CIAIC Comment: CRTC’s new media initiative a vital opportunity to put Canada back on course

In 1998, the CRTC took a close look at the Internet in Canada and decided it did not merit their oversight at that time. Issuing a New Media Exemption Order in 1999, they did however, promise to revisit the issue in 2004. Now, nine years later instead of five, the CRTC has reopened the file and is reflecting on the current reality of the online world. What has changed since the last time the government regulator took a formal look at emerging platforms, content and services?As the CRTC itself is quick to admit, that last time it seriously looked at the issue, modem speeds of 56 kbps were considered cutting-edge. In fact by the end of 1999 just 12% of Canadian households subscribed to broadband Internet access services. By the end of 2006, that number had increased fivefold. Today, the most popular ISP package in Canadian households offers download speeds of up to 5 Mbps - almost 100 times faster, and by far enough to stream DVD quality video with minimal buffering.In that same period, wireless access to interactive content has started to take off. Today, about 55% of Canadians report owning a mobile phone. The proliferation of access and content options for Canadian Internet consumers certainly seems like a positive development. But in context, Canada is quickly losing ground to almost every other modern industrial nation in the world.For starters, Canada has long since shed the once proud distinction it held in 2000 of being the world's most wired nation, a shocking development considering that some of the earliest consumer roll-outs of DSL and cable broadband occurred right here. Today, we sit 11th in the world for broadband penetration, and suffer from some of the highest cost-per-megabyte download rates. Of those nations ahead of us on the 2008 Information Technology and Innovation Foundation Broadband Rankings, only Iceland features more expensive broadband access.What's more, many of the ISP networks in those top 10 countries put Canada's offerings to shame. Download speeds in Japan average more than 63 megabits per second, while those in South Korea near 50 megabits per second on average. Finland, France and Sweden also enjoy double-digit download speeds. The ramifications for delivery of high-quality interactive content are obvious.When it comes to wireless telecommunications, Canada has always been near the bottom of the pack. Europe and Asia have held fast to their positions as mobile media powerhouses with usage rates of mobile devices per capita sometimes exceeding 100%. Content services in those markets have evolved as an important part of their business models. Not so in Canada. Data as a percentage of carrier ARPU (average revenue per user) weighs in around 10% in Canada, doubtless because of the very high cost per megabyte here. Overage costs typically range around $30 per megabyte, and stories of unwitting consumers charged $45 to upload a single low-resolution photograph from their phone to their Facebook profile are not uncommon. Meanwhile, what kind of data ARPU are carriers to the south enjoying? Fourteen%. But once you leave North America, the numbers really start to go up: Italy, 18%. The U.K., 22%. Japan, 29%.But aside from the stark economics of the situation, the interactive media industry in Canada is further challenged by the decentralized, dis-intermediated nature of the Internet itself. Obviously, accessing online content isn't like conventional television, or cable distribution: there's no ready list of who the players are, no channel line-up to tell you which broadcasters are offering the content you're looking for. Many laud the non-linear nature of the online world as democratizing, but the flipside of that is that content producers and distributors require a creative and carefully planned marketing effort to find their audience.The content and technology features of interactive media - once easily distinguishable from one another - are also now often developed in tandem, and the demarcation line between products and services are disappearing. This further complicates the issue for public policy regimes used to dividing content and technology into their own convenient silos.In fact, this industry suffers (or perhaps benefits) from an inability, to date, to define it satisfactorily altogether. Is Twitter the kind of "new media" the CRTC is interested in? How about massively multiplayer online games such as World of Warcraft? Are these new environments substantially different than video-oriented platforms like YouTube, Metacafe and Joost?Amazingly, interactive media has yet to be assigned a North American Industry Classification System (NAICS) number, which means that for the purposes of organizations such as Statistics Canada, the industry effectively does not exist. NAICS is next due for an update in 2012. That's why the Canadian Interactive Alliance conducts its own research, the Canadian Interactive Industry Profile, which is used by government departments to keep abreast of the industry's evolution, and to track the types of companies and services that are cropping up as new consumer demands and markets are identified.All is not lost, however. Despite all the ground ceded to foreign markets and competitors over the past decade, Canada still has an opportunity to recapture its earlier glory as an innovator and world-leader in interactive content and high-speed networks. The CRTC's New Media Project Initiative can be a key step in seizing that opportunity, but only if all the stakeholders in Canada's interactive media industry - producers, developers, networks, carriers and government - work together to create new and more innovative business strategies, and look to formulate many more opportunities for our talented content creators, technology developers and entrepreneurs to succeed both domestically and globally.Nine years ago, the CRTC was reasonably confident that Canada's new media industry would continue to exploit those new demands and markets. In its 1999 Report on New Media, handed down at the same time as the New Media Exemption Order, the commission concluded that "there is no apparent shortage of Canadian content on the Internet today. Rather, market forces are providing a Canadian Internet presence that is also supported by a strong demand for Canadian product."If this was ever a true observation, it's not anymore: presence and product have become glaringly divorced from each other in 2008. While Canada's interactive media is still turning out top-notch, award-winning creative content and innovative designs, many of our leading companies are simply ignoring the Canadian market and orienting themselves to the growth opportunities that exist elsewhere.While no one can pretend to have all the solutions to the problems facing Canada's home-grown interactive media industry, one thing is certain: the commission will have to work hard in order to craft a policy response that doesn't constrain the industry's future growth, but doesn't let some of the existing barriers threatening that growth go unchecked either.As the official voice of Canada's interactive media community, the Canadian Interactive Alliance will be there to articulate a coherent and forward-looking vision for the future of media, culture and entertainment in this country - one where all players, from content creators to network operators to investors, can benefit from Canada's innovative and inspirational culture, and compete internationally with the best the world has to offer.-James Lewis is executive director of the Canadian Interactive Alliance

CIAIC Comment: CRTC’s new media initiative a vital opportunity to put Canada back on course

Broadcast | June 5, 2008

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