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Regulation no long-term fix for Netflix

In an open letter to the Canadian Radio-television Telecommunications Commission (CRTC), a group of media industry executives called on the CRTC to assess the impact of foreign over-the-top (OTT) services on Canadian culture and broadcasting. While many Canadians have never heard the term “over-the-top services,” they’ve probably used them. Since Netflix came to Canada, over-the-top services have accounted for approximately one third of all video streaming during peak hours. Naturally, Canadian broadcasters have noticed this.

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Date Posted: July 4, 2011
Print Edition: June 24, 2011

By Sonja Szlovicsak (The Cascade) – Email

In an open letter to the Canadian Radio-television Telecommunications Commission (CRTC), a group of media industry executives called on the CRTC to assess the impact of foreign over-the-top (OTT) services on Canadian culture and broadcasting. While many Canadians have never heard the term “over-the-top services,” they’ve probably used them. Since Netflix came to Canada, over-the-top services have accounted for approximately one third of all video streaming during peak hours. Naturally, Canadian broadcasters have noticed this.

Essentially, this letter calls on the CRTC to regulate services like Netflix and Apple TV. This is not only a terrible idea, but nearly impossible to do without regulating the internet itself.

Yes, Netflix, Apple TV, and other over-the-top services are a threat to Canadian broadcasters. They bring television and movies to viewers on demand, and (for now) it’s commercial free and cheap. And while OTT services are not necessarily pulling audiences away from traditional television broadcasting, they are pulling television away from traditional broadcasting. Hollywood is beginning to sign with these services, and they’re doing so exclusively. This is a win for Netflix fans that are sick of watching Titantic 2 and The Human Centipede, but a loss for Global and CTV. Canadian privately owned broadcasters rely on the advertising they receive from cheap American programming to subsidize Canadian content.

We are seeing just the beginning of OTT services. But considering the success, in a few years the market will explode and there will be far more businesses providing these services. To begin to regulate these services now will hinder their growth. And since Netflix works on an “on-demand” format rather than scheduled broadcasting, there is no way to force them to show Canadian content for any amount of time.

At best, these services could be forced to carry Canadian content in their libraries. However, since Canadian content is far more expensive to produce than its American counterpart, and is shown across a much smaller audience pool, it is far more costly for a broadcaster to purchase rights to a Canadian show, which, of course, would increase the attractively low price of OTT services.

Yet that’s still not the biggest problem with regulation. For now, these services are based out of the United States, so in theory the CRTC would be able to hand out some sort of fines if they were to violate any regulations placed on them. But as these services grow in popularity, more businesses will pop up offering the same services. How will the CRTC regulate a Netflix based in Sweden? China?

They can’t. Not without blocking access to these services entirely. And since the CRTC has not taken a firm stance on net neutrality yet, there is still a possibility that Netflix Sweden may not be accessible in Canada.

Of course, even if OTT services were regulated and a-okay according to CRTC guidelines, it still doesn’t mean Canadians would have any interest in purchasing them. As it is now, almost any television show can be watched after a quick visit to the Pirate Bay or IceFilms.

If Canadians have any interest in seeing Canadian programming in the future, they should urge the CRTC to not regulate over-the-top services. Instead, they should push broadcasters to create a Canadian version of Netflix, one with quality Canadian programming that Canadians actually want to watch.

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