Ottawa likes OTT – but will it ever follow the DoJ’s lead?





Update: This post now available in audio. Just press the player button below…

[haiku url=”OTT-DoJ-june25.mp3″]

Last year, the CRTC held secret meetings about the OTT “threat.” More recently, Comcast seemed to be thumbing its nose at the FCC over its attempts to put anti-competitive roadblocks in the way of Netflix (just like Rogers has done with its caps).

Ottawa and Washington may be divided over the digital divide, as I noted recently, here and here. But this week, they’ve found common ground in an apparent defence of OVDs and their right not to be trampled on by legacy media operators who can’t innovate and don‘t want to compete.

Don’t mess with my Netflix

Some of my most enthusiastic rants on this page have been inspired by the coming of Netflix. Apart from my deep dislike of the Hastings hookup with Zuckerberg a few months ago, I’ve argued that Ottawa’s Cancon cabal should keep their grimy paws off over-the-top video services (see e.g. Results of CRTC fact-finding on our Netflix agony: there are none!).

Suddenly, the cavalry has turned up, on both sides of the border. Speaking in Banff for the (outgoing) acting CRTC chair, Commissioner Peter Menzies had this to say about the onslaught of over-the-top video:

There’s been some concern that OTT could draw audiences away from our existing world of regulated broadcasting, and undermine the system that supports investment in our own Canadian content. We have been monitoring the effect of these services. So far they seem to be complementary to the existing system. They don’t appear to have led Canadians to cancel or cut back on their cable and satellite subscriptions.

That in itself isn’t very reassuring. Because the test referenced here isn’t whether consumers are better off; it’s whether corporate welfare is at risk. The minute Rogers or Bell or the CMPA say OTT is not complementary, we’re back in the doo-doo. Or maybe not. Menzies again:

But, if I can share with you my personal view, I think these concerns should be turned around. OTT is an exciting new way to reach out to people. Let’s not think of it as a threat to Canadian content. Let’s think of it as an opportunity for Canadian content—an opportunity to export and promote it around the world. Canadians have the talent and creativity to produce programming that can connect with audiences around the globe: our documentaries, our drama, our comedies, our variety and children’s programming.

We have been relying on a subsidized regime to support our own programming so that it can compete with programming supported by a much larger audience base. This model is becoming less and less relevant (my emphasis in both quotes).

Subsidies becoming less relevant? That’s earthshaking coming from the CRTC before an audience of people whose livelihoods depend on significant government intervention.

Same deal in DC, only a lot different

It’s great the CRTC is now on record as lifting the “threat” stigma from OTT (well, a commissioner speaking for the ex-chair is on that record). In Washington, on the other hand, the authorities are taking a far more aggressive approach. The Wall Street Journal reports that the DoJ is looking at possible anti-trust violations in the recent behavior of the cable-TV industry:

The Justice Department is conducting a wide-ranging antitrust investigation into whether cable companies are acting improperly to quash nascent competition from online video, according to people familiar with the matter.

Justice Department officials have spoken to several online video providers, including Netflix Inc. and Hulu LLC, those people said. Investigators have also questioned Comcast Corp., Time Warner Cable Inc. and other cable companies about issues such as setting data caps, limits to the amount of data a subscriber can download each month, these people said.

Nice for the Americans. Not only do their Justice officials actually care about consumer protection; even when they don’t, the FTC does. The best Ottawa can offer is a 1-800 number to call a public agency you’ve never heard of: the Commissioner for Complaints for Telecommunications Services (CCTS).

>> Fun fact: Netflix accounts for 33% of peak downstream traffic on US cable networks (source: Sandvine) <<

Further in the vein of non-surprises, the US cablecos are dragging out the usual bullshit about needing caps to protect their networks from being blown up by bandwidth hogs, and hurting their valued shareholders subscribers:

In its cable TV probe, Justice Department investigators are taking a particularly close look at the data caps that pay-TV providers like Comcast and AT&T Inc. have used to deal with surging video traffic on the Internet. The companies say the limits are needed to stop heavy users from overwhelming their networks.

Internet video providers like Netflix have expressed concern that the limits are aimed at stopping consumers from dropping cable television and switching to online video providers. They also worry that cable companies will give priority to their own online video offerings on their networks to stop subscribers from leaving.

Hands across the border?

There’s a cross-border parallel forming around the OVD trend. The authorities in the two national capitals have heard the wakeup call. And then there’s the huge, depressing difference. When the shit hits the broadband fan, Washington will step in and punish anti-competitive behavior – which invariably means anti-consumer behavior. In Ottawa, however, the call for a new approach to OTT isn’t about consumers. It’s about making the world safe for Canadian content. Commissioner Menzies at Banff one more time:

Let’s take advantage of these great new digital media to promote and export our Canadian content to the world. Let’s develop innovative new content and products, find ways to monetize them, and get them out to worldwide audiences. Now who is going to lead this wave of Canadian innovation? It’s got to be you.

Late last month, OpenMedia’s Steve Anderson had an email exchange with Pete Nowak in Talking internet data caps with Open Media (wherein I get an honorable mention for slamming FCC chair Genachowski for his bad attitude on caps). I wonder if Steve’s suggestion that we cut the CRTC some slack is a good idea at this point:

I actually think the CRTC is doing a reasonable job as of late – the state of the market developed over decades and it will take some time and multiple good decisions to fix it. […] I think we need to be encouraging not slamming the CRTC right now.

One major development since Pete’s post went up three weeks ago is the announcement that Jean-Pierre Blais will be the new CRTC chair. This is the time to start reminding Blais of the good things he can do for Canada. I don’t entirely disagree with Steve’s assessment. But I also don’t see how the pro-Internet community can make an impression on Blais without pointing to some of the major negatives in the Commission’s record.

If you think about how Ottawa and Washington are trying to cope with the current disruptions of the OVD phenomenon, it’s pretty clear progressive reform in this country is hanging by a thread – certainly compared to what the US DoJ will and will not put up with.

I may have a more complete wishlist for M. Blais in a few days. Meanwhile, my respectful number-one suggestion is that he pay serious attention to a glaring omission in everything the CRTC says and does: how it proposes to look after the interests of millions of online Canadians – not as a market for the Commission’s licensees, but as individuals free to use the Internet as they see fit in order to promote their own financial, social and cultural welfare.