Often, we speak of regulatory decisions as fair if each of the parties are equally upset.
It is tough to be a regulator in a competitive environment. Actually, I’m not sure it was loads of fun to be a regulator in the days of monopoly rate setting.
But, it has to be extra frustrating trying to understand when the expectations keep changing.
Back in July, Michael Geist accurately predicted the outcome of the CRTC’s review of over-the-top (“OTT”) video, released last week. At the time, he wrote:
The participants in this consultation fall into three main groups: those seeking competition, those who want more regulation, and those who want de-regulation.
What remains is the next step for the CRTC. It seems certain that there will be a full scale hearing, but the question is whether the Commission will cave to pressure from some groups for something immediately, or wait until the next new media hearing round in 2014. Given the lack of actual evidence – this has been a fear-finding exercise rather than a fact-finding one – the CRTC should surely label this a watching brief and wait until 2014.
“Given the lack of actual evidence… the CRTC should surely label this a watching brief and wait…” Amazing call 3 months ahead.
In the report, the CRTC used language that paralleled the categorization of parties into 3 groups:
Many stakeholders proposed policy options to deal with the challenges associated with growing OTT content consumption; these generally fell into three large categories based on either regulatory or market solutions: a) lowered obligations for regulated entities, b) creating regulatory obligations for OTT providers and c) maintaining the status quo.
The accompanying news release said “While not containing any clear evidence…”, agreeing with the July article. The report itself even used Geist’s expression “watching brief” – a term that is rarely used by the CRTC, having appeared only 6 times in decisions, reports or policies prior to last week.
So I was a little confused by Geist’s article in Sunday’s Toronto Star. In that article, he again acknowledges the “lack of evidence”, but somehow draws a conclusion:
The consultation confirmed that consumers are gravitating toward services that offer on-demand access to video content at a price point far below that offered by conventional pay television and broadcaster services.
No such confirmation was made by the CRTC. The Commission found “that consumer adoption of OTT services is real and growing” but did not see evidence of harm to the traditional broadcast system. The word “price” appears only once in the report, and that was in the introductory reference to the Notice of Consultation. The report therefore did not draw the conclusion or even provide such a confirmation of “gravitation” to low priced on-demand access.
What the Commission said was “significant change is underway in the communications sphere” and it plans to continue to gather information, with a repeat of the fact-finding exercise next year. Fact-based decision making is what we should expect from our regulator.
The Star article says:
Indeed, rather than offering broadcasters and creator groups another chance to make the case for regulation, the CRTC should instead be closely examining the potential barriers to online video services from vertically-integrated media companies that combine broadcasting and Internet services and hold the power to undermine the nascent competition.
For example, Internet plans with expensive data caps can be used to increase the indirect costs of online video services when compared with on-demand video services from cable and satellite companies.
Yet, there was no evidence of consumer harm from internet pricing practices. Wouldn’t such evidence have been highlighted in the July blog post or this week’s Star article? It seems to me that there needs to be some clear evidence of a problem before the CRTC becomes one of the only regulators in the world to regulate retail internet business models. To the contrary, the CRTC report said “many parties stated that Canadians are the biggest online video consumers in the world.”
It seems that the CRTC got this one right by ignoring the call to sit on the sidelines until 2014.
Given the fast pace of change in this environment, the Commission intends to maintain a watching brief on OTT, and conduct financial data collection and another fact-finding exercise in May 2012 to determine if the scenarios put forth by parties with respect to potential regulatory impacts and opportunities have materialized. It expects that at that time stakeholders will be able to provide rigorously collected data, including public opinion research, internal customer surveys, historical revenues and expenses associated with OTT services, market intelligence, qualitative and quantitative evidence with respect to the state of closed captioning and described video for OTT programming and other such quantitative evidence, that will assist the Commission in better evaluating the impacts and opportunities offered by this environment. In addition, as part of its watching brief, the Commission will focus its annual consultation with the broadcasting industry primarily on the subject of OTT.
Everyone, consumers, content providers, content creators, ISPs, vertically integrated companies, independent broadcasters and all other stakeholders and observers alike, will have a chance to gather and submit evidence next summer.
The Commission was clear about its focus on its statutory mandate:
The Commission considers that currently it is best to allow the OTT market to continue evolving, better measurement tools to emerge and entities that contribute to the policy objectives of the Act to take advantage of the many opportunities in this new environment.
What exactly is wrong with that approach?
As Ricky Nelson sang, if you can’t please everyone, you’ve gotta please yourself.