CRTC Message to Broadcasters: Regulatory Games Coming to an End


Last week, the Canadian Radio-television and Telecommunications Commission announced that it is terminating the Local Programming Improvement Fund (LPIF). The fund, which was established in 2008, funneled over $300 million to broadcasters to support the creation of local programming. The decision caught the industry by surprise with the CBC calling it “astonishing” and Bell Media saying it is a “major concern.”

Yet the end of the LPIF is only the latest in a series of moves that unravel recent regulatory efforts to provide broadcasters with increased financial support. My weekly technology law column (Toronto Star version, homepage version) notes the courts and the Commission have sent a clear signal that broadcasters should focus on marketplace success, not manipulating the regulatory system.

The past five years have been marked by enormous change in the Canadian broadcasting sector. The emergence of Internet video and online alternatives such as Netflix, an economic downturn that hurt advertising revenues, and media mergers among broadcasters and broadcast distributors left the CRTC scrambling to address a steady stream of demands for assistance from broadcasters and cultural groups.

The result was a myriad of proposals with the common theme that consumers would be footing the bill. The CRTC first established the LPIF, which added 1.5 percent to consumer cable and satellite costs to help support local television programming. In 2009, broadcasters renewed longstanding efforts for a fee-for-carriage system that would have added up to $10 to subscribers’ monthly bills to pay for local television stations. Soon after came demands to regulate over-the-top video services such as Netflix and to implement fees for Internet providers to support the creation of new Canadian content.

2012 has spelled the end for most of these plans. In February, the Supreme Court of Canada decisively rejected the possibility of new Internet provider fees. Two months later, the Commission released a public letter indicating that it was dropping plans for another “fact finding” exercise into online video. The letter was widely seen as a clear indication that the CRTC had no interest in regulating online video services.

The trend continued last week with the termination of the LPIF as of 2014. The decision split the Commission, with five commissioners voting to terminate the LPIF, three publishing dissents in favour of continuing it, and one commissioner, Michel Morin, issuing a separate opinion that supported terminating the fund.

The majority indicated that fund had achieved its goals and that it would be inappropriate to continue to charge consumers over the long-term, particularly since broadcasters such as the CBC and Shaw acknowledged they would continue to support local programming with or without extra funding.

Morin provided a more insightful take, acknowledging that “no one can say today with certainty that this generous $300 million envelope has significantly increased the overall production of local news.” In fact, he noted that the LPIF lacked even basic reporting requirements. Few stations were able to point to specific news programming that been funded by it and millions were provided to companies such as the CBC, Rogers and Quebecor without any details on how much each station received.

The termination of the LPIF leaves only the fee-for-carriage initiative alive, as it awaits a decision on its legality. Yet even if the Supreme Court rules that a fee-for-carriage system is permitted under the law, it is far from certain that the CRTC will give it the green light.

In fact, having addressed the broadcast side of the equation, the CRTC took on the other big television question on Friday by tackling the restrictive consumer choices offered by cable and satellite companies. The Commission unveiled new rules that will allow consumers to select individual channels rather than expensive large packages.

It is early days for new CRTC Chair Jean-Pierre Blais, but there are signals that the regulatory experiments of the past few years may be coming to an end with a majority of CRTC commissioners content to allow Canadians to become the arbiters what they watch and pay for.

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