CANARIE seeks federal buy in of research program for interactive broadband content

CANARIE Inc hopes to convince the federal government to contribute about $10 million in annual funding to kick start the creation of a new kind of R&D program – one that could become a new model for financing Canadian television content in an interactive and broadband world. A new report commissioned by CANARIE says traditional media producers need to radically change how they finance Canadian content, by migrating from a regulated subsidy model to one that stimulates R&D for two-way broadband content for the web and digital television.

Such a transformation is considered critical in ensuring Canada can compete in a global market for broadband content. “In short, stakeholders in the Canadian interactive development industry need to conduct R&D. Otherwise, the Canadian content industry will be reassigned to roles as little more than valets to media titans elsewhere,” states the 50-page report, Filling the Pipe: Stimulating Canada’s Broadband Content Industry Through R&D. The document was produced by Toronto’s Delvinia Inc, with financing from Canadian Heritage and Industry Canada.

The report is the culmination of five round tables held earlier this year with traditional and emerging interactive broadcasters, technology companies, game developers and academics and researchers from across Canada. In examining various funding models, participants concluded that interactive content should be supported by R&D incentives, rather than by broadcast-like subsidy programs.

Research into interactive content is miniscule in Canada, because big media companies don’t see a business case for developing and distributing content, and small companies are unable to raise capital for development, let alone research.

The report notes that some R&D funding exists for the technology and infrastructure associated with broadband networks, but very little for content. “Interactive content development is a high risk business for everyone involved,” the report notes. “While there is unfaltering confidence that demand for advanced content will grow to create a lucrative industry for Canada, audiences nevertheless cannot articulate demand for a product or service they have yet to experience or that they do not realize it is possible to attain.”

USING PUBLIC MONEY TO ATTRACT OTHER CAPITAL

The main purpose of the CANARIE fund would be to provide seed capital that smaller companies could leverage to attract other forms of investment. “We didn’t hear people in the focus groups saying, ‘give us a fund’,” says Susan Baldwin, CANARIE’s director of advanced content. “They aren’t looking for a subsidy model. They need help in being able to access investment money.”

Baldwin says discussions are ongoing with Canadian Heritage to tap into its new $108-million Internet Content and New Media Strategy program. Industry Canada will also be asked to contribute funding.

As it currently stands, limited research is being conducted in such areas as animation, 3D, user interfaces and artificial intelligence, as well as the cognitive, social and behavioural aspects of the online user experience. Under the plan, the public and private sectors would provide financing to support and/or develop innovative new content and technologies and conduct baseline research. Funding models being proposed include tax credits for larger companies (i.e. broadcasters and cable companies), matching funds or forgivable loans to smaller companies, and labour-sponsored tax credits and distribution incentives for any size of company. Baldwin says such incentives would likely require changes to the SR&ED program, which new media firms have long complained is of limited value to their sector.

Grants or loans would be designed to encourage innovation among SMEs that take a collaborative approach between small and large media firms as well as universities, hospitals and other public institutions. For example, “CANARIE might subsidize a content distributor for limited period of time to license experimental content developed by a Canadian producer. If that content then proves successful with audiences, the distributor may repay the amount subsidized by the funder and maintain a licensing agreement with the producer for further content development,” the report states.

Much of CANARIE’s focus until now has been to help facilitate the construction of broadband networks. Its CA*net 3 network provides universities from across Canada with high-speed access for research. But while high-speed networks are still a priority for the government — it has promised to bring broadband to every community by 2004 — officials realize Canada needs innovative content to inject into these big pipes once they’re built.

CANARIE has increasingly been expanding its focus from network development and deployment to the creation of advanced applications and content. It has received federal funding for three such programs: e-business ($28 million/five years), telelearning ($28 million/five years) and e-health ($4-5 million/five years). Last October, the consortium appointed Baldwin, a former senior bureaucrat with the CRTC and Canadian Heritage, to the new position of director of advanced content. Her mandate is to launch a new funding program for advanced content, components of which would come from the health, learning and business funds.

She is also working to assemble a partnership of media producers, scientists, academics and government representatives to study the potential uses of broadband pipes. This so-called “dot com” research coalition would encourage small companies and rising media conglomerates — such as BCE Inc and CanWest Global Communications Corp — to work collaboratively to share the risk in developing broadband content, and to establish an innovation cycle for new media.

“CANARIE has a reputation for bringing the right partners together and delivering research that is innovative and leading edge,” she says. “We also have the international connections. New media firms can’t survive with just the Canadian market.”

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