Broadcasting bill targets online streaming services

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The federal government tabled changes to the Broadcasting Act that it says will require online streaming services to contribute as much as $830-million a year toward Canadian content by 2023.

Bill C-10, introduced Tuesday by Canadian Heritage Minister Steven Guilbeault, would expand the authority of Canada’s broadcasting regulator, the Canadian Radio-television and Telecommunications Commission, to include online video and music streaming services such as Netflix, Crave, Disney+ and Spotify.

The legislation flows from a related Liberal Party campaign promise, and it is already generating a debate over the role federal regulation should play, if any, when it comes to internet content. Critics of expanded regulation say the bill is an unnecessary intrusion that will hurt consumers. Some Canadian media producers welcomed the bill, but other supporters of content rules criticized it as too soft and accused the government of caving in to Big Tech lobbyists.

The bill would give the CRTC the power to require streaming services to make financial contributions in support of Canadian content in areas such as television, film and music. The bill also sets the stage for the CRTC to regulate the promotion of Canadian content in a similar way to rules that apply to traditional TV and radio stations. The CRTC will be given powers to impose orders on streaming platforms to ensure that Canadian content can be found easily by consumers.

Failing to comply with such CRTC orders could lead to monetary penalties. How all of this will work remains unclear. The legislation gives broad powers to the CRTC, but much of the detail about how funds would be collected and distributed will be left to the CRTC to sort out after a period of public consultations.

“One system for our traditional broadcasters and a separate system for online broadcasters simply doesn’t work,” Mr. Guilbeault told reporters. “This outdated regulatory framework is not only unfair for our Canadian businesses, it threatens Canadian jobs and it undermines our ability to tell our own Canadian stories.”

A background briefing note produced by Canadian Heritage outlines “next steps” for the government as it prepares regulations that will follow the legislation, if the bill is approved by Parliament. These measures would take the form of a cabinet order that provides direction to the CRTC.

The next steps would include an assessment of which online broadcasters should be regulated. Text-based news sites and video games are excluded. YouTube and Facebook posts by individual users are also excluded, but the new rules would apply to curated services such as YouTube Music.

Another step is to “ensure support for programs created and produced by racialized groups, official language minority communities, women and LGBTQ+ communities.” And those support programs should be accessible to people with disabilities.

The department also said it will “revisit how it defines Canadian programs for the purposes of broadcasting regulatory obligations.”

The measures announced in the bill are part of the government’s response to the January, 2020, report by the arm’s length Broadcasting and Telecommunications Legislative Review Panel, led by Janet Yale, a former chief executive of the Canadian Cable Television Association.

That report made 97 wide-ranging recommendations, but just some of them are addressed by Tuesday’s bill. Mr. Guilbeault said he will soon release another bill that relates to news sites and aggregators. He said that bill will be “conceptually” similar to an approach recently announced in Australia and France. Critics have called those plans a “link tax,” and they have been strongly opposed by Alphabet Inc.'s Google and Facebook Inc.

The report also called on the federal government to require providers of foreign media content, such as Netflix, to collect and remit sales tax on Canadian sales. Quebec and Saskatchewan currently require this for the provincial sales tax, but Ottawa does not.

Mr. Guilbeault said that decision is in the hands of Finance Minister Chrystia Freeland, but pointed to language in the government’s September Throne Speech that suggests such an approach may be coming.

Ms. Yale said she is pleased that the government has acted on the key recommendation the report made in broadcasting, which would require online services such as Netflix to contribute financially to Canadian content and ensure people can find it.

“That’s really exciting to us because we felt that for there to be sustainable support for Canadian culture and Canadian cultural sovereignty, these online providers had to be part of the overall system,” she said.

Michael Geist, a law professor at the University of Ottawa, said the policy foundation behind Tuesday’s bill is “really weak.” Prof. Geist said the government’s claims that the Canadian film and television production industry is in crisis is not supported by evidence.

“The truth is that the market has been working really well as Canada being an attractive place to invest in these areas,” he said.

Prof. Geist said there’s a risk that some of the largest investors in film and television production in Canada will pull back until they have more certainty on their obligations – and that new services will think twice before entering the Canadian market.

“I think from the consumer perspective, where this ultimately leads, in addition to the possibility of less choice, is that we’re gonna end up with the CRTC-approved Netflix service or a CRTC-approved Disney+ service,” he said.

The Friends of Canadian Broadcasting, a lobby group that promotes Canadian content, called the bill a mess that fails to ensure the companies are subject to specific requirements for using Canadian production teams.

“No wonder it’s being tabled on election day in the U.S.,” the group said in a statement. “The government is hoping we won’t notice Big Tech wrote this bill.”

Reynolds Mastin, president of Canadian Media Producers Association, welcomed the bill, calling it “important legislation” that will address significant shifts in the market.

“In particular, we applaud the government’s intent to bring online broadcasters – which includes some of the world’s largest global technology companies – into Canada’s legislative and regulatory system,” he said.

Spokespersons for Netflix Inc. and Google both said they are reviewing the bill. Netflix said it “remained committed to being a good partner to Canada’s creative community while also investing in local economies.” A Google spokesperson said the company is encouraged that the bill differentiates between open platforms, such as YouTube, and closed ones, such as YouTube Music.

“We remain deeply committed to the Canadian creator and media ecosystem and look forward to continue working collaboratively with the government and industry,” the company said.

Alain Rayes, the Conservative critic for Canadian Heritage, said the government is “simply passing the buck to the CRTC” on tough questions, and offering no direction. Similarly, NDP MP Alexandre Boulerice said the government is leaving it to the CRTC to figure out the details.

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