Directing Digital Media Innovation: Submission of the Directors Guild of Canada to the Digital Economy Consultation

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Submitted by Directors Guild of Canada 2010–07–13 20:15:55 EDT
Theme(s): Building Digital Skills, Canada's Digital Content, Digital Infrastructure, Innovation Using Digital Technologies

Summary

Our 3800 members are Canadian digital entrepreneurs who direct, produce, edit and design audiovisual media content. We've made 21 recommendations for Canada's digital strategy:

Government allocations

  1. To the CRTC: for monitoring network neutrality internally, and investigating issues that may arise from time to time.
  2. To the CBC and NFB: to renew Canada's capacity for risky, innovative public media through funding at levels comparable to those of our trading partners.
  3. To organizations addressing digital skill–building.

    Federal–provincial initiatives:
  4. Work with the provinces to have higher–learning and other publicly–funded institutions connect with independent creators for the use of tools and equipment.

    Income Tax Act and Regulations:
  5. Revise the Canadian Film or Video Production Tax Credit (CPTC) to cover all linear audiovisual content, whether destined for cinema, television, online or mobile devices.
  6. Do the same for the Film or Video Production Services Tax Credit (PSTV).
  7. Extend the deduction for Canadian print and broadcast ads to websites and "apps" that give prominence to Canadian digital media content.
  8. Revise the Labour–Sponsored Venture Capital Corporations rules to include associations certified to bargain under the Status of the Artist Act.
  9. Merge the Canadian Audiovisual Certification Office (CAVCO) into the CRTC.

    Copyright Act:
  10. Study in detail the forward–going role of copyright collectives and clearance intermediaries and possibility of regulated competition between them.

    Competition Act, Broadcasting Act, and Telecommunications Act:
  11. Provide for the CRTC to act as a sector–specific competition body, with framework oversight to be provided by the Competition Bureau.

    Broadcasting Act, Telecommunications Act and Canadian Radio–television and Telecommunications Act:
  12. Rename the CRTC as the "Canadian Communications Commission".
  13. Follow Europe's lead in replacing "broadcasting" with "audiovisual media"–the Broadcasting Act would become the Audiovisual Media Act — to clarify what is already written in the Act.
  14. Provide for the CRTC/CCC to let privately–held companies file in confidence with the CRTC those internal corporate documents that wouldn't otherwise become public.

    Order–in–Council to the CRTC:
  15. Review the efficiency and scope of costs that programming services face in securing carriage on multiple (a) cable distributors, (b) satellite broadcast distributors, and (c) ISPs.
  16. Revise the Internet Traffic Management Practices (ITMP) Framework to require the CRTC to monitor network neutrality internally, rather than relying only on complaints.
  17. Require the CRTC to work directly with investors seeking accreditation as Canadians.
  18. Clarify the CRTC's role as a sector–specific consumer protection agency for communications markets.

    CRTC/CAVCO (CCC):
  19. Publish all accreditation databases online in a format that allows the data to be fed automatically into interconnecting applications.

    Department of Canadian Heritage:
  20. Work with public institutions (CBC, NFB, Canada Media Fund, Telefilm, National Library) to identify and implement data standards that let digital applications pull content from all of these institutions' online availabilities.
  21. Help break the impasse over equitable terms of trade that prevent digital audiovisual content from sitting on the shelf.

Submission

Table of Contents

A. INTRODUCTION

The Directors Guild of Canada (DGC) is a national labour organization. Our 3800 members direct, produce, edit and design film, television and digital media in Canada. As digital entrepreneurs and audiovisual innovators working in 47 different occupational categories, we are delighted to participate in this long–anticipated consultation.

We acknowledge that this federal consultation is taking place amidst a flurry of related initiatives and federal reports, including:

  • the Fighting Internet and Wireless Spam Act (Bill C–28), Safeguarding Canadians' Personal Information Act (Bill C–29), and Copyright Modernization Act (Bill C–32), which were before the House of Commons when it adjourned for the summer;
  • the Jobs and Economic Growth Act (Bill C–9) removing restrictions on foreign ownership of Canadian satellites, which is currently before the Senate;
  • Industry Canada's consultation on Opening Canada's Doors to Foreign Investment in Telecommunications: Options for Reform, following the House of Commons Standing Committee's recent study on Canada's Foreign Ownership Rules and Regulations in the Telecommunications Sector; and
  • reports both by the House of Commons Standing Committee on Canadian Heritage on new media, entitled Emerging Digital Media: Opportunities and Challenges (interim report), and by the Standing Senate Committee on Transport and Communications on wireless communications, entitled Plan for a Digital Canada.

However, we also understand that this consultation's role is to establish the broader strategy for Canada's digital economy. We have expressed our views on the above–noted initiatives elsewhere. Here, we seek to contribute to the broader strategy orientation that the federal digital strategy will take.

