Business
Navigating the country’s telecommunications landscape a tricky task: Peter Menzies
From the MacDonald Laurier Institute
By Peter Menzies
On the telecom side of things, the CRTC’s long-standing focus on the fundamental issues of access and affordability is far more tangible than the ethereal cultural ambitions that have swamped the broadcasting boat
Canada’s communications policy playing field is more uncertain today than it has been in decades.
The cause is primarily the Online Streaming Act (Bill C-11), which attempts to “modernize” the Broadcasting Act by defining all internet-based audio and visual content as “broadcasting.” Promoted by a series of heritage ministers as a simple matter of ensuring that streaming companies support Canadian content, the act has alarmed a thriving community of unregulated online creators while causing targeted offshore operators to question how they can continue operating in Canada.
Canadian Radio-television and Telecommunications Commission (CRTC) chair Vicky Eatrides, appointed last January, is clearly feeling pressure to implement Bill C-11 as quickly as possible. Following a series of rushed preliminary processes that made it challenging for many companies in the regulatory “rookie” category to participate, the CRTC’s first public hearing is scheduled for Nov. 20.
It involves 127 intervenors, is scheduled to last three weeks, and Eatrides hopes to have initial decisions made by the end of 2024.
With all her staff’s hands to the pumps on that file, Eatrides has shut down dealing with new licensing matters in the traditional broadcasting fields of television and radio for at least two years. All TV licences up for renewal this year were administratively renewed until 2025 (Bell has filed a court appeal). All of those expiring next year were renewed as is until 2026, and the radio industry was informed the CRTC won’t accept applications in that genre for at least two years, putting it in a regulatory cryo-chamber.
Meanwhile, active broadcasting files have been triaged to the extent that they are backed up, in some cases for years, leaving those involved without the decisions they need. The renewal of the CBC’s licence, for instance, remains incomplete 33 months after the CRTC’s public hearing into the matter.
On the telecommunications side, life is much more steady as she goes. Early in July, the CRTC laid out what it described as a more streamlined and flexible manner for determining wholesale access rates with the goal of fostering competition. But these matters are rarely dealt with swiftly, and incumbent companies affected by this new—and, to many, refreshing—approach have a long track record of being able to drag things out.
Competitor access rates is a matter that has preoccupied the CRTC for a decade; the rates have wavered back and forth since at least 2016, and the lack of regulatory certainty has had a debilitating impact on smaller service providers. The largest of those—TekSavvy—threw in the towel early this summer and put itself up for sale.
The management of so-called mobile virtual network operator rates, particularly relevant in the shadow of Quebecor’s purchase of Freedom Mobile, has moved along efficiently. This is another positive sign involving an area in which the CRTC is attempting to foster competition with increased regulatory certainty. When it comes to the telecom side of things, the regulator’s long-standing focus on the fundamental issues of access and affordability is, while complicated in terms of implementation, far more tangible than the ethereal cultural ambitions that have swamped the broadcasting boat.
Two other matters are worth watching.
The first—the CRTC’s role in overseeing negotiations as foreseen in the Online News Act—may evaporate. Meta has moved out of the business of carrying news in Canada, with disastrous consequences for those in the business of creating it. News Media Canada, the industry’s lobbying arm, is now asking the government to bow to Google’s demands before it does the same.
That could mean significant legislative amendments which could eliminate the CRTC’s role entirely. Seeing as the commission has already delayed decisions on which news organizations would qualify until late 2024, this would be a welcome relief.
The second will be whether the CRTC, when dealing with the likes of Disney and Netflix next month, realizes what’s at stake. The United States-based companies aren’t interested in contributing solely through official funds while all the commission appears to want to talk about is how much they should pay and to which funds.
Neither has threatened, as Meta and Google did with Bill C-18, to disconnect Canada if they don’t get the outcomes they need.
Not yet, anyway.
Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, a former newspaper executive, and past vice-chair of the CRTC.
Business
CBC’s business model is trapped in a very dark place
I Testified Before a Senate Committee About the CBC
I recently testified before the Senate Committee for Transport and Communications. You can view that session here. Even though the official topic was CBC’s local programming in Ontario, everyone quickly shifted the discussion to CBC’s big-picture problems and how their existential struggles were urgent and immediate. The idea that deep and fundamental changes within the corporation were unavoidable seemed to enjoy complete agreement.
I’ll use this post as background to some of the points I raised during the hearing.
