CRTC asks Quebecor why it doesn’t go OTT-only

GATINEAU, Que. — In the second day of hearings in the CRTC's Let's Talk TV proceeding, a commission member asked Quebecor Inc. why, if over-the-top (OTT) services such as Netflix are such a hot commodity, it doesn't abandon traditional broadcasting in favour of an exclusively online video service. “If the danger is real, why not transfer everything you have on TVA ?” Tom Pentefountas, the CRTC’s vice-chairman of broadcasting, asked a panel of Quebecor officials. “Why not give back the licence?” Manon Brouillette, CEO of Quebecor’s Videotron unit, replied that if the company went completely to OTT, it would only boost the migration of customers toward OTT and accelerate the demise of the existing TV system. Quebecor focused its appearance in front of the commission largely on the threat it says OTT services pose to Canada's broadcasting industry. During his appearance, Quebecor CEO Pierre Dion told the CRTC that if the CRTC doesn’t take measures to prevent it, a service like that offered by Netflix Inc. will become of one of the largest TV distributors and broadcasters in the country. While companies like Quebecor would likely continue to coexist with such services, “to what extent and in what condition will depend to a large degree on the decisions the commission makes at the conclusion of this proceeding.” He said if the CRTC does not regulate the Internet, “its only remaining option is to deregulate broadcasting in order to allow Canadian players to compete with Netflix and the other OTT services on a level playing field.” Quebecor executives told the CRTC it shouldn’t regulate the makeup of basic TV service, its price or package sizes, and that it should eliminate genre exclusivity. Brouillette said Videoton’s Illico service is offered on three platforms— mobile and Internet, which is not regulated, and through the set-top box, which is. That means, for instance, companies can offer exclusive content on mobile and online, but not through the set-top box. Quebecor has been considered less vulnerable to the threat of Netflix than many of its competitors due to its operation in a French-language market that prefers local content. However, in response to a question about what’s changed in the market to make Netflix a bigger threat, Dion told reporters after his appearance that Netflix is now trying to make inroads in French-language markets. “There is more and more people in Quebec, even in a French environment that will watch films and series in English. So Netflix is trying to penetrate in those French markets, like in France and even in Quebec, even if they have English content. And if we’re not being careful, one day they will also offer French content as well,” Dion said. “So these companies, they operate worldwide, and one day, they’ll go any languages, any countries, any platforms.” Netflix announced in May it would expand its European operations by adding service in Germany, Austria, Switzerland, France, Belgium and Luxembourg. “Now we’re at the crossroads where we need to make major decisions. We need deregulation, so that we can, in two, five, 10 years from now, say ‘We have saved the broadcasting system,' ” Dion said. Dion said that the way people consume content has changed in the last year or two. “The way people consume content on all the platforms, I think we’re at the crossroads. Was it the case two, three years ago? No. Is it going to be in two, three years? Certainly more,” he said. The suggestion of genre protection elimination was proposed by the CRTC in a working document released last month. If that occurred, specialty channels “would no longer have a regulated nature of service, but would be fully competitive and subject to standard requirements. These services would no longer have access rights,” the CRTC said in the document. In response to a question about what genre protection has to do with OTT services, Brouillette said its video-on-demand licence limits the content it can buy and make available on its Illico service through the set-top box. Dion told the panel that eliminating genre protection was, for Videotron, the most important proposal in the CRTC document. It’s a proposal that was also backed by the Public Interest Advocacy Centre (PIAC) during its appearance Tuesday. PIAC lawyer Geoffrey White said that would be “a way of opening up the market to more competition,” though the group said consumers should be able to unsubscribe if a channel changes its nature of service. Among other issues, PIAC’s appearance also touched on over-the-air (OTA) transmissions, which the organization said should not be eliminated and provide necessary competition. “OTA is … an alternative to the system that is going very strong right now,” said White. “The vertically integrated companies are doing quite well financially, and OTA is just another competitive impulse that we say adds pressure on the larger companies to compete, to offer a better service.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

CRTC asks Quebecor why it doesn’t go OTT-only

Broadcast | September 9, 2014

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