers (e.g. TekSavvy) to piggy back onto the VIs’ fibre networks.
While we are still on the subject of telecom policy, I updated you last week on Bell’s purchase of Canada’s second-largest re-seller, the Ontario-based Distributel. That follows BCE snapping up a similar company in Quebec, EBOX, only last February.
LaPresse has published a timely survey which says that EBOX’s prices have gone down considerably since Bell bought them.
The impact that Bell’s moves may have on competition has surely attracted the attention of the Competition Bureau and the state of telecom regulation seems to be in flux more than the usual. The Globe and Mail’s Andrew Willis provides a recent overview of what is happening in the industry.
***
If someone hasn’t already coined the phrase “never send a blogger to do the job of a journalist,” then I claim dibs. I have provided occasional updates on the winding road followed by the federal Liberals in putting forward an Online Harms Bill, promised in their last election platform.
The Senate Judiciary Committee began its first hearings on the Bill this past Thursday. Authored by Democratic Senator Amy Klobuchar, S-673 is co-sponsored by five other Democrats and seven Republicans, including Lindsey Graham (R-SC) and Rand Paul (R-Ky).
***
Has it really been more than two years since Christie Blatchford left us? A great journalist and a wonderful soul. There is a scholarship fund at OCAD being launched in her memory, you may wish to check it out.
For much of Bill C-11’s journey through Parliament, public comment and press coverage have been dominated by its critics which, in any democracy, is what you want.
I’ve posted previously that much of that criticism is factually inaccurate, leveraged by worst-case scenarios, and at times post-truth.
But what are the good reasons for the Online Streaming Act in the first place?
Heritage Minister Pablo Rodriguez’s messaging has been that C-11, like the Broadcasting Act it will amend, is about “a level playing field” for media companies and “telling Canadian stories.”
I agree with both, especially the latter. But it seems that outside Parliamentary committee rooms nobody is elaborating on why “telling Canadian stories” is a good thing.
I am tempted to say that such elaboration on Canadian content invites a discussion of “cultural nationalism” but allow me to disavow that term even though I call myself cultural nationalist as a kind of obligatory warning label.
A truly satisfying description of “national Canadian culture” is elusive (at least in English Canada) and not especially helpful, if only because Canada doesn’t produce and consume culture, Canadians do, in a rainbow of imaginative visions.
When asked why we value Canadian stories, and what makes them Canadian, our minds turn easily to the enduring riddle of the “Canadian identity” in hopes the answer to our question lies there.
During the 1990s we experienced a burst of English Canadian introspection about “the Canadian identity” in response to watershed changes in trade with the United States, globalization of the economy, changing ethnic demographics across the country, and the near separation of Québec in a cliffhanger referendum.
In the collection of essays Belonging (1993) about the meaning of Canadian citizenship, William Kaplan described something familiar to most Canadians: an unresolved tension between on one hand a post-national Canada populated by multiple nations and self-aware communities and, on the other, a lasting desire to live together in a sovereign community, what’s been described as “a focus of political allegiance and emotional energy on a scale capable of satisfying deep human longings for solidarity, symbolic identification, and community.”
The place that Kaplan lands is the concept of citizenship (and identity?) based on the right to participate in a democracy where we can create good things together that “transcend race, religion, language, ethnicity and region.”
Writing around the same time, Toronto Star columnist Richard Gwyn tried to describe a Canadian identity rooted in something earthier, a political creed he called civic Canadianism.
Publishing Nationalism Without Walls (1995) only months before a second sovereignty referendum in Québec would be narrowly defeated, Gwyn was pessimistic about Canada’s future. He dreaded the growing income inequality he saw resulting from trade deals, but also condemned official multiculturalism, immigration policy and “identity politics” as solvents that would unglue the cohesion of Canadians.
As for public support for “Canadian culture,” Gwyn cited polling by Ekos (see page 89 of its report) that demonstrated a high level of public support for “Canadian culture” without identifying what it was.
English Canadians overwhelmingly agreed “Canadian culture” was “something we can all take pride in” and also stated a high “sense of belonging” to Canada.
By the end of his book, Gwyn identified certain civic values as the sovereignty pact we make with our fellow Canadians: a deeper commitment to “egalitarian” and “collectivist” values than you might find in the United States.
But the trouble with grafting this concept of “identity” onto “culture” is —especially if you are searching for distinctive cultural characteristics based on a common Canadian experience— egalitarian and collectivist values may be majoritarian, but hardly a consensus as we are reminded every day in 2022.
If Canadian culture is regulated and provided with subsidies in servitude to the state, national unity, or a contentious set of civic values, then public support for CanCon will be just as contentious.
Perhaps this is the connection to why many right-wing libertarians are harshly critical of Bill C-11 if the justification offered for subsidizing CanCon is a semi-official “cultural identity” rooted in egalitarian priorities they don’t rank nearly as high as liberty and free markets.
That may be why C-11 critic J.J.McCullough pigeon-holes “Canadian nationalism” as loyalty to “left-wing” federal policies rather than anything recognizably cultural. He believes culture is a commodity best left to the unregulated creative marketplace, something he acknowledges is dominated in the English-speaking world by American media conglomerates.
For similar reasons, the idea of CanCon-as-political-agenda may be why other critics of C-11 gripe that the legislation is driven by Québec MPs (where culture has different historical and linguistic roots with no real affinity for American-dominated media).
The libertarians’ equating of Canadian cultural regulation with political goals or agendas is devilishly clever for it eats away at public support for the Broadcasting Act (polling results notwithstanding).
But it’s a mistake for either supporters or opponents of C-11 to conflate political values with cultural regulation, even though Canadian politics and culture share similar moral values.
While some recognizably Canadian culture is expressly political —consider any number of Canadian historical dramas, documentaries, or hockey summits — most of it isn’t.
But what elseit is often seems elusive.
The late Northrup Frye had something to contribute on this point.
Frye (1912-1991) is Canada’s most famous literary critic and an original mind if ever there was one.
Writing in the 1960s when the Québec Independence movement was on the march, Frye became intrigued with what English-language CanLit had to tell us about our inner imaginative lives. (It seems that deep thoughts about being English Canadian are stirred during crises of national unity).
In The Bush Garden: Essays on the Canadian Imagination, Frye offered a series of insights and pregnant ideas rather than a tidy answer to the question “what is the Canadian identity” or imagination. The first and last of eleven essays are the most directly applicable to the debate about CanCon.
Writing about CanLit as just one medium of cultural expression, Frye was not concerned about whether Canada boasted a renowned literature that held its own against the great classics in western literature, much in the way CanCon is often measured against the best that the UK, France or the US has to offer in popular culture.
Frye saw literature as one door into describing the Canadian imagination: “It is obvious that Canadian literature, whatever its merits, is an indispensable aid to the knowledge of Canada. It records what the Canadian imagination has reacted to, and it tells us things about this environment that nothing else will tell us.”
