Like a plot from a ’50s sci-fi movie, satellites are taking control of Earth. Cyber cowboys are dueling to wield global communications’ power as we sleep.
By the time we wake up, the battles will be over and governments around the world will have written new cyber laws in stone. Mega-mergers and issues such as Internet neutrality (see story, p. 17), bandwidth (aka speed) and copyright may be nothing but Wild West nostalgia for anyone over 20.
Bluntly, we’re in a struggle for not just ‘scarce’ bandwidth (to make your gadgets sing faster), but the control of bandwidth and the Internet itself.
A small but potent example is the issue of ‘mobile suck’ – which has nothing to do with vampires and everything to do with creating a ‘shortfall’ in bandwidth for mobile streaming video to drive customers to ever more expensive bandwidth. Online video uploads and consumption are growing like crabgrass – a direct result of the revolution in rising expectations for what you can see in the palm of your hand. And speed raises huge issues about control and ownership of the distribution pipelines.
Dovetail those seemingly mundane topics with the controversy over net neutrality – and all its implications for corporate power versus free speech and democracy – and one can make the argument we Canadians have reached the Final Frontier.
So we ask – approximately two years after the Great Canadian Bandwidth Auction – what have the Canuck telcos done for us lately? Are we beneficiaries of a better consumer environment compared to, say, broadband-rich Japan?
A glance at the mobile space, where so much is riding on Canada’s innovative momentum, is somewhat disheartening.
Rogers cut loose about 1,200 people by the end of the fourth quarter of 2009, while offshoring even more jobs. What does this mean for Canada’s already dubious wireless competitiveness?
‘Canada’s wireless industry is one of the weakest in the developing world,’ says the Techvibes blog. ‘Merrill Lynch puts Canadian wireless penetration at 65%, last among 22 developed countries (below Tunisia and Iraq). The International Telecommunications Union has tracked Canada’s decline from 35th in 1998 to 128th in 2008 – far behind many underdeveloped nations.’
So the rumblings grow, even as content convergence – the birth of what the marketing mavens call ‘transmedia’- rockets ahead.
Meanwhile, down south, the deal between General Electric and cable/ISP behemoth Comcast (which would allow the latter to take control of NBC Universal) appears to be a clear content play, with multi-layered implications being debated at the highest levels of U.S. government and subject to approval by the Federal Communications Commission, currently chaired by Julius Genachowski, a former Harvard Law Review colleague of Barack Obama who reportedly shares the president’s views on the virtues of Internet equality and freedom. Nonetheless, if this vertical integration template receives FCC approval, Comcast would own one hour in five of all televised hours in the U.S., according to Telephonyonline.com. Now that’s vertical integration with a vengeance.
A Comcast/NBC hybrid would wield enormous market power, especially since cable remains the dominant platform for the distribution of paid video content, holding market share of about 60% – more than twice that of the closest techno-rival. However, removing the competitive tension between a major multi-channel video program distributor and a major video content producer, such as Comcast and NBC, would eliminate the hard bargaining for distribution and content that has historically occurred between these two entities.
Canadian media concentration may not be outpacing convergence, but as platforms converge too (for example, webTV and web-powered technologies like Boxee and FLO TV ‘everywhere’), that whooshing sound is competition whistling out of the Canadian living room.
On Dec. 17, Canwest won a respite in its restructuring war with its American investment banker Goldman Sachs, but there’s little optimism that the media giant’s cash-spinning specialty channels won’t eventually be guillotined away (as its nationwide newspaper division, Canwest LP, was earlier this month). And those subscription-based channels are not only a solid business model – but the tail that wags a dog that’s very much alive.
As McMaster University’s Christine Quail reported at a recent Canadian Communication Association session, ‘…only 2% of the population relies on the Internet for TV, with young people and those with higher incomes more likely to view online content.’
Quail has dubbed this the ‘prime-time digital divide’ and maintains that we don’t live in a ‘post-scheduling’ world, and that the ‘technologically-centered class, age, education differences’ still mean that ‘network scheduling, and ostensibly advertising, is still important’ …and that the hoopla over online viewing claims are ‘based on statistical outliers,’ succinctly naming this part of the myth’s equation.
And the Canadian Media Guild, which represents content creators in the broadcast trenches, argues that despite the perceived broadcasting crisis, ‘The broadcasting industry is regulated to the hilt, mainly to protect the businesses that are already in it. Ironically, what’s not well regulated is what the system’s players do with the fabulous resources they generate. After making a king’s ransom from the various benefits they derive, essentially from recycling Hollywood programming, they do the bare minimum of local and Canadian programming.’
Which is not to say that in 2010 the other digital shoe – copyright – isn’t about to fall even harder, with ‘walled gardens’ of content meaning ever more of the web will be pay-for-view. The czar of the ‘programmers’ – as the kings of telecom have taken to calling themselves – Rupert Murdoch himself, has touched perfectly (if bizarrely) on the intersection of searchable content and free public accessibility online, demanding Google pay News Corp. for its search results or lose access. Will this work?
Seth Godin, the web’s leading maven, argues in one of his most heavily retweeted posts ever that ‘Murdoch has it backwards. You don’t charge the search engines to send people to content on your site, you pay them. If you can’t make money from attention, you should do something else for a living. Charging money for attention [online] gets you neither money nor attention.’
We shall see.
Meantime, telco deregulation has not been kind to Canadian consumers as Canada’s Big Three (Rogers, Bell and Telus) are falling ever farther behind the digital eight ball, despite residential and business tariffs amongst the highest on the planet (and combined annual profits of over $2 billion), according to Techvibes.com.
As Michael Geist (the internationally respected Internet legal expert) told the Canadian Senate last June, the brute facts are telling:
• Canadians pay a premium for telecom, ranking 14th out of 30 OECD nations for monthly tariffs (we pay $45, the Brits $30)
• The Canadian web is appallingly slow, 28th out of 30 (Japan, Korea and France have online/mobile experiences light-years ahead of ours)
• Unit cost per megabyte: also 28th out of 30 (we pay a premium for mediocre service)
• Canadian direct-to-home fiber-optic penetration: 0%, dead last (Japan has 48% penetration)
• Canada and only three other OECD countries have monthly data usage caps (those countries have free choice of ISP to avoid capping; Canadians don’t).
At the end of a decade that has seen extraordinary leaps of technology and content creation, Geist’s is a sorry indictment of Canada’s place in the cyberworld. Nonetheless, it is going to be an intriguing year for anyone who wakes up in time to watch the fading and final moments of unbridled Internet freedom.