Television by ccharmon (CC BY-ND 2.0)

Television by ccharmon (CC BY-ND 2.0)


The CRTC TalkTV Hearing: The Gap Between Can’t and Won’t

In August 1999, I wrote my first technology law column for the Globe and Mail. The column was titled The Gap Between Can’t and Won’t and it focused on the CRTC’s new media decision that was released earlier that year. The decision was the first major exploration into the applicability of conventional CRTC regulation to the Internet, with the Commission ruling that it had the statutory power to regulate some activities (such as streaming video), but it chose not to do so.

That column came to mind yesterday as I read through some of the CRTC’s TalkTV transcripts and listened to Jesse Brown’s Canadaland podcast on the prospect of a “Netflix tax.” It seems to me that both the discussions before the CRTC (particularly the CBC’s decision to urge the Commission to establish a fee-for-carriage model and a Netflix tax) and the Brown podcast with Steve Faguy fail to distinguish between the gap between can’t and won’t.

Consider the CBC’s effort to institute a fee-for-carriage system that would force broadcast distributors to pay for carriage of local signals. CBC’s plan – echoed by Bell (which owns CTV) – would establish a wholesale fee for the carriage of their signals that would presumably be passed along to cable and satellite subscribers. While the likelihood of the Commission agreeing to the proposal is approximately zero (the government would trumpet the proposal as a “CBC tax” and move to stop it), it should be noted that this issue was before the Supreme Court of Canada less than two years ago. In a December 2012 ruling, the court ruled that the CRTC can’t institute a fee-for-carriage system under its current Broadcasting Act mandate. Given the court’s decision, CBC and Bell would be advised to take their case to the government, not the CRTC [a reader notes that one way to distinguish the SCC case would be to combine a new fee with the removal of over-the-air signals].

Meanwhile, the issue of a Netflix tax is clearly politically dead, hastened by the Ontario government’s decision to propose it last week before the Commission. The Conservatives seem ready to campaign on the issue and the Prime Minister even referenced it in a speech yesterday. That said, the death of the Netflix tax proposal is an example of something that won’t happen, not something that can’t. I am big fan of both Brown and Faguy, but when they scoff at the prospect of a Netflix tax with claims that it is impossible, “regulating the Internet” or involves government censors, they are wrong. It is not impossible to structure a system that would require Netflix (or any other online video provider with Canadian subscribers) to pay a fee. Such a system might be overbroad, difficult to enforce, and very bad policy, but it is not an impossibility.

In fact, aspects of the Internet and online video are already regulated by the CRTC. The most obvious example is net neutrality regulations that are essential to the success of companies such as Netflix. Similarly, Canadian privacy law surely applies to Netflix. If the company were to violate PIPEDA with its use data related to subscriber viewing habits, the Privacy Commissioner of Canada would undoubtedly adopt the position that the law applies, regardless of whether it involves the “Internet”.

The good news is that the CRTC seems to get all of this. As Faguy notes on the podcast, the Commission seems at times frustrated by the unwillingness of many hearing participants to look beyond obvious self-interest and engage in a genuine discussion on the future of the Canadian broadcast regulatory system. Indeed, skeptics of some of the current players might argue that that is an example where can’t and won’t merge into much the same thing.

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  1. It is possible to subscribe to US services using a US credit card and a VPN to show up there. Any Netflix tax would push me and everyone I know simply to avoid the selection completely.

    The chickens have left the Koop. The CRTC and the thugs from Rogers May have to turn to carjacking to continue the corporate salaries.

  2. I CAN’T stand the thought of a Netflix Tax and I WON’T support any party that attempts to implement one.

  3. Perhaps “realistically impractical” is better than “impossible” in terms of the CRTC regulating Netflix. But I find that to be a mainly semantic argument, since either way it can’t happen.

    I order for the CRTC to impose any regulations on Netflix, it would need to define it as a broadcaster. And that means it would have to create a definition of an online video service that includes Netflix but not every website on the Internet that serves video. And no one in front of the commission has actually proposed such a definition, last I checked.

    I also think that if the CRTC does impose any new rules which are non-trivial, then companies like Netflix may simply pull out of Canada, officially or unofficially, or find ways around those rules.

    The CRTC does have the power to regulate other things about the Internet, but those fall under its jurisdiction as a telecommunications regulator. The key difference is that in telecom, it doesn’t concern itself with content. People can say whatever they want on the Internet, and the CRTC isn’t going to step in.

    There are also other ways to regulate Netflix. A special tax could be imposed on all video streaming services sold in Canada. But that would need to be imposed by legislation. The CRTC does not have the authority to launch such a tax.

    If the CRTC could realistically regulate Netflix, I actually think it would. Not as strongly as TV broadcasters, but it would put some rules in place. The problem is that they can’t, and so came up with their exemption order to pretend that can’t is actually won’t.

  4. Pingback: The CRTC - Netflix Battle: Could It Lead to a Challenge of the CRTC's Right to Regulate Online Video? - Michael Geist

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