In recent years, the Canadian Radio-television and Telecommunications Commission (CRTC) has pandered to consumer misunderstandings, lectured Canadian producers and broadcasters about entrepreneurship, chipped away randomly at Canadian-content rules and generally kicked the regulatory can down the road.
On Thursday, in response to an assignment from the Liberal government to report on broadcasting distribution, it issued a document full of sensible suggestions on how to modernize a regulatory system ill-suited to the digital era. For those of us who have been following this file for a decade or more, arguing for nimbleness even as our knees grew creaky, there was only one possible reaction: finally!
What’s changed? The boss, of course. Liberal appointee Ian Scott arrives on the job without the ideological baggage that encumbered his Conservative-chosen predecessor Jean-Pierre Blais, a broadcast regulator who often seemed contemptuous of regulation.
Not that the problem of the outdated rules is an easy one to solve. As the CRTC’s report notes, the Canadian television market is one-twentieth the size of the U.S. market and no Canadian programming – other than sports and reality and lifestyle shows – makes money. All other categories, including news, drama and documentary, and children’s and aboriginal-language programming, must be subsidized, partly through levies on cable and satellite distributors.
Those revenues are dwindling as Canadians increasingly access both video and audio content online. Meanwhile, radio and TV broadcasters who must honour Canadian content quotas are being forced to compete with unregulated foreign streaming services such as Netflix, Spotify and YouTube.
The report argues that if we don’t want government to be required to make up the difference, the obvious solution is to move the levy from the old distribution systems to the new ones. After all, most of these are owned by the same companies. So, for example, as Rogers’ cable revenues dwindle but its internet revenues grow, you tax less of the former but start taxing some of the latter. The idea is that the shift would be revenue neutral and the levy would be used to maintain the old funding.
The report also argues that the streaming services should be brought into the system. This is the suggestion that is capturing the headlines: Netflix and Spotify should contribute to Canadian content. But how?
Arguing that the old broadcast regulations simply don’t apply to the business models of most online services, the CRTC is now suggesting that all players would sign service agreements that would commit them to both make and promote a certain amount of Canadian content. Unlike uniform regulations, these would vary according to the participant and would be less cumbersome to enforce than the current licencing regime.
This may prove tricky. Look at the so-called Netflix deal that Minister of Canadian Heritage Mélanie Joly was trumpeting last fall: Struck outside the regulatory framework, it seemed to make no distinction between Canadian shows written, directed and performed by Canadians and “service production” – mainly American shows created by American talent but shot here using Canadian crews. On CTV or Global, those shows would never count as Canadian content.
Still, the CRTC’s philosophy – that all players should give back to the system from which they draw their revenues – points the government in the right direction in its current review of the Broadcasting Act.
So far, the Liberals have shown themselves loath to transfer cultural levies over to the digital side or even enact laws that would require online services such as Netflix to collect GST. On that score, they have allowed the misleading anti-tax narrative of their Conservative predecessors to persist.
But maybe now that the CRTC has shown leadership, the Liberals can finally turn the dial and get serious about modernizing the rules it asks the regulator to enforce.