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Debating the SAC Proposal

By Michael Geist

My posting yesterday on the SAC proposal resulted in several emails that essentially asked - if you are against DRM and against levies, what do you propose to do?  That's a fair question, though I did not think that the post was meant to bash levies but rather those that dismiss alternative proposals as distractions.  I did note that I think the SAC proposals suffer from some significant flaws.  To reiterate and expand:

• There are always competing policy priorities.  Given the importance of broadband access for commerce, communication, culture, and education, I think that any proposal must not unduly undermine the policy goal of universal access.  I think that a $5 monthly increase would represent a sufficiently significant price increase such that it might drive some away from broadband.
• The SAC proposal only addresses music.  I expect that others - video, software, and cultural groups - will also demand their piece of the pie. In fact, that's already happening with the proposal for ISPs to contribute 2.5 percent of profits for creating Canadian new media content.  I think that any proposal must comprehensively deal with P2P and this one does not.
• The $5 monthly fee strikes me as absurdly high given the revenues of the music industry.  Music continues to generate significant revenues and this additional billion in revenue bears little relation to any possible revenue decreases that might be attributed to P2P (which is itself debatable).
• I am not convinced that this model requires government intervention at this time.  These are still early days and there is the possibility that the market could adopt this model - either by a voluntary consumer fee or a negotiated ISP license for its customers - without legislative intervention.
• There are some doubts whether the proposal is consistent with Canada's international copyright obligations.
• There are some doubts about the fairness of the distribution of a levy. 
  

Notwithstanding the doubts, I am not an absolute critic of levies. 

As I also noted, I am not at all persuaded that the cross-subsidization concern (non-copiers pay too much, copiers pay too little) is fatal as we all pay tax dollars that goes toward services and programs that we do not use.  While I'm not sure I have the solution, I think the SAC proposal could be improved at a minimum by leaving basic broadband service alone.  A levy would be better suited toward the higher tier offerings from ISPs that offer more bandwidth at higher speeds since those services are frequently marketed as enabling faster file sharing and arguably correlate most closely to music copying.  This tiered approach on the levy would address the digital divide concerns, target users who are less price sensitive, and (arguably) apportion the premium revenue in a fairer manner.  This alone would not solve all the concerns, however.  I think the proposal needs to be viewed as the start of a conversation, not the final say and it was for that reason that I called out the attempt to marginalize it as a distraction.

Full post as published by Michael Geist on February 26, 2008 (boomark / email).