The CRTC fumbles, again.

The CRTC ruled this week that Bell Media cannot hold exclusive rights to streaming NHL and NFL games to their mobile devices.  This means that Bell must allow other cellular providers, like Telus and Rogers, access to their licensing deals with both the NHL and NFL so they can stream live games to their devices as well  This comes out of a challenge from Telus after Bell successfully negotiated rights deals with both the NHL and NFL.  where do I even begin…….

First off, I often criticize the CRTC of being anti-consumer, and on the surface this seems to be a very pro-consumer move.  In some ways, it is, I am more against the CRTC overstepping what should be reasonable, and this goes far beyond reasonable.

This ruling essentially means that no media company in Canada should be allowed to have exclusive rights to anything, which is unbelievable to me.  Competition is built on companies trying to get an advantage over their competitors.  For media companies, that means offering content that no one else does.  That is a strategy that will attract subscribers and viewers.  The CRTC ruling, in essence means that a media company cannot try to gain a competitive advantage over another media company by offering exclusive content.

This ruling hurts the entire chain.  Gaining exclusive rights to broadcasts is often expensive for that company.  While I'm obviously not privy to the dollar amounts, I find it very hard to believe that buying exclusive rights to streaming NFL games especially were cheap.  I would imagine that there was a bidding war for this type of content, with Bell winning out in the end because they offered the NFL the best deal for them.  Under this ruling, when future deals are negotiated what is the incentive for any company, Rogers, Bell, or Telus to really bid for content, when they know in the rules that whoever wins the rights will have to sell content to the other two as well.  This will mean fewer bids, for less money, for that content.

The CRTC's theory on this is that no one should have to choose their wireless carrier based on what streaming content they offer.  While there is some argument to that, and I do believe that Internet providers should be a pipe for customers to get whatever data they want, I can appreciate that these content deals drive the competition between them.  If Telus wanted the streaming rights to the NFL, they should have provided a better bid than Bell did.  Simple as that.

I'm not saying this move is anti-consumer.  Because in many ways, it is pro consumer.  However, I believe it is anti-competition, which is anti-consumer.  Competition is good in every business.  It means that each company is constantly striving to be better, because if they don't, their customers can walk away.  Competition is almost always good for customers because competition makes for better service.  But this week, the CRTC has decided that they have the authority to kill competition between companies in Canada, which is really the scary part.

The CRTC has proved yet again that they have no idea how to actually regulate or manage anything.  It is time to overhaul a dinosaur that has existed long before the internet was invented, and has demonstrated time and time again that it simply does not understand how to regulate an industry that looks nothing like it did at the inception of the CRTC.  If the CRTC cannot understand new media, it needs to stop trying to tell the industry how to work, as all it does in the long run is hurt the consumer.  It is as simple as that.

[Read] - Bell's streaming deals breach CRTC rules

CRTC rules against Usage Based Billing

The CRTC has made a very important, and surprising, ruling on the state of usage based billing on wholesale ISP's in Canada.  While this actually won't affect most people reading this, it is a pretty important and precedent setting ruling.  The most surprising thing about the ruling? The fact that it is actually pro-consumer, not pro-big business.

UPDATED: see the bottom of the post for an update

To keep it simple, the CRTC has ruled that Bell cannot charge wholesale ISP's based on how much data moves through the network.  Bell can, however, charge based on speed of the connection.  As a quick reminder, wholesale ISP's are smaller, often local ISPs that do not have their own network.  They lease space from large ISP's such as Bell, and resell that service to consumers.  So while this ruling does not affect the consumer directly, this will have an impact in the long run.

I made the point months ago that charging wholesale ISP's, or even regular users, on a usage based billing system that puts a limit on how much data a user can download each month makes zero sense.  I won't go back into it, but you can find the previous posts from January 2011 and on on this site that will explain all of it.  The nuts and bolts are that the true cost to the ISP is not how much data moves through a connection, but how fast the connection actually is.  Data is a nearly infinite resource; I'm creating data typing this post right now.  But how fast you can get that data is limited, and it does cost ISP's more to offer faster connections.

