Bye Bye Netflix by ozcast (CC BY 2.0) https://flic.kr/p/aoFMi4

Bye Bye Netflix by ozcast (CC BY 2.0) https://flic.kr/p/aoFMi4

News

The CRTC – Netflix Battle: Could It Lead to a Challenge of the CRTC’s Right to Regulate Online Video?

Netflix just concluded an appearance before the CRTC that resulted in a remarkably heated exchange between the regulator and the Internet video service. The discussion was very hostile with the CRTC repeatedly ordering Netflix to provide subscriber and other confidential information. Netflix expressed concern about the need to keep such information confidential, leaving CRTC Chair Jean-Pierre Blais angry that anyone would doubt the ability of the regulator to maintain the information in confidence. Netflix concern in that regard was understandable given that even confidential information submitted to the CRTC is subject to a public interest test (conversely, U.S. regulators can provide guarantees of confidentiality).

As temperatures increased, the CRTC expressed disappointment over the responses from a company that it said “that takes hundreds of millions of dollars out of Canada” and implicitly threatened to regulate the company by taking away its ability to rely on the new media exception if it did not co-operate with its orders to provide confidential information.

The exchange had the feel of a last gasp effort of a regulator to assert its relevance against a service that enjoys massive public popularity along with some fairly obvioius support from the government. The use of a regulatory threat was particularly surprising and could come back to haunt the CRTC. As I discussed in a post earlier this week, the Commission has long maintained that it has the legislative power to regulate Internet-based services, but chooses not to do so.

The threats during the hearing confirms that the CRTC believes that not only does it have the power to regulate Netflix, but that it does regulate it. It does not require the same obligations as conventional broadcasters, but it maintains that its regulatory structure allows it to order online video services to comply with information disclosure demands. But what if that regulatory power was challenged? Netflix appeared voluntarily before the Commission, but it could have refused. It could argue that it is not a broadcaster and not subject to the Broadcasting Act. In fact, it could challenge the CRTC’s orders for information, arguing it does not fall within the Canadian legislation and does not maintain a physical presence in the country. It seems unlikely that Netflix will chose to escalate the battle with the CRTC, but today’s hearing had the feeling of a prelude to a much larger regulatory and political battle.

51 Comments

  1. I’m glad Netflix stood up to the CRTC. I am a subscriber and my predominant reactions were that who subscribes are none of the CRTC’s business and as a Canadian citizen, frankly, I don’t want the CRTC getting their grimy paws on this information. What on earth do they ‘need’ to know this for? As far as I’m concerned the CRTC is an unnecessary money waster. As a tax paying adult of reasonable intelligence, I feel fully comfortable and confident in determining what media I want to consume. It’s bad enough that because of the CRTC Canadian Netflix sucks compared to the American version. Who to they think they are dictating what Canadians can or ‘should’ watch? I would love to see the CRTC dismantled and the money used to fund the organization go to useful services like health care, employment, infrastructure and education. Good for Netflix for standing up to these self important bullies!

    • Well said – exactly right.

    • I’m so sick of hearing this idiotic knee-jerk reaction. The CRTC has done many good things to protect customers from banning 3 year contracts on cell phones to forcing telco’s to provide access to their networks so that indepent companies can offer cheaper phone service and cheaper Internet service with higher data caps to regulating the cost of phone service so that telcos can’t suddenly jack up prices on service. And you guys want to completely get rid of the CRTC and all of these regulations because you disagree with one thing that it’s doing?

      And as for the claim that Netflix sucks in Canada because the CRTC, I’d really like to know where this ridiculous claim started. The CRTC does not currently regulate Netflix in any way. The reason there is less available on Netflix in Canada is because they licesnsed less content from content owners. The CRTC has absolutely nothing to do with it.

      • Seriously? The CRTC keeps our phone bills down? We in Canada have some of the worst and most expensive cell service in the world. I take it you’ve never been to Europe? or the Far East?

        The CRTC is far too slow moving to effectively regulate the carriers and does nothing of practical consequence to help expand innovation in this country. So, while they do have a continuing role, I’d like to see it expanded to actively ensuring we get better value from our media companies, instead of picking on true innovators like Netflix.

      • If the CRTC did it’s job we would be the paying some of the highest prices in the world for telecommunication services.

