A new CRTC consumer chief: the job ahead for Ms Motzney (1/2)


For once I’m going to start by saying congratulations. In this case to the CRTC’s new Chief Consumer Officer, Barbara Motzney. And add a hallelujah – our regulator now has a consumer advocate.

In much more recent news, still all about the consumer, the CRTC announced last week it’s launching a proceeding “to establish a mandatory code for mobile wireless services” (see Telecom Notice of Consultation CRTC 2012-557). In a post the next day, intrepid CRTC critic Pete Nowak celebrated by characterizing the announcement as being “about bloody time.” Despite himself, Pete then came up with a very useful list of potential initiatives that could make our wireless life much happier.

I’m taking a different approach. I’m going to look at the Canadian media consumer and her problems in broad brushstrokes; and I’m going to do so by examining how we got here. The goal is to find some lessons in the backstory that will point the way to a brighter future.

Let me begin by walking back something I said in a post last month on why the “CRTC plan to focus on the consumer leaves me skeptical.” That goes as follows:

What the CRTC really needs to make this stuff happen is a senior officer who isn’t always framing pronouncements for the licensees: a Director of Consumer Affairs, someone who knows how to speak to real people, how to study their needs and how to make their concerns get on the weekly agenda in Gatineau.

Oops. I wrote that nearly 2 weeks after the new Chair had done precisely what I was lamenting, i.e., appoint a consumer chief (I still stand by my cartoon). Here’s how the CCO appointment looks on the latest Commission org chart:

As indicated, the CCO sits at the executive-director level, so we can begin by assuming the Chair and his advisors have taken this matter pretty seriously. The only previous consumer-oriented action of this magnitude I can remember at the CRTC was the 1997 appointment of David McKendry as a full-time commissioner.

David’s appointment was big news, because he was the only guy with a background in consumer affairs who ever got the job – and, true to form, he made waves in his 5-year tenure (writing dissents and, heaven forbid, doing his own research). In an interview with the National Post in July of 2011, David said aloud what many of us were thinking about the Commission back then (and have thought since):

[T]he CRTC is “insensitive to consumer issues” and “is living in this fantasyland” that there’s competition in the provision of Internet service at a time when the Conservative government is trying to look like it’s being responsive to consumer issues, said McKendry.

In an email, David confirmed he will make his mark once again as the consumer’s friend – as provisional chair of the Canadian Broadcasting Participation Fund, a body that will provide cost awards to consumer groups wishing to intervene in CRTC proceedings. “This body,” David writes, “will hopefully solve the longstanding problem of consumer groups not having sufficient funds to effectively participate in broadcast proceedings.” So far, so good.

Mr Blais goes to Ottawa

Meanwhile, Chairman Blais had the unenviable job recently of pitching his new-look agency to the politicians who make up the House of Commons Standing Committee on Canadian Heritage, whose purview includes the CRTC and hence the Internet (who woulda thunk that with the stroke of a pen the world’s greatest engineering achievement would become part of our national heritage). In his opening statement, posted on the CRTC website here, Blais managed to nod politely in a dozen different directions at once – that, after all, is the job in this particular hotseat.

That said, I think the guest of honor put an anachronistic spin on the consumer appointment that undermines its significance and gives us reason to look closely at how and why we are committed to Canada’s “heritage.” In his opening remarks, the Chairman laid out his vision of the Commission’s future mandate as reflecting three different perspectives on our “complementary and interrelated needs”:

“The CRTC’s role in the years ahead will be one of an enabler to achieve its overriding objective: to ensure a world-class communication system for Canadians as citizens, creators and consumers” (my emphasis).

It’s no accident that “citizens” get pride of place here, even though Canadians as consumers get considerably more cover in the opening remarks. If you had just landed here from Mars, or even the United States, you might wonder why the Chairman was making a distinction of this kind, given the still fresh and exciting news about Ms Motzney. Especially when you read how the citizen is characterized:

Canadians as citizens want to participate in the democratic and cultural life of their country. They do so by having access to news and public affairs programming within a communication system that is accessible to all Canadians, including those with disabilities. Citizens also expect their privacy to be respected by service providers and telemarketers.

Naturally, remarks of this kind to the Standing Committee are not intended to offer a discourse on citizenship . But our Martian might continue to wonder how it is that rolling up public affairs programming, accessibility and privacy turn a warm body into a citizen. Taking our online privacy problems out of their commercial context is puzzling.

Let’s take by way of illustration two of the leading privacy stories that came up last week on Benton’s Communication-related Headlines (terrific daily service, try it). One, from  the Washington Post, concerns a report by the US Government Accountability Office that says wireless carriers are not doing nearly enough to protect mobile location data. The other, from The Atlantic, is headlined “Your iPhone Is Tracking You Again.” These privacy issues, which millions of people are worried about, have evolved out of the business relationships between consumers and the firms in question. I don’t get what makes any of that a part of citizenship – except maybe the well-founded fears among Canadians and Americans that their own governments are really keen on finding ways to violate online privacy on a systematic basis.

The ideology of the media “citizen” 

One way to decipher the Chairman’s meaning is by reference to the deep-rooted ambivalence reflected in Canada’s broadcasting history: the policymaker’s wish to see private-sector broadcasters succeed at maximizing profit, up against the sovereign notion that the broadcasting system should “safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada,” one of numerous highfalutin policy goals set out in the 1991 Broadcasting Act. That legislation aims to do a lot for Canadians, but protecting them as consumers is certainly not one of them.