In a nutshell, with this ruling are that the CRTC has seen the truth to this argument, and has said that Bell can charge wholesale ISP's more for a bigger, faster connection, but not for how much data moves through.  This is a very fair ruling as it does reflect the true cost of internet service.  Wholesale ISP's should be charged more to lease more bandwidth (the actually term for the speed of the connection) from Bell, as that really is where the cost is.  I don't think you'll find many rational arguments against that, as it is fair for everyone.

Why this is important is that it is precedent setting.  Since Bell can't do it, It will be nearly impossible for Rogers, Telus or Shaw to charge wholesale ISP's on usage based billing now as well.  It also means that there is a stronger argument for the general consumer should not be subject to usage based billing.  If large ISP's can't do it for their wholesale customers, why should the general consumer face that type of restriction.  I have always been a proponent of this, and this does give another bullet in the chamber for the groups that are lobbying for it.

The last thing I will say is that I'm very surprised at the ruling, in a good way.  The CRTC very rarely makes consumer friendly rulings of this magnitude.  Traditionally it has catered to larger businesses.  This ruling helps small businesses the most, but will have a long term positive impact on the state of internet and content delivery in Canada.  There are many CRTC rules which I think are so anti-consumer they hurt more than they help (simulcasting sports broadcasting is my favourite example), but this ruling is a surprising breath of fresh air, and a very welcome one.

UPDATE: Since the posting of this article some new news and clarifications have come out.  I have also included links to the original article, as well as the two new articles for this update below.

The Canadian Association of Internet Providers (can no one come up with better names for these types of organizations?) has come out against the ruling, saying that it will drive up costs for consumers who subscribe to those wholesale ISP's, since those who want faster connections will likely have to pay more.  Now, this actually may be true, but then that will make those ISP's and customers of those ISP's on a similar playing field that customers on Bell, Rogers, Telus and Shaw are.   They may even be in a better position because there does not have to be a data limit on their plans, like the larger ISP's have chosen to impliment.

The rhetoric is quite funny.  The large ISP's are unhappy because they wanted to implement usage based billing on the smaller ISP's in an effort to make more money.  Small ISP's are unhappy because they don't like the prospect of having to pay more to the larger ISP's in any way.  Usually, when both sides of the business are unhappy, that is generally a good thing for the consumer.  I know that there is a possibility that a consumer using a small ISP will have to pay a bit more, however the deal remains fair to all sides, and does accurately reflect the real cost of delivering internet.

There has also been an update on exactly how the wholesale ISP's will have to pay for their connection speed.  According to Ars Technica, the Large ISP's will have two methods to charge the wholesale providers.  They can either charge a flat rate, or force the small ISP to pay up front at the beginning of the month for however much capacity they want/need for that month.  That is something I personally don't like, because having to pay ahead of time will lead to guess work.  If the ISP pays for too much capacity, they will pay for more than what they need and end up paying more than they need to.  If they buy too little, it will cause congestion for their customers and slow down their internet.  this is not a good situation for the wholesale ISP's and one that they are likely going to have a difficult time handling.  You will likely see them having to pay for far more than what they usually need on a given month, especially in the beginning, to ensure there is no drop off in capacity.  what I would have liked to have seen is for the wholesale ISP's use what they need in a given month, and then pay the large ISP's the appropriate amount. No more, no less.  This would have been a much more fair deal for those small wholesale ISPs.

[read] - CRTC offers compromise on usage based billing (CBC)

[read] - CRTC ruling may boost prices (CBC)

[read] - Canadian regulators ditch usage based billing for independent ISP's

Why the CRTC needs an overhaul – Part 2

This is the second part of my post/rant about the CRTC.  You can find part one here.