        You assume that independent ISP’s now have a competitive edge because the majors where forced to “open” their networks to smaller providers…what a joke.

        Have you seen any growth in the offering for Internet services? Have you seen your bills get any lower?

        We are still the laughing stock in terms of prices for telco services.

        So remind me again how the CRTC help the consumers lately?

        • The CRTC is not always the bad guy.
          There wouldn’t be ANY independant ISPs in Canada without the CRTC. Why would telcos give companies access to their networks at wholesale prices or at all if they were not regulated ?
          The only way cell companies like Wind exist is because of the CRTC. Pretty good deal if you spend most of your time in a metropolitan area.
          As for ‘growth in the offering of internet services’, I pay less now for 30Mpbs ds than I did 15 years ago for 2mpbs. Not sure if this is due to CRTC influence, but don’t say ISP offerings haven’t gotten better.
          Yes we have crappy prices, but that’s because Canadians would rather do the easy thing and accept what is and complain to each other, on a webpage, or on facebook instead directing their frustration directly to the companies.

          • You pay less for 30Mbps down than you did for 2mbps 15 years ago because of the natural progression of technology. The CRTC has absolutely zero to do with that. I have friends in the U.S who get gigabit internet to their homes for less than I pay for my 28mbps connection, we’re falling painfully behind here in terms of innovation from our ISPs. I’d love to know why I can’t get an ISP with a decent upstream. 28Mbps down is passable but 256kbps up is an absolute joke. The CRTC has really done absolutely nothing to make the internet market more competitive here. They drive up costs, not innovation. Also, don’t even get me started with the CRTC and it’s ludicrous regulation of television content. The result of which is why organizations such as the Writer’s guild feel that they are entitled to our tax dollars to fund horribly written and produced Canadian content which the CRTC then floods the channels with. It’s all such a joke. Then when Netflix comes in and attempts to do something innovative, hold up, we can’t have that. After all, we wouldn’t want Rogers and Bell to actually have to innovate their own services to compete. Everyone knows that both those companies have the CRTC in their back pocket, and now they are pressuring the CRTC to cut down Netflix rather than attempt to compete at their level and offer comparable services. It’s all just one big joke.

      • You must work for Bell or Rogers, do you think the CRTC atually saved us money from the 3 year contracts, all the 2 year ones went up by at least $20 a month, so no savings what so ever, thanks CRTC!!!

      • Absolutely. They are doing God’s work. Such as standing idly by for years while Robbers, Telus and Bell shoved their outrageously priced cable packages down our throats.

    • Just as a minor point, the CRTC is not the reason that Canadian Netflix sucks compared to American netflix. The problem that causes this is market segmentation along geographic lines, sometimes called “geographic restrictions”. For that, you can thank our current collection of copyright regulations themselves, as they have evolved under the diligent care of those who profit from them.

    • I agree with all – CRTC has time to go and stop limiting freedom of speech and leave the control and that have to control everything. Canada has been coyed from newer technologies because of this so old aged think your in control CRTC your not – just causing trouble for the rest of Canada. Time to take back control from these types. Protection of rights is our bill of rights, Protection of freedoms to what does not exist in this pro-communist control is not right. Netflix has their rights to hold true to their business plan. So it be time to lead and lead away from this type of bully action. Time for the people to grant paying for use of what channels they wish only to pay for and watch. Time for the “hydro companies” to stop this delivery charge – no others charge in service for sevice features. Time for the old hats to back off and lay off peoples of Canada any longer. Bring the open allowable competition instead of spooning down the throats of all viewers. Freedom of choice is the new life.

  2. Jean-Francois Mezei says:

    One of the likely outcomes of the #TALKTV proceeding is that the CRTC will do a review of the DMBU exemption (DMEO).

    Netflix’s reluctance to play ball at #TalkTV may result in a review of the exemption order to be pointless if Netflix refuses to participate constructively.

    One has to remember that VI companies in Canada complained about Netflix getting a free ride, so the CRTC has t evaluate this.

    And this is one reason Blais stated that he needed EVIDENCE to properly evaluate OTT contributions to canadian content (in other words, he gave Netflix the opportunity to counter the BDU’s self serving arguments).

    Netflix wasn’t smart enough to see the CRTC gave them an opportunity to respond to BDU’s self serving arguments. It squandered it.