B. INNOVATION USING DIGITAL TECHNOLOGIES (theme one)

1. Increasing Innovation in the Audiovisual Media Sector

You have asked:

Should Canada focus on increasing innovation in some key sectors or focus on providing the foundation for innovation across the economy?

Canada must plainly do both these things.

It is clear that Canada must provide the foundation for innovation across the country. That task is the core goal of nearly all of our international counterparts' national digital strategies.

However, as recognized by the structure of the Consultation Paper to which this submission responds, innovation in three key sectors is critical to providing that foundation:

  • the ICT industry, through which Canadians create or import the digital devices, applications, interfaces, and underlying technologies embedded across the digital economy;
  • the digital content which drives demand for these services by speaking to and through Canadians' needs and interests; and
  • the broadband and other telecommunications infrastructure that enables these technologies, services and content.

Of these, we wish to highlight digital content, which tends toward two types.

First, users generate content through the use of digital applications: telling the Urbanspoon smartphone app that you "like" a particular restaurant, posting a talkback comment to Slashdot, or even engaging in a Skype conversation generates content. Innovation in this area is focused on the applications through which this content is generated.

Second, as more time, effort and expertise is spent on developing particular content, the content gains in value, but its creation becomes more professionalized. Innovation in this area is focused on the content created, rather than the tools by which it is created. Audiovisual content produced for film, television and digital devices — and generally repurposed across these platforms — is likely the most labour–intensive form of content creation, particularly in its professional format.

The audiovisual media sector has enjoyed remarkable growth and wholesale transformation in recent years. To the surprise of some, highly professionalized audiovisual media forms have enjoyed a resurgence in this environment. Television and film content ported to streaming or download formats have been significant drivers of bandwidth demand. "Quality" scripted dramas with very high per–episode production costs have generated vast online fan communities as well as sales and rentals of DVDs and, increasingly, online. At the same time, the access of enthusiastic individuals to ever–less–expensive digital creation tools has continued to shrink the continuum that connects the most casual hobbyists to the most ardent professionals.

Equity investment in fresh audiovisual content is no less risky than other forms of early–stage start–up. However, the success Canadians have achieved in this sector is not by chance. It is the outcome of marketplace policies and programs through which Canada's governments and their agencies have helped Canadian creators compete both in our domestic markets and internationally.

These marketplace policies recognize that Canada's audiovisual sector is a "triple–purpose technology". It is a key employer and revenue generator in its own right. It is the soft infrastructure that drives demand for other innovative technologies such as broadband services. And it plays a key role on the civic and cultural stages: democratic governments everywhere view the ability to sustain national conversations and cultures as in the public interest, and Canadian communication policy has been no exception. Federal governments have therefore made sustained strategic investments in the audiovisual sectors, recognizing that, given the Canadian English–language market's combination of small size and cultural proximity to the world's most successful English–language audiovisual sector, professionalized audiovisual media production on any meaningful scale could not otherwise occur.

These facts have not changed. If anything, the audiovisual sector's three roles — as an economic engine, as a demand driver for other key innovation sectors, and as civic and cultural infrastructure — are more relevant than at any time in the past. Canada should continue to focus on increasing innovation in the audiovisual sector.

2. A Successful Digital Strategy for the Audiovisual Media Sector

You have asked:

What would a successful digital strategy look like for your firm or sector? What are the barriers to implementation?

For the audiovisual media sector, a successful digital strategy is an industrial and cultural plan which gives Canadian creators access to the same support that their counterparts in other developed, democratic, mid–sized countries enjoy. It is an enabling strategy for Canadian audiovisual creators to work at their best in providing innovative and compelling content to domestic and export markets.

The most serious barrier to implementing a digital strategy that allows the audiovisual media sector to contribute successfully is inexperience. Audiovisual content markets are highly sophisticated, risky and labour–intensive. It is has been our experience that the gap between uploading a video of one's cat to YouTube and being part of a team that pulls off successful scripted entertainment is sometimes ill–appreciated. Certainly this is a gap that anyone can bridge, provided they are willing to devote themselves to training and experimentation and have the talent to translate those efforts into results. However, training and effort of this type do not come free, or even cheaply.

