Five years ago, the Canadian Radio-television and Telecommunications Commission held two major hearings on new media and the Internet. The 2009 hearings, which featured contributions from the major telecom and broadcast companies in Canada, paved the way for Canadian net neutrality rules and the renewal of a regulatory exemption for new media broadcasters such as online video services.
Despite weeks of hearings, Netflix was only mentioned twice: once when it was referenced in a quote from a U.S. publication on the emergence of Internet video and a second time when a Canadian company referred to its mail-based DVD rental service.
Netflix may not have been top-of-mind in 2009, but my weekly technology law column (Toronto Star version, homepage version) notes that today it is seemingly the only thing the industry wants to talk about. New consumer choice of television channels was billed as the centerpiece of the CRTC’s future of television hearing, but witness after witness has turned it into The Netflix Show. Starting with the Ontario government, broadcasters, broadcast distributors, producers, and other creators have lined up to warn ominously about the impact of Netflix on the future of the Canadian television system.
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The Government of Ontario’s call for regulation of online video services has generated considerable attention and a government campaign against what it is calling a “Netflix tax.” While the Government of Ontario has tried to back pedal on its request, the newly released CRTC transcript confirms that government officials were warned about the likely public response. Indeed, the following exchange with CRTC Jean-Pierre Blais foreshadowed the reaction:
THE CHAIRPERSON: To put a blunt face on it, you are inviting the CRTC to regulate Google, YouTube and Netflix, aren’t you, and what advice will you be giving your Minister later on today when the potential headline is, “Government of Ontario wants to tax Netflix” or “Government of Ontario wants to regulate the Internet”?
MR. FINNERTY: Well, in fact what we recommend is that new media broadcasting activities be regulated. We did not recommend that the Internet be regulated, but we are very clear in our submission, both our written submission and in today’s presentation, that we believe that new media broadcasting activity should be regulated to support the principles of the Broadcasting Act and to support Ontario’s very important entertainment and creative cluster.
It is worth noting that the Government of Ontario is not alone on this issue. A review of submissions from many cultural groups reveals that “regulating Netflix” is a common theme in the submissions. For example, the Government of Quebec asks the CRTC to investigate the possibility of imposing payments on online video providers:
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As CRTC Chair Jean-Pierre Blais anticipated, the Government of Ontario’s call for regulation of online video services attracted considerable attention, including comments from Canadian Heritage Minister Shelly Glover roundly dismissing the possibility. Glover stated:
“We will not allow any moves to impose new regulations and taxes on internet video that would create a Netflix and Youtube Tax.”
Last night, I received an email from a spokesperson for Ontario Minister of Tourism, Culture and Sport Michael Coteau that tried to soften the call for online video regulation. The spokesperson stated:
“The presentation today provided important elements for CRTC consideration as it undertakes its review. The government is not advocating for any CanCon changes, or that any specific regulations be imposed on new media TV, until more evidence is available.”
I asked for clarification on what “more evidence” means. The spokesperson responded that there will be over 100 presentations at the CRTC hearing and that all need to be heard from before moving forward.
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This afternoon, the Ontario government appeared before the CRTC as part of its future of television hearing. The Ontario government issued a clear call for new regulation of so-called new media companies such as Netflix and Google. The government states:
In order to create a more level playing field, the ministry recommends decreasing this regulatory imbalance. The ministry believes the best way to accomplish this is to expand the regulation of new media TV, rather than by lightening the current regulation of traditional TV.
What does the expansion of regulation involve?
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Rogers Communications unveiled its plan for streaming more than 1,000 National Hockey League games on the Internet last week. Having invested billions of dollars to obtain the Canadian broadcast and Internet rights to NHL hockey, the cable giant pointed to the future of broadcast by embracing consumer demand for making games available online.
As part of the launch, Rogers Media president Keith Pelley responded to questions about the approach by stating “there’s no such thing as too much choice. Let the consumer decide what they want to watch.” Pelley was speaking about hockey streaming, but my weekly technology law column (Toronto Star version, homepage version) notes his comments should resonate loudly this week in a broader context as the Canadian Radio-television and Telecommunications Commission opens its much-anticipated public hearing on the future of television in Canada.
The CRTC hearing has already generated thousands of advance comments from major stakeholders and individual Canadians. It has also unleashed considerable angst from established broadcasters, broadcast distributors, and content creators, who fear that the broadcast regulator will overhaul the current system by implementing changes such as mandatory pick-and-pay channel selection for consumers and reforms to longstanding policies such as simultaneous substitution (which allows Canadian broadcasters to substitute Canadian commercials into U.S. licensed programming).
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