Canadian Prime Minister Justin Trudeau by World Bank Photo Collection (CC BY-NC-ND 2.0) https://www.flickr.com/photos/worldbank/25613452631

Canadian Prime Minister Justin Trudeau by World Bank Photo Collection (CC BY-NC-ND 2.0) https://www.flickr.com/photos/worldbank/25613452631

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What Comes Next for Canadian Digital Policy Under a Liberal Minority Government?

In the closing months of the last Liberal majority government mandate, I spoke to a government official about the lessons learned from the prior four years. Their response?  If we knew then what we know now, we would have moved much faster on policy. The four years moves very quickly and if you don’t manage to lay the groundwork and introduce proposed legislation within the first 12 – 24 months, it becomes very difficult to enact given competing policy priorities, demands on committee time, Senate review, and a myriad of other challenges.

As I think about what comes next for Canadian digital policy under the new Liberal minority government, those words strike me as more relevant than ever. Even if the government runs more like a majority than a minority (which certainly seems likely on digital policy as no one is forcing an election over privacy or wireless pricing), the same ministers return to their portfolios (which may or may not happen) and the same committee structures return largely unchanged (which will not happen since that INDU chair Dan Ruimy was not re-elected), picking up where the government left off in June will not be easy. Further, the Liberal platform provides the roadmap for future reforms, but moving rapidly on these issues – particularly given expectations that a minority government’s mandate may run shorter than a majority – suggests that quick wins will be preferred to extensive legislative reform.

So what are likely next steps on digital policy?

During the election campaign, I wrote an op-ed comparing the Liberal and Conservative proposals and discussed the various platforms on my podcast in a conversation with OpenMedia’s Laura Tribe. There are at least six areas of potential focus with considerable overlap between them: telecom and broadband, privacy, culture, tech company regulation and taxation, copyright, and international policy.

Telecom and Broadband Access

The telecom file garnered considerable attention during the campaign as most parties (Conservatives excluded) took turns promising to lower wireless and Internet costs. I also wrote an op-ed on wireless policies, summarizing the Liberal plan as:

Meanwhile, the Liberals launched their own proposal over the weekend with a promise to cut prices by 25 per cent over the next four years. Rather than relying on price caps, the party says it plans to work with the carriers “to offer plans comparable to global prices, plus an unlimited family plan”, create new competition by mandating wholesale access for new mobile virtual network operators (MVNOs) that pay for access to existing networks but offer their own pricing and plans, and set-aside future spectrum to make it easier for new entrants to enter the marketplace.

The op-ed identifies several ways to make the plan more effective, including greater certainty on the telecom policy direction, fully opening the market to competition, rejecting new fees on wireless and Internet services, and use affordability as a foundation for telecom policy.

The likely outcome is that the government will wait for the CRTC’s MVNO process to take shape and monitor pricing data over the next 24 months. When combined with reform recommendations from the Broadcasting and Telecommunications Legislative Review Panel (report due in January 2020), the government is unlikely to introduce major changes until for at least one year, likely two. It will be too late for a major overhaul by that time, but assuming change is desired, quick wins would include expanded MVNO competition, the 3500 MHz spectrum auction that is viewed as essential for 5G implementation, and naming a new CRTC chair in 2022 when the term of current chair Ian Scott comes to an end.

As for broadband access, the Liberal approach is well established with programs designed to provide funding for rural broadband initiatives and a commitment to universal, affordable broadband access by 2030. Given the timeline, major changes from the current path would be a surprise.

Privacy

The Liberal platform identifies its Digital Charter, introduced earlier this year, as the basis for future reforms. The Charter envisioned privacy reform post-election, including changes to consent standards, stronger enforcement, and data portability. The platform also promises a new Data Commissioner, though it remains unclear how that role would intersect with the federal privacy commissioner.

While the document provides a reasonable starting point for discussion, further consultation seems likely before any new bill is tabled at the House of Commons. Indeed, the best case for privacy reform would be for formal consultations based on the Digital Charter to wrap up by the fall of 2020 with legislation introduced before the end of the year. Privacy reform can be contentious, however, and slipping into 2021 is a distinct possibility. If that happens, there is a real risk that the legislative clock will run out on the bill before it can be enacted as heavy lobbying on virtually any significant reform is a near-certainty. Should that happen, pressure from the European Union on the adequacy of Canadian privacy law is likely to intensify.