A popular paradigm for the digital future is the idea that scarcity has given way to abundance. To some extent this is true. Many of the home videos that once remained buried have made their way to video–sharing websites like YouTube. So has much of the scripted audiovisual content financing and originally aired on other platforms, particularly television. But when it comes to risky, challenging or simply highly entertaining audiovisual content that achieves more than 15 seconds of fame, then inspiration and perspiration, not "abundance", are the proper paradigm. In this respect, it is perhaps worthwhile to note that on the day that submissions to this consultation were originally due, Google's YouTube, which has struggled to develop a "premium" content program to compete with such providers as Hulu and iPlayer, announced the creation of a YouTube Partner Grants program whose "goal is to catalyze the creation of new ideas and production models from some of our most innovative and original content partners for the benefit and advancement of the entire industry." They said:

We've been amazed by the creativity and resourcefulness of many of our partners. Some, operating on shoe string budgets, have been able to produce incredible videos, generate substantial revenues and command an audience that rivals that of network television. This new creative class often manages 360 degrees of their business operations, from the writing, filming and producing of their content to the marketing, post–production and distribution of their videos. Despite their success, many partners lack the resources and deep financial backing available to studio–backed production houses. The goal of YouTube Partner Grants is to act as a catalyst by infusing additional funds into the production budgets of a small group of YouTube partners who are at the forefront of innovation. Funds from YouTube Partner Grants will serve as an advance against the partner's future YouTube revenue share. This additional funding can allow partners to invest in better cameras, achieve higher production quality, expand their marketing efforts, expand their staff, or just hire more talent.

A successful digital strategy for the audiovisual sector is one in which Canadians are in a position to invest talent and time into creation in ways that stoke their creativity, leverage their resourcefulness and continue to allow them to share their stories with each other and with the world, from platform to platform.

C. DIGITAL INFRASTRUCTURE (theme two)

1. Characteristics and Frameworks

You have asked:

What speeds and other service characteristics are needed by users (e.g., consumers, businesses, public sector bodies) and how should Canada set goals for next generation networks?

and

What steps must be taken to meet these goals? Are the current regulatory and legislative frameworks conducive to incenting investment and competition? What are the appropriate roles of stakeholders in the public and private sectors?

Rankings comparing Canadian wireless and wireline broadband speed, cost and availability have been the object of intense scrutiny in recent years. This scrutiny is appropriate. The future of advanced digital services, including audiovisual media services, is being written now, and at a global scale. Digital infrastructure is the means by which Canadians are participating in this vast collective enterprise. It is always appropriate to ensure that we are doing so at the highest level and on the broadest scale possible.

But this scrutiny is not enough. The speeds and costs of end–user access simply do not tell the whole story. As the Consultation Paper states, correctly in our view:

As broadband networks spread around the world, digital media and the content are the advantage; they will be what attracts continued investment and talent, improves productivity, promotes prosperity in the digital economy and secures Canada's place in the digital world.

What is more, Canadians are among the world's highest per–capita audiovisual content consumers, whether on television, the Web, or new media platforms. Given digital audiovisual content's roles both in promoting broadband networks and as a key economic sector in its own right, the service characteristics needed by audiovisual content users — who are both consumers and producers — are an essential part of Canada's digital strategy.

These service characteristics fall into two main areas: content distribution infrastructure, and non–discriminatory access. These areas have a simple idea in common. Those who have created content and those who wish to use that content must have access to one another. That is not to say that content aggregators, editors and curators do not have an important role to play. However, the more that mandatory gatekeepers through which creators and consumers must mediate their relationships can be peeled away, the more aggregators and curators compete on innovation, not artificial scarcities.

(a) Content Distribution Infrastructure

By content distribution infrastructure, we mean the way in which audiovisual content travels from the creator's, aggregator's or programming service's facilities to the end–user's service provider. Content distribution infrastructure's capacity and design is particularly important for audiovisual content, whose data–rich nature leads to high bandwidth costs — but whose self–similar nature, wherein each user requesting the content will receive a very similar version, creates the opportunity for significant efficiencies:

  • Is the programming service or content supplier required to deliver its content separately to multiple cable companies' head–ends within a single metropolitan region?
  • Are ISPs able to access key audiovisual content providers' streams locally, or must they bring their network to an interconnection point halfway across a province in order to gain access to non–Canadian caching and content networks?
  • Do prohibitive bandwidth costs prevent new aggregators from bringing innovative audiovisual media packaging and selection mechanisms to market?

Questions such as these, which are ordinarily commonplace in the telecommunications environment, have not often been asked in the context of current regulatory and legislative frameworks for audiovisual media. However, they are critical, and directly affect the barriers that prevent start–up content suppliers and aggregators from entering the market quickly.

Further, questions such as these offer some insights into the futures of audiovisual media regulation. Will the converged communications regulator have to mandate the making available of content that is in the public interest at relevant interconnection points, or will the market supply this? If, similar to the Local Interconnection Regions in the telecommunications regulatory context, certain content is required to be made available at interconnection points in order to avoid inefficiencies, then to which content providers is it in the public interest to grant this right?

We therefore recommend that the Governor–in–Council require the CRTC to review the efficiency and scope of costs that programming services face in order to secure carriage on multiple (a) cable distributors, (b) satellite broadcast distributors, and (c) ISPs.