    • Untrusted_Computing says:

      JF,

      Netflix is simply acting like an incumbent, if you recall, when there were CRTC inquiries regarding the throttling of internet connections and the institution of more aggressive bandwidth caps the incumbent internet providers were very uncooperative with the CRTC, Netflix is currently acting the same way as it knows it has both the government and the Canadian TV watching public behind it.

      Nothing would lead to an inquiry as to the mandate of the CRTC faster than Netflix leaving the Canadian market. It’s also worth mentioning that if it does, most Canadians (myself included) will start using workarounds to access it anyway.

      At the end of the day, Netflix could have behaved better, but didn’t because it doesn’t have to.

    • Small issue Harper has made it very clear there will be no Netflix tax etc.

    • Did anyone watch the hearing between the American Networks and Crtc if so how did it go?

    • Netflix was only dumb if you believe the CRTC has the authority to regulate Netflix; Netflix doesn’t believe that and is likely prepared to go to court over the issue if need be.

  3. The term “subscriber and other confidential information” is massively unspecific. Was it the number of subscribers? How many people watch particular shows? Or the names and addresses of the people in Shawinigan who watched “Orphan Black” on Tuesday the 18th? Whatever my feelings about the CRTC and Netflix, this is sort of under-reported.

  4. The link is to the netflix statement: is there a transcript? I’d love to see what was said.

  5. You can find the CRTC transcripts, here – http://www.crtc.gc.ca/eng/transcripts/2014/index.htm.

    Today’s transcript (for Sept 19/2014) will probably appear Monday or Tuesday.

  6. Peter MacKay says:

    “Thank you Mr. Chairman” is the new “Go fuck yourself!”

    Jean-Pierre Blais should be embarrassed for his douchebaggery.

  7. Here’s the video of what actually happened: https://www.youtube.com/watch?v=RVkcGEuDl4I

    I’m sorry but this was the Netflix rep acting inappropriately. Blais asserted his authority because the rep was behaving as though Canadian law did not apply to Netfix. They knew the law/regulation when they entered the Canadian market yet wanted special treatment, in the form of confidentiality guarantees, when the commission does not have the authority to provide those guarantees. Not only is it insulting to the commission, it’s unprofessional for anyone let alone a lawyer.

    • The video at https://www.youtube.com/watch?v=RVkcGEuDl4I say that it’s “The Canadian Content”, “A short film about the problems with Canadian television, and how we can fix them.”

      I’m still waiting for someone to post a transcript or a link to the video.

    • Nope, NETFLIX’s servers are not in Canada, so they’re not entering the Canadian market…it’s Canadians that are pulling data from them. And what’s the CRTC going to do? Block the internet? LOL! This isn’t China…

    • “I’m sorry but this was the Netflix rep acting inappropriately.”

      If you don’t like Netflix, feel free not to subscribe. I imagine they will not be deeply upset. If Blais is going to act like a grand panjandrum it’s not surprising he’s going to get called on it.

  8. Peter MacKay says:

    The Netflix lawyer was nothing but professional. The CRTC has no authority over Netflix. Netflix didn’t even have to show up to the hearing. Of course they want confidentiality guarantees…Rogers and Bell would love to get their hands on that kind of competitor information.

    • I guess that Rogers and Bell will have to create their own version of Netflix and compete with them at the $8/month price point…lol

  9. truenorthern says:

    Why do they need a list of subscribers??
    Do Shaw/Telus/Rogers give the CRTC lists of subscribers?
    Why?

    • The article doesn’t say they want a list of subscribers. It says “subscriber information” which could just as easily mean that CRTC only wants the total number of subscribers. “Confidential information” doesn’t imply that they want information about subscribers. Since Netflix doesn’t share information on how many subscribers there are, even the number of subscribers is confidential.

  10. “Hostile” does not even begin to describe the unprofessional manner in which JP Blais treated Corie Wright from Netflix, and Netflix itself. As a voluntary presenter I would sincerely question the Commission’s ability to compel anything from Netflix. Personally, I think the CRTC is a leaky ship and were I in charge of Netflix’ submission, I’d either provide nothing and have that fight or provide it in such an anonymized manner (which I’m sure they will do) as to be useless.

