The Next Internet Czar: Bill C-11 gives cabinet sweeping powers it shouldn’t have

Adversaries in the House of Commons Heritage Committee, CPC MP Rachael Thomas and Liberal MP Chris Bittle

November 7, 2022

“Internet Czar” is a political trope stoking fears of an all-powerful Ottawa mandarin —either the Heritage Minister or CRTC Chair—  imposing one-person rule over culture and freedom of expression.

All you have to do is imagine your worst partisan enemy being that person. Depending on your point of view, one day that could be either the Liberals’ Chris Bittle or the Conservatives’ Rachael Thomas elevated to cabinet as Heritage Minister with oversight of the newly amended Broadcasting Act.

No, that’s not because C-11 activates the CRTC’s long dormant jurisdiction over Internet broadcasting, although some would tell you that. 

Rather it’s because a low-profile change to the Broadcasting Act in C-11 in section 7(7) would give the federal cabinet and future Heritage Ministers the power to pre-emptively “order” detailed terms of operation for broadcasting undertakings that are currently vested in the CRTC, our independent and arm’s length regulator.

You might recall that in September 2017 then-Heritage Minister Melanie Joly announced a $500M five-year deal with Netflix to spend studio money on film production in Canada.  Presumably Joly’s end of the deal was to deflect rising public demands to regulate the foreign streamers, demands that Justin Trudeau refused for another three years (and one election) until he relented by tabling Bill C-10.

You might also recall the terms of the Netflix deal were secret, wrapped in cabinet confidentiality to escape Access to Information laws.

To this day, there is nothing to indicate that this deal required Netflix to dedicate a dollar of that $500M to Canadian content or French language programming, as opposed to just carrying on making movies for the American market while drawing upon the low Canadian dollar and generous Canadian tax credits.

Indeed Netflix surpassed the $500M in Canadian spending less than two years later. This allowed us to infer that the $500M was a lowballed commitment and that Joly had likely begged Netflix for the deal, any deal.

The substance of Joly’s secret Netflix deal was pre-emptive regulatory action. This was an expedient alternative to cabinet asking the CRTC to conduct public hearings and revive its dormant jurisdiction over Internet broadcasting. 

So think of Bill C-11’s new section 7(7) as the Joly/Netflix scenario writ large.

Having said that, I am afraid the rest of this post is so technical it may seem like watching paint dry. But if Senators studying Bill C-11 don’t read every last word of it and take it to heart, they are in dereliction of their duty.

All are forgiven for overlooking the innocuous wording of section 7(7) in C-11:

(7) For greater certainty, an order may be made under subsection (1) with respect to orders made under subsection 9.‍1(1) or 11.‍1(2) or regulations made under subsection 10(1) or 11.‍1(1).

Here’s a tip, any time you see “for greater certainty” look under the hood. 

First, you have to split your C-11 screen to view 7(7) next to 7(1) of the current Broadcasting Act (just kidding, I will explain).

Section 7(1) is where cabinet retains a political override to do two important things: clarify any of the encyclopedic broadcasting policies under section 3(1) of the Act and, at an operational level, give precise guidance to the CRTC in formulating regulations under section 5(2) implementing those policies on broadcasting undertakings:

7(1) Subject to subsection (2) and section 8, the Governor in Council may, by order, issue to the Commission directions of general application on broad policy matters with respect to

(a) any of the objectives of the broadcasting policy set out in subsection 3(1); or

(b) any of the objectives of the regulatory policy set out in subsection 5(2).

Take note the existing section 7(1) confines the cabinet override to “general application on broad policy matters.” To give you a flavour of that, the last time cabinet used that power was in 2013 when the Harper government ordered the Commission to implement a general scheme of “pick and pay” of specialty TV channels. 

C-11’s section 7(7) blows the doors off of section 7(1). 

Far from “general application on broad policy matters,” s.7(7) authorizes the Heritage Minister/Internet Czar, through cabinet, to “order” anything in the long list of detailed broadcasting conditions historically carried out by the CRTC as conditions of licence or regulations. 

