Henry Blodget has a piece called “For Whom The Bell Tolls? It Tolls For TV…” that should be read.

For understandable reasons, many TV executives continue to dismiss the digital threat out of hand, pointing out that people still spend 5 hours a day in front of their boob tubes and arguing that the TV habit is so entrenched that satellite-cable-telco-network juggernauts will be able to maintain their chokehold and profits forever.

Such a viewpoint isn’t limited to the domain of some industry executives. Other executives have seen a different future and are trying to prepare for an alternate future.

At some point, just as it has with newspapers, this dwindling attention will be noticed by the folks who pay all those massive TV industry bills–advertisers and consumers.

And many of those advertisers and consumers will stop paying those bills–or at least radically reduce the amount they are paying.

At which point the TV industry as we know it will collapse.

Importantly, what I mean by this is NOT that people will stop watching TV content. They’ll keep watching it–some of it, anyway–just the way they’re still reading newspaper content. They’ll just get the TV content they watch in different ways (Netflix, iTunes, YouTube, Hulu). And, unlike today, they won’t get it in a way that supports the production of vast amounts of excess TV content (100s of channels) and steers humongous profits into the pockets of TV executives and shareholders.

For some time, I have been wondering about the transitional state.

At what point does a broadcaster cease to be a broadcaster from a regulatory perspective? If a content provider doesn’t broadcast over the air using public airwaves, what makes them a broadcaster subject to licensing?

At what point does a broadcast distribution undertaking (“BDU”) cease to be a BDU from a regulatory perspective? If a content delivery company uses standard public internet or even a VPN within a public internet access service, at what point does it cease to require a license?

There are now more than a billion smartphones in use in the world, up 47% from the 700M in use a year ago, according to Strategy Analytics.

An important new report from the Information and Communications Technology Council of Canada (“ICTC”) says that by year-end 2012 there will be 13 million smartphone users in Canada, up from 9.1M at the end of 2011. These users are said to have “a seemingly insatiable appetite for downloading and using mobile applications”, creating a huge opportunity for developers.

So ICTC has taken a snapshot of Canada’s app development ecosystem, exploring:

• Occupations engaged in app creation;
• The indirect and induced employment in the app economy labour market;
• The economics of app creation: The costs associated with developing apps, funding mechanisms of app enterprises, opportunities and challenges to funding app initiatives;
• The total expenditure on apps and related products and services by Canadians;
• The various avenues of revenue generation and total revenue generated by Canadian app-makers;
• The growth potential of the app economy and estimated job creation in this segment;
• Support and encouragement required to ensure that the Canadian app makers flourish and consolidate their position on the global stage; and
• Implications for policy makers with respect to talent, financing, and communications regulation.

The study [full study (630KB pdf)] finds there are 22,800 technical professionals among the 41,300 directly employed in the Canadian app economy. The Canadian app ecosystem generates $775 million per year in revenue and are estimated to reach $1.19 billion in 2014 (up 54%) and $2.2 billion in 2016 (an increase of 184%).

According to the report, nearly half (47%) the jobs in Canadian app development are found in Ontario, followed by 22% in Quebec and 15% in BC.

The report explores some interesting questions for policy makers in its final section entitled “The Way Forward”:

• Should supporting nascent enterprises be prioritized?
• Should necessary capital for small app enterprises be ensured?
• Should creating a job market-ready workforce be emphasized?
• Should integrating skilled foreign workers more effectively be prioritized?
• Should collaboration with other sectors be prioritized?
• Should awareness of global competition be raised?

Let me add a few other questions.

Will government intervention help or hinder Canadians competitiveness in app development? Are there policies that can help Canadians get a disproportionate share of the growing revenue opportunity?  How can Canadian app developers thrive in a global market that has few barriers to entry?

According to the report:

As mobile apps continue to become the preferred means to access and consume digital products and services, it is vital that the app economy stakeholders ensure an enabling environment, a smooth path to progress, and opportunities for growth. These formative years are crucial in laying a strong foundation for sustained success. Sound skills policy, an attractive investment climate, and collaboration among all stakeholders of skilled app workforce are all key ingredients of growth and for attracting investment, as well as for Canada to gain maximum benefits from workers’ productivity gains. The app economy employs a notable number of Canadian workers and targeted measures can create a better functioning app ecosystem to benefit from competition, strengthen the business environment, and improve efficiency.