Frye made a series of observations about Canadian literature (and here we should consider if they also apply to other Canadian imaginative traditions like television) that most Canadians would recognize as true.
Canada did not have much of a youth as a post-Contact nation and, in the history of the European world, arrived rather late. Western mythical traditions in literature were so well established, said Frye, it’s no accident that instead Canadian literature often revolves around grand narratives in our history.
On that point he identified a distinctive feature of CanLit as “the romantic, exploratory and idealistic” that is “emotionally linked with Confederation and Canadianism.”
But he also spotted an “alternating rhythm” in CanLit, the pastoral myth of an idyllic childhood, usually located on the Canadian frontier. He described the act of imagination as “reflective, observant and pastoral” and likely associated with regional and local expressions of culture. That may be why one of his most memorable comments about the Canadian imagination was “don’t ask who are we. Rather ask where is here?”
Frye compared these complimentary literary traditions to a similar polarity between great tales of nationalism versus imaginative expression rooted in regional or local communities.
What he said is worth quoting at length, because it’s insightful:
“The question of identity is primarily a cultural and imaginative question, and there is always something vegetable about the imagination, something sharply limited in range. American writers are, as writers, not American: they are New Englanders, Mississippians, Middle Westerners, expatriates, and the like. Even in the much smaller British Isles we find few writers who are simply British: Hardy belongs to “Wessex,” Dylan Thomas to South Wales, Beckett to the Dublin-Paris axis, and so on…
“Similarly, the question of Canadian identity, so far as it affects the creative imagination, is not a “Canadian” question at all, but a regional question. An environment turned outward to the sea, like so much of Newfoundland, and one turned towards inland seas, like so much of the Maritimes, are an imaginative contrast: anyone who has been conditioned by one in his earliest years can hardly become conditioned by the other in the same way. Anyone brought up on the urban plain of southern Ontario or the gentle pays farmland along the south shore of the St. Lawrence may become fascinated by the great sprawling wilderness of Northern Ontario or Ungava, may move there and live with its people and become accepted as one of them, but if he paints or writes about it he will paint or write as an imaginative foreigner….
“Thus when the CBC is instructed by Parliament to do what it can to promote Canadian unity and identity, it is not always realized that unity and identity are quite different things to be promoting, and that in Canada they are perhaps more different than they are anywhere else. Identity is local and regional, rooted in the imagination and in works of culture; unity is national in reference, international in perspective, and rooted in a political feeling.”
Frye mistrusted nationalism in culture —he was opposed to Separation— but nevertheless saw national, regional and local expression as all of one Canadian cultural piece:
“The essential element in the national sense of unity is the east-west feeling, developed historically along the St. Lawrence-Great Lakes axis, and expressed in the national motto, a mari usque ad mare. The tension between this political sense of unity and the imaginative sense of locality is the essence of whatever the word “Canadian” means. Once the tension is given up, and the two elements of unity and identity are confused or assimilated to each other, we get the two endemic diseases of Canadian life. Assimilating identity to unity produces the empty gestures of cultural nationalism; assimilating unity to identity produces the kind of provincial isolation which is now called separatism.”
Aside from offering his opinion on what features of CanLit seem authentically Canadian, Frye also had something to say about the impact of our neighbours to the south.
The Canadian compulsion to define our own cultural traditions as distinct within North America, he suggested, is not anti-Americanism but an imaginative reflex to the domineering globalization of modern life:
“The writers of the last decade, at least, have begun to write in a world which is post-Canadian, as it is post-American, post-British, and post everything except the world itself. There are no provinces in the empire of aeroplane and television, and no physical separation from the centres of culture, such as they are. Sensibility is no longer dependent on a specific environment or even on sense experience itself. A remark of one critic about Robert Finch illustrates a tendency which is affecting literature as well as painting: “the interplay of sense impressions is so complicated, and so exhilarating, that the reader receives no sense impression at all.”
“Marshall McLuhan speaks of the world as reduced to a single gigantic primitive village, where everything has the same kind of immediacy. He speaks of the fears that so many intellectuals have of such a world, and remarks amiably: “Terror is the normal state of any oral society, for in it everything affects everything all the time.”
“The Canadian spirit, to personify it as a single being dwelling in the country from the early voyages to the present, might well, reading this sentence, feel that this was where he came in. In other words, new conditions give the old ones a new importance, as what vanishes in one form reappears in another. The moment that the peaceable kingdom has been completely obliterated by its rival is the moment when it comes into the foreground again, as the eternal frontier, the first thing that the writer’s imagination must deal with.”
There is one last pithy thing Frye said that I find myself hanging on to:
“One theme which runs all through this book is the obvious and unquenchable desire of the Canadian cultural public to identify itself through its literature.”
It’s an interesting choice of words, “an unquenchable desire.”. The thirst metaphor is compelling. Perhaps what we call Canadian culture, the telling of stories, is less a museum of artifacts than a compulsive introspection into our identity as Canadians.
While I suspect most libertarians are less compulsive about the Canadian imagination than I am, nevertheless the argument they make is that thanks to the miracle of the Internet we don’t need cultural subsidies to tell Canadian stories and should just leave CanCon to make its way in the free market.
Andrew Coyne likes to make the market argument and did so in a recent column:
“In the world of 1950, when there was no internet, no satellite or cable TV, and no means for viewers to pay for content directly, there was a clear case for government intervention. With spectrum in short supply, competition was limited. And when the business model of private broadcasters depended on delivering the largest possible audience to advertisers, much of what they broadcast tended to be the same – usually imported American fare. Some mixture of subsidy and regulation could be defended, precisely to recreate the diversity of offerings a well-functioning market provides.
“But none of those conditions now apply. There is no theoretical limit to the number of services streaming on the internet, nor much in the way of barriers of cost or distance. Consumers can pay directly for content, so providers need not always aim for the broad middle, but can serve niche markets as well. Regulation is unnecessary at best, if not actively harmful; so is subsidy. In particular, there is nothing to prevent Canadians from paying for Canadian content if they choose – and no reason to force them to if they don’t.”
That last sentence echoes McCullough: the sole calculus of culture is the number of paying customers. Point finale.
It is true that “niche content” —Coyne’s category for CanCon— can now find bigger audiences through Internet distribution. For example independent Canadian TV programmers and YouTubers use the Internet platform to expand their discoverability by domestic audiences and, depending upon the niche, draw even larger foreign audiences.
On the other hand, the same technological miracle has robbed Canadian media of much of its advertising revenue.
The Internet hasn’t changed the fundamental challenge to supply enough high-cost national, regional and local content to compete against American content for Canadian eyeballs.
The challenge is scale, scale, and scale, in that order.
It’s scale of financial resources to match US studios and their billion-dollar programming (outmatching Canada by the factor of 20:1) now launched directly into the Canadian market by streaming apps.
And it’s scale of audience for the advertisers who want to reach those audiences despite the competing scale offered to them by the titans of digital advertising, Google and Facebook.
The Internet is at best a mixed blessing for CanCon and there you have the reason for C-11 updating the Broadcasting Act.
