[acc-cca-l] Press Release: The CMCR Project’s 2018 Media and Internet Concentration in Canada Results

Dwayne Winseck DwayneWinseck at cunet.carleton.ca
Mon Dec 17 10:02:59 MST 2018

December 17, 2018

Greetings colleagues! As always, I hope that you are well. Some of you may have already seen this, so apologies for cluttering up your inbox and mindspace.

I would very much like to hear any comments or constructive criticisms that you might have and appreciate those who have taken the time in the past to do just that. Here's the basics and there's a lot more in the 102 page report.

Earlier this week the Canadian Media Concentration Research Project<http://www.cmcrp.org/> the I direct released the second of its two-part annual series on the state of telecoms-internet and media concentration in Canada. A downloadable PDF of the report can be found here<http://www.cmcrp.org/media-and-internet-concentration-in-canada-1984-2017/>.

The report examines the state of competition in the ‘network media economy’, including analysis of the following sectors: mobile wireless market, internet access, broadcast, pay and streaming TV services, internet advertising, advertising across all media, newspapers, browsers, online news sources, search, social media, operating systems, etc. in Canada over the period from 1984 until 2017.

For the second year now, this report delves deeper into the state of competition specifically in local and regional mobile wireless, retail internet access and “cable TV” services. We show that mobile competition has improved considerably in Quebec, for example, where Videotron has carved out a 13% market share for itself by revenue. In Ontario, Alberta and BC where Shaw operates Freedom Mobile, it has carved out an estimated market share of between 5% and 6%. Despite these gains, however, the big three national carriers’ market share actually increased in 2017, mostly due to Bell’s acquisition of MTS.

Concentration levels are even higher in local retail internet access and cable TV markets, where the legacy cable companies and telecoms operators generally ac­count for between 87% and nearly 100% of the market, respectively. In short, there are strong reasons for concern in all these markets. Now is not the time to let up on policy measures that have begun to bear at least some fruit, and perhaps good reason to double-down on them—but whether the CRTC will do that is increasingly looking doubtful.

The report also identifies qualitative features of the network media economy that set Canada apart from other countries. In this regard, two things stand out: the sky-high levels of diagonal integration and the extremely high levels of vertical integration that exist in this country.

Diagonal integration is where mobile wireless, wireline internet access and cable TV service are owned by one and the same player. In most countries, there are stand-alone mobile network operators (MNOs) competing in the market, whereas in Canada the last stand-alone mobile operator (Wind Mobile) was acquired in 2016 by Shaw.

Vertical integration is where network operators own media content companies. Current levels of vertical integration are exceptionally high in Canada by both historical and international standards. Indeed, the scale of vertical integration doubled between 2008 and 2013 and by 2017, four vertically-integrated communications conglomerates in Canada had come to account for 57% of the $80 billion network media economy: Bell, Rogers, Shaw (Corus) and Quebecor.

As a result, Canada stands alone in the developed world on account of the fact that all of the main TV services in the country, except for the CBC and Netflix, are owned by telecoms operators. In the US, by contrast, three vertically-integrated behemoths—AT&T, Comcast and Charter (Liberty)—accounted for just a third of that country’s mammoth $1,405 billion (CDN) network media economy in 2017 (adjusted to take account of AT&T’s take-over of Time Warner earlier this year). In the US, like most other countries as well, most broadcast and pay TV services are not owned by telecoms operators—a fact that has extremely important implications, as this report shows.

In sum, extremely high-levels of vertical and diagonal integration are a distinguishing feature of the network media economy in Canada, and this fact needs to be recognized and dealt with accordingly. Indeed, the principle of “common carriage” (popularly known as “net neutrality”) is built for conditions like these—albeit not contingent upon them. As this report suggests, this unique combination of conditions helps explain why internet access, mobile wireless and cable TV services prices are so expensive, data caps low, unlimited options rare and expensive, and the variety of stand-alone internet streaming TV services on offer limited in Canada, amongst other things.

After declining between 1984-2010, the level of concentration across the overall network media economy has once again risen over the past decade. It is also crucial, however, to stress that the general dynamics that we observe in this report also differ across time, place and media.

Concentration levels have fallen, for example, in cable TV (when measured locally, but not nationally), internet access (at both the local and national level), wireline telecommunications, broadcast TV and the “total TV marketplace” (the latter, largely because of the growth of internet streaming TV services, especially Netflix) and internet news sources. That said, however, the declines in cable TV and internet access are from very high levels of concentration and they continue to be extremely concentrated despite the modest changes that have taken place.

Concentration levels have risen in mobile wireless services, except in Quebec. This is the most competitive wireless market in the country, and it shows in terms of more affordable rates for several tiers of services not just from Videotron but each of the national carriers competing with it in the province, and higher monthly data allowances. They have also risen in pay and specialty TV services, thereby reversing recent trends, as well as in internet advertising, search, mobile and desktop operating systems, mobile and desktop browsers. This suggests that, far from being immune to consolidation, “core elements of the internet” are highly susceptible to such pressures.

The following figure provides a high-level snapshot of where things stood in 2017 for each media covered in this report on the basis of their respective HHI scores (a measure defined in the report).

