Cover design by Tyler Cleroux
May 5, 2024
The CRTC decided on Friday to deflate rumours that it is set to announce its ruling on Phase 1 of implementing the Online Streaming Act Bill C-11 and set out the agenda for Phase 2. Yet another week flips by on the regulatory calendar without the Commission determining the obligations of foreign streamers to fund and distribute Canadian content.
No matter, that gives everyone a chance to catch up with their reading.
Allow me to recommend Canada vs California, my primer on the culture war over regulating Internet broadcasting. It was officially released on May 1st and is now available in Canadian bookstores and online. (Indigo has it listed as available on Thursday May 9th).
A history of the Online Streaming Act is an opportunity to tell some culture war stories and, testing your patience, take some deep dives into the regulatory minutiae behind the generous amount of rhetoric expended on the bill.
The Online Streaming Act had a long run up, beginning with amendments to the Broadcasting Act in 1991 that anticipated the Internet, followed by the CRTC decision in 1999 not to regulate Internet broadcasting for the indefinite future.
Here’s an excerpt from the book:
The Internet was still young in 1991 but the Mulroney Conservatives’ new definition of broadcasting was waiting for it to grow up. It would not be long before audiovisual and audio programs would be broadcast over the Internet’s “means of telecommunications,” as the Broadcasting Act now read.
The Liberal government of Jean Chrétien, elected in 1993, kept its eye on the Internet in a low-key manner as befitted a prime minister who was fond of saying that half of life’s problems solved themselves. The Liberals did what governments often do with important policy that can be left on a political backburner: commission a study.
In 1994 the Liberal cabinet asked the Canadian Radio-Television and Telecommunications Commission to report on content and competition policies for new communications technologies comprising “the information highway.” The report projected that broadcasting of programs would eventually take place over the Internet.
Industry and public policy groups also recognized the Internet as a future broadcasting platform and urged the CRTC to take the first regulatory steps…
On July 31, 1998, the CRTC issued a public notice convening a discussion of what, if anything, it should do about new media and got lots of advice from industry and the public. On May 17, 1999, the Commission issued its ruling.
The Commission immediately narrowed the scope of what Internet activity fell under the definition of “broadcasting (audio and audiovisual programs) by means of telecommunications.” First, Internet content predominantly in written form was out of bounds. Next, peer-to-peer and point-to-point communications were out. That excluded video games, e-mail, online paging, faxing, e-commerce and Internet-protocol telephony.
Finally the Commission punch-line: online programs for public distribution “do fall under the definition of broadcasting [but] the Commission has concluded that regulation is not necessary to achieve the objectives of the Broadcasting Act.” Accordingly, the Commission served notice that it would issue an exemption order under its frequently used power to suspend regulation of any broadcasting service that did “not contribute in a material way” to public policy…
Next, the Commission reaffirmed the toolkit policies behind fostering Canadian programming in mitigation of the market power of US media, in exactly the terms described in Chapter 1 of this book:
Under its mandate to implement the policy objectives set out in the Broadcasting Act, the Commission has imposed Canadian exhibition and expenditure requirements on traditional broadcasters, as well as requirements for distribution undertakings to contribute financially to the production of Canadian programming. This was done in recognition of the fundamental importance of broadcasting to Canadian sovereignty and cultural identity and the realization that market forces alone would not provide a significant amount of Canadian broadcasting content. Canada’s small domestic market makes it difficult to finance the creation of competitive Canadian programs. Whereas U.S. producers can recover the majority of their production costs through domestic licence fees, the licence fees earned in Canada by most Canadian program producers represent only a fraction of their total production costs.
The economies of scale that exist in the United States make American programming less expensive for Canadian broadcasters to acquire than Canadian programming. At the same time, American programming has tended to attract larger Canadian audiences than Canadian programming because of its higher production values and well-established star system. This has particularly been the case for English-language television. American broadcasters cannot provide their programming directly to Canadian viewers except in situations where off-air signals are directly receivable. This has resulted in a system whereby profitable non-Canadian programming is purchased by Canadian broadcasters to subsidize the cost of Canadian programming . . .
