The regulator sparks headlines when its chairman raises the possibility of legislation for over-the-top video providers. Canadian network operators weigh in on the business impact

CRTC opens consultation on Netflix-style services

Canadian network operators will be part of the discussion, but they’re not clamouring for the CRTC to start regulating over-the-top video services such as Netflix, much less create laws around them.

The issue of potential legislation came up this week at the Banff World Media Festival, where CRTC chair Konrad von Frickenstein was quoted by the Globe and Mail and other publications that OTT services are “a huge issue,” given Netflix alone accounts for 13.5 per cent of downstream traffic during peak hours.

Public input on OTT services, which also include Google TV and Apple TV, has already been opened up by the CRTC, which was recommended by a standing committee on Canadian heritage and an industry working group. The focus of the public proceedings will include any technological developments in consumer devices and network capabilities that will influence OTT programming, and whether the OTT offerings lead consumers to downgrade or cancel their cable or satellite subscription.

According to Bill Sandiford, who leads the Canadian Network Operators Consortium, OTT is largely seen as a broadcasting issue whereas its focus has been on telecommunications. That said, individual members have been discussing it, he said.

“We will participate in the consultation that takes place, just to make sure any of our members’ concerns are addressed,” he said. “There have been various members who have said they have no objections to the way things with OTT video services have already been handled. They see no real reason why they should be regulated, but that’s at an individual level, not the CNOC as a whole.”

David Elder, a lawyer with Stikeman Elliot in Ottawa, said there could be considerable challenges in the CRTC getting the kind of measurements around Canadian consumption patterns. And even if the CRTC got the data it needs, he said, there may be questions on whether it is appropriate to take any kind of action without explicit legislative direction.

“I think we would be looking at a marked shift form the way the commission has tended to regulate online media,” he said.

The CRTC would likely have jurisdiction over OTT services is they are offered through a traditional subscription, Elder added.

“If it’s something that someone’s picking up over the Internet and ad-supported, the CRTC has a much taller order,” he said.

Any regulation around OTT will likely focus on the impact on Canadian content, but Sandiford said CNOC members see opportunity if such services persuade them to downgrade what they get from cable and satellite providers.

“If anything it will help us,” he said. “Our members are fighting an uphill battle against companies that are bundling. As customers start to move away from those services, it’s breaking the bundle they have from the incumbent TV players to take services like Netflix and hopefully Hulu, if it arrives in Canada.”

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