In part one I briefly talked about the protectionism the CRTC takes with regards to Canadian content.  I want to talk a bit about how the CRTC handles TV, and how it is really limiting how Canadians can get TV shows legally through new media sources, namely the internet.

I am going to start by explaining where the United States stands in online media.  It’s a fairly simple process in the US.  Fox produces the show 24, and they have full rights to that show to distribute it however they want.  24 can be watched on regular TV, it can be purchased on the iTunes store, and it can be legally watched online on various websites, most notably hulu.  Through all of these, Fox collects a royalty.  It collects a percentage of the sales on iTunes, as well as revenue from advertisements on both the broadcast TV and web versions.  The streaming web versions have advertisements just like the broadcast TV does.  in the year since hulu launched, it has exploded in popularity.  The people that visit the site do not care that there are ads in the shows.  they appreciate that they can watch the shows online, and are more than willing to sit through normal ads.  This model is proving very successful, and more and more shows are appearing on the web in either a paid downloadable form, or an ad-supported streaming fashion.

Now, lets move over to the Canadian logistics. In Canada, Global TV has paid for the right to show 24 on it’s network.  This means that Global has full rights to the show in Canada.  Under CRTC rules, Global simulcasts 24 fox in the US, except that the fox channel in Canada is dubbed over the the Global broadcast.  This means that the Fox broadcast is not seen at all in Canada.  This is to ensure that all ads shown on TV are the Canadian ads.  This I have no problem with(except for the super bowl of course.  I want those US ads).  where it gets muddy is the online space.  I will use the iTunes store and 24 as an example. 

Since Global owns the rights to 24 in Canada, it also owns the rights for all online broadcasts of the show as well.  for Apple to offer 24 on the iTunes store in Canada, they have to negotiate a deal with Fox, as it is the owner of the show as a whole.  Then, because Global owns the broadcast rights in Canada, Apple essentially has to negotiate the same deal again with Global.  this means that while Apple only has to negotiate one deal to offer 24 in the US, it has to negotiate 2 deals to offer 24 in Canada.  This means that they will have to pay fees to both Fox and Global, which, if any such deal can even be done, will likely mean that extra cost being passed onto the consumer who buys the show.  Apple has been reluctant to this point to have to pass that cost onto the consumer, so those deals have not been made.  To be fair, Global does offer it’s shows streaming on it’s website.  However, as of this writing, they have chosen not to allow other methods of streaming either through them, or through sub-licensing their rights to the show.

If you look on the iTunes store in Canada, there is a lot of Canadian content, as well as some US content.  Canadian content can be negotiated the same way the US content is in the US. if CBC produces a show, they own all the rights, so Apple only has to negotiate one deal to get the show on iTunes.  there are also several US networks and shows in Canada.  Those are shows that do not have a Canadian rights owner.  Meaning that there are no Canadian networks that broadcast them.  In that case Apple again only has to negotiate one deal for those shows, as there is no one who holds the rights to broadcast the shows in Canada.

What I would like to see the CRTC do is begin removing the online component of the Canadian network’s license to show US shows in Canada.  If they want those rights, they should have to negotiate them separately.  This would allow proper competition in the marketplace, instead of a monopoly of the Canadian networks over US content.  Let’s un-do the shackles, and let people actually innovate with TV delivery on the internet.  It’s the way of the future, and if the CRTC chooses not to allow this to happen, they risk having the country left behind as others innovate.

Why the CRTC needs an overhaul – Part 1

The title says it all doesn’t it?  the Canadian Radio-television and Telecommunications Commission(CRTC) is broken, and needs to be fixed.  the problem is, is that I’m not sure if it can be.  For those of you who don’t know, the CRTC is the governing body of all radio, TV, telephone, cell phone, and internet traffic in Canada.  The closest to an equal organization in the US would be the FCC, except that the CRTC also controls some things that the RIAA and MPAA in the US controls also.  Sounds great doesn’t it?  This post will truly be a wall of text, so I have decided to break it up into two parts.  The first part will deal with the current hearings going on between the RIAA and Canadian ISP’s regarding the internet.  The second part will be about the CRTC and TV in Canada.  I hope you’ll find it an interesting read.