Culture

The Liberal platform devoted a specific section to culture, promising to strengthen the CBC’s regional mandate, open up the CBC digital platform for journalism startups and community newspapers, and increase Telefilm funding. Yet the most important – and likely contentious issue – involves Internet companies:

move forward, in our first year, with legislation that will take appropriate measures to ensure
that all content providers – including internet giants – offer meaningful levels of Canadian content in their catalogues, contribute to the creation of Canadian content in both official languages, and promote this content and make it easily accessible on their platforms.

This commitment is notable for the inclusion of a timeline (first year of the mandate), who it covers, and the flexibility in the requirement. While something is coming in the first year – the government will presumably wait for the final report from the Broadcasting and Telecommunications Legislative Review Panel in January 2020 before acting – the specific language is somewhat ambiguous, stating it will ensure meaningful levels of Canadian content, contribution to the creation of Canadian content, and promotion of that content. Further, it applies solely to content providers, thereby excluding Internet and wireless providers from its ambit.

Companies such as Netflix could argue they already meet these standards given that they offer considerable Canadian content, spend hundreds of millions on productions each year in Canada, and promote that content on their platforms. It goes without saying that cultural groups would like the government to ignore data that indicates record investment in production in Canada and to mandate commitments that go far beyond current expenditures in the form of contributions to funding programs. There is a risk in doing so, however, since the USMCA might allow the U.S. to retaliate with measures of “equivalent commercial effect.”  The net effect could be hundreds of millions of retaliatory tariffs or measures against Canadian goods and services.

Tech company regulation and taxation

As I noted during the campaign, the Liberal platform marked a dramatic shift in approach to technology companies, shifting from an emphasis on innovation to regulation. The platform features several technology regulation proposals, including a promise to introduce new legal requirements “that all platforms remove illegal content, including hate speech, within 24 hours or face significant financial penalties.” The policy, which borrows from similar rules in Germany, is intended to put pressure Internet platforms to more aggressively remove online content. The platform also promises greater labour protections for people who work through digital platforms, though most of those workers will fall under provincial jurisdiction.

The Liberals have also promised to address taxation, though their proposals also provide some flexibility. The platform commitment states:

make sure that multinational tech giants pay corporate tax on the revenue they generate in Canada. We will also work to achieve the standard set by the Organisation for Economic Co-operation and Development (OECD) to ensure that international digital corporations whose products are consumed in Canada collect and remit the same level of sales taxation as Canadian digital corporations.

According to the Parliamentary Budget Officer costing exercise, the corporate tax proposal would take effect on April 1, 2020 with a three per cent tax on targeted advertising services and digital intermediation services with global revenues of over $1 billion and Canadian revenues of more than $40 million. This would cover search and social media services, but the scope of “digital intermediation services” is uncertain. For example, it seems unlikely to cover a content provider such as Netflix.

As for digital sales taxes, those are likely coming but only after international standards are developed. In fact, the Liberal platform commits only to working with the OECD to establish a standard, not actually implementing digital sales taxes.

Copyright

Copyright did not figure prominently in any major party platform and only made an appearance in the campaign toward the very end with the CBC’s ill-advised lawsuit against the Conservative Party. The lawsuit is unlikely to dissuade parties from using copyright works in their campaign materials, but may succeed in demonstrating the importance of a robust fair dealing provision in the law. Indeed, expanding the fair dealing provision was one of the recommendations of the copyright review.

Having just completed the review, the government is unlikely to prioritize major reforms early in its mandate. The review recommended many reforms (as well as further study of some issues) but a copyright overhaul would be difficult in a minority government environment. In fact, the most notable copyright issue may arise from the potential ratification of the USMCA. Should that trade deal proceed, Canada has two years to implement copyright term extension with the prospect of adopting innovative approaches that meet the treaty requirements and safeguard large portions of the public domain by instituting a registration requirement. That approach would be consistent with the copyright review recommendation and will receive attention as the deadline for implementation gets closer.

International Policy

The Liberal platform references several international policies that intersect with digital issues. As noted above, there is a commitment to work with the OECD to develop global standards on digital sales taxation. Similarly, the technology company regulation rules around content moderation and takedowns are derived from international discussions with countries such as Germany, France, and New Zealand.

In a commitment that would bring a smile to my late colleague Ian Kerr, the Liberals also promise to support a ban on lethal autonomous weapons:

take a leadership role in ensuring the ethical use of new technology, by developing and supporting international protocols to ban the development and use of fully autonomous weapons systems;

The commitment is consistent with its earlier emphasis on ethics and artificial intelligence. While there is much work to do to bring other countries on board, it suggests that Canada hopes to play an important role in developing emerging global technology policies.

One Comment

  1. Pingback: News of the Week; October 23, 2019 – Communications Law at Allard Hall

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