Thank you very much. I will lead the discussion and hand it over at the end to my colleague Ben Klass.
Good morning and thank you for inviting us to appear before your committee. Our research at the Canadian Media Concentration Research Project examines the evolution of everything from mobile wireless Internet access and cable TV services to the quickly evolving digital media delivered over the Internet such as online video services like Netflix and Crave, Internet advertising, social media and newspapers.
In the 1990s and early 2000s, it was commonly believed that the advent of digital media and the Internet would usher in more competitive and diverse communications and media markets. However, in his summary of the results of a recent 30-country study, Columbia University professor Eli Noam concludes that concentration levels in mobile wireless, broadband Internet access and other communications markets continue to be “astonishingly high”. While the data for content media is mixed, the trend is in an upward direction.
Moreover, in the last decade, a handful of global Internet giants have remade the Internet in their image—a centralized Internet ruled by a few search engines, social media services and digital media content aggregation platforms. These conditions generally apply to Canada as well.
Where Canada does stand out, however—and not in a good way—is in its sky-high levels of vertical and diagonal integration. The figure distributed to the committee provides a snapshot of where things stand as of 2019 based on HHI measures of concentration—a point I hope we can discuss during the question and discussion period.
If the proposed mega-merger between Canada's second-largest and fourth-largest communications and media conglomerates, Rogers and Shaw, is approved, it would have four major implications. It would overturn a decade and a half of policies by successive Conservative and Liberal governments alike to foster a fourth maverick mobile operator in regions across the country. It would significantly lessen competition for the mobile wireless market at the national and provincial levels and for the national Internet access and cable television markets. It would reduce the number of doors that TV and film producers have to knock on from four to three when seeking a national distribution deal and from three to two in English-language regions of Canada. Moreover, with data combined from 18.2 million Canadians integrated across Rogers' and Shaw's multiple platforms, this deal raises substantial questions about the link between big data, market power, and privacy and data protection.
The proposed Rogers and Shaw merger is an excellent opportunity to see whether the Competition Bureau can use its existing tools to full effect and hold the line on current policies. It is also an excellent opportunity for it to turn its professed interest in the link between big data, market power, and privacy and data protection into action. This is also in sync with the recent report by the ETHI committee, “Democracy Under Threat”.
Competition policy should also go beyond assessing consolidations solely in terms of price to consider, for example, standards of data and privacy protection. For example, Facebook loudly touted its respect for people's expectations about trust and privacy when it competed with tens of other rivals during the competitive era for social media. Since taking over Instagram and WhatsApp in 2012 and 2014 and consolidating control over social media, however, it has systematically degraded the standards of privacy and data protection that it offers.
Price is, obviously, still a concern. Consider that in the oligopolistic mobile wireless industry in Canada, Bell, Rogers and Telus have been able to persistently charge high prices that are significantly higher than in comparable countries while offering mobile wireless plans with stingy data allowances that constrain how people use their phones and the mobile Internet. As a result, mobile data usage in Canada is about half the OECD average and a third of what it is in the U.S.
There is also a need to restore a focus on the broader effects of concentration on competition—for example, the creation of kill zones—as well as how the massive economy of scale, scope and network effects that are common to digital services are used to buttress dominant market positions, undercut rivals and expand into new markets.
The focus should also be on limiting the threat that concentrated corporate power poses not just to markets but to policy; society; the evolution, design and use of technology; and democracy.
Four principles drawn from the history of communications regulation should serve as guides for what a new generation of regulation for communications, the Internet and the digital economy could look like: structural separation, line of business restrictions, public obligations and public alternatives.
I'll now turn it over to Ben. I hope you can indulge him for half a minute.