July 8, 2015
Tom Pentefountas, Vice-Chairman, Broadcasting
Canadian Radio-television and Telecommunications Commission
Check against delivery
Good morning and thank you for inviting me to speak today.
It is a distinct pleasure for me to attend events hosted by the International Institute of Communications. They give me, as I’m sure they do you, the chance to understand the particular challenges being faced by fellow regulators, to hear the solutions you propose to overcome such difficulties and to take away lessons learned that may apply to my work back in Canada. I’m here as much to listen over these two days as I am to speak.
I want to share some insight with you today, about the magnitude of change and the speed of change in today’s broadcasting industry, about the ways in which we at the Canadian Radio-television and Telecommunications Commission responded to such change, and about how we put viewers, broadcasters and creators in better positions to thrive in television’s age of abundance.
We at the CRTC have put a great deal of thought into the future of media in general and the television industry in Canada in particular. Beginning in October 2013, we hosted a conversation with thousands of people: broadcasters, industry analysts, content producers and citizens. And we’ve drawn important conclusions based on the feedback they gave us. Conclusions that, as you will see in a minute, we used as the basis for decisions that we put in place to change the way in which content is made, aired and governed in Canada’s media industry.
What did we learn?
I’ll outline three lessons for you right now. First, broadcasting—and I mean broadcasting everywhere: in Thailand, Australia, Korea, Malaysia, Myanmar, Brunei, Laos, the Philippines, the United Kingdom, as well as back home in Canada—is evolving in ways and at speeds that very few could have imagined even five or ten years ago. Content is everywhere. It is available to anyone at the time, in the location and on the device of his or her choosing.
Second, the depth and pace of such change has forced everyone associated with media—creators, viewers and distributors—to re-think their relationships with programming. Viewers will have to learn new ways of discovering content in the digital universe. Producers will have to innovate to bring the next great show to audiences’ screens. Broadcasters will have to reinvent themselves to remain relevant in a world where content is less and less consumed in linear fashion.
The third lesson we learned is this: if they are to keep up with the demands of media change, the rules we regulators create must be easier to understand and adhere to, must better respond to technological innovation and must anticipate what is to come as much as what is contemporary. They must invite investment. They must encourage innovation. And they must throw open borders rather than closing them, because protectionist ideas and attitudes that may have worked well yesterday appear old-fashioned today—and will be downright obsolete tomorrow.
These are the core concepts that we at the CRTC learned during our review of the television system and the foundation for our regulatory framework for the digital landscape.
Age of Abundance
In 2013, we embarked on a review of Canada’s television system, which we called “Let’s Talk TV.” We did so with the understanding that the regulatory framework we had in place was increasingly ill-suited to keep pace with change in the broadcasting industry. It was cumbersome, restrictive and, at times, ineffectual.
You see, our rules governed a system where television content was made, aired and watched in traditional, predictable fashions: in the studios of independent producers and major networks, at specific times of the day and on televisions mounted to the walls or sitting in the corners of living rooms, bedrooms and kitchens.
Today’s reality, however, is that fewer and fewer people every day watch television on set schedules, and on traditional devices. They watch the content they want, where, when and how they want using their phones, their tablets, their laptops and their desktop computers. Meanwhile, the choices available to them are expanding. Viewers are no longer bound by two or 10 or even 50 television stations. They can watch hundreds more on TV and online—and the options available to them grow every day.
Consider that users upload 300 hours of video to YouTube every minute of every day. That’s on top of the 1,300-some hours of traditional television broadcasting available every day in Canada alone.
Content is abundant in today’s media world. That simple fact has empowered the viewer in ways few of us might have foreseen even a decade ago. He or she now controls just about every aspect of the viewing experience. You’ve doubtless heard the expression “content is king.” Well, our Chairman is fond of adding his own twist to that idea by reminding us that in this age of abundance, “the viewer is emperor.” Content no longer dictates to viewers. Viewers control how and when they consume content.
We at the CRTC kept that truth firmly in mind when we launched our Let’s Talk TV conversation. We set out to hear from as many people as possible—members of the public as well as experts across the industry—about how they engage with television, what they watch, how and where they watch and on what devices.
We learned from that intelligence. What we heard from Canadians helped us to build a new framework for the television system, one that responded to these transformations, that further empowered the viewer, and which gave broadcasters and producers the tools they needed to adapt their service offerings for success.
Let’s Talk TV decisions
We announced our decisions last winter. Let me touch on a few of them briefly, because although these ideas are unique to Canada, they nonetheless contain lessons that you may want to consider for your markets. I’ll start with our decision to change the rules under which producers and broadcasters create and air content.