(b) Non–Discriminatory Access

By non–discriminatory access, we mean the scope that gatekeepers and aggregators with market power have for relying on their middleman role to raise the cost of users' access to content, and creators' access to other users, as a commercial model. While competitive content distribution infrastructure will limit this ability, bottlenecks will always remain. The service characteristic of next–generation networks that will best ensure that these bottlenecks do not become toll booths that hinder Canadian innovation is network neutrality.

The CRTC has made a commitment to network neutrality through its balanced Internet Traffic Management Practices (ITMP) Framework rules. In the absence of strong civil society or public advocate groups in Canada that have the ability and interest to deploy monitoring tools and assist with the filing of complaints, however, we are concerned that these rules will not operate in the manner intended. Accordingly, we recommend that the government require, and allocate funding for, the CRTC to monitor network neutrality internally, and to investigate issues that may arise from time to time.

2. Rural and Remote Communities

You have asked:

How best can we ensure that rural and remote communities are not left behind in terms of access to advanced networks and what are the priority areas for attention in these regions?

At the CRTC's recent hearing on community television, a number of parties advocated that the funding which cable companies currently allocate to themselves in order to create community television stations, instead be allocated to local "independent media centres" at which citizens could undertake media production of various types.

We see some risk in designating a single group of persons in each community to act as local gatekeepers, especially when such a group is not directly affiliated with democratic local institutions, as public libraries might be. However, persons in local communities, including rural and remote communities, wish and ought to have the ability to create sophisticated content and we view this as essential. Persons living in rural and remote communities must have access to the bandwidth required to interconnect local broadband networks to regional backbones, and to the tools and training that allows them to make full use of them.

We are aware that universal broadband initiatives in other jurisdictions have made great efforts to collect data and maintain up–to–date databases as to the presence and location of broadband providers. We support similar efforts in Canada and believe that, as the government's main arm's–length administrative body in the communications sector, the CRTC must play a leading role in developing and maintaining such a database. This is particularly true given the obvious synergies between that activity, monitoring the state of competition and, where necessary, intervening to correct market failures that competition does not prevent or discipline.

D. CANADA'S DIGITAL CONTENT (theme four)

1. Identifying our Advantage

You have asked:

What does creating Canada's digital content advantage mean to you?

We suggested earlier in this Submission that the audiovisual sector is a "triple purpose technology" which acts as an economic engine, a demand driver for other key innovation sectors, and a civic and cultural infrastructure. We think Canada should create a digital content advantage by building on our successes to foster a domestic sector that hits its targets in each of these three areas — that is, a sector that drives broadband demand by creating compelling audiovisual applications and content that successfully reach audiences both abroad and in Canada, where they become part of our national conversation.

User–generated content plainly has an important role to play, not least in terms of the underlying applications through which such content is generated or distributed. Our focus here, however, is on the professionally–produced audiovisual content whose scope and scale are too large and too time–consuming to be reliably produced by individual hobbyists over evenings and weekends. It is simply not likely that services like the U.S.'s HBO or Canada's Showcase will find adequate substitutes for the expensive scripted drama they air among user–generated content shot in the basement during spare time.

This approach is consistent with Canadian communications policy goals, which have always sought for Canadians to play a role in the expensively–produced television serials that are so popular with Canadians, rather than abandoning the field to imports. Put simply, for Canadian audiovisual media policy to take seriously its status as a "triple–purpose technology" — key employer and revenue generator, broadband demand driver, and civic and cultural instrument of our deliberative democracy — is nothing new. Canadian broadcast and film policy has always been formulated as industrial policy. As for other sectors of the economy, government coordination and subsidy has always been part of this industrial policy.

That is also consistent with the approach of our major trading partners. European Union economies are subject to the Audiovisual Media Services Directive, for instance, which states that

Audiovisual media services are as much cultural services as they are economic services. Their growing importance for societies, democracy — in particular by ensuring freedom of information, diversity of opinion and media pluralism — education and culture justifies the application of specific rules to these services.

and that

Member States shall ensure that on–demand audiovisual media services provided by media service providers under their jurisdiction promote, where practicable and by appropriate means, the production of and access to European works. Such promotion could relate, inter alia, to the financial contribution made by such services to the production and rights acquisition of European works or to the share and/or prominence of European works in the catalogue of programmes offered by the on–demand audiovisual media service.

Because this audiovisual media programming is repackaged across platforms, creating Canada's digital content advantage will require focusing on content at least as much as on the platform on which the content is carried. It is simply no longer relevant to regard the television, film and "new media" audiovisual markets as separate silos. Rather, the relevant market is audiovisual media content.

2. Encouraging Investment

You have asked:

How can stakeholders encourage investment, particularly early stage investment, in the development of innovative digital media and content?

Innovative digital media and content exist in a multi–platform world. New media platforms such as online and mobile environments are a key focus for developing innovative digital content, but they do not yet represent the bulk of the audiences and revenues available. Put simply, most audiovisual content that is consumed on multiple platforms was still first produced for television.

