ISP Tax May Be The Next Big Culture Funding Fight

My weekly technology law column (Toronto Star version, homepage version) places the spotlight on the next big cultural funding issue that promises to make the current dispute seem like a short preview as compared to the forthcoming main attraction. The Canadian Radio-television and Telecommunications Commission will hold hearings on new media regulation in early 2009 and barring a change of heart, the focal point will be the prospect of a mandated levy on Internet service providers to fund new media cultural production.  

Opponents will deride the plan as a new tax, but that has not stopped cultural groups from lining up in support of such a scheme.  Earlier this year, several groups, including the Canadian Film and Television Production Association, the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), the Directors Guild of Canada, and Writers Guild of Canada, proposed a mandatory ISP contribution of 2.5 percent of broadband revenue to help fund Canadian new media content creation.  In support, the groups released the results of a public opinion survey which they said found that "69 percent of Canadians believe that ISPs should be required to help fund the production of Canadian digital media content in the same way that cable and satellite TV providers are required to contribute a small percentage of their revenues to the production of Canadian television programs."
More recently, the CRTC commissioned Eli Noam, a Columbia University finance professor, to conduct an independent study on the issue.  Noam's report, TV or Not TV, canvassed the regulatory options as the Commission grapples with a broadcast environment that has shifted from one of scarcity to seemingly unlimited abundance. Noam concluded that there should be regulatory harmonization between online and offline broadcast that could include public funding for the production of Canadian content. Noam's preferred funding model is "a combination of public funds; an excise tax on ISPs and carriers that would be harmonized with the existing levy on cable and satellite TV providers; and the use of spectrum sales revenues into a special trust fund."

The current discussion on cultural funding may take on greater urgency once the ISP levy takes centre stage.   There is little doubt that such a levy – which Canadians would see each month on their ISP bill – would generate strong opposition from consumers.  The various political parties may be battling to demonstrate their support for the cultural community today, yet an unpopular ISP levy would surely put those positions to the test.

The ISP levy proposal will also force regulators to show their cards on whether they believe that new Internet regulation is needed.  The Commission concluded in 1999 that the Broadcasting Act gave it the power to regulate "new media undertakings," but that given the paucity of Internet video such regulation was unnecessary. Nearly ten years later, streaming and real-time video have become a staple of Internet use with millions of Canadians turning to their computers rather than their televisions for video news and entertainment.  While the differences between the two mediums will be obvious to a generation that lives online, some regulators may be tempted to equate television and the Internet, arguing that a harmonized regulatory approach necessitates the imposition of Canadian content requirements and cultural funding programs.

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  1. How Will Such A Beast Be Administered?
    Having snarfled at the public trough myself for many a year, the immediate question which comes to mind is: “How would such a beast be administered?”

    All issues of arts support aside, if such a tax were implemented who would be responsible for the disbursement of these collected monies? What criteria would be applied to eligibility for and allocation of these monies?

    The same institutions who currently control the purse strings of similar funds? Telefilm? The CTF? Some new administrative bureaucracy equally hobbled by conflicting mandates from powerful industry lobbys and the well-intentioned yet consistently boneheaded political aspirations of Heritage Canada?

    If ISP’s are to be taxed (and thereby depress the still growing marketplace of culture within the net) then those monies should be kept out of the hands of “cultural gatekeepers” of the same ilk as have distorted and repressed our current film and television “industries”. Provide a tax break to productions, akin to what existed for the burgeoning Canadian film industry in the 1970’s, supported by the monies accrued through such a tax. Structure this production tax support in such a way as to encourage private investment.

    I have done very well from my involvement with Telefilm, the CTF and the myriad of other funds available to television producers in this country. To attempt to re-create the same strictures – uh, structures – for culture production on the internet would the greatest folly.

    The internet is NOT television. The internet is NOT film. The internet is its own unique creature and the future of our our country’s artists and entrepreneurs to be able to access, fund and work within the net will not be served by yet another poorly administered Kafkaesque conglomeration of dickheaded bureacracy.

