November 1, 2018
Ian Scott, Chairperson and Chief Executive Officer
Canadian Radio-television and Telecommunications Commission
Check against delivery
Before beginning, I would like to acknowledge the Algonquin people and pay homage to their elders. We are meeting here on unceded Algonquin land and we owe the First Nations our gratitude.
This September marked my one-year anniversary as Chairperson of the CRTC. In that short period of time, I’ve seen remarkable changes in the industry that the CRTC oversees. The last decade in particular has seen even greater changes in how Canadians communicate and consume content.
We all used to think of broadcasting primarily in terms of fixed cable networks. Now more Canadians than ever watch or listen to content on digital devices from digital platforms.
We used to think of telecommunications in terms of wired landlines. Now, Canadians have more mobile phones than landlines, and more than one in four households relies solely on wireless services.
And that change pushes on. Canada is only a few short years away from fifth-generation wireless technology—5G—which will revolutionize telecommunications. It promises faster speeds, lower latency, and new uses that most of us have not yet imagined.
All this is to say nothing of the widespread nature of broadband technology, which has transformed the way in which Canadians communicate with one another and the institutions around them. It is our link to the digital economy.
Given such change, it is timely and wholly appropriate that the Government of Canada is laying the groundwork for extensive reviews of the Broadcasting and Telecommunications Acts. To that end, I acknowledge Janet Yale and the members of the expert review panel who are here with us today and who will participate in a town hall discussion later this afternoon.
We at the CRTC have our own thoughts on the challenges before Canada’s communications system. As the entity that regulates and supervises broadcasting and telecommunications in the public interest, the Commission is dedicated to ensuring that Canadians have access to a world-class communications system that promotes innovation and enriches their lives. We therefore have a deep interest in the work of the expert panel.
In my time today, I will unpack a few of the concerns that we see. I also want to talk about potential solutions to ensure Canada’s communications system continues to serve Canadians well, now and into the future.
Access to fixed broadband
The first concern I want to address is broadband. Specifically, universal access to this service, which has become essential in the daily lives of Canadians.
It’s true that 84% of households across the country have access to fixed broadband services that offer speeds of at least 50 megabits per second for download and 10 megabits per second for upload. Access, however, is still strongly divided across rural and urban lines.
While more than 95% of urban households were able to access such services in 2017, just 37% of households in rural Canada enjoyed such services. That trend has to change.
In 2016, we declared that broadband Internet is a basic telecommunications service. Moreover, we set three targets that these services should meet.
One, we said that 90% of Canadians should have access to that 50/10 standard for fixed broadband Internet services by 2021, and that all Canadians should have such access within the decade that follows. We, and many others in the industry, remain committed to this objective.
Two, we said that all Canadians who subscribe to fixed broadband services should have access to unlimited data plans.
And three, we said that the latest mobile wireless technology should be available to Canadians not only in their homes and businesses, but also along all major roads.
The Broadband Fund is set to launch next year, and it will provide up to $750 million over its first five years. We want this money to fund projects that will help realize these important objectives.
We will provide further guidance to applicants in the spring. We look forward to seeing the ways in which they will aim to help address this fundamental challenge.
Mobile wireless affordability
I said earlier that Canadians are increasingly using their mobile wireless services as their primary means of communications. In doing so, they are consuming more wireless data today than they ever have before.
The latest findings in the CRTC’s Communications Monitoring Report show that mobile subscribers with data plans used an average of two gigabits worth of data per month in 2017. That’s an increase of 30% over the previous year. Our collective appetite for bandwidth is insatiable: we’re streaming content, sharing pictures and videos, checking our social media accounts and using a variety of apps.
As Canadians consume more, they pay more. Indeed, the average household spent about $223 per month on communications services last year. About $92 of that sum went to their mobile wireless plans.
Concerns have been raised about the affordability of mobile wireless services and that cost may be a potential barrier in their adoption—particularly for people in low-income households. We share these concerns.
While mobile wireless carriers have taken important steps to invest in their networks, we cannot measure our success by investment alone. Canadians expect a competitive, affordable and innovative mobile wireless market.
For these reasons, the CRTC recently initiated a proceeding to address a gap in the market for lower-cost data-only plans, which has already led to the introduction of new mobile wireless service options for cost-conscious consumers.
Moreover, the Commission announced that it would initiate a broader review of mobile wireless services in 2019 to consider, among other things, the best means to ensure competitive choice in the marketplace. My fellow Commissioners and I will dig deep to address these market challenges, as well as those that lie ahead with the rollout of 5G mobile networks.
I cannot say which direction that review will take us, but I will say that we will work towards ensuring that the market for wireless services yields healthy competition, affordable pricing, innovation and investment.
Aggressive sales practices
I’ll touch briefly on one other telecommunications review that is before us. Last summer, the Government of Canada asked the CRTC to prepare a report on the retail sales practices of Canada’s large telecommunications carriers.
We began our inquiry into that matter in July, and conducted extensive public-opinion research throughout the summer. The findings were telling. Of the nearly 8,700 Canadians who responded, a strong majority reported being extremely concerned about misleading and aggressive sales practices.
Last week, we held a public hearing during which we heard from a wide variety of Canadians, stakeholders and advocacy groups. Our next step is to use that evidence to inform our report to the government and to make recommendations. I encourage the expert review panel to look for our report, which is due in February.
Creating, promoting and discovering Canadian-made content
On the broadcasting side, our main challenge is content. Specifically, the continued creation and promotion of Canadian-made content.
