Canadian Telecom Summit and Vertical Integration: A Match Made in Heaven

When I hear ‘summit meeting’ two images come to mind. The first being power suit wielding bigwigs arriving in lavishly polished sedans, and the second being public demonstrations. While this year’s Canadian Telecom Summit had distinct lack of public protest, it certainly had its share of high-profile government officials and industry executives.

For three days, those in attendance entertained keynote speeches on topics ranging from network privacy to the adaptation of tablets and other multi-screen technologies. But for many, including myself, the hot button presentation was from Konrad von Finckenstein, the chairman of the Canadian Radio-television and Telecommunications Commission.

Speaking on the sore issue of vertical integration, Mr. von Finckenstein openly mused — to the horror of many there — whether the existing regulatory framework adequately addressed the market power of the industry’s key firms.

Citing BCE’s recent acquisition of the CTV network, Shaw’s purchase of Global, and the existing broadcasting assets of Rogers and Quebecor, Mr. von Finckenstein asked whether the reoccurring squabbles between these integrated companies were signs of an impending market failure.

In other words, as Jamie Sturgeon of the Financial Post suggests, “the new market structure… has positioned the integrated companies to wield content assets against one another and other rivals — with evidence mounting that indeed they are.”

Case in point, mere months ago, Quebecor insisted that Bell TV drop the Sun News Network from their linear services because of failed negotiations. Afterwards, Quebecor then appealed to Bell customers — through their broadcasting assets — asking them to urge Bell to agree to the failed terms, or risk losing their services.

Add to the mix Rogers difficulty in securing rights to Bell Media’s mobile content (which Bell removed from Rogers mobile on-demand service Wednesday), and Telus and Bell’s mobile television troubles, and you have what resembles the beginning of a market breakdown.

So what does vertical integration and telecom disagreements mean for the media consumer? Likely, for those subscribed to the services of a lesser-integrated corporation, it will result in various disruptions of service. For those subscribed to the services of an conglomerate, it will likely mean a shrinking of consumer influence.

This why the CRTC’s continually postponed vertical integration hearings are so important. In this increasingly concentrated industry, consumers are becoming less like patrons and more like bystanders. We purchase services expecting the upmost in service, but when fewer companies own more of both content and distribution, competition is stifled, prices fluctuate, and alternatives in service become limited.

Naturally, the CRTC plans to formally hear the industry’s views at the up-and-coming vertical integration hearings beginning June 20, but in an industry where facts seem to be as scarce as competition, consumers need to voice their concerns, and spread the word.


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