IBG recently completed a study that demonstrates some of the problems with Canada's existing broadcasting system. Between 2015 and 2019, some Canadians cut the cord and the base of Canadian subscribers fell by about 6.5%. IBG's study finds that over this same time period, the revenue of non-mandatory, Canadian independent television discretionary services fell faster, by 20%. Meanwhile, the revenue of the large, vertically integrated discretionary services actually rose. The collective per-subscriber wholesale rate for these services increased by more than 20% over this same time period. This is more than twice the rate of inflation.
These differences suggest strongly that the market power of Canada’s large, vertically integrated BDUs is distorting the Canadian market. This kind of discrepancy in revenue is not sustainable. It is undermining diversity in the Canadian system. We believe that the CRTC’s rules in this area need attention, but at least the CRTC has the authority to do what is required. Under Bill C-10, they won’t in an online environment.
In an online environment, it's imperative that the CRTC have clear jurisdiction to ensure the fair treatment of all players, including in the ever-changing use of algorithms and in the fair use of data. We are not alone in our concerns. The Canadian Communication Systems Alliance, CCSA, represents independent cable and IPTV companies. They're on one side of the independent broadcasting coin in Canada and we are on the other.
In its submission to you, the CCSA underlines the importance to this committee’s work of the market power of Canada’s own media giants. We support the CCSA’s comments, which echo our own, and the changes the CCSA is proposing in addition to our own. CCSA suggests an amendment to proposed paragraph 9.1(1)(f) to add a reference to contracts between broadcasting undertakings.
CCSA also proposes that the CRTC’s authority to protect against undue preference and disadvantage in the distribution environment be brought into the bill. Both changes respond to the reality of the consolidated broadcasting industry in Canada.
Lastly, I will follow up on some other points of discussion we have been following in this committee. On the question of Canadian ownership, of course Bill C-10 should include Canadian ownership of all types of services as a policy objective. It should be updated, not removed as a policy. On the question of the role of Canadian broadcasters, we've heard words of support for Canadian broadcasters and the important role we play as the bedrock of the system, but the bill omits the most important issue for most broadcasters: fair access to the means of distribution.
Thank you for the chance to appear. We’d be happy to answer your questions.