As a result, investment in the development of innovative audiovisual content whose first "window" is a conventional platform, such as television and film, directly assists the development of innovative audiovisual content for new media platforms. Investment in digital media and content must, therefore, avoid coming at the expense of less investment in audiovisual content for conventional media. Otherwise, investment in digital content innovation will simply have diverted creative efforts elsewhere, rather than increasing Canada's innovative capacity.

(a) Direct Funding

The Canada Media Fund, Telefilm, National Film Board, and Canadian Broadcasting Corporation (CBC) are the key federal vehicles for direct investment in Canadian audiovisual content creation. Each of these institutions has undertaken major initiatives in support of innovative digital content. The Canada Media Fund's strong support for content produced for multiple platforms, which grew in part out of the Telefilm Canada New Media Fund, is an important step forward in this regard. So, too, is the NFB's digital initiative, including its commitment to maximizing domestic and foreign audiences for its audiovisual rights on the Web and through various devices, including the iPhone, iPad and Boxee set–top box. The CBC has similarly been a digital content innovation leader on a number of fronts, ranging from its Internet– and satellite–only radio services, CBC Radio 3 and Bande à part, to the creation of online CBC Digital Archives.

What these federal institutions lack, however, is funding that is stable, sustained, and on track to seed digital content innovation on a large–scale basis. Sweeping change is underway as to how audiovisual content is distributed in Canada. It is essential that these four audiovisual innovation accelerators be in a position to support Canadians in participating in these changes. Canada's Digital Economy Strategy ought to take the bold step of making a long–term investment in these four audiovisual innovation institutions that is earmarked to digital innovation.

Of course, these federal agencies, which play an essential role in Canada's dual industrial and cultural approach, derive funding from beyond government as well. In certain cases this funding arises from the commercial success of these agencies' investments. In addition, the Canada Media Fund benefits from a required yearly contribution by cable and satellite television providers ("BDUs") as a proportion of their gross annual revenues. However, the Internet has begun to disintermediate the roles that BDUs play in dedicated subscription television services into distinct firms, each of which handles only one or the other of BDUs' two component parts: network transmission and the selection and packaging of content. As this takes place, a substantial portion of the revenue basis for BDUs' percentage–based contributions is being shifted towards transmission services which may not be subject to the Broadcasting Act. The effect is to reduce the funding that is available to the Canada Media Fund. We therefore call on the federal government to review whether, in order to adapt to this shift, funding should be raised for the Canada Media Fund from the service providers whose subscribers use the service to access audiovisual content.

(b) Indirect Funding

Federal tax credit programs are an important element of Canada's industrial strategy for unlocking digital content innovation. If updated, they can continue to be. We therefore ask that, as a starting point, the federal government update existing mechanisms in order to support audiovisual content regardless of platform through three important changes.

First, the Canadian Film or Video Production Tax Credit (CPTC) and Film or Video Production Services Tax Credit (PSTV), designed well before Internet–based media matured into their present form as a distinct value proposition, should be extended to cover all linear audiovisual content, whether destined for cinema, television, online or mobile devices.

Second, section 19 of the Income Tax Act, which allows advertisers to deduct from taxable income those expenses related to advertising in a Canadian periodical or newspaper or on a Canadian television or radio service, should be amended. The same deduction should be available for advertising on a website or within an "app" that gives prominence to Canadian digital media content.

New criteria and mechanisms would be required to accredit those productions or websites wishing to take advantage of these tax credits. As outlined at greater length below, we believe that CAVCO ought to be merged into the CRTC, which would develop and apply these criteria, in order to create a single window for matters such as these.

The Income Tax Act provides for Labour–Sponsored Venture Capital Corporations (LSVCCs), which allow investors to hold, in their RRSPs, investments in a small or medium–sized company in which a fund sponsored by a trade union has made an initial investment. The sponsoring trade union is entitled to appoint members to the LSVCC's board of directors. The third change we propose to existing tax incentives is that Parliament revise the definition of an "eligible labour body" which may sponsor an LSVCC fund, which is found at section 204.8 of the Income Tax Act, to add:

or an artists' association certified under section 28 of the Status of the Artist Act.

Artists' association certification is no less difficult to obtain than that of a trade union. Associations can be accredited only by the Canadian Artists and Producers Professional Relations Tribunal when, acting under the Status of the Artist Act, it issues an order certifying the association as representative of artists in a sector and, therefore, empowered to represent those independent artists in collective bargaining with the producers under federal jurisdiction who engage their services.

In addition to the DGC, accredited audiovisual–related artists' associations currently include the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), Alliance québécoise des techniciens de l'image et du son (AQTIS), Association des réalisateurs et réalisatrices du Québec (ARRQ), Société des auteurs de radio, télévision et cinéma (SARTEC) and Writers Guild of Canada (WGC). These associations have no less incentive and, in many cases, have a far more focused incentive than more traditional labour unions in pursuing the venture capital opportunity presented by the LSVCC rules. It is time to bring them under these rules.

