Here's why. The same few cable and satellite distributors also control access to the Internet and mobile devices. They control all of the distribution channels; you cannot reach consumers without going through them. These same few distributors have increasingly expanded their content and programming holdings. That is, they have vertically integrated. The main advantage of vertical integration is to favour your own products and services. By favouring themselves, they inadvertently or purposely disadvantage unaffiliated programming services. Their gain is always our loss; our loss is always their gain.
They can do this, for example, by establishing artificially high prices or onerous financial terms of access for the services they provide. For them it's simply moving money from one pocket to the other. But for independent services, it represents real costs. Examples might include charging high rates to insert bill stuffers or access ad inserts on U.S. specialty services.
Packaging and pricing at the retail level is another concern. Under the relaxed CRTC rules, distributors can put their own services on basic service or heavily promote packages composed entirely of their own services along with popular American channels. In new media and wireless, the same is possible. We may find their applications pre-loaded on their mobile devices while we struggle to gain the attention of consumers amidst the hundreds of thousands of available mobile applications.
It's far too late to stop vertical integration. The attached handout shows the startling extent to which the industry is about to become vertically integrated. The CRTC's reliance on after-the-fact dispute resolution is not a practical solution. How is a small programmer going to constantly complain against the people they need to package, price, and sell their services? Who bites the hand that feeds them?
It is possible to establish regulatory safeguards to try to offset these advantages and level the playing field ever so slightly. Requiring vertically integrated companies to make public certain non-confidential information, to bring what is now in the dark into the open, would help. Providing preferential packaging and channel positioning to independent broadcasters would help. Stronger enforcement of the CRTC's genre protection rules would also be effective. But there has to be a will to undertake these and other measures.
We hope that bringing these concerns to your attention will sensitize lawmakers to the risk that vertical integration poses to the diversity of voices and ownership in broadcasting.
We're happy to answer any questions you may have.
Thank you.