After C-11 becomes law, CanCon and the Internet will get along just fine so long as we consider the Internet an improved communications technology rather than worship it as a sacred totem of liberty.
Our current CanCon rules may be subject to both improvement and occasional ridicule, but that is all perfectible if telling Canadian stories is worth it.
The ancient Romans distinguished between “natio” —a cloving to ethnic cousins— and “patria,” the love of the land we inhabit.
In our beautiful home of many nations, it’s our experience of patria we treasure and it’s our Canadian imaginations that celebrate it.
Kamloops skyline. Photo by Kent Simmonds, 2021
Charts in this post are from the CRTC’s 2018 report Harnessing Change.
I don’t often write about telecommunications policy on MediaPolicy.ca. I prefer to comment on policy matters about media rather than the pipe that distributes it.
But Canadian public policy governing media and their distributors have a lot in common: a regulator in the CRTC, vertically integrated media companies owning both pipe and content, and a small army of consumer advocates and independent communications companies antagonistic towards those large companies.
This brings me to the CRTC file concerned with “wholesale Internet broadband” pricing. Now under appeal to federal court, it has become an iconic regulatory fight.
The fact that the file is associated with BeerGate —the controversy over CRTC Chair Ian Scott and Bell CEO Mirko Bibic having a cold one at an Ottawa pub— makes this scrap even more intense.
But it’s difficult for the casual observer to drill down to an informed opinion about the CRTC’s “just and reasonable” wholesale prices that retail service providers (“re-sellers,” in effect) like TekSavvy and Distributel pay to piggyback onto the networks of the big telco and cable companies. (Ironically, Distributel was purchased last week by Bell).
CRTC rulings on wholesale pricing can be opaque, obscured by the industry jargon describing the network technology and architectures (which can differ by company and between telcos and cablecos) and the dark art of CRTC costing methods.
As a public service of sorts, I thought I would offer a digestible account of what is going on. This might come in handy when we get appeal rulings. There is no date set as yet for the Court of Appeal. As there are hundreds of millions of dollars at stake in the dispute, it will likely go all the way to the Supreme Court.
***
Modern telco networks require multi-billion-dollar investments. All to chase the same customers.
So perhaps it is not surprising we have a market dominated by a few large companies. Contrary to popular belief, foreign telcos are welcome to set up shop in Canada and build their own networks. They don’t because of the daunting capital cost of market entry to build fibre networks in a country with a large landmass and a small population.
That’s why it’s been federal policy for two decades under one Conservative and two Liberal administrations to mitigate the market power of the big Canadian telcos by enabling smaller ones to rent carriage on their networks.
The CRTC sets Internet broadband wholesale prices under the authority of the Telecommunications Act but also under the general guidance of federal cabinet policy dating back to Harper-era Minister Maxime Bernier who in 2006 instructed the CRTC to “promote competition, affordability, consumer interests and innovation” but to lean heavily upon “market forces.”
Or as the current Liberal Minister François-Phillipe Champagne said in the most recent iteration of that policy in May 2022, the CRTC must find the sweet spot between “the need to invest in our networks and the need to promote continued competition and affordability.”
Maybe it’s not surprising that wherever the CRTC identifies that sweet spot, it’s controversial.
The CRTC’s May 2021 ruling on “just and reasonable” wholesale broadband rates reversed its August 2019 decision that had made a second rate cut in four years (the first came in October 2016).
That enraged re-seller telcos like TekSavvy and Distributel, their supporting cast of critics, and even a former chair of the CRTC who said he was “stunned” by the reversal.
The 2021 decision came about after the telcos used all three channels available in the Telecommunications Act to appeal the 2019 Decision: to the courts, to cabinet (on the basis of its guiding telecom policy) and to the CRTC itself in a “review and vary” application, ordinarily a long shot in regulatory matters.
The court ruled that the CRTC did not make an error of law.
But in August 2020 the federal cabinet responded that the 2019 rate cut wasn’t sufficiently mindful of the big telcos’ burden of investment, saying “Canada’s future depends on connectivity”. Then Minister Navdeep Bains kicked the file back to the CRTC which was set to consider the telcos’ review and vary appeal.
The CRTC’s 2021 review and vary ruling (the one that TekSavvy is now appealing to federal court) is 68pages long and easy to read if you are both a regulatory lawyer and a fibre network technician.
Let’s try to render it comprehensible for us ordinary mortals.
***
The Commission’s decision retells the history of the federal government and the CRTC plotting a course to create more competition in Internet broadband services by encouraging re-sellers who don’t have the spare billions to build their own networks. Distributel (200,000 customers) and TekSavvy (270,000) emerged as the leaders in the biggest market, Ontario.
As early as 2008 the CRTC created its revised regulatory framework for wholesale services and definition of essential service.
A cost accounting method known as “Phase II” spat out a pair of wholesale rates: an “Access” rate measuring the number of re-sellers’ customers hooking up to the network and a “Capacity” rate calibrated to the extra flow of network traffic, passing through “transport” routing equipment at waystations located across the network.
Those two rates had been set by the CRTC in 2011 —to cover the next ten years— at a variety of rates for different telcos. To take an example, the key wholesale rates for the Bell network were set at $25.00 per customer for Access and $2,213 per 100 mbps for Capacity (varied in 2013 to $25.62 and $1036).
By midway through the decade a lot had changed in the industry, including the cost of network technology, and the re-sellers in 2015 asked the CRTCto reopen wholesale rates and implement a further rate cut.
The CRTC was disposed to give it to them, but in two steps.
First, on an Interim basis the Commission tweaked some of the costing inputs used in the Phase II rate-setting method. The result was that Access rates remained the same, but the CRTC delivered some shock therapy by cutting Capacity rates from $1036 to $148 per 100 mbps, an 85% reduction.
It appeared to help re-sellers: in the three years following the implementation of the 2016 rates the re-sellers would increase their customer base by 23% (compared to 4% for cable and 7% for telcos).
The Commission also promised Final rates and launched a lengthy hearing to gather evidence and do the costing analysis. Three years later in August 2019 the Commission reduced the Access rate again and further slashed the Capacity rate from $148 to $102.
The telcos immediately appealed to the federal court and obtained a “stay” putting the rate cuts on hold. In time, both the Federal and Supreme Court denied their judicial appeals, which only examined whether the CRTC has committed an error in law.
But the telcos also petitioned federal cabinet and as mentioned above cabinet didn’t like the rate cut and so in August 2020 Minister Bains sent the rates back to the Commission, which was already considering the review and vary motion from the telcos.
So far, so comprehensible. But some more context before we continue.
***
Part of the CRTC’s original plan to create more retail competition was to order the telcos to sell wholesale access to the re-sellers in an “aggregated wholesale” model in which the telcos provided turnkey access to the re-sellers, throughout their networks from core to customer premises. Under this plan, wholesale-based service providers only needed to connect at one or two places in a network in order to sell service to any premise in the entire province.