The three measures set out above are the government's first step in leveraging private–sector investment in emerging digital audiovisual content models. They would modify existing tools to ensure that they are appropriate to the digital environment.

The Consultation Paper expresses interest in going beyond these to, in addition, review whether federal lending institutions and private–sector venture capital can be better leveraged for ongoing audiovisual media investment. We support such a review.

3. Marketplace Framework

You have asked:

What elements do you want to see in Canada's marketplace framework for digital media and content?

The Consultation Paper challenges regulatory agencies to "find ways to transform their approach, away from complex and micro rules, put in place when access could be controlled, roles were well defined and interdependencies could be managed, to devising simpler rules to reward success and require innovation."

At this juncture in our regulatory history, virtually nobody likes "complex and micro rules", whether they are related to taxation, securities regulation, or access to valuable resources. However, we are concerned that the above citation reflects a view of the audiovisual industry which fails to appreciate its economic and organizational realities, and which are no less complex in unregulated than in regulated sectors.

An array of business models exists for digital audiovisual media. At the risk of over–simplifying, they fall somewhere between

  • open–entry platforms such as the public Internet which enable creators and users to connect in a highly competitive content ecosystem, and
  • closed platforms — usually tethered to an access service or hardware device — in which a gatekeeper has the power to make business decisions as to which participants to favour and which to disadvantage.

As for the underlying digital infrastructure, the marketplace framework we favour is one which lowers barriers to entry by keeping open those platforms that are open, and ensures non–discriminatory treatment by those closed platforms that have the market power to matter.

A world which no longer requires "complex and micro rules" is one in which there are no more gatekeepers. That is a world we would very much like to see. However, we are less confident that it will become a marketplace reality. We therefore urge the federal government, in designing its digital strategy, to resist the urge to make sweeping statements as to the long–term future of the digital marketplace, and instead to focus on a marketplace framework that bridges between the present and future. Rules typically arise as the result of a trade–off between benefits and responsibilities. Benefits discussed in this submission have included tax incentives and access to content distribution. In this section we discuss some of the responsibilities that we believe should accompany benefits such as these.

(a) Communications Legislation

Calls from a number of corners have asked Parliament to overhaul or rewrite and combine Canadian broadcasting, telecommunication and radiocommunication statutes.

We are not convinced of the merits of such an exercise. The separation of carriage and content is a long–standing communication policy tenet that promotes neutral intermediaries and discourages gatekeeping.

Certainly, it may be useful to increase coherence between radiocommunication and telecommunication rules. Similarly, it is possible that certain administrative aspects common to these Acts could usefully be combined while retaining, as in the U.K.'s converged Communications Act 2003, distinct approaches to media and to network regulation.

However, there is very little evidence that the existing legislative frameworks require the CRTC to do anything that it ought not to do in a converged environment, nor that they prevent the CRTC from doing anything it is required to do in such an environment. The CRTC is in the process of adopting converged rules of procedure, is able to undertake converged communications monitoring activities, and is generally able to create single sets of converged rules or guidelines wherever this makes sense. As a result, it is not clear what, concretely, would be achieved by undertaking a wholesale redrafting exercise at this time.

At the same time, where specific amendments to address actually–existing issues are proposed, they should be considered seriously. One that we strongly recommend, in order to clarify the scope of the Broadcasting Act and of the nature of the audiovisual markets over which it has jurisdiction, is to follow the lead of the European Union, which replaced its "Broadcasting Without Frontiers Directive" with an "Audiovisual Media Services Directive", and replace the term "broadcasting" with "audiovisual media" — hence, the Broadcasting Act would become the Audiovisual Media Act. The subject matter of the Broadcasting Act has not, for some years, corresponded to the narrow sense of a "broadcaster" as still referred to in everyday vocabulary or, for that matter, in the Copyright Act. The slight terminological shift to "audiovisual media" would, we believe, clarify what is already written in the Act and reduce confusion as to its scope.

(b) Canadian Communications Commission

Although not often given much credit in the popular press, and occasionally handicapped by a lack of public engagement and informed reporting, the CRTC was one of the world's first "converged" communications regulators, having overseen both broadcasting and other telecommunications markets since 1976. Since that time the CRTC has, under various administrations and at times at the prompting of Orders–in–Council, been engaged in a long–running and occasionally laborious process of broadening competition in the audiovisual sector and, more recently, renewing itself in response to convergence. We are aware of no other government agency which has consulted the public more frequently and more routinely, and done so with so much reliance on the Internet.