You might recall how my recent post on CBC funding described a corporation shedding audience share like dandruff while spending hundreds of millions of dollars producing drama and comedy programming few Canadians consume. There are so few viewers left that I suspect they’re now identified by first name rather than as a percentage of the population.
Since then I’ve learned a lot more about CBC performance and about the broadcast industry in general.
For instance, it’ll surprise exactly no one to learn that fewer Canadians get their audio from traditional radio broadcasters. But how steep is the decline? According to the CRTC’s Annual Highlights of the Broadcasting Sector 2022-2023, since 2015, “hours spent listening to traditional broadcasting has decreased at a CAGR of 4.8 percent”. CAGR, by the way, stands for compound annual growth rate.
Dropping 4.8 percent each year means audience numbers aren’t just “falling”; they’re not even “falling off the edge of a cliff”; they’re already close enough to the bottom of the cliff to smell the trees. Looking for context? Between English and French-language radio, the CBC spends around $240 million each year.
Those listeners aren’t just disappearing without a trace. the CRTC also tells us that Canadians are increasingly migrating to Digital Media Broadcasting Units (DMBUs) – with numbers growing by more than nine percent annually since 2015.
The CBC’s problem here is that they’re not a serious player in the DMBU world, so they’re simply losing digital listeners. For example, of the top 200 Spotify podcasts ranked by popularity in Canada, only four are from the CBC.
Another interesting data point I ran into related to that billion dollar plus annual parliamentary allocation CBC enjoys. It turns out that that’s not the whole story. You may recall how the government added another $42 million in their most recent budget.
But wait! That’s not all! Between CBC and SRC, the Canada Media Fund (CMF) ponied up another $97 million for fiscal 2023-2024 to cover specific programming production budgets.
Technically, Canada Media Fund grants target individual projects planned by independent production companies. But those projects are usually associated with the “envelope” of one of the big broadcasters – of which CBC is by far the largest. 2023-2024 CMF funding totaled $786 million, and CBC’s take was nearly double that of their nearest competitor (Bell).
But there’s more! Back in 2016, the federal budget included an extra $150 million each year as a “new investment in Canadian arts and culture”. It’s entirely possible that no one turned off the tap and that extra government cheque is still showing up each year in the CBC’s mailbox. There was also a $93 million item for infrastructure and technological upgrades back in the 2017-2018 fiscal year. Who knows whether that one wasn’t also carried over.
So CBC’s share of government funding keeps growing while its share of Canadian media consumers shrinks. How do you suppose that’ll end?
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Business
PBO report shows cost of bureaucracy up 73 per cent under Trudeau
From the Canadian Taxpayers Federation
The Canadian Taxpayers Federation is calling on the federal government to rein in the bureaucracy following today’s Parliamentary Budget Officer report showing the bureaucracy costs taxpayers $69.5 billion.
“The cost of the federal bureaucracy increased by 73 per cent since 2016, but it’s a good bet most Canadians aren’t seeing anywhere close to 73 per cent better services from the government,” said Franco Terrazzano, CTF Federal Director. “Taxpayers are getting soaked because the size and cost of the federal bureaucracy is out of control.”
Today’s PBO report estimates the federal bureaucracy cost taxpayers $69.5 billion in 2023-24. In 2016-17, the cost of the bureaucracy was $40.2 billion. That’s an increase of 72.9 per cent.
The most recent data shows the cost continues to rise quickly.
“Spending on personnel in the first five months of 2024-25 is up 8.0 per cent over the same period last year,” according to the PBO.
“I have noticed a marked increase in the number of public servants since 2016 and a proportional increase in spending,” said Parliamentary Budget Officer Yves Giroux. “But we haven’t seen similar improvements when it comes to service.”
The Trudeau government added 108,793 bureaucrats since 2016 – a 42 per cent increase. Canada’s population grew by 14 per cent during the same period. Had the bureaucracy only increased with population growth, there would be 72,491 fewer federal employees today.
The government awarded more than one million pay raises to bureaucrats in the last four years, according to access-to-information records obtained by the CTF. The government also rubberstamped $406 million in bonuses last year.
“The government added tens of thousands of extra bureaucrats, rubberstamped hundreds of millions in bonuses and awarded more than one million pay raises and all taxpayers seem to get out of it is higher taxes and more debt,” Terrazzano said. “For the government to balance the budget and provide tax relief, it will need to cut the size and cost of Ottawa’s bloated bureaucracy.”
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