The apps development ecosystem is nascent and indeed, it is crucial that we establish a solid foundation to enable Canadians to achieve sustained and sustainable success.

How will the apps ecosystem be nurtured in the context of the long awaited national digital strategy, due to be released before the end of this year?

Videotron announced a major milestone today. The Quebec cable company now has a million customers that subscribe to at least 3 of the 4 major products in the company’s portfolion: cable TV; internet access; residential telephone service; mobile phone service).

It is a remarkable achievement especially when you consider some not so distant history.

There was a time that cable TV penetration in Quebec lagged the other provinces. With a majority French language customer base, there was not the same demand for Videotron to retrieve the major US networks, a “community antenna” which served as the fundamental basis for English Canadian cable companies.

Videotron launched its home phone service at a deeply discounted price relative to offers from other cable companies across North America. But Videotron’s counterparts in other markets started with considerably more cable TV customer penetration. Videotron’s approach helped pull through new cable subscriptions.

As of this past June 30, Videotron has

• 1,837,900 cable television customers,
• 1,425,000 of these subscribe to digital cable service
• 1,341,100 high-speed Internet access subscribers
• 347,600 subscriber connections mobile telephone service
• and 1,223,400 households and organizations with cable telephone service

Not everyone hates their phone company or cable company. According to Videotron, “The love story between Videotron and Quebecers continues.” Leger Marketing has found a stellar 98% customer satisfaction rating.

It is worth considering how Videotron has built such a strong reputation with its customers.

In February, the CRTC had issued a regulatory policy that required phone companies to install a “jack-ended demarcation device” on the first diagnostic service call to a home that was not so equipped. The Commission’s thought process was that it “would result in a consistent practice among ILECs and more equitable treatment of customers who currently do not have jack-ended demarcation devices as compared to those who do.”

It was a reasonable thought on the part of the CRTC. after all, those of us with such demarcation points can quickly determine whether a problem is outside of the house (ie. the telephone company’s problem), or inside the house (ie. the homeowner’s problem).

The problem with the CRTC’s policy set out in February was that the Commission had not asked for cost estimates associated with installing such a demarcation point coincident with the service call. As it turns out, it is a material amount.

So the CRTC agreed with the application to review and vary the original decision: “that there was substantial doubt as to the correctness of the regulatory measure to mandate the installation of a jack-ended demarcation device as set out in Telecom Regulatory Policy 2012-83.”

As a result, in a decision released earlier today, the Commission decided to give the phone companies the option to

1. not install a jack-ended demarcation device and provide repair services for inside wire free of charge; or
2. install a jack-ended demarcation device, at which time the ILEC may charge for the repair of inside wire during the same visit.

The Commission’s intent is for all homes to get demarcation points, without crazy up front costs being incurred by the carriers. Today’s approach provides a reasonable solution in the interest of customers, who will continue to receive free wire repair services if their phone company decides not to install a proper demarcation device.

Early iterations of Canada’s anti-spam laws were named with some irony as the Electronic Commerce Protection Act.

Last week, the CRTC issued guidance [“Guidelines on the interpretation of the Electronic Commerce Protection Regulations” and “Guidelines on the use of toggling as a means of obtaining express consent under Canada’s anti-spam legislation“] that were intended to help Canadian businesses better understand the soon-to-be proclaimed anti-spam legislation. The CRTC said that it expects the legislation to come into force in 2013.

A number of law firms have written advisories that appear to confirm that the rules will add considerable red-tape for Canada’s business community. For example, here are links to reports by David Elder at Stikeman Elliott, Michael Fekete and Matthew Wanford at Osler and Bernice Karn of Cassels Brock. Each speak of the compliance burden on business.

I wonder to what extent these rules will serve as an inhibitor to the use of electronic mail and digital communications as a means to reach consumers. The imposition of such rules appears to fly in the face of Government statements (and a Red Tape Commission) that it is seeking to lessen the burden on small business.

As I have written before, I continue to have doubts that any of us will see a decrease in the volume of real spam – offers for anatomical enhancement, debt relief, etc. This bill, as it was passed, will serve to dramatically increase the cost of electronic business and act as a deterrent for e-commerce adoption by legitimate businesses in Canada. The government should sit on this one until its impact can be assessed and integrated into an overall national digital strategy.