    “Subscriber information” in the context used is primarily viewer counts – there seemed to be no request for individual identification or even geolocation among provinces. Some of the requests are purely ridiculous: VPN use does not necessarily equal accessing content from outside a licensing zone; CanCon (or Netflix’ equivalent) viewing outside Canada is not within the purview of the CRTC.

    These guys are trying to maintain their fast-disappearing jobs and the business models of the large corporations that support them. They should just quietly slip away.

    (And, who would ever think that a hearing where lawyers ask the questions and provide the answers would actually get anywhere?)

  11. Increasingly the governments just need to be challenged on everything because absent challenge they’ll just try to get away with anything.

    In this case, were I netflix, I’d offer them this ultimatum… “do you want me to cut off service to Canada and blame you for it?” y/n?

    Then hang up and see if they want to pull the pin on that grenade.

  12. This is all very interesting. I was a satisfied satellite customer with Bell who spends 3 months during the winter in the southern USA.
    We purchased an extra dish and set it up along with the ‘box’ from home so we could watch Canadian TV while out of Canada.

    All of a sudden, the dish did not work because Bells’ satellite was moved and set up in such a way that anyone south of the 49th could not access it. Many of the Canadians switched to Shaw so they could continue to view Canadian content while living for up to 6 months down south. Apparently Shaw has or is in the process of moving their satellite as well so that Canadians holidaying south of the 49th could not access Canadian TV. We get all sorts of excuses for these corporate decisions, but mainly we are told that the CRTC implemented these changes and that both Bell and Shaw were in danger of losing their licences if they continued to allow us to view Canadian TV while out of our country.

    And yet, I live in BC and notice when driving my granddaughter to her soccer games in the Westwood Plateau area in Greater Vancouver/Lower Mainland, there are many homes who have satellite dishes with strictly Chinese lettering on them. These are obviously immigrants from China who choose to watch Chinese TV rather than Canadian TV and my question is: Why is this okay with the CRTC? We are paying our monthly fees to Bell and Shaw and prefer to keep track of what is happening in Canada while we enjoy some healthy sunshine during the winter. So what is the problem? Seems to me there are different rules applied by the CRTC, depending on whether we are Canadian citizens, born and raised in Canada or recent arrivals who do not wish to watch Canadian TV. At the same time, it looks as though the CRTC wants to restrict Canadian viewers from accessing a much better Netflix from the U.S. than what is offered in Canada, but don’t give a hoot if I cannot access Canadian TV while holidaying in the U.S.

  13. “massive public popularity along with some fairly obvioius support from the government.”

    Let us call a spade a spade here.

    fanboys and the gov playing up to the fanboys for popularity votes.

  14. Pingback: CRTC Calls Out Netflix [UPDATED] | The IT Nerd

  15. How about the “imporant creative sectors” (cough) proceed to make plenty of excellent television that we all want to see, and not worry what happens when this eventually shows up on Netflix. Most of the content is regurgitated. And at even below the zero-interest level should be anything related to VPNs and “licensing zone” and what’s-the-mot-du-jour. The Internet has moved into the 21st century.

    We have more important things to worry about, e.g. the sneaky way they try to kill free over-the-air television, forcing you into buying a basic subscription. At 20/mo it’s $240/yr, at 30/mo it’s $360/yr. Let’s call it the CRTC-Tax.

    • Trying to put rules on streaming services is a far bigger issue then the end to ota.

      • What I meant was: the CRTC shouldn’t worry too much about Netflix. They have a couple of new shows (all hits), but most of their stuff is old. So broadcasters should broadcast plenty of interesting television and people will watch it.

        But it might just be a smokescreen to kill free OTA. Yessir. You want ANY kind of TV? That’ll be an average $25 subscription + tax, and a $5 settop box + tax for EVERY tv in your house over the 1 (one) that is included in your subscription.

  16. Let’s try another hypothetical shall we? Let’s say that the CRTC’s mandate holds and they now start to enforce the regulation.

    The CRTC calls on Company A to present their Canadian content creation report to verify that they have met their obligations. Company A simply ignores this request. What’s the CTRC’s next step? Fine Company A. Company A ignores this request also. Company A has no legal/physical presence in Canada (in fact it doesn’t even charge HST to its customers). The CRTC asks a judge to tell all of the network providers to block Company A’s service? The great Canadian firewall on content is born. Or service like unblock.us just doubled their subscriber base.