Canada, of course, shares a great relationship with our southern neighbour, the United States. As you might imagine, a great deal of American media content flows freely over our border. For years, the CRTC tried to carve out a place for programs made in Canada by encouraging creators to produce, broadcasters to air and viewers to watch these shows.
One of the tools we used to do this was the broadcast quota. We required broadcasters to devote a certain percentage of the shows they aired at various times of the day to be Canadian made, while our government gave producers financial incentives to make Canadian programs. Our hope was that more and more Canadians would connect with Canadian-made shows as a result.
The quota system wasn’t perfect. It did some things very well, such as bringing new Canadian-made productions to air. But it also encouraging broadcasters to air and re-air the same shows in order to meet their content obligations. Such was the trade-off in place for many years.
In the age of abundance, however, where viewers have more direct control over their watching experiences, we regulators can no longer pretend our borders are sealed. Quotas are less and less relevant every day. They simply don’t work when a viewer watches shows only online or on demand. So one of our first steps was to greatly reduce our application of broadcast quotas.
What did we hope to achieve in so doing? We wanted to free up broadcasters to air the shows their audiences wanted most, as opposed to tired re-runs of the same old programs. We stopped short of eliminating broadcast quotas altogether. Because evidence tells us they still have a role to play during prime-time hours, when a significant number of viewers still watch conventional broadcasts, and when the best Canadian-made programs are usually brought to air.
Our decisions also took aim at the way in which content was created. Too often, our rules very narrowly defined the criteria that made a program Canadian. We loosened them and launched two pilot projects to allow producers more freedom to innovate, to bring the best Canadian-made content to the screen, and to invest more money in the system. This is intended to create a virtuous cycle that funds and develops even more—and better—programs made by Canada.
Because we understand that, regardless of where they’re made, the best shows now have the potential to travel high and far and wide. None of England, Denmark or Australia is particularly known as a hotbed of television programming, but you’ve doubtless watched or heard colleagues and friends speak about Downton Abbey, Borgen or The Code.
The CRTC wants to give Canadian producers the tools they need to create the world’s next favourite television program, and the tools we have put in place will surely help them do just that.
Among all these decisions we made, we were also mindful that Canadians value local television.
Television, as you know, is more than just a medium for entertainment. It educates. It informs. It connects us with culture. It helps us participate in our everyday political lives. Local television in particular plays an important role in this regard.
During our Let’s Talk TV conversation, Canadians reminded us of the importance of local television. We listened and we acted by putting in place rules that ensure every television subscriber has access to an affordable entry-level service that prioritizes local and regional news and information programs.
Because for all the talk of the ability of digital media to connect us to news and information immediately, I have yet to be convinced—and a great number of Canadians agree with me—that such platforms can do as good a job of bringing citizens closer to breaking news and reporting on facts as accurately and completely as television.
Beyond the entry-level service, Canadians will be able to choose the channels they want on an individual basis or in small, reasonably priced bundles of channels. The empowered viewer is the new reality, and the traditional system must adapt to it. Television distributors will have an incentive to offer reasonably priced services that meet the needs and interests of Canadians. Similarly, broadcasters will have an incentive to produce high-quality, original content that is compelling and attractive.
These steps were not easy to take. Some worried about producers’ ability to survive in this new environment, about the future of Canadian-made programming, and about the capacity of the system to fund larger-scale productions.
Speaking as a member of the panel that arrived at these decisions, I can say they weren’t easy ones to make. But we made these choices because they were necessary to create a regulatory framework for Canada’s television industry that responded to the digital media environment and positioned our creators, broadcasters and advertisers for success.
Promotion and discoverability
One of the unintended consequences of the new television age is the change in relationship between viewers and broadcasters. For many years, the broadcaster scheduled programming and the viewer watched. Along the way, the viewer learned about new programs and, based on the information provided, chose to watch—or not.
In this viewer-driven age where watchers consume programs on their own terms, the opportunity to discover new content is greatly reduced. Broadcasters no longer act as the main go-betweens to link creators and consumers. They have become disintermediated. Instead, viewers are left to their own devices to find new programs to watch, while creators (and here I include advertisers as well as show-makers) must be evermore innovative to bring their productions to a multitude of screens.
The CRTC is acting to solve that problem in two ways. First, we created an industry working group to explore the development and application of a viewer-data measurement system that could be implemented via set-top boxes.
Knowing who watches what and when is valuable data for the media industry. Such information can be monetized. It can create new—and potentially vast—revenue streams that can bring new revenues into the television system, while also giving the industry the intelligence it needs to better compete with data-rich digital platforms.
Our other solution to the challenge of disintermediation is to host a summit on discoverability. It’s one thing to fund and make great content. It’s another entirely to have it found and watched. Content must be widely available, evidently visible and easily found.
