In a decision that could be worth hundreds of millions of dollars to the entertainment industry, a federal court will be asked to rule whether companies that provide Internet access should be viewed as broadcasters of online content, or merely the pipes that transmit bits of data to computer screens.
The federal broadcast regulator attempted to answer that question in February, but after hearing detailed legal arguments from both sides of the debate, the Canadian Radio-television and Telecommunications Commission has decided to turn the matter over to the Federal Court of Appeal.
Content producers, such as actors and screenwriters, argue that Internet service providers (ISPs) perform a similar role to cable companies and broadcasters when material flows onto the Internet. As such, they should be subject to the Broadcasting Act, which requires those companies to give financial support to Canadian content on TV and radio.
The ISPs, which are mostly the cable, phone and independent firms through which people access the Internet, are universally opposed to the idea, arguing they are merely the transmitters of data online, and therefore should not be forced to pay.
Rather than issue a ruling itself, the regulator is handing the issue to the courts.
"It's important that this question be settled, rather than us making the decision and having somebody challenge it, as undoubtedly they would," CRTC chairman Konrad von Finckenstein said. "We need to know what powers do we have. The court will tell us once and for all."
The stakes are high, given that one proposal considered at the February hearings into Canada's new media sector was to create a $100-million fund that the ISPs would pay into, which would be available to producers of professional content for online and mobile platforms. The regulator is concerned that domestic culture could potentially be drowned out in a sea of online content from around the world.
Opponents call it a levy on the Internet, and were relieved the CRTC chose not to impose the idea on its own.
"We do not purchase or program content, we're people who deliver [data]packets. So I'm quite content that the court will not find us to be broadcasters," said Ken Englehart, senior vice-president of regulatory affairs for Rogers Communications Inc., one of the country's largest Internet service providers.
But Canadian content producers were optimistic the idea is still alive. The Alliance of Canadian Cinema, Television and Radio Artists, the union representing Canadian actors, wanted the regulator to make a swift decision, but an official said he was encouraged about being referred to the court system.
"Broadcasting in new media is just another format for distribution of programming. So we think it's illogical for the CRTC not to be regulating broadcasting in new media," said Stephen Waddell, ACTRA's national executive director. The Writers Guild of Canada has argued that funding for professionally produced Canadian content is necessary to ensure domestic productions are made. "If we can't make it, Canadians can't watch it," said Rebecca Schechter, WGC's president.
However, smaller ISPs, who feared the new fees, were pleased the new system was not imposed on Thursday. "I'm glad they realized they have to clear that up," said Tom Copeland, president of the Canadian Association of Internet Providers, which represents about 50 independent Canadian ISPs.
Also in yesterday's decision, the CRTC said it would continue its hands-off approach to regulating broadcasting content online and through mobile platforms. This means the regulator won't require Canadian broadcasters to carry a certain amount of Canadian content for those new media platforms, as they do for TV and radio. The decision follows on a similar move almost a decade ago, where the CRTC opted to not regulate new media. "We didn't see any evidence of any need to intervene," Mr. von Finckenstein said. "As a regulator we always worry about unintended consequences – if you move to do something it has a different effect, one that we didn't predict and is maybe negative."
In staying away from such regulations, the CRTC made the right call, said Michael Geist, a law professor at the University of Ottawa who holds the Canada Research Chair in Internet and e-commerce law. "It's probably about as good as we could have hoped for. Many people, including myself, were concerned that the CRTC would feel compelled to do something, having gone through the process and conducted all these hearings … that there would almost be the sense that a regulator feels they need to regulate. And now, for the second time, they've resisted that urge."
However, Mr. Geist said the country needs to work toward a digital strategy, and that separating broadcasting and telecom regulations is an outdated approach. "It's now a pretty consistent theme that Canada is in need of a digital strategy and I think that the separation between broadcast and telecom for regulatory purposes is from a different era and that this is time for a change," he said.