The world has been sitting on pins and needles since the CRTC’s hearings on vertical integration in the telecom-media-Internet industries held in June. The CRTC’s just come out with its new rules on the subject today.You can see the press release here or the full decision here.

A lot was at stake. The Big Four vertically integrated media companies in Canada — Bell, Rogers, Shaw and Quebecor Media (QMI) — said there was no problem, and proposed that, at most, the CRTC should accept some amalgamation of their propsed code. Everybody else disagreed: Telus, CBC, Access Communications, public interest groups, Channel Zero, the Weather Channel, and in a qualified way, Astral.

Rogers also carved out a somewhat distinct position given that with its CityTV network being the smallest of the Big Four’s holdings (QMI/TVA, Bell/CTV, Shaw/Global (Corus), suggesting a code with a bit of teeth so that it could feed its own mobile and Internet operations. A complete list of positions is available here.

Arguments were made about small markets needing big media players, and that argument front-ended the CRTC’s press release today. In fact, however, as I’ve said in previous posts, Canada’s total media economy is not small, but the eighth largest in the world, and growing fast. We don’t need “big media” to coddle small Canadians, but rather carriers that provide clear channels and the most open media set-up possible, full stop.

So, what did we get? The CRTC announced six key measures, but there are at least two big elephants in the room that we need to consider, too. Here are the six headline items:

1. The Big Four — Bell, Shaw, Rogers, QMI — cannot offer TV programs exclusively to their own mobile or Internet subscribers. They must make them available to Telus, Wind, Access Communications, MTS Allstream, etc. Score on this one: Good (paragraph 22).

2. Programs created specifically for Internet or mobile distribution by the Big Four can be exclusive. Score on this one: umm, I suppose it’s a good one (paragraph 23).

3. No disrupting people’s experience in front of the telly. In other words, no black-outs like the kinds that have bedevilled relationships between Bell and Quebecor in the past and which have periodically erupted in the U.S. between, for example, Time Warner and Comcast on the distribution side of the business and Disney, Fox (NewsCorp) and Scripps Howard on the content side, when things get nasty over carriage (transmission) and programming rights. Score: sure, seems pretty good to me (paragraph 104).

4. Status quo maintained with respect to independent television producers’ access to schedules of the Big Four’s specialty channels (25 per cent) and broadcast schedule (satisfactory).

5. End of “block-booking,” the practice of tied selling where access to one channel is tied to taking a block of several channels. It was outlawed in the U.S. for Hollywood in 1948 (S.Crt’s Paramount Decision), and it came to television in Canada today. Score: thumbs up (paragraph 63).

6. The CRTC admonished the vertically integrated companies to come up with a broader range of “pick and pay” models within six months allowing people to order television and programming services ala carte. And what happens if they don’t? Another round of hearings, that’s what. Score: pass for at least trying and the cute raised eyebrow. If you don’t regulate, you can always browbeat these behemoths into doing something, suggesteth the latter. I don’t know, this one just seems to punt the issue down the line (less than satisfactory, but with words of encouragement so that KVF can do better next time).

So, on points 1, 2, 3 and 5, some clear “wins” for competitors and consumers. Point 4 holds the line, while point 6 will require us to wait and see if the different players can sort things out amongst themselves. Otherwise, well, more consultations, hearings and decisions. Indeed, the CRTC points to many instances where additional consultations, hearings and decisions might be needed if the different interests can’t sort things out by themselves.

One particular issue worthy of mention here is the CRTC’s efforts to push Bell, Rogers, Shaw and QMI to share subscriber info collected and stored in their set-top boxes with independent programmers (paragraph 141), albeit with due deference to privacy laws and concerns. The threat of yet another round of consultations on just this issue also now hangs in the air if the two sides are unable to work things out themselves.

And how about those elephants in the room, you ask? There are two, I suggest, and they’re inter-related.

