Boxee beta screenshot by Ian Forrester (CC BY-NC-SA 2.0) https://flic.kr/p/7vRe8Z

Boxee beta screenshot by Ian Forrester (CC BY-NC-SA 2.0) https://flic.kr/p/7vRe8Z

Columns

The CRTC’s Fundamental Flaw: Broadcasting May Be the Internet, but the Internet is Not Broadcasting

Canada’s communications regulator last week reversed decades of policy by recommending that the government implement new regulation and taxation for internet services in order to support the creation of Canadian content. The report on the future of program distribution, which will surely influence the newly established government panel reviewing Canada’s telecommunications and broadcasting laws, envisions new fees attached to virtually anything related to the internet: internet service providers, internet video services, and internet audio services (wherever located) to name a few.

My Globe and Mail op-ed notes with the remarkable popularity of services such as Netflix and YouTube, there is a widely held view that the internet has largely replaced the conventional broadcast system. Industry data suggests the business of broadcasters and broadcast distributors such as cable and satellite companies won’t end anytime soon, but it is undeniable that a growing number of Canadians access broadcast content through the internet.

The foundation of the Canadian Radio-television and Telecommunications Commission report, which garnered applause from cultural groups that have been asking for internet regulation since the 1990s, was aptly summarized by NDP MP Pierre Nantel, who tweeted “the internet IS now the broadcast system.”

Yet Mr. Nantel and the CRTC have it backward. It may be true that the broadcasting system is (or will soon be) the internet, but the internet is not the broadcasting system. Indeed, the decision to treat the internet as indistinguishable from broadcast for regulatory purposes has sent the CRTC down a deeply troubling path that is likely to result in less competition, increased consumer costs, and dubious regulation.

The CRTC maintains that internet access is “almost wholly driven by demand for audio and video content.” However, its own data contradicts that conclusion since it also notes that 75 per cent of wireless internet traffic is not audio or video. The reality is that internet use is about far more than streaming videos or listening to music. Those are obviously popular activities, but numerous studies point to the fact that they are not nearly as popular as communicating through messaging and social networks, electronic commerce, internet banking, or searching for news, weather, and other information.

From the integral role of the internet in our education system to the reliance on the internet for health information (and increasingly tele-medicine) to the massive use of the internet for business-to-business communications, internet use is about far more than cultural consumption. Yet the CRTC envisions the internet as little more than cable television and wants to implement a taxation system akin to that used for cable and satellite providers.

There are several significant problems with viewing the internet through the prism of a broadcasting system. First, the CRTC mistakenly thinks that since (a) it regulates broadcast and (b) broadcast is now the internet, then (c) it must now regulate the internet. However, given that the internet is much more than just broadcast, the CRTC’s proposal would attempt to regulate far more than the broadcasting sector.

The CRTC recommendation covers any audio or video services that touch Canada, presumably including foreign media organizations, podcasters, and video game makers. There is no reason to conclude that the commission should be entitled to regulate these entities, but that is precisely where its logic ultimately leads. Further, faced with the prospect of Canadian regulation, some of those services could decide to geo-block Canada, concluding that a relatively small market was not worth the regulatory costs and hassles.

Second, the taxation (or mandated contributions) for cable and broadcast to support Canadian content production are at least premised on the fact that a cable subscription provides little other than access to broadcast content. The internet offers a limitless array of possibilities that have nothing to do with broadcasting, however, rendering the policy link far more tenuous. Governments can (and do) support the creation of Canadian content through grants, tax credits, and other subsidies, but foisting support on a monthly internet or wireless bill stretches the definition of the conventional broadcast system beyond recognition.

Third, precisely because the internet is such an integral part of our daily lives, ensuring universal, affordable access is a competing policy goal that should not be so easily discarded. But the CRTC provides little more than an unconvincing assurance that the impact of new internet taxes will be “cost-neutral”, even though Canadians who only rely on internet access will clearly pay more under the proposed approach. The government has handed this policy conflict to its review panel, asking it to consider new ways to support the creation of Canadian content while at the same time confirming that it opposes an “approach that increases the cost of services to Canadians.”

The CRTC report suggests that the government and its review panel think they can have it both ways with new taxes but no new costs. Yet its proposed approach is grounded in the past, with an ill-fitting solution that wrongly expands the CRTC broadcast regulatory mandate and new taxation into every corner of the internet.

6 Comments

  1. Interesting comment in the comments section to Geist’s op-ed in the Globe and Mail:

    Not the best Geist article. First statistical evidence is 75% of wireless traffic is not video or audio – hmmm, did we forget that wireless isn’t the only way to connect to the internet and is not the way Netflix gets into the house. Leaving out an inconvenient statistic that doesn’t support the headline means the whole thing becomes an agenda driven partisan opinion. Geist, as an academic, would never accept such a flawed argument from a student, why should anyone accept it from him?

    • For Canadians who live in metropolitan areas, substantially more than 90% are connected to the Internet via WiFi or their smartphones – both wireless. In Toronto, for example, if you order new residential or business Internet service, or move homes, the internet comes via WiFi, not a landline. Indeed, telecom providers are losing landline customers as people get rid of the “home phone” because so many have a mobile device of one kind or another.

  2. Frank I. Reiter says:

    Measuring usage by traffic is like counting an hour of high def television as four times more use than an hour of standard def television. My hunch is that if you look at hours spent on social media, email, and general web browsing, it will be greater than hours spent watching Netflix etc.

  3. You nailed it Frank I. Reiter. And there are so many other on-line activities as well, and who knows how many hours that takes up. In my case, I’m generally using on-line time and bandwidth for several things, both up and down at the same time, I spend many hours using IRC, which has negligible bandwidth usage. These days there are also a lot of people who actually do their office work on-line as well. Some may not even be aware that their business application is configured that way. Does their 8 hours in the office count as traffic usage to the CRTC? Should their time/traffic be taxed?

    Seriously, it goes on. A tax via ISPs would result in me paying more for my phone, because I use the internet for that. Should my bandwidth for uploading my own content, which is very much Canadian, also be taxed.? From my personal perspective it is hard to think of the CRTC’s view on this as being anything other than malicious and downright un-Canadian.

    Let me go on. To some of us, Canadian content does not just mean something produced with the intent of collecting royalties. I make web sites which are distinctly Canadian for the benefit of Canadians. I pay for servers out of my own pocket. I pay for domain names out of my own pocket. I spend many hours doing this. The link in my name above is an example of real Canadian content provided by me. Should I be taxed on this? The CRTC just makes my blood boil!

  4. To the Commissioners and apparatchiks at the CRTC, it is as if the first decade of the 21st century never happened. Worse, they are trying to drag us all back to the 1950s and 1960s when there were only one or two TV stations in town so the industry had to be tightly regulated and consumers had to be taxed to ensure that Canadian content could be produced and aired.

    I don’t have a television but stream British programming from the BBC, ITV, Channel Four.and other outlets one or two nights a week. Does the CRTC truly believe that, for example, the Beeb will send a check every month? And if my WiFi provider were to be taxed for my having access to British broadcasters they would likely try to find a way to block it. Oh, wait: Bell is already trying to get the CRTC to let them do just that!

    The plain fact is that I, like millions of other Canadians, use the internet primarily as a tool for business or to keep in touch with friends, family and acquaintances. Business use alone accounts for 75% of my internet usage. Under what conceivable circumstances can that be equated to anyone watching the CBC, CTV or any other broadcast or cable station?

    Sheesh!

  5. Pingback: Law and Media Round Up – 11 June 2018 – CCTV Installer Near Mear

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