This week’s Canadian Radio-television and Telecommunications decision to reject the proposed Bell–Astral merger surprised most observers, as few predicted with much confidence that the deal would be flatly rejected. There was good reason to doubt such an outcome, given that the CRTC review of the merger transactions has historically focused on the “tangible benefits” package that often provide millions in funding for new Canadian television and radio productions.

The result was largely regulatory theatre. The purchaser would typically unveil a benefits package featuring self-interested proposals, often amend those plans at the CRTC hearing to demonstrate it was sensitive to criticisms from various groups, and then the CRTC would proceed to further tweak the package to show it was not ready to rubber-stamp the transaction.

The process generally served the companies and the tangible benefits recipients well. The merging companies were reasonably assured of getting their deal approved and the tangible benefits recipients received hundreds of millions in funding with few strings attached.

The problem was that the public was missing from this process. Tough policy issues with a direct impact on the public were put off for another day as the public interest was supposedly served by trickle-down benefits generated by market efficiencies or the creation of new Canadian programming.

The most important aspect of this week’s decision is that the new CRTC – make no mistake, this is a new CRTC with expectations from the government that it adopt a pro-consumer approach – will put the public and the public interest at the heart of the review process. CRTC Chair Jean-Pierre Blais made that clear during the Bell-Astral hearing and he reiterated it on Thursday, telling a press conference that “it is my intent to put Canadians back at the centre of their communications system.”

The change in approach is obvious when comparing the Bell-Astral decision with the Bell purchase of CTVglobemedia only two years ago. In the Bell-CTVglobemedia deal, the words “public interest” appear only four times, each with reference to public interest groups and their participation in the regulatory process. The analysis of the transaction was based largely on the tangible benefits package, which supposedly served as a proxy for the public interest.

In the Bell-Astral decision, the Commission states clearly that the tangible benefits are only part of the analysis, repeatedly emphasizing “the applicant’s burden to prove that the transaction is in the public interest extends beyond the tangible benefits requirement.” This represents an enormous change in the review process, providing consumer and public interest groups with far more power since their submissions will now play a crucial evidentiary role in assessing the public interest effect of the transaction.

The change in approach should also have a major impact on creator groups that were the prime benefits-package beneficiaries. Those groups were often ready to trade the short-term gains from the packages for the long-term pain of a converged market that would suffer from reduced competition that hurt both consumers and creators. With the tangible benefits package now only part of the analysis, the influence of creator groups on the review will be reduced as they share the spotlight with consumer and public interest perspectives.

Bell issued a strongly worded release indicating it was shocked and appalled at the decision, yet the real surprise is that the CRTC used the powers it has always had to go beyond a public interest analysis based chiefly on the size of the tangible benefits cheque.

This approach has been building for several months. From the appointment of a consumer chief to Blais raising consumer interventions directly during the Bell-Astral hearing, the CRTC is leaving no doubt about the prioritization of consumer concerns. Its three-year priorities document placed consumer access as the top priority, dropping the prior emphasis on balance.

In four months, Blais has transformed the CRTC into a pro-consumer advocate, creating the kind of regulatory agency that few thought imaginable.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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