Home > Bell, CRTC, Digital Policy, Economics, Rogers, Social Media, Telecommunications, Telus > CRTC vs Netflix: The Fight For Survival Is On

CRTC vs Netflix: The Fight For Survival Is On

The regulatory process in telecom and broadcasting in Canada is badly broken, and under the new chairman Jean-Pierre Blais it’s very existence as a regulator is about to be put into question by new media companies. From allowing companies like Bell and Rogers to get away with internet throttling for years with no recourse, to excessively high phone bills, and now Blais has picked a fight with Netflix over his assumption that new media companies are regulated under a public mandate in which the not only the Government doesn’t agree with, but companies like Facebook, and Google are surely to take exception too as well as future media distributors.

There is a very interesting presentation about the future of telecom from a market analyst I’ve come to trust over the years when it comes to media. His name is Gerd Leonhard. Below is an embedded talk on the future of telecom to ITC leaders in the EU.

What’s about to take place in media is another technological disruption in content distribution channels. It happened over music, and it’s starting to happen in video content as well.  Over the next few years Africa and the Middle East will be wired up fully with satellite wifi, bringing about 3 billion more users to the net. In these places cell phones dominate and the net will be the medium of choice to consume media. As a result, there is going to be a huge demand on what is known in the policy trenches as “over the top media” (in which Leonhard explains in detail how this currently affects telecom providers in the above embedded video), or in more English related terms “internet broadcasting” services like Netflix.

The next evolution in content distribution will be in the form of social media. Social media companies mine your information on your social media profile to sell you advertising on that site. As a result Google and Facebook will be getting into content distribution within the next 5 years to not only service the needs of the 3 billion coming online in the near future with media, but also to fulfill a market need in media advertising which would be more targeted ads over content through social media. What this will essentially do is set up an entirely new global content distribution network.  This change (due to the needs of the new 3 billion internet users) will be quite rapid.

Telecom companies in Canada currently have an artificial monopoly on Canadian content distribution rights, in which the suppliers of that content will be looking towards the social media distribution channels as more lucrative compared to traditional over the air distribution networks through Rogers, Bell etc. As a result these big telecom companies stand to loose a ton of money, and will have to reinvent themselves, or at least try to minimize the damage.  This technological change will completely disrupt telecom business models in Canada.

For a long time on this blog, I’ve been quite strong on privacy issues regarding all telecom providers on your private information.  The reason being is that telecom providers hold a lot of personal information on websites visited etc.  Social media, is a gold mine of information, but Internet marketers know it’s not completely accurate.  The information from your telecom provider is more accurate regarding the profiling of their users.  With social media gaining content distribution and stealing it from the telecom providers; the next logical step in market and business transition would be the sale of your information at the telecom provider level, with investors hungry for accurate analytics.

Last week the CRTC got into a spitting match with Netflix over it’s subscribers data. All broadcasters in Canada are required to hand over their “ratings” information to the CRTC. Netflix doesn’t provide this information publicly, and refused to give this info to the CRTC. The CRTC then came up with an implied threat of regulating Netflix if it didn’t cough up that info.  Who regulates the disclosure of your private info collected by online broadcasters is the current question before the Canadian public and government, and it’s a big one since it will impact how your information is handled in the future by telecom, online broadcasters and how will the flow of our personal online data be monitored, and by whom?  In my opinion the CRTC is not mandated to handle this information.  It flows through the Privacy Commissioner, which pretty much puts the CRTC in a very tight corner in the near future regarding it’s ability to regulate anything.

The one thing to be optimistic about is that our regulator and our telecom industries are about to be kicked in the pants by companies that out pace Rogers/Bell by a large margin.  If the CRTC moves forward on pushing Netflix, Rogers/Bell/CRTC will not be controlling that conversation.  That’s going to be interesting.  If I were Bell/Rogers or other creative unions, I’d be very careful what you wish for right now.

To Be Continued….

UPDATE: September 29th, 2014 -> The CRTC has backed down from the Netflix spitting match.  Wise move considering the above info. Worthy to note that the CRTC still thinks it has regulatory power over internet content, it will now not enforce, however even backing down from this public spitting match has significantly weakened that presumption. It would have to be legislated in, and I don’t think any government would be willing to do this considering the power of Google and Facebook.

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