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Government’s Telecom/Broadcast Review Sets Up Internet Taxes and Regulation As a 2019 Election Issue

The government unveiled the members of its telecom and broadcast review panel this morning setting the stage for Internet access taxes, Netflix regulation, and the imposition of cultural policies on telecommunications to emerge as a 2019 election issue. The new panel will be chaired by Janet Yale, who brings experience from both telecommunications and broadcasting to the role. The remaining six panel members line up nicely as telecom nominees (Hank Intven, my colleague Marina Pavlovic, and Monica Song) or broadcast nominees (Peter Grant, Monique Simard, and Pierre Trudel).

The leaked coverage this morning paints the panel as an effort to redraft broadcasting regulation with Internet companies such as Netflix and Facebook firmly in the government sights. Yet the reality is far more complex with terms of reference that touch on a wide range of telecom and broadcast issues. The Canadian Heritage perspective may be focused on broadcast and Internet regulation (despite repeated assurances that there is no support for new Internet taxes), but the ISED view will be focused on competition, consumer issues, and net neutrality. Last week’s CRTC report provides momentum for Internet taxes and regulation, however, the government has yet to provide much of a response. Indeed, the instructions to the panel reflect the departmental tensions with language that supports both sides and questions that touch on everything from consumer protection to the CBC.

Given the timelines – the panel is expected to release an interim report in a year – there will be no legislative changes during the current government. However, the timing virtually guarantees that this will be an election issue in the fall of 2019. With the CRTC report and the panel’s interim recommendations, the government will have to take a position on Internet taxation and regulation. While the digital sales tax issue is relatively easy to address, the broader recommendations of widespread Internet regulation and taxation on Internet access will require all parties to adopt a clear policy position.

My general perspective on the potential combination of the two statutues was articulated in an April 2017 op-ed in the Globe and Mail, namely that broadcasting and telecom policy serve different purposes and objectives. The key section in the op-ed:

Revisiting Canada’s twin communications laws is regarded by the cultural lobby as the opening to treat telecommunications regulation as a matter of cultural policy in what would amount to the Broadcasting Act taking over the Telecommunications Act, with the Internet treated as little more than a giant cable-television system.

Few Canadians would view their wireless or Internet connections as a matter for cultural regulation, but that is precisely what the cultural groups envision. Indeed, in light of an earlier Supreme Court of Canada decision that rejected attempts to impose cultural taxes on Internet service providers owing to the separation of the two statutes, creating a combined culture-focused Communications Act would establish a fundamental change in Canadian Internet regulation.

Yet, the reality is the policy objectives of telecommunications and broadcast do not mesh well, making it difficult to craft a single communications statute. Telecommunications regulation is fundamentally about competition and consumer protection. The rules are designed to foster affordable network access, effective consumer rights through transparency and redress and to prevent the temptation of vertically integrated telecom giants to grant their own content preferential treatment.

Those rules must be adapted for the Internet – decisions scheduled for release this week by the Canadian Radio-television and Telecommunications Commission on net neutrality that address equal access for Canadian content and applications are the Internet’s version of old battles over common carriage – but the twin policy goals of competition and consumer protection remain largely unchanged.

Broadcast policy, on the other hand, is primarily a cultural policy document designed to maximize the benefits of broadcast spectrum in a world of scarcity. In that analog world, the “broadcast system” features policies such as licensing requirements, Cancon contribution mandates, public-broadcaster support and simultaneous substitution policies as a means to encourage the creation of Canadian content and to safeguard broadcast space for domestic content.

The broadcast world of scarcity has given way to a world of abundance, however, with no channel limits nor restrictions on the ability for anyone to “broadcast” or distribute their content to a national or international audience. Instead, the key ingredients to encourage cultural choice and to provide incentives for creativity include equality of network access, marketing, distribution and ease of discovery in a world of seemingly unlimited content.

Given the seemingly endless reviews and reports, there is considerable fatigue on this issue. Yet given what is at stake, Canadians will need to pay attention and speak out in the months ahead.

6 Comments

  1. The nuances of telecom and broadcast policy will interest few in an election year. But the prospect of additional taxes on internet access will strike a chord with ‘most everyone.

    I can understand – if object to – the CRTC and its apparatchiks trying to wrestle control over the internet from the freewheeling WIld West it has grown to become. Yet there is no justification to do so, not on public policy grounds, not on access grounds, not even on the ground of revenue or encouraging Canadian content production.

    Perhaps it is time for the government to introduce legislation walling off internet content from either the Broadcast Act or the Telecommunications Act.

  2. richmond2000 says:

    I think we need TWO separate “discussions” about the INTERNET and access
    and a second one about content delivery channels and creators IE NETFLIX / BELL MEDIA
    as treating it as ONE ISSUE is geared to the notion of vertically integrated creator + delivery + access and the INTERNET can NOT afford to be treated like BELL satellite Television as it is a WAY more important and “life impacting” not to mention being “global” in reach

  3. Lisa Macklem says:

    The bottom line is that the two acts are disfunctional. And there’s another option to treating the Internet like broadcasting. Why not re-invent broadcasting?

  4. Bell Better BeCareful says:

    The simple solution is to separate network/distribution, from service/content

    Bell the infrastructure company should have no connection with Bell the marketing and sales company

    Let Ting or Sugar sell wireless service — handling all the billing, collection, marketing, service, bundling, and service — at the same price as is charged to Bell Media.

    $/GB, just like all other utilities, and attach requirements for Canadian ownership for national security only specifically where it is desired, and let the government focus its energy where it wants

    Only once Bell the infrastructure company is not inhibiting and preventing access to media, can we seriously consider taxation by the Heritage Ministry to not be captured and actually have a chance at supporting artists

  5. Pingback: Math Not Magic: If Melanie Joly Mandates Internet Taxes, Consumers Will Foot the Bill - Michael Geist

  6. Brenda Delaney says:

    I see no reason to regulate Canadian content in a world where global content is available for free on YouTube and in a country that’s becoming increasingly culturally diverse. The government should provide some support to help Canadian content creators compete on the world stage, but there’s no longer any need or reason for a government agency to decide what we can watch. I support taxpayer funding for the CBC and Radio-Canada, but leave Netflix and other globally-focused streaming services alone.

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