Normally the CRTC must give public notice and hold hearings or accept submissions in licensing matters . Once completed, the conditions of licence can be appealed to Federal Court as an error of law or, more effectively, brought to federal cabinet on matters of policy.

But section 7(7) allows an Internet Czar to short circuit all of that with a pre-emptive order.

Here are the new powers cabinet will have.

First under section 9.1.(1), cabinet will have the same powers as the CRTC over critical programming policies that are implemented as operational terms (either as “licences” or “orders”) for individual broadcasting undertakings, on both linear and Internet platforms:

• Programming objectives relating to priority genres (news, drama, etc.), languages, original content and discoverability;
• “Must carry” orders for distribution platforms to carry public service or high priority programming;  
• Fair terms and conditions of consumer subscriptions;
• Mergers (e.g. Rogers-Shaw);
• Protecting Canadian ownership of the broadcasting system as a whole (e.g. foreign takeovers of Canadian broadcasters).

In addition, under sections 10.1 and 11.1 cabinet will have the same powers as the CRTC over equally critical programming policies as “regulations” covering several broadcasting undertakings at once:

• The definition of Canadian content in programming;
• For Canadian content, the obligations imposed on both domestic and foreign media companies (e.g. Crave, Netflix) to either finance or make Canadian content;
• The exhibition of Canadian programming during evening prime time;
• Programming standards including limits on abusive content and misinformation (except for user generated content which is unregulated under C-11);
• Advertising;
• Election advertising and broadcast time;
• Allowing foreign channels to be carried by broadcasting undertakings (recall Russia Today being expelled from cable).
• [For the full list see here]

Not only would cabinet have the same powers as the CRTC, it could exercise them pre-emptively as a trump card over the CRTC.

No Canadian ever asked for section 7(7). 

Possibly Netflix and the Hollywood studios did. 

After all, an unrestricted cabinet power to carve in stone conditions acceptable to the Hollywood streamers without having to worry about the CRTC imposing tougher conditions would go a long way to neutralizing the hardball threats of trade complaints the studios always keep in their back pocket.

If that’s what’s driving section 7(7) it would be an unworthy justification. Canada must be pragmatic but principled about appeasing the Hollywood streamers. 

We fought for, won and maintained Canadian cultural sovereignty in the 1988 FTA and 2018 CUSMA trade deals. That sovereignty may have a price tag (the US can retaliate with countervailing measures) but both Mulroney Conservatives and Trudeau Liberals rightfully bragged to Canadians about having preserved it.

Whatever the origins of section 7(7), Senators should send back C-11 to the House with the clause deleted. 

That message has already been delivered by broadcasting experts Robert Armstrong and Monica Auer’s Forum for Research and Policy in Communications.

Armstrong also reminded Senators of another problem with C-11. The Bill substitutes “orders” for “licences” governing online undertakings.

That could mean two unintended consequences, both bad.

Public hearings are not required for “orders,” still aren’t under C-11, and this would make it possible for either the CRTC or cabinet to short circuit the public consultation process for Netflix and any other online undertakings. As “licenced” television on linear platforms fades, orders will displace licences.

Secondly, C-11 does not update the Broadcasting Act’s “break glass in case of emergency” feature in case of the CRTC’s occasionally bad policy decision (the CBC licence renewal as a recent example). Specifically, C-11 does not amend the existing section 28(1) to expand the right to appeal “licensing” renewals to federal cabinet to encompass “orders,” at least insofar as “orders” are about to become the “licences” for online undertakings. The Coalition for the Diversity of Cultural Expression has submitted an amendment to the Senate fixing that.

Lastly, Professor Armstrong recommended deleting section 34.995 which allows cabinet to “order” additional regulations relevant to the CRTC’s powers to levy fines on non-compliant broadcasting undertakings. 

However it is a familiar regulatory tool in Canadian public policy to leave cabinet elbow room to deal with unforeseeable enforcement challenges. That section should be left alone to stand.

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