COMMENTARY: Growth of new media means the job of CRTC chair will only get tougher by Peter Miller

Jan 23, 2012


TUESDAY EVENING, MANY of us will be at a reception to say goodbye to Konrad von Finckenstein on the last day of his term as CRTC chair. In public, we will celebrate his successes. In private, and in hushed tones, we will compare notes on what we see as the best and worst decisions under his leadership and contrast him with our favourites among his predecessors like Charles Dalfen, Francoise Bertrand, or André Bureau, to name the three most recent.

(For the record, I think von Finckenstein’s best decision was Diversity of Voices and IN-DEPTH provided an extensive look back at his tenure with a feature interview published Monday.)

As the government’s formal search for a replacement gets under way, it seems only fitting to comment on the nature of the job, and perhaps most importantly, the challenges a new chair will face over the next five years.

First, then, the fishbowl nature of the job.

The genius of administrative agencies such as the CRTC is that they function as industry sector experts, sitting between necessarily high-level government legislation on the one hand and changeable policy frameworks on the other. Canada’s Communications sector is ideal for such a construct. Telecommunications and broadcasting provide a critical economic and cultural backbone for a sparse multilingual populace across a vast geography, located right next to the globe’s economic and cultural powerhouse. Supervising such a complex, detailed and challenging industry requires expertise. Add the high profile nature of the CRTC – Canadians take great interest in, and generally endorse the role of, their broadcast and telecom regulator – and you have a recipe ripe for political discord.

It should be no surprise then that governments of all stripes generally find the CRTC problematic. While an arm’s length agency, the Commission’s profile with Canadians and importance to the Canadian economy lead to a natural desire to take ownership. But taking ownership risks wearing decisions that are often neither easy nor popular. Which brings the cycle back to letting the agency be a bit more arm’s length after all.

Successful CRTC chairs seem to combine a strong management and policy bent with equally strong political instincts. Independence does not mean that political winds can be ignored. Clear policy leanings should ideally be sensed and acted on before they become formal directions or rebukes, while in-the-moment political positions should be taken with a grain of salt. It is hard to look at the next CRTC chair’s term without thinking that these challenges will only get more difficult.

So what are the big policy challenges?

In telecommunications, successive governments have made it clear the CRTC is to “rely on market forces to the greatest extent possible”. Unfortunately this is easier to say than it is to put into practice. Remember, not 25 years ago, telecommunications was considered a “natural monopoly”, in light of the expense of landline infrastructure, particularly the last mile to the home. Today, thanks to technological advancements and convergence, wireline telecommunications is a “natural duopoly” in terms of links the home, but not in other facilities or wireless.

Nevertheless, “competition” in virtually all telecommunications services, from Internet access to wireless, requires the CRTC to supervise myriad commercial arrangements between new competitors and the cable and telco duopolies. Ministers who direct by “tweet” in all of this may get headlines, but are unlikely to get it right.

The result is a very managed form of competition. From spectrum set-asides to tweaking of foreign ownership rules, competition needs constant help. In truth, Telecom Policy does not rely on market forces to the greatest extent possible, so much as to the greatest extent practicable, in order that the benefits of competition accrue to consumers and the economy alike.

The challenges in broadcasting are even greater. Despised by purist economists for its reliance on such “economic rents”, the genius of the Canadian broadcasting system is its ability to extract Canadian programming obligations out of predominantly private industry players, in return for the privilege of owning a broadcast licence, all the while keeping quality, diversity and pricing similar, if not better, to that of our neighbours to the south. This is an elephant that flies.

While the federal government puts in $1.5 billion in direct subsidies to Canadian programming (mostly the CBC), regulation of the industry directly and indirectly kicks out closer to $4 billion in Canadian programming. Not bad, and certainly not replaceable by direct government subsidy. The problem is that this entire edifice is built on the construct of a “closed”, controllable system, a construct that is completely undermined by the Internet and its capacity to provide analogous access to programming. Figuring this out will be the defining challenge of the next CRTC chair’s tenure.

Right now, the debate is stuck on the delusion of “regulatory symmetry” --- either regulate OTT or deregulate incumbents. The answers are unlikely to be found in either extreme. History does, however, give us a clue. The Canadian broadcasting system was founded to combat the complete bypass of Canadian voices by “unregulated” U.S. radio and TV stations available over the border and over the air. Why is this any harder to do 60 years later?

Bottom line: The CRTC is far from irrelevant; and the job only gets harder. An open system is not the end of regulation, but the days of merely taxing chosen gatekeepers, are numbered, if not already over. New, smarter regulation has to be highly-focused and proportionate, with increasing thought to level and efficiency. The obligations from regulation cannot outweigh the benefits (usually market protection). If we want a modern universal telecommunications infrastructure, and if we want a Canadian broadcasting system period, there is no other choice.