But in the long term this aggregated model was to sunset: re-sellers would be expected to move to a “disaggregated” model. This would mean installing their own transport equipment mid-way through the core-to-premises network, at hundreds of local points of contact in each of those provincial networks, like at the knuckle joints in a human hand but with a lot more fingers.
The regulatory wisdom behind forcing the re-sellers to a disaggregated set-up was that it would provide more competitive market conditions and encourage them to put more skin in the game of capital spending.
The transition to disaggregated wholesale rates was supposed to happen on the third anniversary of the Commission setting disaggregated ratesbut very little progress had been made on the transition by the time the 2019 or even the 2021 rates were issued for aggregated wholesaling.
***
All of that context of aggregated and disaggregated rates became important in the 2021 ruling that cancelled the deep rate cuts from the 2019 ruling because in the 2021 ruling the Commission decided not to carry out a detailed recalculation of the complex cost analysis done in 2019.
Here’s why.
The Commission first examined a lengthy list of costing errors the telcos claimed were made in the 2019 ruling and agreed with each one of them. The 2019 rates it seems were riddled with errors.
But instead of launching yet another legal proceeding to work the corrected inputs through the Phase II costing model to produce revised aggregated rates, the Commission defaulted to the higher Interim rates from 2016, with a few modest downward adjustments.
Foremost, the Commission projected that any recalculated Access and Capacity rates that the re-sellers would have to pay were likely to be similar to the 2016 rates they were already paying, maybe even higher.
Given that projected result, the Commission decided that all of the players —-the telcos, the re-sellers and the Commission itself— needed to focus all of their time and resources on completing the transition to the disaggregated model.
The Commission made the 2016 Interim rates final (with one caveat, below).
This didn’t mean the re-sellers owed the telcos any of the hundreds of millions at stake: the “stay” freezing the 2016 rates had seen to that.
But as a side-issue the Commission ordered Bell to refund $44 million to the re-sellers as a result of cancelling a 10% “mark-up” rate that the re-sellers had been paying Bell since 2016 for access to a special part of its network.
That meant that after integrating the repeal of that special mark-up, the 2021 wholesale rates for re-seller access were in fact reductions of the 2016 rates from $148 to $138, instead of the 2019 cut from $148 to $102.
***
The re-sellers responded to the 2021 ruling in the same manner as the telcos had reacted to the 2019 ruling: the biggest re-seller TekSavvy appealed to the federal court, and the re-sellers petitioned the federal cabinet to overturn the ruling on policy grounds (rejected by Minister Champagne in May 2022).
Appealing the rulings of administrative tribunals to the courts is difficult.
That’s because Parliament sets up administrative tribunals to specialize in the fact, policy and law of their chosen regulatory field. An appeal from a tribunal like the CRTC to a court is restricted to errors of law: situations where the tribunal is found not to have obeyed its governing statute, in this case the Telecommunications Act.
Can TekSavvy convince the Court of Appeal that the CRTC has disobeyed the Telecommunications Act in reaching its controversial 2021 ruling?
The legal factums were filed by TekSavvy and the telcos at the Federal Court of Appeal this summer and they are interesting.
***
TekSavvy’s first argument is the Commission’s 2021 ruling did not meet “legitimate expectations” of a fair process.
TekSavvy says the Commission blind-sided them at least two different ways.
First by telling re-sellers in the 2016 hearing that led to the Interim rates that they didn’t need to submit evidence supporting their position: yet now the 2016 rates have been confirmed as final based on uncorrected errors in the 2019 ruling.
Second by telling participants in the 2016 hearing that final rates would eventually be established after a “full and comprehensive review” of the 2011 rates, inducing TekSavvy to keep its powder dry and accept the expediently set Interim rates.
Bell’s rebuttal to TekSavvy’s fairness arguments will probably be enough: the Commission did perform a full and comprehensive review of the 2011 rates during the 2019 proceeding in which TekSavvy participated and submitted all of the evidence it wanted.
The fact that the 2019 results were abandoned in favour of defaulting to the 2016 rates doesn’t change the fact that TekSavvy was given the opportunity to take its best shot and did so.
TekSavvy’s second argumentis that the Commission failed to obey the instructions in section 27(5) of the Telecommunications Act to use a “method or technique” (i.e. Phase II costing) to generate final wholesale rates. TekSavvy characterizes the CRTC’s default to the 2016 rates as failing to use any method at all.
Bell’s reply is that the Commission based its 2011, 2016 and 2019 rates on the Phase II costing method. It’s 2021 decision not to re-input corrected costing assumptions into the Phase II model doesn’t change the fact that the rates are built on a recognized costing method.
And this is what the appeal really comes down to: will the Court accept the Commission’s reasons for not correcting the errant 2019 rates on the grounds —and the Court may well defer to the Commission’s judgment on this— that the CRTC was satisfied from what it learned during the 2019 and 2021 hearings that the 2016 rates were at least as generous to the re-sellers as redone 2019 rates would be. Also the Commission believed it would be a waste of regulatory resources to perfect the 2019 rates given the anticipated transition from aggregated to disaggregated networks.
(Another ironic moment: the Liberal cabinet’s May 2022 denial of TekSavvy’s petition was accompanied by a new Policy Directive instructing the CRTC to delay the sunsetting of aggregated rates until re-sellers can compete on a disaggregated basis in “a broad, sustainable and meaningful” manner).
TekSavvy’s last shot at winning the appeal is the most salacious.
It’s BeerGate.
TekSavvy is asking the court to invalidate the 2021 ruling based on the legal doctrine of reasonable apprehension of bias on the part of CRTC Chair Scott (one of nine commissioners who made the ruling).
The supporting facts are that Scott held numerous lobby meetings with Bell and other telecommunications companies on his own; that he gave a speech to the Canadian Club in which he expressed “a preference for facilities-based competition” (meaning telcos that build their own networks); and that he had an unchaperoned meeting with Bell COO Mirko Bibic in McGee’s Pub only a week after Bell had filed its review and vary application to overturn the 2019 rates.
TekSavvy says the bias is self-evident and that might be the gut reaction of many observers.
But from a legal perspective it’s very much an uphill battle. Putting aside judicial precedents that set a high bar to establish bias, lobbying on Parliament Hill is so well accepted it has its own federal statute that sets up rules and a meeting registry.
There isn’t any rule against one-on-one meetings even if common sense suggests it’s a good precaution, especially where the regulator is also an adjudicator.
And there is no rule against lobbying in a bar even though in this case the BeerGate appointment started out as a social meeting (Bibic was the incoming CEO of Bell) and ended up being registered as a lobby meeting after Bibic began talking to Scott about Bell Media’s plan to expand its broadcasting footprint in Québec.
As for Scott’s Canadian Club speech, Scott’s preference for “facilities-based competition” has been Commission and cabinet policy since 1992 (with caveats about the value of re-seller competition, which Scott referenced later in his speech).