We believe that this process of renewal and streamlining must continue, and recommend that the federal government issue a further Order–in–Council and earmark appropriate funds for the CRTC, to be renamed the Canadian Communications Commission, to develop its accreditation, monitoring, competition and consumer policy capacities. There is a significant opportunity to simplify federal program administration and reduce regulatory burden by streamlining and combining functions where appropriate.

First, on accreditation, and consistent with the recommendations above regarding indirect funding, we recommend that CAVCO be merged into the CRTC to a create a one–stop Canadian accreditation shop for audiovisual content, including eligibility for indirect federal funding, Canadian content requirements, programming genre identification, and any other accreditation and registration functions. All accreditation databases should be published online, in a format that allows the data to be fed automatically into interconnecting applications, in order to achieve the second benefit of creating an online database of all Canadian programming in which there was a sufficient economic interest for registration.

We also call for the same CRTC, or CCC, branch to streamline and substantially improve corporate accreditation for Canadian–owned and –controlled companies. Direct investors in Canadian broadcasting licensees must currently place internal corporate documents on the public record, including shareholdings and governance, qualified by the CRTC as Canadian. We recommend that the Order–in–Council require the CRTC to permit privately–held companies that would not otherwise be required to make public their internal corporate documents to file them in confidence with the CRTC. We further recommend that the Order–in–Council order the CRTC to work directly with investors seeking accreditation as Canadian, rather than requiring them to be accredited through the licensee or holding company in which they have invested.

Second, on monitoring, the Commission has in recent years expanded its oversight of, and regular release of data regarding, the state of competition in Canadian communications markets. This is an essential role for a market authority and helps bring transparency and certainty to market participants. We recommend that the future Commission be mandated to maintain and expand these activities.

Third, with respect to competition policy, we do not believe that the current dual CRTC/Competition Bureau structure has served the sector well. Rather, it has resulted in increased red tape in some cases, and has created risks that scrutiny of competitive threats falls "between the cracks". Accordingly, we call for a renewed Canadian Communications Commission to act as a sector–specific competition body in the areas regulated by the Commission, with oversight to be provided by the framework Competition Bureau. This structure, which mirrors that recommended by the Office of the Privacy Commissioner in its submission to the CRTC's proceeding on Internet traffic management practices, would further have the benefit of bringing the communications markets authority's specialized industry and policy expertise to bear in conducting competition analysis of this nature.

Consumer policy is often approached as a component of competition law. The CRTC is empowered to enforce certain consumer protections, but its status as a consumer policy enforcement agency has not always been clear. We recommend that the Governor–in–Council clarify that the CRTC is to act as a federal, sector–specific consumer protection agency similar to the role played by provincial consumer protection agencies for most areas of the economy, particularly non–regulated sectors.

(c) Public, Private, Civic: Maintain a Media Model Mix

The current Broadcasting Act, which we have proposed be renamed the Audiovisual Media Act, views the Canadian audiovisual media system as a tripartite system with public, private and community elements.

This commitment to ensuring the viability of a mix of funding models for audiovisual programming services is a sound one. Different economic imperatives drive different priorities, and so the maintenance of these three sectors is important to ensuring a diversity of voices and messages in the Canadian audiovisual media sector. However, if this goal is to be met, the public media sector must have access to sufficient financing to ensure that its reliance on commercial revenue is not so great as to impair its public interest mandate.

CBC/Radio–Canada is the backbone of Canadian public media, operating multiple television and radio services in each language and in local markets across the country. It has been a pioneer in the digital space, investing in digital over–the–air radio and, more recently in television. It has also developed substantial new media programming and, with TOU.TV, pioneered Canada's first Hulu–like television platform. Yet per–capita funding to the CBC is lower than funding to the public sector broadcaster in nearly any other developed country. Only the U.S. — by far the largest market in the world and, further, one which has historically specialized in the scripted entertainment sector — has been able to sustain significant audiovisual innovation without larger investments in public media. By comparison with online audiovisual media's progress in economies such as the U.K. or France, Canada is far behind.

It is time to renew public media's capacity to play a distinct role within Canada's audiovisual media mix. To compete effectively on the world stage, we require the ability to match our international counterparts which rely on their public media as a "model user" which engages in risk–taking and innovative experimentation with new technologies ahead of the market. We therefore urge the government to renew Canada's capacity for risky, innovative public media by funding CBC/Radio–Canada and the NFB which, as noted earlier, has been a digital leader on a shoestring budget, at levels comparable to those of our trading partners. Public audiovisual media ought to be acting as "model users". Without the funding to do so, they simply can't.

