How local TV could really matter: end of antiquated phone and cable companies

(First published on IT World Canada blog)

I suspect most Canadians have seen the advertisements from the Local TV Matters campaign from broadcast networks CTV (and the'A' Channel), CBC, and Global (and Chek News). This includes some of the PSA's and songs they (ironically) make available through YouTube. You may also have seen the material from the Stop the TV Tax campaign brought to you by re-broadcasters (cable/satellite/etc companies) Bell (and Bell Aliant), Cogeco, EastLink, Telus and Rogers.

Bell Canada is part owner of CTV, and there are other complications. ACTRA (Alliance of Canadian Cinema, Television and Radio Artists) is obviously in favor of cable companies paying for local programming (far beyond news), and has a position different than either the broadcasters or the re-broadcasters.

While Conservative MPs previously opposed fee for carriage, they seem to now be far more supportive. I believe that this has been the result of effective marketing on the part of the broadcasters in claiming cable rates won't go up even if re-broadcasters are paying all broadcasters, including local stations. The CRTC is asking for consumer input into this debate (Deadline November 2, 2009).

As a Canadian citizen you may feel stuck in the middle of a battle between massive television networks and massive communications (phone and cable) companies . This fee for carriage debate may turn out to be good news to Canadians in the long run as it may allow us to finally modernize our communications infrastructure.

In March of 2008 I wrote about what I felt would be an ideal future communications infrastructure, how do we get there, and what is stopping us. The short form is that I believe we need to do away with current phone and cable companies as they are currently structured, and replace them with a utility model where the distribution network within a municipality is handled like electricity is now. This would be a government owned utility where policy is set by the government, even if management is outsourced to the private sector. Services would be fully competitive between players outside the public sector, with the CBC being one narrow exception. We have this small blip in our history where communications services stand out as being treated differently than all other critical infrastructure, and we need to fix this special case.

Lets look at the current skirmish, and how this may help us to eventually obtain an ideal infrastructure.

When cable companies were first formed, what they were doing was simply illegal. They were taking television stations out of the air and retransmitting them without permission from or payment to the relevant copyright holders. In Canada not only do the creators of the programming have copyright, but a broadcaster has a copyright in the communication signals that it broadcasts (Section 21 of the Canadian Copyright Act).

To legalize cable a deal was struck between governments, the cable companies and the broadcasters. This arrangement came out of an era when television was paid for by advertising. It was thought that since increasing audience size at no cost to the television station would increase their advertising revenue, that cable companies would not have to pay television stations. Cable companies were also mandated to carry these free local stations in a given local area as part of the basic cable package such that consumers would not have to pay more.

Advertising is moving from print and television broadcasts to online. It is ironic that the television networks are using a YouTube station as part of their campaign given YouTube's owner (Google) is where a significant part of this advertisement revenue is going. Advertising alone will soon not (in some cases already doesn't) pay enough to keep local programming going.

Integrated with the timing of this debate is the August 31, 2011 date for the Canadian Digital Television switchover. Local broadcasters are already having to retool how they transmit television over the air, and are wanting to renegotiate their arrangements with re-broadcasters at the same time.

While I don't have pointers to the text of the relevant legislation (please add to comments if you do), I believe that, if local broadcasters are to receive payment from re-broadcasters, this long-standing deal will break down in all aspects. It won't simply be cable companies paying local broadcasters (as is the case for other stations), but will likely end the concept of a basic cable package. Consumers will want to decide on their own what stations they are paying for as the costs are passed on to them. À la carte television will eventually become the norm, where television viewers pick individual stations and/or networks rather than purchasing any cable company created bundle atall.

When consumers are choosing what stations they want, is there any utility to a cable company as they are currently organized? The next logical step will be to follow what I detailed for an ideal infrastructure. Viewers would be able to directly subscribe and pay television networks through connecting to them over the municipal communications utility, with these competitive networks (rather than a monopoly cable company) deciding what packages viewers could choose (if any).

For some stations there will be competition between these networks rebroadcasting some of the same stations. I might be able to choose between CTV, CBC, Global and some new entrants to access foreign networks such as BBC or FOX. These foreign networks may also set up Canadian subsidiaries to offer subscribers direct access. For those subscribers who like the way things are now, successors to cable companies can offer simple one-stop-shopping bundles people could subscribe to and have someone else manage any complexity.

Once this utility infrastructure is in place, it will be trivial for new on-demand subscription services for specific shows. I want to be able todirectly subscribe to a series like Defying Gravity, another great science fiction show filmed inVancouver like BattleStar Gallactica was. This direct and more predictable revenue could make it easier for producers to end the uncertainty around the future of this great show. I'm really tired of having less-than-scientific rating systems and (largely tuned-out) executives of large networks deciding what programming will exist, rather than more healthy communication/collaboration between the creators and their fans/audiences.

The same type of thinking applies to voice services as multimedia services. There are already people promoting competition (including “foreign”) in telecommunications, with a utility model making this much cheaper for new entrants.

If we follow through with this utility infrastructure it will be a win-win situation for content creators, broadcasters and other Canadian citizens. The losers are of course the monopoly phone and cable companies who will eventually fade into memory like other obsolete companies.

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Russell McOrmond is a self employed consultant, policy coordinator for CLUE:Canada's Association for Free/Libre and Open Source Software,co-coordinator for Getting Open Source Logic INto Governments (GOSLING),and host for Digital Copyright Canada.