Canada’s communications regulator last week reversed decades of policy by recommending that the government implement new regulation and taxation for internet services in order to support the creation of Canadian content.
The report on the future of program distribution, which will surely influence the newly established government panel reviewing Canada’s telecommunications and broadcasting laws, envisions new fees attached to virtually anything related to the internet: internet service providers, internet video services and internet audio services (wherever located) to name a few.
With the remarkable popularity of services such as Netflix and YouTube, there is a widely held view that the internet has largely replaced the conventional broadcast system. Industry data suggests the business of broadcasters and broadcast distributors such as cable and satellite companies won’t end anytime soon, but it is undeniable that a growing number of Canadians access broadcast content through the internet.
The foundation of the Canadian Radio-television and Telecommunications Commission report, which garnered applause from cultural groups that have been asking for internet regulation since the 1990s, was aptly summarized by NDP MP Pierre Nantel, who tweeted “the internet IS now the broadcast system.”
Yet Mr. Nantel and the CRTC have it backward. It may be true that the broadcasting system is (or will soon be) the internet, but the internet is not the broadcasting system. Indeed, the decision to treat the internet as indistinguishable from broadcast for regulatory purposes has sent the CRTC down a deeply troubling path that is likely to result in less competition, increased consumer costs and dubious regulation.
The CRTC maintains that internet access is “almost wholly driven by demand for audio and video content.” However, its own data contradicts that conclusion, since it also notes that 75 per cent of wireless internet traffic is not audio or video. The reality is that internet use is about far more than streaming videos or listening to music. Those are obviously popular activities, but numerous studies point to the fact that they are not nearly as popular as communicating through messaging and social networks, electronic commerce, internet banking, or searching for news, weather, and other information.
From the integral role of the internet in our education system to the reliance on the internet for health information (and increasingly tele-medicine) to the massive use of the internet for business-to-business communications, internet use involves far more than cultural consumption. Yet the CRTC envisions the internet as little more than cable television and wants to implement a taxation system akin to that used for cable and satellite providers.
There are several significant problems with viewing the internet through the prism of a broadcasting system. First, the CRTC mistakenly thinks that since (a) it regulates broadcast and (b) broadcast is now the internet, then (c) it must now regulate the internet. However, given that the internet is much more than just broadcast, the CRTC’s proposal means that it would attempt to regulate far more than the broadcasting sector.
The CRTC recommendation covers any audio or video services that touch Canada, presumably including foreign media organizations, podcasters and video-game makers. There is no reason to conclude that the commission should be entitled to regulate these entities, but that is precisely where its logic ultimately leads. Further, faced with the prospect of Canadian regulation, some of those services could decide to geo-block Canada, concluding that a relatively small market was not worth the regulatory costs and hassles.
Second, the taxation (or mandated contributions) for cable and broadcast to support Canadian content production are at least premised on the fact that a cable subscription provides little other than access to broadcast content. The internet offers a limitless array of possibilities that have nothing to do with broadcasting, however, rendering the policy link far more tenuous. Governments can (and do) support the creation of Canadian content through grants, tax credits, and other subsidies, but foisting support on a monthly internet or wireless bill stretches the definition of the conventional broadcast system beyond recognition.
Third, precisely because the internet is such an integral part of our daily lives, ensuring universal, affordable access is a competing policy goal that should not be so easily discarded. But the CRTC provides little more than an unconvincing assurance that the impact of new internet taxes will be “cost-neutral”, even though Canadians who only rely on internet access will clearly pay more under the proposed approach. The government has handed this policy conflict to its review panel, asking it to consider new ways to support the creation of Canadian content while at the same time confirming that it opposes an “approach that increases the cost of services to Canadians.”
The CRTC report suggests that the government and its review panel think they can have it both ways with new taxes but no new costs. Yet its proposed approach is grounded in the past, with an ill-fitting solution that wrongly expands the CRTC broadcast regulatory mandate and new taxation into every corner of the internet.