The Discoverability Summit will bring together leading thinkers from the public and private sectors in Canada and around the world to consider new ways to connect viewers with the content they desire. It won’t be an easy exercise. This will not be a discussion about regulation. It will be about real, tangible solutions to a problem that faces regulators, viewers, creators and broadcasters the world over. Our goal is to create a solution for the world’s problem of discoverability, not just Canada’s.
This notion of the disintermediation of the broadcaster is not without opportunities, by the way. Creators in particular are in unique positions to monetize the content they produce in innovative ways. For example, so many millions of us carry smartphones in our pockets and our purses every day, and we use them in innovative ways: to send emails, browse social media and watch content.
The global market for these devices is growing at a staggering annual rate. The Economist predicts that by 2020, four in five adults will own mobile phones.
If more and more of us watch movies and television shows on these devices, and if creators now must market their programs direct to consumers without the benefit of broadcasters as intermediaries, then surely the potential for revenue generation is that much greater. Put another way, why would a creator sell a show to a broadcaster for thousands of dollars when it can sell direct to consumers at pennies a transaction—with far greater revenue potential?
Digital broadcasting opens still more doors for creators. Consider click to retail, the next big promised development in online shopping. Click to retail would empower viewers to click on products they see in programs to have them billed to their credit cards and delivered to their homes in hours. Imagine the potential spin-off revenues to be realized by creators and retailers thanks to such technology.
We’re not there yet, of course. But it’s not far off and I’m sure it’s why major players such as Amazon are making their forays into the content creation universe.
Let’s Talk Broadband
We have one innovation to thank for this sea change in broadcasting and media: broadband technology. In just 15 years, high-speed Internet has grown from a luxury service available to only a few homes and businesses to an essential facet of everyday life in nearly every home, company and government office. Broadband is the technology so many of us depend upon for entertainment, yes, but also education, communication, information, healthcare, access to government services—and so much more.
It is the brush that painted the digital media landscape, and the platform on which so many innovations stand. Its importance and ubiquity cannot be overstated.
We at the CRTC appreciate the powerfully influential role that broadband technology plays in Canada and around the world. We acknowledged as much in 2011. That’s when we set a target for Canadian Internet service providers to deliver what we then considered the minimum speeds necessary—at least 5 megabits per second (Mbps) download and 1 Mbps upload—to all homes and businesses in the country by the end of this year.
Much progress has been made over the intervening years. Today, nearly every Canadian has access to such Internet speeds and the benefits of the connectivity they offer. There are still, however, some areas in the country where these speeds are not available.
Are those targets still relevant today? How do we ensure that everyone has a similar baseline level of service, regardless of where they live?
Those are the fundamental questions the CRTC will ask during a forthcoming review of our mandated basic telecommunications services. We see regulators in other countries aiming for much higher targets—25 Mbps in the United States and Australia, and 50 in Germany—and we wonder if our targets should be brought more in line with those of other geographic and political neighbours.
I don’t know the answer to that question. My fellow Commissioners and I will rely on the intelligence given through the course of our public consultations to formulate our answer—not just to this question, but to many others associated with the basic services Canadians need and desire.
One of the most important lessons we learned during our hearing on the television industry is that members of the public have valuable—and occasionally unexpected—insight to share on important regulatory matters. It behooves all of us regulators to remember that we serve the public and to bring the public’s intelligence to bear on the decisions we make. The CRTC succeeded in using this approach for our review of the television system, and I am confident of similar success for our equally important review of broadband technology.
What does success look like in the digital media world, in television’s age of abundance?
For the viewer, it’s about finding and watching new and exciting programming—the best the world has to offer, produced anywhere in the world—as and when he or she decides.
For the broadcaster, it’s about offering new services that interest consumers and keep them engaged, and using viewer data to make content (advertising as well as programming) as relevant as possible.
For the creator, it’s about bringing content to individuals rather than to broadcasters, and taking advantage of new opportunities to realize impressive revenue streams.
And for us regulators, it’s about modernizing the rules we create to make them more responsive to changing times and conditions, about offering broadcasters and creators more opportunities to bring new ideas into the market, and about ensuring the public plays a major role in helping us arrive at our decisions.
We at the CRTC have put a great deal of thought into the future of the television system in Canada. The ideas I just articulated to you are the lessons we learned over the course of our in-depth review, and the foundations upon which we have built our framework for the new television age. Study them. Learn from them. Pick the elements that work best for you and adapt them.
Because although the solutions we have put in place are undeniably Canadian, television is no longer just a national industry. It’s international. We all face similar challenges and can learn from each others’ experiences.
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