Funding is not sufficient without some basic level of coordination, however. Audiovisual innovation in Canada must take place both among programmers and aggregators of programming. Unlike the U.S. and U.K., where programming services cooperated to develop multiplatform "players" such as Hulu and iPlayer, very little such coordination has taken place in Canada. We believe that the public sector's role as model user is an important one in redressing this problem, and therefore recommend that the Department of Canadian Heritage work with public institutions including the CBC, NFB, Canada Media Fund, Telefilm and the National Library to identify and implement a common Application Programming Interface ("API") and metadata standards for audiovisual content. These standards would unlock the ability of digital application designers to pull digital content from across all of these institutions' online availabilities. Identifying and implementing these standard interfaces would further help establish a broader sector–wide standard for "calling" audiovisual content from within applications, consistent with the goal of achieving broader multi–platform access to digital audiovisual content made in Canada.

(d) Terms of Trade Negotiations

Among market–oriented policies' most basic roles is to review economic relationships in which there is a significant imbalance of power — and, where unequal bargaining power leads systemically to inefficient outcomes, and to establish rules which redress this inequality.

Consumer legislation and securities regulation are among the best–known marketplace frameworks of this type. A lesser–known area in which unequal bargaining power impedes optimal outcomes takes place when licensed television programming services, which still control the lion's share of audiovisual content buying power in Canada, negotiate terms with independent content producers. The Canadian market's failure to complete "terms of trade" is just that — market failure that is hurting Canada's ability to compete with digital content innovators abroad.

In the audiovisual media sector, terms of trade are master agreements between programming services and rightsholders that establish ground rules for the rights to linear audiovisual content. Because television programming services control access to large audiences these services can, in the absence of terms of trade, require rightsholders eager to access that audience to cede rights to content across all platforms, not just television. Even where the programming service does not intend to use the new media rights, it may still prefer to acquire them — at little or no additional cost — rather than allow them to be exploited by another party. The result is digital content that frequently sits on the shelf unused.

This inefficient outcome, which arises as the result of new media platforms' still–emerging status, dampens digital content innovation by disincenting the creation of ancillary new media content. Terms of trade are a marketplace framework for avoiding this outcome. In the U.K., for instance, terms of trade agreements incorporate a "use–it–or–lose–it" time limit after which new media rights revert to the rightsholder. These agreements have allowed the U.K. digital content sector to enjoy access to widespread Hulu–like multiplatform subscription video services like iPlayer for years. Services such as Rogers On Demand Online or TOU.TV in Canada, by comparison, remain nascent. We recommend that the Department of Canadian Heritage assist the broadcasters and Canadian Media Production Association, who have been negotiating over terms of trade for more than two years, in breaking the impasse.

(e) Reinvent Copyright Collectives

Canada has more copyright collectives than any other jurisdiction in the world. At the same time, digital technologies have created opportunities for copyright collectives to

  • restructure and bring substantial efficiencies to their operations, including the use of content tracking, particularly using the ISAN standard; automated content tracking, including the tracking of non–tagged content; and online registration and transactions between rightsholder and collective; and
  • revisit their roles, by reviewing the extent to which they can leverage advanced content tracking and payment clearance systems to act as payment intermediaries for member rightsholders to receive direct payment both for retail streaming or downloading usage, and for licensing for incorporation into other works.

We note that the European Commission's recently–released Digital Agenda for Europe identifies as one of its priorities to enhance the "governance and transparency of collective rights management", including its improvement and adaption to technological progress. This process will rely on the development of interoperable standards and data formats. We urge the government to monitor this process closely and to undertake detailed study of the role of copyright collectives and clearance intermediaries, and the possibility of regulated competition between them, in a digital environment.

E. BUILDING DIGITAL SKILLS (theme five)

You have asked:

What do you see as the most critical challenges in skills development for a digital economy?

and:

What is the best way to address these challenges?

and:

What is the best way to ensure the current workforce gets the continuous upskilling required to remain competitive in the digital economy? Are different tasks required for SMEs versus large enterprises?

For audiovisual media creators, the digital economy means constant change in the hardware and software tools for creating. These tools augment, rather than undermine, creators' skills and talents, but require steady investments of time and, frequently, money in order to keep up. Access to training and, more simply, to new tools at reasonable rates in order to experiment with them is therefore a critical challenge. This challenge is felt most acutely by independent creators who are less able to draw on organization–wide pools of equipment or knowledge.

A number of organizations such as the Cultural Human Resources Council have sprung up to address these issues, among others. We strongly support such organizations and recommend that the government invest in their important work, which yield significant dividends for Canada's digital economy.

At the same time, we call on the government to work with its provincial counterparts in working to connect independent creators with higher–learning institutions and other government–funded bodies in order to make new creative tools and equipment available on a temporary or lending basis to independent creators.

The public consultation period ended on July 13 2010, at which time this website was closed to additional comments and submissions. News and updates on progress towards Canada’s first digital economy strategy will be posted in our Newsroom, and in other prominent locations on the site, as they become available.

Between May 10 and July 13, more than 2010 Canadian individuals and organizations registered to share their ideas and submissions. You can read their contributions — and the comments from other users — in the Submissions Area and the Idea Forum.

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