We can talk about making Netflix charge GST, or phasing out ads from the CBC, or the various proposed changes to telecom policy that will have a huge financial impact for the industry but be largely invisible to end users, but the real headline out of the Broadcasting and Telecommunications Legislative Review Panel report released on Wednesday is this: A big expansion of government regulation in media.
I’d say this wasn’t a surprise looking at the backgrounds of the panel members, but that would be unfair. The panel was made up of legal experts with experience all over the industry, including with telecommunication providers who would be largely against these kinds of additional regulatory burdens. And, frankly, it was a surprise that they would push for this much additional regulation.
Certainly, going boldly in the other direction wasn’t an option. The terms of reference that guided the panel made it clear that the government hasn’t changed its objectives in terms of getting the industry to promote Canadian content, ensuring diversity and accessibility, protecting local news and the CBC, and ensuring that additional costs won’t be assumed (directly) by the consumer. If you have issues with those objectives, take it up with the government, not the panel.
And in any case, those 97 recommendations are in the hands of that same federal government, and it will be up to them to decide which of those recommendations to follow and which to ignore. Those recommendations that are less politically popular should get filtered out at that stage, as well as those that would be too disruptive to take the political risk.
The recommendations are summarized in various news stories about the report (CBC, Globe and Mail, Wire Report, iPolitics, Cartt.ca, The Logic, Global News, Postmedia, Toronto Star)
Here are some highlights of what the panel has proposed:
Streaming and online media
- Make all online media subject to government oversight. Not just Netflix, but Facebook, Google, Apple, even news media websites. While they would not have to be licensed by the CRTC, the larger ones would have to at least register (and have many of the same obligations), and report confidential information. (A suggested order would make this apply only to those with more than $10 million in Canadian revenue a year.)
- Require “curators” (media providers with editorial control over their media) to devote a portion of their content budgets to Canadian programming. (Or impose a levy where such a quota is inappropriate.)
- Require “aggregators” and “sharers” (those without editorial control) to give a portion of their Canadian revenues to the Canadian system, including news.
- Make foreign streaming services subject to sales tax. Quebec and Saskatchewan already do this at the provincial level, and Canadian streaming services are already subject to this, so it was kind of a no-brainer.
- Allow the CRTC to collect data (including recommendation algorithms) from media producers and publish that data in aggregate form.
- Require “media content undertakings” to devote portions of their catalogues to Canadian content and ensure a certain prominence to Canadian content, including in things like app stores.
- Monitor and if necessary intervene in large media companies’ use of “Big Data” that may have privacy implications for Canadians.
- (Carefully) establish liability for digital providers for harmful content distributed using their systems, while protecting freedom of expression.
- Phase out all advertising within five years.
- Set up a five-year funding guarantee for the CBC instead of having it set its budget based on parliamentary appropriations that can change with every federal budget.
- Add “taking creative risks” to CBC’s mandate.
- Remove specific references to radio and television from CBC’s mandate.
- Move away from the CRTC licensing CBC’s individual services
Internet service providers
- No new ISP tax. The panel recommended against the idea of taxing internet service directly to support Canadian media.
- Require the CRTC to, if they deem it necessary, implement “measures to improve affordability for marginalized Canadians from diverse social locations.”
- A much larger role for the CRTC in establishing rules for how telecoms do business with each other and interconnect.
- Give the CRTC power over “passive infrastructure” like street furniture to make it easier for telecom companies to install equipment.
- More power to the CRTC to regulate access to telecommunications infrastructure inside large apartment and condo buildings to ensure competition.
- Require the CRTC consult municipalities before granting permission to install telecom facilities.
- Expand the CRTC’s jurisdiction to cover all “electronic communications services” being provided in Canada, regardless of if they’re Canadian-owned or have a presence here.
- Direct disputes over tower sharing to the CRTC.
- Expand the federal journalism tax credit to include broadcast media.
- Require sharing and aggregation websites like Facebook and YouTube to provide “links to the websites of Canadian sources of accurate, trusted, and reliable sources of news with a view to ensuring a diversity of voices” and require “prominence” of such links.
- Require social media platforms abide by regulated terms of trade that balance “negotiating power” with news producers so news producers are compensated for their content being shared online.
- Rename the commission the Canadian Communications Commission (which sounds a lot like a “Canadian FCC”).
- Give the commission more powers to do market research and regulate proactively rather than based solely on industry applications.
- Allow the commission to issue conditional and interim broadcasting decisions, fine broadcasters, and issue ex parte decisions where warranted.
- Reduce the maximum number of commissioners to a chair, one vice-chair and seven other members, down from the current 13 total, and have all members based out of the Ottawa region.
- Create a Public Interest Committee of experts that would “provide advice as part of the decision-making process.” The panel cites the OFCOM Consumer Panel in the U.K. as a model.
- Create and fund an accessibility advisory committee.
- Allow sharing of confidential information between the commission and the Competition Bureau as well as the Privacy Commissioner.
- Synchronize rules related to powers and procedures between the telecom and broadcasting side.
- Establish a firm 120-day deadline to review a decision when asked through an appeal by a party to it.
- Strengthen rules that provide funding for public interest interventions in CRTC proceedings.
- Combine the Canada Media Fund and Telefilm Canada, which finance TV and movie production, respectively.
- Redirect cable and satellite companies’ required contributions to the Canada Media Fund be redirected to certified independent production funds, like the Bell Fund, Fonds Quebecor, Shaw Rocket Fund etc.
- Make it illegal to “operate devices, equipment, or components to receive unlawfully decrypted subscription programs” online (borrowing from the anti-satellite-piracy law).
- Make the minister of industry responsible for ensuring “communications devices and their operating systems respect security requirements, protect users’ privacy, and incorporate accessibility features.”
That’s a lot. Even if there are exemptions for small businesses, this new regulatory regime would cover a large part of the online industry. And if these new laws and the regulations that stem from them aren’t very carefully implemented, there could be a lot of undesired side-effects, including many online businesses blocking out Canada because they don’t think it’s worth going through the regulatory burden.
And even those who will participate because there’s so much money at stake (like Netflix) will certainly balk at some of the regulatory obligations like submitting their algorithms to audits. When the CRTC tried to get some basic information out of Netflix as part of its Let’s Talk TV proceeding five years ago, Netflix flat-out refused, and the commission had no power to force the company to comply, so it just gave up. Stronger laws could change that (especially if other countries have similar laws), but expect a lot of resistance.
There’s also a lot unclear about how this will affect those currently licensed by the CRTC. The proposal would change the objectives of the Broadcasting Act, and (though this isn’t laid out explicitly) remove the requirement that Canadian broadcasting be Canadian-owned. That could have serious implications if, say, it allows Bell and Corus to be bought by American media giants.
The federal government has said it plans to have legislation by the end of the year. I look forward to seeing how much of this radical change it has the stomach for, especially in a minority parliament.