    There are probably thousands of Company As out there. Does the CRTC have the resources (money, lawyers and sheer manpower) to achieve something like this? Could an enforcement activity of this size be cash positive for the tax payer? Would the Canadian public agree to even more watered down internet access?

    Let’s flip this on its head: let’s say Canada birthed the next OTT service that everybody wants and the EU shuts it down because of some content creation rule. There would be outrage, this would be all over the news, our economic attachés in all of Europe’s capitals would hold meetings and find local lobbyists to help them. This just means that Canada isn’t open for content import like many of the other global markets and thus less competitive.

    Applying a regulation in the wrong place (an open internet) is like fighting windmills.

  17. Hmm, Netflix may not only be exempt from the Broadcasting Act, but it may also be exempted from the new media exemption.

    As I read it, under the CRTC’s definition of a new media broadcaster, Netflix isn’t a broadcaster and therefore isn’t subject to the CRTC’s purview. That definition is in the 1999 notice, which still stands and is referenced in the most recent amendments to the new media exemption. It states in part:

    “Among the services that also do not fall within the scope of the definition of broadcasting are those where the potential for user customization is significant, i.e., services where end-users have an individual, or one-on-one, experience and where they create their own uniquely tailored content. The Commission considers that these types of services do not involve the transmission of programs for reception by the public and are, therefore, not broadcasting.”

    The fact is Netflix’s algorithms create a personalized service for each member based on their preferences, ratings and prior viewing habits. This can be tailored down to individual family members so that each sees different content.

    As such, Netflix could argue that its service provides the “potential for significant customization” carve-out under the CRTC definition of new media broadcaster and so it isn’t a new media broadcaster. And if it isn’t a broadcaster, then Blaise overstepped his authority.

    Knowing how cagey Netflix is about subscription information even in their securities disclosures, my sense is they are loathe to hand over this information. The CEO would have to approve. Given that the hearing wasn’t even about Netflix or OTT services, I suspect he’ll be very suspicious of individual commissioners’ motives in seeking the information.

  18. Netflix is the first on the block to use mass internet marketing for movie content.

    There is and will be other companies doing movies on the net… define a movie… google gets seven thousand uploads every day for their utube channels.

    The CRTC targeting the company when their rep appears voluntary, seems to be poor judgement. If and when Netflix should go bankrupt because of other competition, the activity occuring today would seem rather silly in hindsight.

    Today, a person could be a couch potato from birth to death, and never have to watch the same internet video twice… think about that… and all the other things that technology has changed. It is new world, and old concepts, do not apply.

  19. This is a sad debate. I personally can’t believe the audacity of the CRTC to suggest that Netflix isn’t ‘doing its thing’ and is sponging off Canada. How many dozens of other companies – WalMart, Costco, Home Depot, etc – have to face this kind of attack?
    But what’s really sad about all of this is that this is how we treat innovators. We talk the talk, but we clearly don’t walk the walk when it comes to supporting entrepreneurial spirit in Canada. Instead, we tax those who are successful and blanket the Bells and Rogers of the world with massive ‘Can Con’ subsidies and ad campaigns.
    And don’t suggest that Canadians are not paying for Netflix already. Internet usage fees have skyrocketed and Bell/Rogers are punching away at the cash till while crying about going broke.
    To be frank, the whole thing is embarrassing and media companies in Canada are getting the good s-kicking that they deserve.
    The next one on the chopping block should be the CRTC itself. Why do we still regulate content in Canada? To protect our obsolete media companies.

  20. The CRTC left Netflix for last on purpose. Jean-Pierre Blais looked like he was on the attack dog for the Canadian Cable Co’s and Telco’s. This man has allowed cross ownership of media by a tiny grow of mega rich cable and Telco companies. When they were given the right to buy up Radio stations, Local TV stations etc these folks all claimed they could afford to operate paying the staff but, now they want , they demand a second revenue stream by saying they will lose money, close stations and the sky will fall if they are not allowed to charge customers for local off air TV on their cable bills. So… Let them close the stations or turn the licenses back to the Government as punishment for the massive FRAUD they tried to pull on the people of Canada. The CRTC is made up of people who care only about BIG Business. No change there.

