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As Netflix clashes with Canada's telecommunications regulator over the question of whether the entertainment service should have to hand over subscriber data, lawyers will have a heyday debating the rights and wrongs of the matter.

The key question: Is Netflix, which has no physical presence in the country, a Canadian broadcaster and therefore subject to the Broadcasting Act?

It's an interesting philosophical puzzle to ponder, but the facts on the ground say that Netflix has already won this battle. Any attempt to block the low-cost streaming service in Canada would be met with howls of pain from its multitudes of customers – which is one reason why Stephen Harper already appears to be adamantly opposed to a Netflix "tax."

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The real question in this conflict is whether legislators will be brave enough to seize on the issue as an opportunity to bring some badly needed clarity to our national broadcasting policy.

The success of "over-the-top" streaming services like Netflix and YouTube highlights not just the changing state of technology but also the dubious intellectual foundation for much of Canada's current regulatory regime.

The original case, decades ago, for having a government overseer ride herd on the radio and television industry was based on the reality that broadcast spectrum is scarce – without a regulator to divvy things up, rival radio and TV stations might have tried to occupy the same frequency and chaos would have resulted. So regulation was both necessary and welcome.

What's more, broadcast spectrum was always a natural resource: No one built it, no one created it. It was simply a feature of the physical world that we used for our own purposes. So it made sense to employ this public property for public ends and have a government regulator ensure it was used in the best interests of consumers and the nation.

But neither of those arguments applies in the case of the Internet, which is privately constructed and, for all practical purposes, unlimited in its potential capacity to deliver information. The regulator's rationale for regulating its content isn't based on necessity or scarcity. It's rooted in the notion that Ottawa has a duty to promote cultural nationalism and support our own broadcasting system and production industries.

That sounds dandy in theory; in practice, however, it can quickly morph into regulatory overreach and endless debate about matters as mundane as what constitutes an acceptable basic bundle of cable TV channels, or whether anyone should be allowed to compete with the Food Network.

Notably, the current regime has been marked by steadily rising prices for consumers. "Canadians are spending more for their television services," the Canadian Radio-television and Telecommunications Commission noted a few months ago. "Cable subscription fees have increased faster than the consumer price index in recent years."

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Even those who believe the current regime is fine must acknowledge it is opaque. Among other things, it quietly transfers wealth from consumers to creators of Canadian content, by making viewers subsidize content they may not want. But the flow of dollars takes place in so many ways – from rules about when Canadian shows must be aired, to guidelines about how much money must be poured into Canadian production – that it's difficult to follow the cash.

So how to make this system both more effective and also more transparent? A good starting point would be to emphasize that the Internet in general, and video streaming services in particular, is a hands-off zone for telecom regulators. Trying to impose a levy on Netflix won't work.

That is simply an acknowledgment of reality: There's no effective way for a regulator to impose a heavy hand on the Internet without encouraging consumers to find technological end-runs around the rules.

But what about Canadian culture? If government wants to encourage Canadian programming, it could introduce a levy on Canadian Internet service providers that could then be used to provide grants for Canadian producers of content.

This system would make clear how much money is being transferred from consumers to producers of content. Among other things, this would have the healthy effect of allowing us to compare costs and benefits.

Defenders of the current system like to boast about the huge success of Canada's television production sector and the jobs it creates. At the same time, they say, continued support of the sector through broadcast policy is vital.

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This seems distinctly odd: Surely if an industry is thriving, it can stand on its own feet. If subsidies are needed, we should be able to determine how much. Heck, we should even be able to look it up on the Internet.

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