The federal Ethics Commissioner Mario Dion cleared Scott under the Conflict of Interest Act because he accepted that Scott and Bibic were not “friends” and therefore the BeerGate meeting did not violate that legislation. TekSavvy was smoked by that, arguing Dion should not have taken Scott’s word for it.
But Dion’s ruling doesn’t bind the Court of Appeal where a judge could still decide the pub rendezvous is too icky to be tolerated. On the other hand, a federal court judge slapping down the Chair of a major federal tribunal is unprecedented. The bias issue remains a wild card.
***
It may be several months before the Aggregated Wholesale appeals conclude.
But it’s only one chapter in a serial novel about industry regulation that has a flare for the dramatic.
If you want to follow it in more detail than the occasional news story in the mainstream press you can buy a subscription to Cartt.ca (about $150 per year) or follow the unpaywalled Telecom Trends written by Mark Goldberg.
Today the Globe & Mail’s Andrew Coyne penned another condemnation of the federal Liberals’ media legislation.
It’s mostly a repeat of a column he wrote in April opposing federal wage subsidies for news journalism, Bills C-11 (the Netflix Bill), C-18 (the FaceGoogle Bill), and the expected Online Harms Bill. At the time, I responded. No need to cover that ground again.
But in his most recent column Coyne ups the ante by calling for the abolition “of CanCon,” anything resembling state assistance to media, and getting rid of the CRTC altogether.
As for the CBC (where he has a regular gig on the news show At Issue), he’s fuzzy on that although in a January column he favoured “refunding” the public broadcaster by which he means reducing it, to what he doesn’t say.
The occasion of writing the same columns again is his accurate observation that the Fall session of Parliament will see a “confrontation” over competing visions of state assistance to Canadian media. The much demonized Netflix Bill will be in the Senate and the slightly less vilified FaceGoogle Bill will be in the Commons Heritage Committee.
More to the point, Pierre Poilievre will be the newly minted leader of the Conservative Party and will refocus his attacks on media legislation in the House.
Coyne’s column appears to be a manifesto looking for a political champion. A similar appeal to Conservatives was published by Peter Menzies in late August.
The O’Toole Conservatives’ 2021 election platform supported very modest versions of Bills C-11 and C-18. And while Poilievre is categorically opposed to C-11 he made comments at a campaign stop in British Columbia that implied he wanted to amend Bill C-18, not kill it.
The third rail that no Conservative wants to touch is the strong support in Québec —relative to English Canada—for state assistance to the media (although a Nanos poll last May suggests media legislation has public support across the country).
For example O’Toole’s 2021 platform promised to defund CBC News, greatly reduce CBC English TV, but leave Radio-Canada and CBC North untouched.
Menzies pokes at this taboo, perhaps tongue in cheek it’s hard to tell, by recommending Conservatives repeal Bill C-11 but write a cheque to French language film production to satisfy Québec.
Another voice in the recent debate is Independent Senator Paula Simons who hails from Edmonton. She sits on the Senate Committee that will review C-11 later this month.
A former journalist, Simons wrote a blog post lamenting the misinformation about C-11 that is being exploited by unnamed politicians.
***
Speaking of the FaceGoogle Bill, south of the border Senator Amy Klobuchar has rallied bipartisan support for an American version of C-18, in matching House (HR 1735) and Senate (S 673) versions.
One interesting difference in the US copycat of pay-for-news legislation pioneered in 2021 by Australia: the biggest media like the New York Times and the Washington Post would be excluded, perhaps calculated to mollify Republicans. Fox News already has a global deal with Google and Facebook.
Commentators don’t expect the Bill to reach the Senate floor prior to the 2022 midterm elections.
***
One of our great successes in Canadian political drama is the regulatory dogfight over Internet broadband and Wireless price competition.
There was a shocker on Friday afternoon: re-seller Distributel (200,000 customers in Ontario) announced it has sold its business to Bell Canada. That follows a similar Bell acquisition of the Quebec-based re-seller EBox (80,000 customers).
That leaves TekSavvy on its own as the largest re-seller (270,000 in Ontario) and tormenter-in-chief of big telco.
Competition and pricing issues are very political —the Rogers-Shaw deal being the most prominent example— and federal politicians continue to dance on hot coals whenever mergers and acquisitions are in the news.
To whit, Industry Minister François-Phillipe Champagne’s twitter response to the Distributel announcement:
Like many Canadians, I learned this evening of the proposed transaction for Bell to acquire internet provider Distributel. I trust the Competition Bureau will ensure this transaction protects the interest of Canadians when it comes to affordability and competition.
— François-Philippe Champagne (FPC) 🇨🇦 (@FP_Champagne) September 2, 2022
The Competition Bureau will undoubtedly take an interest in this file.
It will be interesting to see if Bell’s acquisitions of Distributel and EBox have a competitive impact on prices, in either direction.
This week I posted about the CRTC’s renewal of OUTtv’s broadcasting licence. The cable specialty channel focusses on LGBTQ+ content.
The post gets a bit heavy-duty on the fine points of CRTC policy, but it is an interesting (and I think important) story of how independently-owned programming services are fighting to enlist the CRTC’s help in getting better audience exposure from the telco and cable companies.
***
Heritage Canada was on the hotseat this week when Jonathan Kay broke the story of the federal government’s retainer of Laith Marouf as an anti-racism consultant for Heritage despite his outrageous Tweets over several years now described by Diversity and Inclusion Minister Ahmed Hussen as “anti-Semitic and xenophobic.”
Hussen effectively fired Marouf but the controversy is far from over. The Marouf tweets were highlighted several times over the twelve months in tweets and blog posts by telecommunications analyst Mark Goldberg, tagging the Heritage Minister and his Department among others.
Kay’s article asks how federal civil servants could have ignored these warnings. While Kay habitually delights in pranging the Left, in this article he has done a public service by opening a taboo policy debate over how government should be advancing its agenda to fight systemic racism without getting lost in negative identity politics.
***
The online threats against Global News journalist Rachel Gilmore —who bravely will not back down— keep getting worse.
In response, the Prime Minister has tweeted an appropriate condemnation.
Between the Marouf scandal and the targeting of journalists with hate and threats of harm, the public is well primed for a good discussion of the federal government’s Online Harms Bill once it is tabled in Parliament.
***
In February I wrote a context-piece about TekSavvy’s accusation that CRTC Chair Ian Scott was in cahoots with Bell. The central allegation was “the beer” shared by Scott and BCE CEO Mirko Bibic in an Ottawa pub, caught on camera.
TekSavvy and other wireless re-sellers have incorporated “the beer” incident into their appeal of a CRTC decision on wholesale rates charged to them by Bell and the other telcos, alleging a “reasonable apprehension of [CRTC] bias.” The Federal Court of Appeal has yet to schedule a hearing.
TekSavvy also filed a complaint to the federal Ethics Commissioner Mario Dion, the same commissioner who found against the Prime Minister in the SNC Lavalin affair in 2019 and against former Finance Minister Bill Morneau in the WE Charity scandal in 2020 (while clearing Trudeau).