Concentration Rankings on the basis of HHI Scores, 2017


This year’s report adds a whole new section on the role of advertising as a source of revenue spending across a variety of media in Canada, i.e. TV, radio, online, newspapers, and magazines.

Like the first report in this series, this report focuses foursquare on Google and Facebook’s growing dominance of the $6.2 billion internet advertising market in Canada. The shift to the “mobile internet” has seen both of them consolidate their grip on internet advertising and attempts to resurrect the “walled garden” vision of the Internet as, for example, Google expands from search into a suite of cloud-based applications, the Chrome browser, Android operating system, undersea cables, and data centres around the world.  For its part, Facebook’s acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively, and similar, albeit less extensive investments in its own data centres and a few underseas fibre optic cables represent a similar trend.

The sprawling expansion of the internet giants adds up to the two companies—and others, such as Amazon, Apple and Microsoft—building what is tantamount to their own private internets that bring huge volumes of internet traffic as close to the doorsteps, desktops and devices of their users as possible. These activities have huge implications for the very character of the internet as we know it.

Many observers denounce Google and Facebook on the grounds that they are pillaging the revenue that traditional, advertising-based media industries need to support the production of entertainment, journalism and Canadian culture. Our last report, however, cast doubt on these claims, and this one does too by raising and exploring the following points:

1.     The $6.2 billion online advertising market that Google and Facebook dominate is just one part of $13.1 billion spent on advertising across all commercial media, including television, radio, newspapers, magazines, outdoor advertising, etc. and smaller part yet of the larger $80.3 billion network media economy in Canada. In sum, while Google and Facebook dominate internet advertising, their dominance does not extend either to the rest of the advertising market and certainly not to the $80.3 billion media economy in Canada as a whole.

2.     While the perception that Google and Facebook are “vampire squids” is not without merit, the more intractable but seldom recognized problem is that total ad spending in Canada appears to be declining on a per capita basis and relative to the national economy. That Google and Facebook are carving out an enormous role for themselves in a shrinking advertising market no doubt puts a sharp edge on the conflict between them and the Canadian firms at the top of the list of biggest commercial media operators in Canada, i.e. Bell, Shaw, Rogers, Postmedia, Torstar, Quebecor, the CBC, etc. The latter, in turn, are intensifying their own efforts to harvest personal data on a vastly greater scale than ever before and clamoring for weaker privacy rules at the same time in the hope that victories on both fronts will enable them to compete with the global internet giants more effectively—a surefire recipe for a race to the bottom between domestic media companies and the global internet giants.

3.     Once we look past the advertising-based sectors of the media economy to include those that rely on subscriber fees—the “pay-per media”, as we call them—a dramatically different picture than the one usually told emerges. In this alternative and critical account, the biggest players in the network media economy are not Google and Facebook that depend almost entirely on advertising but Bell, Rogers, Telus, Shaw (Corus) and Quebecor which get the lion’s share of their revenue from subscriber fees and connecting people to the internet, mobile phones as well as media content, services and apps of all kinds. In fact, the “big five” Canadian players are far larger than Google and Facebook, based on the latter’s revenues from Canada. In fact, Bell’s revenues, for example, were seven and fifteen times those of Google and Facebook, and twenty-six times those of Netflix, while Google, Facebook and Netflix ranked as the 6th, 8th and 11th biggest media firms in Canada in 2017 based on their estimated revenues within the country.

Additional headlines of this report include:

·      the top five companies—Bell, Telus, Rogers, Shaw and Quebecor—accounted for 73.4% of the $80 billion network media economy last year, up from 72.1% the year before;

·      Bell is the biggest player in Canada by far—nearly twice the size of its closest rivals, Telus and Rogers—and it single-handedly accounted for 28% of all revenue last year—up by one percent from a year earlier;

·      TELUS emerged as the second largest communications and media company in Canada for the first time last year;

·      mobile wireless is very highly concentrated with Rogers, Telus and Bell accounting for 93.2% of the sector’s revenue in 2017—up one percent from the year before and reflecting Bell’s acquisition of MTS;

·      new entrants Shaw (Freedom) and Videotron’s share of the market ticked upwards to 4.8% in 2017—up from 4.1% the year before;

·      the least concentrated mobile wireless market in Canada is in Quebec, where Videotron had 13% market share by revenue and 15% based on subscribers at the end of 2017—which is up by a 1.3% on the basis of revenue and steady based on subscriber share;

·      incumbent telephone and cable companies accounted for 87% of the residential retail internet access market in 2017 (i.e. Bell, Rogers, Shaw, Telus, Videotron, Cogeco, Eastlink and SaskTel).

