Netflix Inc puts Canada's cable industry at risk, Quebecor warns CRTC

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The wildly popular “behemoth” that is the Netflix Inc. video-streaming service will steamroll traditional cable providers unless they are soon freed from existing regulatory constraints: That’s the warning Quebecor Media Inc. issued to Canada’s broadcast regulator on Tuesday.

[np_storybar title=”How Netflix is forcing Canadian cable companies to up their game” link=”http://financialpost.com/2014/09/01/how-netflix-inc-is-forcing-canadian-cable-companies-to-up-their-game/”]Since most Netflix subscribers also typically pay for conventional cable or satellite service, the company is in some ways just another subscription service. But in a very short time it has become a major force in the Canadian broadcast and cable landscape. Keep reading.
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Netflix Inc puts Canada's cable industry at risk, Quebecor warns CRTC Back to video

In turn, the Canadian Radio-television and Telecommunications Commission challenged Quebecor to explain what exactly was stopping the Montreal-based broadcast giant from simply exiting the highly regulated cable space and competing directly with Netflix Inc. online.

Quebecor, whose TVA Group is the largest French-language TV network in North America, was addressing a CRTC hearing that is looking into the future of television and Canadian broadcast regulation.

“If the Commission fails to act swiftly after this proceeding, a service such as Netflix will become … one of the largest broadcasters in this country in the near future,” said Pierre Dion, President and CEO of Quebecor.

“In the past, regulation supported the development of Canada’s broadcasting system. But, in an age of globalization where we must confront international behemoths that are free of all constraints, rules of this type can no longer be imposed on our industry.”

Tom Pentefountas, vice-chairman of broadcasting with the CRTC, asked Quebecor why it doesn’t simply give up its broadcasting licences and exclusively offer on-demand streaming video — as Netflix does — if it finds the regulations so burdensome.

“What exactly is that regulatory straitjacket that keeps you from competing with Netflix?” he said.

Quebecor’s answer was that it still sees “a role” — and a market — for traditional cable television in Canada, at least for now. Quebecor already offers a Netflix-like online service called Club Illico; but Manon Brouillette, president and CEO of Quebecor’s Videotron cable and Internet division, said she didn’t want to hasten the decline of traditional cable by offering that service alone.

“We’re not saying we’re against the Canadian broadcasting system. On the contrary,” Ms. Brouillette said. “We’re saying we want to fight to protect the system.”

Videotron has already started offering popular build-your-own cable packages, but Quebecor still opposes the CRTC’s proposals to require cable companies to offer customers the option to choose and pay for only the channels they want. Ms. Brouillette said any such requirement would just be yet another regulatory burden that cable companies would have to meet.

“To keep Canadians in our broadcasting system, Videotron needs the widest possible manoeuvring room,” Ms. Brouillette said. “100% pick-and-pay is dangerous.”

A statement from Heritage Minister Shelly Glover this week made it clear that the Conservative government would not favour any new government regulations or fees for providers like YouTube and Netflix

“The CRTC has in the past declined to regulate such services — a position that our government continues to firmly support,” Ms. Glover said in the statement. “We will not allow any moves to impose new regulations and taxes on internet video.”

CRTC chairman Jean-Pierre Blais said he was sorry to hear nothing but complaints about regulatory burdens from Quebecor, a company he called a leader in digital innovation with products like Club Illico. He asked the executives to come up with a more nuanced vision for the future of television in Canada.

“De-regulation is part of your DNA. I understand that,” Mr. Blais said. “But I was a bit disappointed.”