This week Dion exonerated Scott in the “beer scandal,” clearing him of allegations he violated section 6 of the federal Conflict of Interest Act.
Section 6 specifies two different standards of illegal conflict of interest. The more demanding standard states that if a public officeholder has an opportunity (for example, just by having a beer in private with a stakeholder) to benefit their self, a relative or a friend, that’s a conflict of interest. It’s a legal presumption that the opportunity is the wrongdoing. Proof of corruption is not required.
But if the opportunity is with just an ordinary “person” then there must be proof of something “improper.”
The headline of Dion’s ruling was that he accepted Scott and Bibic were long-time business acquaintances but never friends and did not socialize outside of work. It was media reports that used the term “friends” (I made the same mistake in my post) but here are Scott’s actual words as reported last February in the Toronto Star:
I went for a beer with someone I have known for many years …. And it ended up he chose to address a broadcasting issue a little of what Bell might be doing in the future.
Dion took Scott at his word and did not open a formal investigation. TekSavvy spokesperson Peter Nowak expressed disappointment, but it’s hard to see how Scott is supposed to prove a negative.
What’s not elaborated upon in Dion’s report is why, if Scott and Bibic’s meeting was between “persons” and not “friends,” he found nothing “improper” in the opportunity that the private meeting created.
There is a helpful passage from Dion’s WE Charity report (it’s called the “Trudeau III Report,” which is some cause for mirth) where Dion explains what “improper” means under the Conflict of Interest Act:
For there to be a contravention of subsection 6(1), those private interests must have been furthered improperly. In the Trudeau II Report, I provided examples of improprieties from past examination reports. I explained that an impropriety under the Act occurs when a public office holder exercises an official power, duty or function that goes against the public interest, either by acting outside the scope of their jurisdiction or by acting contrary to a rule, a convention or an established process.
Although I found no indication of preferential treatment of WE by Mr. Trudeau in my analysis of the matter under section 7 of the Act, it must be pointed out that preferential treatment, in the general sense, could also be viewed as an impropriety under subsection 6(1).
The beer meeting post-dated the CRTC ruling on wholesale rates (so no preferential treatment) and (to quote Scott’s denials) “no rule was broken.” Ergo, no impropriety under the Act.
There is still the matter of whether a federal judge thinks the long-accepted practice of lobbying CRTC commissioners on matters of general policy —participated in widely by industry stakeholders including Bell, TekSavvy, and at one time by yours truly— creates a reasonable apprehension of bias when those same Commissioners sit as adjudicators.
The CRTC has nudged the regulatory needle in the direction of independent programming services seeking better terms of carriage from cable TV companies.
That makes OUTtv CEO Brad Danks “a small ‘h’ happy,” as he told Cartt.ca in a recent interview.
The reason for Danks’ muted joy was the Commission’s licence renewal of his LBGTQ+ focused channel on August 18th. OUTtv is owned by the privately held Stern Partners, but Danks is its long time guiding light and an articulate champion of independent programming services in an industry dominated by big media companies.
The plight of independent programmers gets little public notice. It’s the cable and satellite companies — known in CRTC-speak as “broadcasting distribution undertakings (BDUs)” — that are customer-facing.
Programming services like OUTtv survive by making distribution deals with the BDUs that have more bargaining power. The programmers look to the CRTC to balance the commercial relationship through regulation.
The story of OUTtv is an instructive episode in the David versus Goliath regulatory drama.
The Commission’s renewal of OUTtv’s 2013 licence was the programming service’s first renewal since the Commission relaxed regulatory rules in 2015 governing how programming services obtain BDU carriage.
Before the 2015 changes, OUTtv was one of many licenced Category A channels enjoying “must carry” privileges on BDUs.
“Must carry” was paired with “genre exclusivity,” a CRTC-enforced monopoly benefiting niche Canadian channels, including OUTtv because of its LBGTQ-focussed programming. The “rate card” compensation that BDUs paid to channels like OUTtv was negotiated or if talks broke down fixed by binding arbitration.
But in 2015 the Commission abolished the must-carry/genre exclusivity privileges along with the “Category A” label.
To mitigate the repeal of must-carry, the Commission ordered the vertically integrated BDUs Bell, Rogers, Québecor’s Videotron, and Shaw to carry as many independent channels as their own broadcast services (the “one-to-one” rule). It’s a measure of the BDUs’ dominance of the specialty TV market that, in spite of the one-to-one rule, their own specialty channels still earn $3 for every $1 of revenue earned by the independents.
The Commission also updated the Wholesale Code. Those are the rules of engagement between BDUs and independents around good faith bargaining, reasonable rates and other commercial terms, again backed up by binding arbitration.
The few remaining “must carry” specialty channels on BDU platforms are the so-called “section 9(1)(h)” channels hosted on the basic TV dial: the Aboriginal Peoples Television Network, weather channels, news services for minority anglophone and francophone communities, accessibility programming for disabled Canadians, and most recently the multi-lingual OMNI network. OUTtv is not among them.
Must-carry in the BDU “basic” television package that includes local Canadian and American stations gives these services maximum audience exposure and —-importantly—- a rate-card fixed by the CRTC.
Like any niche content channel, OUTtv’s business model is built on the authenticity of its content. But to be profitable, it must build out audience scale.
In past rulings the CRTC acknowledged the importance of OUTtv’s programming for two reasons: to serve an LBGTQ+ audience that is underrepresented in television and to provide a “bridge” to the mainstream audience.
As Danks put it in his recent licence application, OUTtv programming provides his community with authentic content and positive encouragement while offering straight viewers more insight into the LGBTQ community than they might see on the major TV networks.
The Commission agreed:
44. The Commission agrees with the licensee and the interveners that OUTtv plays an important role in the Canadian broadcasting system as it is the only service in Canada that targets LGBTQ2 communities with all of its programming. OUTtv responds to the needs and interests of these communities and contributes to raising greater awareness and understanding by all Canadians. In addition, OUTtv Network invests significantly in original first-run productions, thereby ensuring the reflection of LGBTQ2 communities in television programming while contributing to the diversity of programming available to Canadians. The licensee also uses independent producers who identify with LGBTQ2 communities. The Commission considers that the service contributes directly to fulfilling objectives of the Act by providing a unique contribution that targets and reflects the LGBTQ2 communities.
But like all television companies today, OUTtv’s linear TV business has faltered over the last decade.
Despite OUTtv increasing programming expenditures devoted to Canadian content (now an eye-catching 58% of revenue), CRTC filings for 2016-2020 show its annual revenues for linear TV in steady decline.
In 2020, it sustained a 30% operating loss ($1.6 million on $4.1 million of revenue). Subscriber numbers grew and peaked in 2019 at 1,056,752 but fell hard to 890,525 the following year.
OUTtv responded by expanding its online audience and digital revenue in Canada and abroad through distribution deals with Amazon, Roku and other platforms,an increasingly common strategy for niche broadcasters. But OUTtv’s bread and butter remains carriage on regulated Canadian BDUs to reach the biggest domestic audience.