    Tax the ISPs? I don’t think that time has come nor those funds needed. Gonna do it anyway? Okay – just don’t screw it up like all the other funds and agencies that have come before.


  2. Taxed twice?
    This new tax is in addition to the tax Canadian consumers are already paying on blank media (cd-r, dvd-r etc), based on the assumption that blank media is used to burn things obtained from the internet at no benefit to Canadian content creators. Doesn’t that mean this tax is redundant and consumers are being taxed twice?

  3. Ryan Cloke says:

    Internet Video Not = TV
    Thats funny because 99.9% of the content I watch/listen online is not produced professionally or funded by these funds. It is truly creative content.. made because they love it… and that is why I love it.

  4. But Stefan, the blank media charge is a levy not a tax, so we\’re talking about something completely different /Sarcasm

  5. hijacking “artists”
    I don’t know how these “artists” made arts funding an election issue, but they did it. All of a sudden, all party leaders have a comment or two on the arts funding… I think most readers here are asking the same question.

    Canada is now a multicultural society. This means Canadians who weren’t born here are less likely to choose Canadian content (English or French); thus, the internet is a great place to get content from one’s birth place. Furthermore, I think the Canadian public go to the internet for content that is free of these “artists”. I know I do.

    I am proposing a new funding system for the arts. First, we need to abolish these taxation scams called levies to fund Canadian content. Example, the blank media levy introduced by the Liberals. Then, we should establish a pay for use license system – not necessarily pay per use, and certainly not a pay for use license but you don’t own the media nor own your hardware to play the media and have no license. However, the most important is if people don’t use Canadian content, they are free Not To Pay for something they do not use.

    This is not about “culture is important and we should protect it like education or healthcare.” Culture is an expression of feelings and sharing. Culture is not a business. If you’re in business trying to cash-in on culture and you fail, then your business is a failure. Therefore, you should take responsibility for your business’ failure like every other businesses.

    Retail stores have real thefts of their merchandise every day. These lost merchandise are gone and irreplaceable, but you don’t see them crying to the government to establish taxation scams posed as levies for thefts of irreplaceable goods. These levies are thefts from the “artists” onto the public.

  6. Other than saying he opposes the idea, I don’t see Professor Geist giving any reason for opposing a tax/levy on ISPs

  7. I don’t see much of a problem *IF* the money goes to providing Free content (as in Libre). Something like or the Library of Congress in the United States.

    Somehow I think this will end up as just another blank cheque to the media cartells -at the added expense of struggling artists who are trying to distribute their works via the internet.

  8. Flat Fee?
    What I do not understand is how can this money be put into a pool to help fund New Media projects. This money should be going towards a flat fee based approach as discussed in:

    [ link ]

    Investment in New Media is one thing, but investing in New Media producers while making it virtually impossible to compete through the current copyright system and fee’s attached is another.

    The only way to invest in new media productions is to ensure a FAIR copyright system for all producers, and consumers. This money should be going towards fixing the copyright pandora’s box, rather then throwing money away and investing in projects that will fail due to the unfairness and utter discontect from politians and regulators on the copyright issue.

    Not worth the dog **** I stepped in this morning. This coming from a New Media Producer!

  9. I can hardly wait for the money to come rolling in on my Canadian website that I run.

  10. SAY NO
    it only allows them more greed
    it does not advance culture
    it does not advance technology
    it does not make anyhting more affordable to poorer people
    it does not help the economy
    it DOES take YOUR MONEY and give it to people who should NOT HAVE IT.

  11. We need more!
    We need to have this tax! How else are we going to get such fantastic, Canadian culture programs like Matchmaker, Till Debt Do Us Part, and Canada’s Next Top Model???

  12. This taxe should be an worldwide thing. Isp, blank média, cell phones, smartvs, etc…should be taxed to stop this copyright conflits all over the world. A small taxe of 0.01% worldwide on every electronic devise that allows copyright infrigment should be enough for all art, new etc producers. Sorry about mt bad english