Péladeau says Internet business “slightly profitable”, but still supports three strikes policy

Quebecor Media Inc.’s Internet business is still making money but that could change if the CRTC decides to impose a levy to support the creation of Canadian content online. Quebecor’s chief executive Pierre-Karl Péladeau made the comments yesterday during an appearance before the commission as part of its new media broadcasting hearings. Humming the same tune as other Internet providers Bell Canada, Rogers Communications, MTS Allstream, Shaw Communications and the Canadian Association of Internet Providers, Péladeau said adopting such a scheme would be harmful and against the law. “We are against any project that involves taxing ISPs or wireless service providers,” he said. “We think such an issue would be counterproductive, and in any case illegal.” Péladeau said his company’s Internet business was “slightly profitable,” which calls into question why his company supports a three strikes policy. Much like in baseball, users get warned for downloading illegal material twice, but the third time would see their Internet service cut off. “People are already looking elsewhere, and they will continue to do so if Canada persists in its protectionist ways,” he said. His argument could be considered a little disingenuous given that most broadband consumers in Quebec can only choose between BCE Inc. and Quebecor’s Vidéotron, or “mini-wholesalers” that piggy-back off the two companies’ infrastructure. Though Péladeau wants to ease the burden on Quebecor, he supports tougher rules for subscribers. During a previous submission to the CRTC on the net neutrality issue Quebecor favoured a graduated response, or three-strikes you’re-out policy. This policy could have dire consequences for consumers who run afoul of the rules – it is also easier to enforce in a less competitive environment. “There is a difference between three-strikes-you’re-out and the notice providers are currently using,” Michael Geist, a University of Ottawa law professor who holds the Canada Research Chair in Internet and E-commerce Law, tells Tech Media Reports. “ISPs would be obligated to cut service and then share the information with each other so that there would be no way you could get service.” In effect this echoes the ethos behind the dead copyright bills C-60 and C-61, which were criticized by net neutrality advocates as being oppressive. “All ISPs maintain provisioning agreements that give them the right to terminate subscriber access,” says Geist. “But this is different, in that there would be a positive legal obligation to take the subscriber off, and then to keep the person off the Internet more generally.” On the content side, the result can be an unholy alliance between artists and big media companies. As it stands the Canadian Independent Record Producers Association (CIRPA) believes that content blocking of P2P sites should be considered. “We don’t have a definite position on this, but we do have genuine concerns,” Duncan McKie, president and CEO of CIRPA, tells Tech Media Reports. “We have to look at the claims of ISPs and others, but we do not favour a position where names are available to companies to pursue lawsuits.” When it comes to money for new media and Canadian content, Quebecor, a subsidiary of Quebecor Inc., has made it clear that it supports recent changes to the Canadian Television Fund (CTF) in support of the new Canada Media Fund, in which all funding bodies, including Canadian Heritage, are represented on its board of directors. To Péladeau this makes more sense than a tariff. “If we are required to share income in order to fund new media then the Canadian consumer will pay the price,” said Péladeau. As it stands, Quebecor has particular interest in copyright control and cultural subsidies given its ownership of Quebecor Media Book Group Inc., Archambault Group Inc. and TVA Films – all companies that are engaged in the production, distribution and retailing of cultural products. “We cannot use a regulatory issue to solve a problem that is first and foremost a copyright management issue, which is the true cause that the presence of Canadian new media has become weaker,” said Péladeau in support of his argument that independent licensing agreements with artists represents the best option. This potentially puts Quebecor in direct conflict with any regimen that ties investment in Canadian media with an ISP tariff. “ are being asked to tax Internet service so that organizations that represent artists can drink at the pool that we have seen in the past does not necessarily create the best talents,” said Péladeau. Quebecor is feeling the squeeze during this slowdown. It lost $343.7 million in the final quarter of 2008, and is in a spitting match with incumbent cellphone providers. Last month it accused them of delaying the approval of agreements to share towers and roaming services, claiming that it would take its argument to the federal Industry minister and to arbitration.

Péladeau says Internet business “slightly profitable”, but still supports three strikes policy

Broadcast | March 12, 2009

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