In response to an e-mail, Danks said “we have been working hard to grow our revenue in the online platforms in Canada and around world. However it is important that OUTtv be treated fairly on the Canadian system as well. Maintaining these revenues is important to give us time to make the transition to the future.”
To achieve that, CEO Danks wanted three things from the Commission.
First he asked to keep the must-carry BDU privileges from his expiring Category A licence.
Second, he wanted the Commission to fix the tariff at which BDUs would pay for carrying his channel (a difficult ask given the Commission hasn’t done that since 2006 except for the handful of “section 9(1)h” services on the basic dial).
Most importantly, he proposed a better deal from the BDUs on how his channel is sold to cable customers.
This latter point is called “best available packaging” in the CRTC’s Wholesale Code. In the world of specialty TV where audience scale is the key to profitability, placement in the most popular pre-assembled bundles or theme packages is where the success of independent programming services is made or broken.
Currently Bell, Rogers and Shaw relegate OUTtv to their most costly and least subscribed premium bundles and still remain in-bounds of the CRTC’s forgiving interpretation of “best available packaging”.
Other BDUs like Telus —-which offer customers small theme packages instead of general bundles— have placed OUTtv’s unique content in lower-penetration “variety” packs grouped with home improvement and women’s channels.
The promised land for OUTtv and most independent programmers is inclusion in a BDU’s lowest-priced but well subscribed general bundle of specialty channels.
However BDUs don’t let just anyone into the promised land. They are gatekeeping dozens of programming services (including their own), all clamoring for maximum audience exposure.
Protecting their own bottom line, BDUs may package independent channels with a loyal following in a manner that drives customer traffic to a less popular but more expensive package. Fairly or not, popular programming services can be conscripted as cross-subsidizers of other independent services.
More troubling from the independents’ point of view, the BDUs are motivated to look after their own specialty channels first, although that practice is limited by the Wholesale Code’s rule against self-preferencing.
OUTtv had a bad experience with the CRTC’s interpretation of “best available packaging” rules in 2012 when Telus chose to assign OUTtv to its less popular Lifestyle Extra pack with five per cent market penetration instead of the higher (50%) penetration Lifestyle bundle. The Commission’s solution was to leave OUTtv in the Lifestyle Extra pack but order Telus to do a better job marketing it. The Commission’s bottom line was:
Requiring TELUS to place OUTtv in the “Lifestyle” package in the circumstances would unreasonably undermine TELUS’s overall packaging flexibilityand lead to less choice for consumers….the differing penetration levels of packages should not be sufficient in and of itself to sustain a finding of undue preference or disadvantage.” (Emphasis added).
If that was what the Wholesale Code’s prescription of “best available package” really meant for independent programmers, Danks was looking to fix this in his next licence renewal.
In the end the Commission gave OUTtv some of what Danks was asking for in its licence renewal released August 18, 2022.
The decision’s headliner was a “must-carry” order for OUTtv in the licenced English language market.
As a former Category A channel, OUTtv’s “must carry” represents the status quo. But at least the order deprives BDUs of the opportunity to play hardball with OUTtv over distribution deals by serving notice of non-renewal.
On the more important issue of packaging, the Commission appears to have struck a compromise between BDU and OUTtv interests.
Instead of giving Danks the binding order he was seeking, the Commission gave his BDU partners a non-binding “expectation” of packaging privileges that expands on the limited rights of programming services found in the Commission’s Wholesale Code:
To this effect, clause 9 of the Wholesale Code states that “[a]n independent programming service shall, unless the parties agree otherwise, be included inthe best availablepre-assembled or theme package consistent with its theme, programming and language.” Given the exceptional importance of OUTtv to the achievement of the objectives of the Act, the Commission considers it appropriate to set out the following expectation:
The Commission expects broadcasting distribution undertakings to include the OUTtv programming service in pre-assembled or thematic packages, consistent with its theme, programming and language and with the highest penetration rates. (Emphasis added)
What the Commission did here is to request but not compel BDUs to recognize OUTtv as a special case because of the public interest in its LGBTQ+ content and for that reason defined “best available” package as the one with “the highest penetration rates.”
This gives Danks almost everything he needs to get a better deal on packaging.
It does not however temper any of the hardball negotiating tactics —-low balling the rate-card and delaying arbitration proceedings top the list— that independent programmers often accuse BDUs of using (denied by the BDUs, to be sure).
On this point, the Commission gave Danks a consolation prize with another non-binding directive to BDUs:
52. In addition, the Commission encourages BDUs to treat the OUTtv programming service fairly and to avoid withdrawing the service, imposing punitive or retaliatory measures, imposing unreasonable rates, significantly altering the packaging or otherwise substantially reducing the wholesale payment for the service. (Emphasis added)
A dissent from BC/Yukon Commissioner Claire Anderson would have converted the majority’s expectations and encouragements into mandatory orders.
Now that the Commission’s ruling has made Danks “small ‘h’ happy,” OUTtv is headed for some lengthy negotiations with all BDUs, big and small.
The outcome may not be known for months, especially if disputes over rate cards and packaging go back to the Commission for arbitration.
Is this a precedent for future licence renewals of other independent programmers?
It would be optimistic of them to think so.
The OUTtv ruling is clearly tethered to the public interest of giving a boost to underrepresented programming by and for an equity-seeking community. This is similar to what the Commission just did for indigenous, racialized, and disabled communities in the CBC licence renewal.
Meanwhile the independent programmers’ list of grievances against the BDUs were recently aired at the CRTC’s Rogers-Shaw merger hearings but mostly deflected by the Commission.
The independent programmers see themselves getting squeezed by BDUs which are responding to their own profit pressure from Netflix and other foreign Internet competitors.
Verifying that perception, since 2016 the specialty channels owned by Bell, Rogers, Québecor and Shaw have shrunk by two per cent of revenues while the independents are down seven per cent. The PBIT profit rate for the BDUs’ specialty channels was 30% in 2020 while the independents were at ten per cent, even lower if the programming services that enjoy a secure flow of “section 9(1)h” subscriber fees are factored out of the calculation.
Last Thursday I posted an opinion on CTV’s firing of national news anchor Lisa LaFlamme, describing it as self-sabotage of a great news organization. If you want to catch up on the controversy, I recommend Steve Faguy’s blog.
One observation I made in my post was that we can only draw conclusions from the facts we see above the water line. So long as LaFlamme and CTV Editorial VP Michael Melling are not granting interviews we can really only be sure of two things: she was fired and her age had something to do with it.
Below the water-line, there may be more to be seen but with sources inside CTV requiring anonymity to speak out it remains murky for now.
Canadaland published a transcript of the staff meeting CTV executives held with a red-hot newsroom which came across exactly as you might have expected: an exercise in deflection. When asked point-blank if LaFlamme was fired because of her age, Bell Media Senior VP Karine Moses replied that as a woman herself she would not fire LaFlamme because LaFlamme is a woman.