I saw this citizen ethos in action starting over a decade before the 1991 Act came into being (the policy preamble, by the way, did not change appreciably in tone or spirit compared to the 1968 version; it just got more long-winded). I had the honor of working briefly with the venerable Graham Spry, one of the small group who championed the development of a national public broadcaster starting way back in the 1930s. My immersion in the citizenly side of broadcasting continued through the 1980s with a couple of federal task force assignments, a stint at the CBC and work for citizen advocacy groups.

Throughout this period, I heard many people draw a sharp line between the needs of the consumer and those of the citizen. Unlike Chairman Blais, however, these folks did not always intend that division to create two separate but equal classes. Many of them, dedicated to doing battle with the commercial broadcasters and their disregard for the public interest, dismissed the assumption that mere consumers had any stake in cultural policy debates. Citizens trade in patriotism, love of king and country, democratic freedoms, public broadcasting… Consumers just buy stuff.

I also noticed how this disdainful attitude played into the hands of federal officials, who seemed much more comfortable with vague, collectivist goals than with the far messier business of looking after the welfare of individual consumers. That in turn was the cue for Canada’s program-makers and cultural bureaucrats to take what began as a cultural policy and morph it into an industrial policy – i.e. federal and provincial programs to keep the industry in paying gigs. The small community that’s on the receiving end of public monies like the Canada Media Fund have captured the divorce between consumer and citizen in the telling phrase “Canadian TV programming of national interest.”

I’ve often wondered how the purely cultural side of Canadian policy can be justified, even in a vaguely empirical way, when the rationale is based not on the people’s interest but the so-called national interest. I know the pitch: the industry gets the crafts working, audience share for Canadian programs needs to max out, then those programs need to showcase Canada in lots of export markets, etc. The weird thing, however, is that financial and audience success translates into calls to put more funds into more of a good thing. But when the numbers are down, we still hear demands for help, only for the opposite reason: send money, we need to make and sell more shows, especially so Canadian viewers aren’t deprived of their dose of Cancon.

This is the industry that constitutes the second leg of the Chairman’s policy stool, the so-called “creators,” which he described thusly:

Canadians as creators not only develop innovative content, but also ensure its delivery across all platforms—including television, radio, the Internet and mobile devices—for domestic and global audiences. Producers, actors, directors, artisans, writers, technicians, broadcasters, broadband distributors, wireless service providers and digital media innovators create content that reflects Canada’s rich regional, ethnocultural and linguistic diversity.

It may seem odd to credit struggling actors and writers for enhancing our diversity in the same breath as Bell, Rogers, Shaw, QMI and Telus – as though the incumbents were elements of some Platonic national treasure. Yet these strange bedfellows have all done very nicely under a policy framework that was originally designed to keep US competitors from taking business away from anyone on the list above. It’s convenient for the recipients that our cultural investments don’t require any meaningful demonstration of ROI – not ROI for those who produce the content but those who pay for it.

The Canada Media Fund notes on its website that it “delivers $375 million in funding annually to support the Canadian television and digital media industries.” The biggest chunks of cheddar by far go to television. While the CMF gets it money from both Canadian taxpayers and the BDUs, that doesn’t make the CMF a bona fide public-private venture. If you’re a taxpayer and you subscribe to a TV service (as do 89.6% of TV households), then you’re being taxed twice: once on behalf of the Consolidated Revenue Fund and a second time by your BDU.

Regressive tax, rising costs

The big TV providers are required to contribute 5% of their BDU revenues to the broadcasting system. Most of this ends up in the CMF – over $200 million last year (see CRTC CMR 2012, p.100, Fig 4.4.4). None of this is a charitable donation; the BDUs pass the whole cost on to the customer. (I note in passing that the current CMF budget is about 1.7 times greater than the entire budget of $225 million provided by the Tories for the Broadband Canada program.)

The BDU contribution scheme is thus both regressive and earmarked. First, unlike income taxes, the BDU levy has no means test; it’s passed on to subs willy nilly, rich and poor alike. Second, the levy does not go to the CRF but to the CMF (as well as a couple of other pots, like cable’s community channels) – and then into the pockets of a special interest group, the professional creators. (We’ll look at what happened to millions of amateur creators in the next post.)

The funding mechanism for Cancon is also unreasonable because of the distinctively upward trend in the cost of subscription TV in this country. The embarrassing cost of Canada’s pokey broadband gets lost of press – on this page, from Pete Nowak and others. TV gets much less. Yet it turns out that, from 2007 to 2011 inclusive, the big BDUs enjoyed an annual rise in ARPU (i.e. in CAGR) of 6.4% (2012 CMR, p.97, Fig 4.4.1). Compare that to inflation measured as CPI: in August it was hovering around 1.4%. Even if you look at Canada’s all-time inflationary average – 3.2% – the rise in the CPI is only half the 5-year ARPU increase for TV. If the costs of watching TV are going up that much faster than inflation, don’t I as a taxpayer and subscriber have a right to know what I’m getting in return?

Coming next… How will Blais and Motzney reconcile what’s bad for consumers with what’s allegedly good for citizens?