    As for Netflix I watched the exchange where Jean-Pierre Blais demands to know why the Netflix person did not know what the short version name for the privacy requirements in Canada. When they Netflix rep. who appeared without being required to Jean-Pierre Blais proceeded to rip in to her and then demand that Netflix turn over private information on how many subscribers they have in Canada by 5pm on Monday. Talk about an jerk. Like Rogers, Shaw, Bell or TELUS would ever do this. Jean-Pierre Blais was talking down to the Netflix rep from the start. People in CANADA do not want CDN Content force feed to them! If I owned a restaurant and made bad food no one would buy it. The same applies to CDN content. In my opinion and that of others over 95% of CDN content is junk. Why Mr. Jean-Pierre Blais do you think people buy Netflix services ? If Netflix was a Canadian idea, a Canadian company formed by one of the big Cable of Telco’s the CRTC would be right on their side. Jean-Pierre Blais was leaving Netflix for last because he was looking for a fight. I do not think that he has any LEGAL right to order Netflix to provide the information he demands. As for his smart comment about Netflix not trusting the CRTC? Netflix has every reason not to trust them. Netflix subscriber list is private – Private as in not for anyone outside of Netflix to have access to. The Internet is a Global River where the major owners of that river have decided that they want to not only control the river but , the traffic that runs on the river. Folks it is NEVER going to happen. Netflix represents all that is great in a system that allows for free and open competition. That is NOT something Canadian companies ever want to see the light of Day. I live next door to a country that has the best selection of content in the world. I pay my taxes and I intend to spend my hard earned cash where I please. As for the opinions of Jean-Pierre Blais and his CRTC minions they can stuff it and go watch CBC the over funded provider of all that content from the 1940′s movies I could care less to watch.

    Face it folks this is Canada where TV providers want to sell you years old stale bread a price higher than FRESH BREAD. No thanks my cash is going South. Ban Netflix and others, force them to pay fees that amount to extortion and I will always find a way around the hassle. Technology is here to stay – Live with it.

  21. UHD TV

    What i really took issue with is the Crtc should have really gone after Bell/Rogers/Shaw they did not they more or less were very kind.

  22. Well, I believe Netflix has every right to withhold information. Also, isn’t it written in every online confidentiality page that any pertinent data can be withheld from the concern party. I just think the CRTC is more concerned about their loss. They should look at every side of the story.

  23. Richard Stallman says:

    Please don’t think of Netflix as “the good guy”. Netflix imposes digital restrictions management (DRM) is pressuring the W3C to officially endorse DRM, makes high definition video available only on locked-down operating systems that the user can’t change. Don’t help Netflix put its boot on the interet’s neck.

  24. The transcript is up, and paragraphs 21001 through 21042 are the exchange.

    Ms Wright had been told she couldn’t have confidentiality, and had her lawyers talking to the CRTC. The Commissioner though she’d been told the opposite and got grumpy. After a recess, they straightened it out:


    21035 We were given to understand that if we submitted information, its confidentiality couldn’t be guaranteed.

    21036 However, if the panel can guarantee that our sensitive and commercially sensitive information will have guaranteed confidential treatment, we would be happy to submit that information to you.

    21037 THE CHAIRPERSON: Right. Well, thank you for that.

    21038 You operate under an exemption order that requires you to provide information. Failure to provide information puts at risk your exemption order. So the Commission is ordering you to provide the number of subscribers that you have currently in Canada by 5:00 p.m., Ottawa time, Monday.

    21039 The Commission provides confidential treatment to that information.

    Teapot, tempest therein.

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  26. wookiemunger says:

    CRTC has an irritating habit of interfering how Canadians spend their hard earning money on entertainment. Who cares if Netflix is owned by the American giant Browser Google Inc. It’s like Mr. Harper doesn’t like Canadian pouring dollars on good watchable entertainment on the U.S. side of the border. To hell with this Canadian content guidelines being forced and shoved down Canadian throats. What’s wrong with having the liberty to watch what one desires? I’m sick of CRTC rambling on above this Netflix issue.

  27. CTRC is going to lose the fight against Netflix as they are struggling to find relevance in modern media. Abolish CRTC. Things have changed and it’s time to move on and progress.

  28. wookiemunger says:

    Most people don’t realize that it’s Rogers and Bell Canada that are the official culprits who are asking CTRC to pressure fight and bully their ideological B.S. federal regulatory powers against Netflix. CRTC is a complete waste in Canadian Tax Dollars.