First, references to the actually existing provisions in the Telecommunications Act (1993), specifically the common carrier sections 27, 28 and 36, and specifically so when it comes to broadcast programming, are completely ignored, referenced only in passing. Vertical integration has rendered these a bit of a fiction, but the CRTC has enormous powers under these sections. That it has not leaned on them at all shows how far common carrier/network neutrality principle and the rule of law have been eclipsed by a “cobbling-things-together-as-we-go-along” approach. Even from the perspective of “the market,” I don’t think that can be a good thing.

The second big elephant in the room is that there’s nothing in the new rules establishing parity of treatment between rivals’ online video distributors (OVDS) such as Netflix, AppleTV, GoogleTV, etc., on the one hand, and the Big Four’s own online “TV everywhere” initiatives and IPTV offerings. With the “common carrier” principles apparently in hibernation, perhaps this is not surprising.

What this means is that when Bell, Shaw, Rogers and QMI stuff TV programming/video down their pipes, it won’t count against the bandwidth caps that characterize almost all Internet access offerings in Canada. For Netflix and other OVDs, the caps apply and bandwidth measured bit by bit. Call this the Netflix choke-hold, and the CRTC seems to have done nothing about it.

This element of the decision is a lost opportunity and one can’t help wonder if it’s a byproduct of all the fuss being made about how OVDs like Netflix are supposedly ravaging the foundations of the incumbents’ TV operations (although accounting for less than 1 per cent of industry revenues) and the strong push by  Shaw, Astral, a report of the Senate Committee of Canadian Heritage, and the incumbent industry-driven Over the Top Services Working Group to have such entities regulated as broadcasters. For anyone thinking of setting up a similar OVD operation in Canada, this element of the decision seems like bad news.

The extent of this loss can be seen by comparing it to the model adopted by the FCC and Department of Justice when they approved the Comcast-NBC/Universal amalgamation in January earlier this year. While that deal actually had many interesting facets to it, the most interesting for the purposes at hand is the requirement that Comcast not give preferential treatment to its own online TV services over those of rival OVDs or withhold NBC-Universal programming rights from OVD providers either. The CRTC’s decision address the latter point, but does nothing with respect to the first. A half victory?

The extent to which the CRTC’s approach falls short can be further realized once we remember, on the continuum of things, even the incomparably stricter measures of the FCC -DOJ conditions in the Comcast-NBC case must be seen as modest measures compared to steps like structural separation and alternative network build-outs in, for example, the U.K., New Zealand, Australia, Sweden, Chile, Romania…

These measures were simply off-limits in the current proceedings.

Of course, the Big Four argued all along that the need to regulate them was always speculative and groundless. But that is simply not born out be the evidence provided during the hearing by Telus, Access, MTS Allstream, SaskTel, Channel Zero, Wind, etc., that argued the problems are all too real and that gaining access to CTV content, for instance, became a whole lot harder once Bell acquired it earlier this year. The historical record, as I’ve also argued, is also quite unequivocal on the folly of allowing those who own the medium to control the message.

At the very least, the CRTC does seem to have disagreed with the Big Four’s Panglossian view of the world, where nothing needs to be done, and at least taken baby steps to deal with a real issue.

And just to point out one thing that you won’t find in the CRTC’s decision is the wee bit underpinning all of this, and that is the heavily concentrated state of the TMI industries in Canada. Yes, I state these numbers regularly, but it’s worth repeating that when you allow those who control the medium to control the messages as well, predatory behaviour and choke points on the free flow of information will arise as sure as night follows day.

So, again, just as a reminder, here was the picture in 2010 of Bell, Shaw, Rogers and QMI’s share of the entire TMI industries in 2010:

– 84 per cent of cable and satellite distribution

– 78 percent of all television revenues

– 6 per cent of wireless revenues

– 54 per cent of Internet Service Provider revenues

– 53 per cent of the wired telephone market

– 39 per cent of radio

That is, ultimately, the source of the issues at hand, and unfortunately, the CRTC’s decision today seems mostly to be tiny pin pricks in the side of the real elephant in the room.

Dwayne Winseck is a professor at the School of Journalism and Communication at Carleton University. This content first appeared on Winseck’s Mediamorphis blog.