Mainstream media outlets did a thorough job. The Globe reached a source who made a very specific allegation that he or she heard Melling grumble about LaFlamme’s decision to stop colouring her hair and wondered aloud who let her to do that.
Put that in the smoking gun category?
Searching for more facts below the water-line, two other things emerged through anonymous sources.
Canadaland’s Jesse Brown relied on a “high level CTV” source to support several allegations against Melling, the most damaging being an assessment of his general character that includes a stunning factual allegation:
“He’s a company man,” says the high-level CTV source. “He does not stand up for the journalists…He doesn’t like it when women push back and he brags about how he’s destroyed careers of anyone who dares push back.” (Emphasis added).
So far, no one corroborates that Melling has bragged about destroying careers.
The Toronto Sun’s Brian Lilley took another tack by claiming that one of the reasons LaFlamme was fired was because of her newscast’s reporting of the 2018 Patrick Brown story involving young women. The background requires diving down a rabbit hole: you can read about the story here, Brown’s lawsuit against CTV here, and the cashless settlement of the court action here and here.
It’s fair to say that from the beginning of the Brown story Postmedia writers portrayed their rival CTV’s coverage as irresponsible. And editorially Postmedia has supported Brown’s political career.
Lilley’s recent coverage cites at least two anonymous sources quoted thus:
“They were giddy,” said one former colleague of LaFlamme and her executive producer Rosa Hwang as they were working on the story.
“They wanted their own ‘Me Too’ story and were determined to get it,” said another co-worker of the pair.”
The latter source (a co-worker) is offering an opinion (or perhaps the supporting facts were edited out of the story).
The first source —a “former colleague”— makes a damaging allegation against LaFlamme and Hwang— but it’s thin on the facts (“giddy”). And the question must be asked about Lilley’s reporting on such a key and sole sourced allegation: why is a former colleague granted anonymity?
Lilley concludes: “The Brown case wasn’t the only factor in LaFlamme’s dismissal, but it was a factor alongside several others.”
From here, Lilley’s column looks like a relitigation of CTV’s coverage of the Brown story: LaFlamme and Hwang just get smeared in the drive-by.
As a non-journalist I don’t have an intuitive grasp of when ethical lines about the use of anonymous sources get crossed. Feel free to leave a comment on this page.
***
The government has filled on an interim basis the CRTC Broadcasting Vice-Chair vacancy created by the departure of Caroline Simard with Alicia Barin, the current Québec commissioner.
Simard has left the Commission to become the Commissioner of Elections Canada rather than seek a renewal of her five-year term at the CRTC or apply for the CRTC Chair position vacated by the outgoing Ian Scott.
Simard is the author of two very strongly worded dissents against Scott’s majority decisions in the CBC Licence Renewal and the “N-Word” Radio Canada ruling.
Barin voted with Scott on the CBC licence renewal which is being appealed by a number of organizations, including the government of Québec. It’s unknown if Barin was involved in the Radio Canada ruling since the adjudication of the listener complaint was not conducted as a public hearing.
***
Google announced its hosting platform YouTube will offer a multi-channel online broadcasting distribution service in Europe similar to Roku and Amazon Prime. It already offers an online cable bundle as YouTubeTV in the United States.
As I posted previously during the Bill C-11 debate, YouTube operates different lines of broadcasting businesses. YouTube’s “user generated content” ecosystem is just one of them.
Perhaps you had an “I knew it” moment when you read that CTV executive Michael Melling raised the question of national news anchor Lisa LaFlamme’s silver hair colour a few months before he fired her.
We are still learning in bits of divulged information what led up to LaFlamme’s dismissal from her job at the top rated national news show, a role in which she could only be described as wildly successful if that description doesn’t distract from the journalism gravitas she offered Canadians.
As a now retired but life long union staff representative in the media industry, I handled hundreds of dismissals. Each time there was a lot going on below the water line that the public (or the rest of the workplace) didn’t ever hear about. So if we pass judgment on someone’s firing, we can only base it on what we are permitted to see or what emerges later (the circumstances of Wendy Mesley’s departure from the CBC is a textbook case of waiting for the full story).
LaFlamme has said all she wants to for now. She is referring working reporters to her posted video statement. Melling isn’t talking, other than a press release written in corporate-speak that cites appealing to a younger audience.
Melling was on trial in the press and social media this week. It’s fair to say the judgment by a jury of his peers and the general public is guilty as charged. The Globe’s Robyn Urback qualified that today in a columnby reminding us that salary dumping of top-earning stars is a ruthless commonplace in media and especially Bell Media since Wade Osterman took the reins.
Still LaFlamme’s firing remains a very disturbing story about hair colour and the general circumstances of a powerful male executive butting heads with a strong (and more respected) female subordinate.
Melling started his career at the small-ish CTV station in London, Ontario. He didn’t have the reputation as an ogre, more like flinty-eyed but a good listener. Not the kind of BBPD (bad boss personality disorder) you fear working for.
He was good at what he does —-finding economies, containing costs—- and was promoted in December 2018 to a job that included running Toronto’s Cable Pulse 24. That all-news channel is one of CTV’s most financially successful properties at a forty per cent net profit according to CRTC filings. The age of the staff skews 35-ish.
Melling became General Manager of CP24 six months after the 25 on-air reporters and hosts voted to unionize. The issue was pay. It had been a problem for years before he got there.
This is where I joined the story, assigned by Unifor to negotiate the first collective agreement. As soon as we got the confidential salary information it became clear why the staff had opted for the union: the salaries were egregiously polarized by gender, the worst I saw in my thirty-year career as a union negotiator. Most of the female reporters had been at the station several years and were far below the journalist salary line at CTV’s other Toronto news outlet CFTO-TV which has been unionized for decades.
Melling didn’t cause that but he wasn’t eager to fix it either.
Sitting across from him in contract negotiations, Melling did not look very pleased to be there, but my guess is that was either his game face or his dismay at us messing with his budget.
The negotiations took some time to arrive at the standard salary structure in a unionized newsroom which is always a laddered job rate ending in a “maximum” salary for most of the staff, with a handful of top-earners retaining their existing salaries above the union rate with cost of living raises. All staff have the freedom to negotiate more pay in excess of the so-called maximum.
Although the CP24 negotiations were not unlike crawling across broken glass, we reached an agreement to an accelerated phase-in of pay equity. Knowing Bell Media corporate culture as I do, the decision to cough up more salary came from someone well above Melling’s level. (The silver lining in the silver lining is that the station’s exceptional profitability went up).
I am pleased to say that CP24 continues to operate as a money-machine for CTV without having to fire top journalists in a pivot to a younger audience.
And that observation is my take-away from this sordid story. If the executives at Bell Media believe that the path to a younger audience (and retaining the older audience) lays through firing the Lisa LaFlammes of the world, heaven help the whole organization and the rest of the staff still working there.
MediaPolicy.ca 