·      the quick pace of IPTV growth over the past half-decade means that the “cable monopoly” is long gone. A tight duopoly persists, however, and local markets are extremely concentrated by the standards of the HHI;

·      the number of Canadian households with a cable TV subscription fell to 76.1% last year, down from 85.6% at its high point six years ago, but those losses have been largely offset by price increases for cable TV and broadband internet access that have outpaced the consumer price index by large margins;

·      combined, Bell and Shaw (Corus) accounted for nearly half of the entire television universe (e.g. television distribution and services) by revenue and possessed a total of 130 television stations and services between themselves in 2017;

·      there was a steep rise in TV concentration between 2010 and 2014 but the spin-off of some pay TV services by Bell and Shaw (Corus) and the rise of Netflix and other OTT services has helped turn the tide. The “big 5” TV operators’ took 82.2% of all TV revenue (including internet streaming) last year—down from 86.3% in 2014 and with a very big change insofar that Netflix has replaced Quebecor as the 5th largest TV operator in the country;

·      Netflix’s had estimated revenue of $820.6 million in Canada last year—up sharply from $635 million the year before.

·      Smaller TV operators such as DHX, Stingray, Blue Ant, Channel Zero, APN, V Interactions and CHEK have benefitted from some new openings as well as the divestiture of TV services by bigger players like Bell and Shaw (Corus) However, their combined market share in 207 was far less than Astral Media’s share alone on the eve of its take-over by Bell in 2013 (7.6%);

·      Canadians get their news from a wide plurality of internet news sources, both old (CBC, Postmedia, Toronto Star, CTV) and new (Huffington Post, Buzzfeed), as well as domestic and foreign (BBC, Yahoo!-ABC, Guardian, New York Times);

·      The scale of vertical integration amongst the “big 4” vertically-integrated giants in Canada more than doubled from 2010 to 2013. In 2017, Bell, Rogers, Shaw (Corus) and Quebecor accounted for 56.7% of the $80.3 billion industry—in the US, in contrast, after the AT&T take-over of Time Warner earlier this year, four vertically integrated companies’ accounted for a third of that country’s $1,405 billion (CDN) network media economy;

·      diagonal integration is where mobile wireless, wireline, ISPs and BDUs are owned by one and the same player, and is extensive in Canada as well, whereas in many countries there are stand-alone mobile network operators (MNOs), such as T-Mobile or Sprint in the US, or 3 in the UK, and Vodafone in many countries. The last stand-alone mobile wireless company in Canada–Wind Mobile–was acquired by Shaw in 2016;

·      Vertical and diagonal integration tend to dampen competition between different ‘modes of communication’, raise prices, limit the size of monthly data caps, promote the use of zero-rating schemes that challenge the precepts of net neutrality (i.e. common carriage), etc. The use of data caps and zero-rating turns carriers into editors, or gatekeepers, and tilts the ‘model’ of the evermore internet- and mobile wireless-centric media universe towards a logic of integration, control and “walled gardens” vs “the open internet”.

·      In recent years, the CRTC had rediscovered media concentration and taken steps to do something about it in a series of landmark rulings: e.g. its Mobile TV, Talk TV, regulated wholesale mobile wireless and wireline decisions, and the “zero-rating” decision in 2016 that girded the already strong “Net Neutrality” framework in Canada. Common carriage (or “net neutrality”) is crucial in a context where high levels of vertical integration obtain, although it does not turn on the point. The key question today is about the direction of the Commission under its current chair, Ian Scott, but already evidence is mounting that the Commission will take a far less assertive stance under its new chair than it did under the last one.

The Canadian Media Concentration Research<http://www.cmcrp.org/> project is directed by Professor Dwayne Winseck, School of Journalism and Communication, Carleton University.  It is funded by the Social Sciences and Humanities Research Council and has the mission of developing a comprehensive, systematic and long-term analysis of the media, internet and telecom industries in Canada. He can be reached at either dwayne.winseck at carleton.ca<mailto:dwayne_winseck at carleton.ca> or 613 769-7587 (mobile).

Open Access to CMCR Project Data

CMCR Project data can be freely downloaded and used under Creative Commons licensing arrangements for non-commercial purposes with proper attribution and in accordance with the ShareAlike principles set out in the International License 4.0. Explicit, written permission is required for any other use that does not follow these principles. Our data sets are available for download here<http://www.cmcrp.org/canadian-media-concentration-research-project-dataset-2017/>. They are also available through the Dataverse, a publicly-accessible repository of scholarly works created and maintained by a consortia of Canadian universities. All works and datasets deposited in Dataverse are given a permanent DOI, so as to not be lost when a website becomes no longer available.


Special thanks to Ben Klass, a Ph.D. student at the School of Journalism and Communication, Carleton University, Lianrui Jia, a Ph.D student in the York Ryerson Joint Graduate Program in Communication and Culture and Han Xiaofei, also in the Ph.D. program at the School of Journalism and Communication, Carleton University. They helped enormously with the data collection and preparation of this report. Ben wrote key aspects of the wireless section. Sabrina Wilkinson, a graduate of the School of Journalism and Communication at Carleton University and now at Goldsmiths University in the UK, also offered valuable contributions to the sections on the news media. Agnes Malkinson, yet another Ph.D. student in the Media and Communication program at Carleton University, is responsible for the look and feel of the reports, and keeps the project’s database in good working order.

Professor, School of Journalism and Communication and
Director of the Canadian Media Concentration Research Project,
Carleton University, Ottawa, Canada
Phone: 613 520-2600 x.7525
Mobile: 613 769-7587
Follow me on Twitter: @mediamorphis

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