As far as programming is concerned, we live in an age of abundance. The digital environment creates opportunities for access to more global content, democratizes content production, introduces more content buyers, and allows for deep audience analytics. Yet it also creates challenges. Canadian content is harder than ever to find among all the available programming options. Its traditional supports are in decline. Consumer expectations of quality are higher than ever. And a unique Canadian rights market may be disappearing.
The CRTC has been looking into this matter carefully. In May, we released our Harnessing Change report, which looked at the future of programming in Canada. The report sets out what could be done to support the production, discoverability and promotion of Canadian programming. It also considered the extent to which current policy tools—deregulating traditional players or applying existing regulatory tools to new players, for example—could address these principal challenges.
Drafted at the request of the government, our report concluded that the current regulatory approach is out of date. It focuses too much on drawing supports from traditional radio and television services, and it is becoming less effective as consumption of these services declines. We therefore recommended that new approaches, ones that would engage new actors such as digital players that benefit so greatly from this new environment, were needed.
Here are the three principles that we proposed in our report.
One, policy needs to broaden from an exclusive focus on content production and promotion to include its discoverability. Programming made by Canadians is important not only from a cultural point of view, but also a financial one. It is the lens through which we see ourselves, and an important contributor to the economy. Yet even the best-made content fails to achieve either objective if it cannot be found. We must do more to bring this great programming forward so it can be discovered and enjoyed by audiences across the country and around the world.
Two, we need to recast players’ roles in the system. Today’s reality is that more than just traditional players benefit from the system. New actors draw significant revenues and should also contribute to the system. We are not suggesting they make identical contributions to traditional players, but they should certainly participate in an equitable way. After all, there are social and cultural responsibilities that come with operating in Canada.
Finally, we said that new legislation and regulation must be responsive to social and technological change. This is key. The regulatory tools we have at our disposal now lag behind even today’s technological and social realities. To prepare ourselves and our system for the challenges of the future, new regulatory tools must be flexible and adaptable. They must assume that unforeseen changes will be the norm.
There are four additional areas that will undoubtedly be considered during the legislative review. I’d like to highlight the outcomes that would enable the CRTC to carry out its mandate in the most efficient and effective way.
The first is the legislative approach for net neutrality. The Telecommunications Act provides the CRTC with the tools and flexibility to establish and enforce a net neutrality framework. The framework we have built over the past 10 years will likely be tested as needs and technology continue to evolve. There may indeed be situations relating to public safety or security, telemedicine or self-driving cars where a certain flexibility will be required and should therefore be maintained in the legislation.
The second pertains to jurisdiction over access to passive infrastructure, such as rights-of-way. 5G will transform Canada’s telecommunications environment. Robust telecommunications broadband and wireless networks will become a significant competitive advantage for our country.
Deployment in certain areas, however, may be challenging. Rights-of-way issues that cut across provincial and municipal jurisdictions, as well as private interests, will need to be resolved. These are potentially thorny matters that, in extreme cases, wind up before the courts.
The Government of Canada has already acknowledged that shared responsibility over passive infrastructure presents challenges for the efficient deployment of 5G. We agree. For our part, we lack complete jurisdiction to intervene. Our hope is that legislative changes will empower the CRTC to resolve disputes, order access and establish guidelines regarding passive infrastructure. The solution may lie in expanding our authority to resolve disputes as they apply to non-traditional structures—such as lampposts and bus shelters. Access to these structures will be critical for the efficient deployment of future technologies.
The third area touches on broadcasting. The Broadcasting Act, as it’s currently written, does not allow the CRTC to impose administrative monetary penalties when broadcasters do not respect their obligations. We can revoke a broadcaster’s licence for non-compliance, or require them to appear before us. However, these processes take time and cost taxpayers money.
Administrative monetary penalties would be an easy-to-implement tool that could address non-compliance more quickly and efficiently. Given our experience in enforcing the telemarketing rules over the past decade, we can confidently state that such penalties are a real deterrent to non-compliance when used with other enforcement methods.
The fourth cuts across both broadcasting and telecommunications. As they currently stand, the Broadcasting and Telecommunications Acts describe only objectives. For example, that the broadcasting system should safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada. Or that the telecommunications system safeguard, enrich and strengthen the country’s social and economic fabrics.
It should be the objective of legislative drafters in Parliament to clearly state the purpose of each piece of legislation. Rather than providing the regulator with a long list of attributes that get weighed one against another, the drafters of these new laws should provide us with a simple, clear statement of purpose that will allow the Commission to pursue its objective. Greater clarity on purpose and roles will allow us to be more effective in our work.
I can’t predict what our industry will experience in the coming years. No one can. But one thing is clear: Canada’s communications industry is in a tremendous state of flux. Broadband and wireless today, and the promise of 5G to come, are bringing forth challenges that we as regulators and you as industry stakeholders would have never dreamed of even five years ago.
That’s exciting. And it’s daunting.
One thing none of us can do in the face of such change is stand still. New tools and new approaches are needed for new challenges. As the body that implements the Broadcasting and Telecommunications Acts, the CRTC has a unique perspective on how changes to these foundational pieces of legislation can address today’s challenges as well as tomorrow’s.
It is our belief that the CRTC needs new tools to implement our regulatory policies. I said as much earlier this week to the Honourable Senators who are also examining the modernization of Canada’s communications legislation. My message to them was that we need flexible, efficient tools that can be adapted for use today and tomorrow.
The more rigid or heavy-handed the instruments at our disposal, the less efficient they—and we—will be.
We look forward to working with the members of the expert panel to develop the tools needed to ensure the continued vibrancy of Canada’s world-class communications system.