Saturday, March 21, 2015

Ontario Government intervention in Over the Top video policy discussions

I sent the following to my MP and Ontario MPP, after reading a few articles on Michael Geist's blog about Ontario’s Campaign for a Netflix Tax. For me this isn't about price, as I believe I get good value for money from Netflix and wouldn't mind paying more. For me this is a question of fairness, with the Ontario government having naive, counterproductive, and outrageously backwards ideas of what constitutes fairness in this area of policy.

I recommend other people in Ontario write to their MPPs and MPs on this issue.

To: John Fraser (MPP) and David McGuinty (MP),

I am a constituent of Ottawa South, sending this to both my MPP and my MP as this area of policy has considerable Federal-Provincial overlap.  Please forward to the relevant ministers and government departments as appropriate.  This should include the Ontario Minister of Tourism, Culture and Sport and his Deputy Minister.  The Deputy Minister has already made some of his views on this area of policy known.

The growth of modern communications technologies such as those using the Internet Protocol includes the growth of what is often called "Over The Top" (OTT) video services.  These are services which make use of existing telecommunications infrastructure and standards, and run "over the top" of them such that they finally become neutral to the underlying communications technology.  OTT services are able to be delivered to us wired and wirelessly, over copper and fiber, and will be neutral to any other telecommunications technology we will dream up in the future.

With this technological advancement comes appropriate calls for regulation of these services.  Unfortunately the contribution to this debate by the Ontario government has thus far been naive and counterproductive.

While there are a wide variety of  options in this marketplace, I tend to group them into two classes:  true OTT services which are neutral to both communications service provider and technology,, and services which tie the ability to purchase the OTT service to a specific brand or subsets of brands of communications services.

The first group of legitimate OTT services include Netflix, YouTube, and some of the websites of Canadian broadcasters which allow streaming of content over the full range of Internet access service offerings in Canada.

The second group of services, which I believe should be declared illegal under Section 77 of Canada's Competition Act, related provisions under Canada's Telecommunications Act, and likely the Copyright Act (some copyright exceptions that legalized BDUs don't apply to OTT), include Shomi (Rogers, Shaw), CraveTV (Bell), and Fibe TV (Bell).

The harm of allowing this tied selling between content delivery services and specific brands of communications services cannot be underestimated.  The best way to protect the interests of Canadian creators and their audiences is to enable and protect an open marketplace that minimizes commercial barriers between these two groups.  Canadians who wish to access and pay for content made by fellow Canadians should not have intermediaries blocking their transactions.  One of the greatest advancements in communications technology for the benefit of these groups has been the growth of the Internet and neutral communications technologies.

The greatest threat to creators and their audiences is attempts by legacy communications technology providers to block or otherwise delay this distribution technology neutrality.  Government should take special care with proposals from people alleging to represent creators who suggest the welfare of creative sectors are tied to specific distribution brands, as evidence suggests they are under a form of Stockholm syndrome.  These individuals are not putting forward the interests of creators, but the interests of the intermediaries which represent their greatest threat.  Reading the Ontario government submission to the CRTC's "Let's Talk TV" consultation suggests it was authored by or on behalf of people with this harmful point of view.

I believe the primary objective of OTT service regulation should be to further foster and protect content distribution neutrality.  As with other policy goals there are a wide variety of policy levers that can be harnessed.

CRTC chair Jean-Pierre Blais has recently announced decisions  that suggest that agency will be appropriately targeting non-neutral OTT services like Shomi and CraveTV with additional regulatory obligations than what will be required of neutral OTT services (CRTC 2015-86).  While Steven Davidson, Deputy Minister, Ministry of Tourism, Culture and Sport, called for the reverse, I hope that the Ontario government will reverse its regulatory direction and help promote a healthy modern video content sector.

A small sampling of proposals:

* The companies that own the non-neutral OTT services have been the beneficiaries of many decades or longer of grants, tax breaks, government granted monopolies, and in some cases public infrastructure handouts.  One small way to help level the playing field is to provide directed content production grants to new entrants, encouraging original content by neutral OTT services to be produced in Ontario and Canada. These grants should not be available to non-neutral OTT services, their owners, or companies owned by their owners.

* Any existing government grants and programs which support content creation, whether audio/visual, audio, multimedia, text or otherwise, should be conditioned on the outputs being made available to citizens in a distribution neutral way.  Content which would be exclusively licensed to specific distribution mechanisms, including OTA, BDU (Cable/Satellite), or non-neutral OTT services would not qualify for these programs.

* Any proposals or promotions of a "Netflix tax", "YouTube Tax" or similar counterproductive proposals should be clearly revoked both publicly and in any behind-the-scenes lobbying.  Anyone who is honestly looking for a level playing field between neutral OTT and non-neutral OTT services should recognize that it is the non-neutral OTT services which have had decades of unfair government granted advantage which should be reversed.  Far from a "tax" on neutral services, there should be additional government grants for neutral services.  I don't  propose a tax on non-neutral services as I believe the CRTC and the Competition Bureau should declare these services unlawful and force them to become neutral services or shut down.

* While traditional CanCon is not a provincial responsibility, I believe there is a place for provincial involvement if CanCon rules are finally modernized and adjusted for the current content distribution reality.  The strength of CanCon rules should reflect the level of intermediary editorial control.   Services where Canadians are free to choose what they access from a large catalog with minimal intermediary interference should have a minimum of regulation, while services that have greater intermediary editorial control should have stronger regulation.  I don't believe CanCon should apply to Netflix or YouTube, but strongly believe this regulation applies to traditional OTA and BDU broadcasting.  I believe CanCon should also apply to a growing class of physical retailers like Walmart which through display and stocking choices have effective editorial control.

Thank you, and I look forward to a reply.  I apologize for the length of the letter, but this is an area of policy that is too complex for soundbites.  The health of the neutral network sector is of great importance to me as both a consumer and as someone who works in the Internet sector.  This is part of a larger area of policy I watch closely, and is one that greatly influences my voting and related political choices.

Russell McOrmond
305 Southcrest Private,
Ottawa, ON
K1V 2B7

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