Be that as it may, in 1999 the Internet was still too young to regulate: the Commission projected at least seven to ten years before audiovisual and music broadcasting could become a significant presence on the Internet. For the time being, the Commission considered what little video and audio streaming there was to be complementary to conventional broadcasting and noted that Canadian media companies regarded the Internet as mostly a marketing platform for their television programming. Clearly, any regulatory squeeze on Internet broadcasting would not be worth the juice.
The Commission then made a couple of observations that twenty-five years later can only be described as prescient. The Commission said it could not project what broadband video broadcasting might look like one day but speculated the broadcasters of the future might be the Hollywood studios Disney, 20th Century Fox (now Disney) or Metro-Goldwyn-Mayer (now Amazon) streaming directly to Canadian subscribers instead of retailing their shows through Canadian broadcasters. Moreover, the Commission perfectly anticipated YouTube in projecting an Internet platform distributing a fragmented media universe of countless channels:
Many Canadians will increasingly have access to a diversity of content and services that might not have been available to them through conventional broadcasting. This may benefit Canadians who belong to communities of interest that have not been well represented by mainstream media. This also raises the question of whether the Internet will ever have the ability to create mass audiences in a manner similar to that of conventional television, which is driven by mass-oriented entertainment programming, or whether the sheer number of “channels” offered by the Internet will always result in fragmentation. While some [submissions to the Commission] spoke of mass market Internet services, others were of the view that the successful content creators on the Internet will be the ones who target narrower communities of interest such as sports fans, art and music lovers, youth culture, and so on.
But those new distribution platforms were years in the future. For the Commission, the Internet was not ready for regulation and the regulator was not ready for the Internet. In December 1999 the Commission issued its formal New Media Exemption Order.
Over the next twenty years the Commission declined to revoke the New Media Exemption Order. The last refusal would be issued by CRTC Chair Jean-Pierre Blais on August 6, 2015, the day after Stephen Harper posted his “no Netflix tax” video on social media. The Commission’s reasoning in every renewal of the exemption was that unregulated broadcasting over the Internet posed no threat and “would not contribute materially” to the Broadcasting Act’s Canadian programming objectives. In other words, the regulatory squeeze was still not worth the juice.
Stephen Harper political ad, August 2015
One CRTC Commissioner who could see where it was all going wanted to put a stake through the heart of regulating broadcasting over the Internet. Concurring in the 2009 renewal of the exemption, Timothy Denton foresaw the day the tide of public opinion might change and a future Commission would be under pressure to revoke the Internet exemption:
Unless the decision-making framework is changed, there is a good chance that a future Commission will feel obliged to extend broadcasting licensing over Canadian portions of the Internet in an effort to preserve an obsolete system.
Denton said the “decision-making framework” — the Broadcasting Act — was itself “an artifact of history” and must be amended to permanently prevent the regulation of the Internet.
Stephen Harper had another six years in power after 2009, four in majority, to take Commissioner Denton up on his challenge to put the Internet forever out of the reach of the CRTC. But despite the no Netflix tax video, the Conservative election platforms in 2011 and 2015 were silent on broadcasting, as were their previous platforms in 2004, 2006 and 2008.
Then, on October 19, 2015, Harper’s Conservatives lost the general election and were replaced by a Liberal majority government headed by Justin Trudeau. The Liberal election platform promised more money for the CBC and the reversal of Harper budget cuts to Telefilm, the National Film Board and the Council of the Arts. Of course, Trudeau had already promised to keep his hands off of Netflix. His signature election promise was to legalize cannabis.
The incoming Trudeau Liberals were indeed modern: as hip as weed and the Internet. So was the new heritage minister, Mélanie Joly, a rookie member of Parliament and rising star from the Montréal riding of Ahuntsic-Cartierville. When her mandate letter from the prime minister’s office arrived three weeks after election day, it was an unremarkable list of priorities and included nothing about the Internet or broadcasting other than the promised $150 million for the CBC.
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