Speech by Stephen Simpson, Regional Commissioner for British Columbia and the Yukon, Canadian Radio-television and Telecommunications Commission

To the Annual Conference of the International Institute of Communications panel on “Minimizing risks – A regulator’s challenge”

Singapore, Singapore
October 9, 2012

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Thank you for that kind introduction.

I’m very pleased to be with you today. The past few days have been great. I’ve enjoyed meeting colleagues and friends from around the world, and taking part in the IIC’s International Regulators Forum and various sessions during the Conference itself.

We live and work in an exciting time.

Financially, we are becoming more connected through global banking and investment networks. Economically, our domestic industries and production capabilities are being woven together like never before through multilateral trade negotiations, like the Trans-Pacific Partnership talks that are getting underway and which Canada recently joined. Socially, technological advances and social media mean we can literally “reach out and touch someone,” on the other side of the world. Politically, we are affected by the revolutions, wars and protests sweeping the globe.

In short, globalization is making the risks inherent in our domestic regulations that much greater. But, it is also making the potential opportunities for our industries and consumers that much brighter.

Our discussion is focused on how we can manage the risks that are part and parcel of the increasingly complex environment in which we work: risks, I might add, that have domestic and international implications.

I’d like to use my time by sharing Canada’s experience with you: first by giving you an overview of Canada’s communications sector; and then by looking at some of the issues we are dealing with at the Canadian Radio-television and Telecommunications Commission (CRTC) to minimize risks facing our communications sector and Canadian consumers in an increasingly globalized world.

Overview of Canada's communication sector

Canadians are, by nature, relatively quiet and unassuming. We live next door to a giant, in every sense of the word. In fact, Canadians like to joke that when the United States sneezes, Canada gets a cold.

The United States is Canada’s best friend, to be sure, but a friend who can sometimes be the more dominant of the two. This is especially true when it comes to culture, information and entertainment.

It’s a long-standing government policy that Canada’s communications sector must reflect our country and our people: our cultural identity, as defined by our English, French and aboriginal ancestors and the many immigrants who have made Canada their home.

The legislation and regulations that support our broadcasting and telecommunications sectors encourage the development of Canadian expression, firms, talent and creative resources.

For example, the CRTC requires all broadcasters to contribute to the creation of Canadian programming. During prime time, at least half of all programming hours on conventional television must be devoted to Canadian content. Likewise, a percentage of revenues must be spent on producing Canadian programming, including drama series, documentaries and local news. And most cable and satellite companies, for their part, must contribute a portion of their revenues to funds that support the creation and promotion of Canadian content.

We also have limits on foreign ownership. Our broadcasters and distributors must be controlled by Canadians, and there are limits on the number of voting shares non-Canadians may own.

Laws and regulations like these were developed in the analog era. Nevertheless, they remain in place even in the digital age.

What is new, however, is the manner in which the CRTC is enforcing them.

Because content and information now flows from anywhere at any time, we know we can’t micromanage our industry. We know we can’t pick winners and losers. We remain committed to allowing the market to lead the way.

At the same time, we have had to determine how best to apply clear, simplified regulations to minimize risks for our industry, while upholding the public interest.

Striking the right balance and minimizing risks have become all the more important in light of changes that have revolutionized Canada’s communications sector over the past few years.

Canada’s communications sector has been consolidated into an integrated industry dominated by a few big players. Today, four large companies, what I will call the “big four,” control the full range of communications services in Canada: Internet access and telephone, over-the-air television stations and cable channels, as well as TV distribution via cable and satellite.

The “big four” currently account for 67% of all communications revenues in the country. In their capacity as broadcasters, they control program rights, including the rights to the most popular programs. In their capacity as distributors, they can deliver this content to consumers on all the television set, Internet websites and all sorts of mobile devices.

For economic and technological reasons, corporate consolidation and vertical integration are facts of life in the digital age. Canadian firms must be able to compete in the global marketplace. What’s more, given the small size of the Canadian market, there are benefits to integrating broadcasting and distribution services under the same corporate umbrella.

Nevertheless, consolidation and vertical integration pose very real risks to smaller competitors and consumer choice. And it is in response to these risks that the CRTC has been to considering whether and how to intervene.

The issue of striking the right balance between competition and regulation is front and center in Canada right now. Canadians are debating “how big is too big,” not just within our telecommunications sector, but our natural resources and financial sectors, as well.

The CRTC is presently reviewing an application that would allow one of the “big four” to become that much bigger. Bell Canada Enterprises (BCE), one of Canada’s largest conglomerates, is proposing to spend $3.3 billion to buy Astral Media, the owner of some of Canada’s best-known premium specialty and pay channels. If the transaction is approved, BCE would add Astral’s 20 channels and 84 radio stations to its stable of 28 conventional television stations, 30 specialty channels and 32 radio stations.

We are examining the deal with the public interest in mind. Would the deal be consistent with the CRTC’s policy on ownership of media outlets: a policy designed to maintain a diversity of voices within Canada’s broadcasting system? What would it mean for Canadians? How would it impact smaller players in our market? Would it give one player too much power?

Conclusion

Let me conclude with an eye to the future.

The reality is our world is shrinking. None of us live in isolation from one another. We are not islands unto ourselves. Technology is bringing us together, and globalization is magnifying the opportunities and risks our industries and consumers face every day.

In my view, this reality requires us to work together like never before. To cooperate as the world’s regulators to bring global solutions to bear on problems that affect us all: from reducing unwanted telemarketers’ calls just as the enforcement agencies involved in the International Do Not Call Network have been doing; to tackling the thorny issue of spam in the years to come.

I began by talking about Canadian culture. How Canadian governments have sought to protect Canadian culture from being assimilated into that of the United States.

So, what is our role, as regulators, in promoting our unique cultures worldwide?

Should we be actively equipping our cultural industries and creators – the ones who produce and distribute our television shows and films, to succeed on the global stage? How best can we do this? How can we empower our consumers and creators to share their ideas with their neighbours down the street or on the other side of the globe? How big is too big? When and where should we build walls around our sectors so national objectives can still be met? Will this even be possible in 10 or 20 years time?

How do we capitalize on the tremendous potential globalization has for our industries, while at the same time minimizing the risks to our cultures and consumers?

Questions like these make this Conference so timely and worthwhile. In an ever changing environment like ours, it’s good to be able to talk to regulators from around the world, sharing best practices and lessons learned. After all, we’re all in this together.

Thank you.

 

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