For those who do not know, the CRTC requires that all TV and Radio stations based in Canada show a certain amount of Canadian content every day.  Canadian content is content that is shot and produced in Canada.  Some stations, like Global and CTV, usually only supply the minimum amount of Canadian content as required by the CRTC, where stations like CBC usually produce a higher level of Canadian content.  To this point, the CRTC has said that the internet is exempt from this rule.  The CRTC is now revisiting this exemption, and is weighing whether or not to require that a set amount of traffic delivered to Canadian PC’s would be Canadian content.

Let me just step back and let that sink in for a second.  Seriously, really sit and think about that.  Okay, done?  Good.

My first, gut response, is that the CRTC has no idea at all what it is doing, or talking about.  Contrary to belief from some US senators, the internet is not a “series of tubes.”  It is an open world and restricting it is next to impossible. 

It is possible to use IP address sources to find which content is coming from a Canadian PC or server, but that would in no way be accurate at all.  A Canadian could be using a US based hosting service, so the content could be Canadian, but coming from the US.  A US customer could be routing content through a proxy server in Canada, which would make the content look like it was coming from Canada, when it really is US produced.

Then lets look at the other side.  How are ISP’s supposed to enforce this?  The current number being thrown around is that 30% of internet content would have to be Canadian made content.  Never mind trying to throttle P2P traffic, what is an ISP supposed to do?  Suppose that there is a way to correctly tag all Canadian content on the internet.  In a scenario where 30% of all content viewed would have to be Canadian, what happens if that quota is not met?  Will ISP’s block all non Canadian web pages until over 30% of the content for the day is Canadian?  Will they cut you off of the internet all together?  Think of it this way.  After literally a decade of fighting, illegally downloading music, TV shows and movies is absolutely rampant across the internet.  If no one can stop illegal copyright violation, how are Canadian ISP's supposed to stop legal content from flowing?

I believe that this is one of the few times that every major ISP in the country, Shaw, Bell, Telus, and Rogers, have all agreed on one thing.  This would be a very bad idea.  Shaw was the first to voice it’s concerns, while the other three followed suit shortly thereafter.  It’s a kind of ISP solidarity that is unprecedented in this country.  They have realized that enforcing this would be impossible, and are telling the CRTC this.  The question is, will the CRTC listen?

Attempting to restrict the content on the internet would be catastrophic to the growth of the internet in Canada.  In a country this size, with such a small, spread out population, the internet has really changed the way that smaller communities, especially northern communities, can communicate. 

To me, this really shows how badly out of touch, and out of date the CRTC really is.  It is an organization that exists solely to protected Canadian interests.  I will never dispute that that is an important function, but in the age where I can find out exactly what is going on half way around the world in real time, the kind of protectionism that the CRTC undertakes is not realistic.  Instead of trying to fight the internet, the CRTC should be aiming to give everyone more access, and easier access to it. And instead of forcing Canadian content down peoples throats, they should be working with Canadian content providers to make good quality Canadian content that people will actually want to watch.  Don’t force the bad on us, but promote the good.  Make it good, and the people will watch.  Two of my favorite TV shows right now are The Border and Flashpoint, made by CBC and CTV respectively.  Both are action  shows, and both are, in my opinion, among the best shows on TV in their Genre right now, in the US or Canada.  CBS in the US has even bought the broadcast rights of Flashpoint from CTV and simulcasts new episodes when they air.

Is it too much to ask for the CRTC to stop trying to force decades old ideals down our throats?  I hope not.  And I hope they get the picture.  the CRTC needs to leave the internet alone.  I hope they are listening.