Minister Michael Coteau, Ministry of Citizenship and Immigration, at the Northern Leaders’ Forum by Premier of Ontario Photography (CC BY-NC-ND 2.0)

Minister Michael Coteau, Ministry of Citizenship and Immigration, at the Northern Leaders’ Forum by Premier of Ontario Photography (CC BY-NC-ND 2.0)


Ontario Government Soft Pedals Netflix & Google Regulation, But Record Speaks For Itself

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.

Yet a review of the Ontario government submission to the CRTC and its prepared remarks yesterday make it clear that the government strongly supported immediate regulatory reforms and that the need for “evidence” is actually a reference to revenue thresholds that would trigger mandatory payments by foreign online video providers.

The Ontario government submission to the CRTC provides a detailed vision of regulating online video providers. It recommends that the CRTC immediately put in place “thresholds and performance measures” that would “permit the future imposition of new media TV system Cancon financial obligations.” It envisions thresholds based on the number of subscribers or subscription revenues with the goal of imposing financial obligations once a certain number is achieved.

The same submission explains why the government believes that only foreign online video providers should face these obligations (it would exempt domestic providers), noting:

Regulating foreign OTT providers with respect to Cancon would result in more symmetrical regulation, and in a significantly greater contribution to the Canadian broadcasting system with respect to Cancon (spending and broadcasting). Not expanding regulatory supports for foreign OTT providers could thwart continued growth and development of Canadian new media industries, thereby impeding achievement of broadcasting policy objectives, especially production of original/first-run made-for-new media and TV programming.

Those do not appear to be the words of a government waiting to hear from other witnesses. In fact, yesterday’s prepared remarks included the following:

“The ministry recommends that the CRTC put thresholds in place now that would permit future Cancon financial obligations for foreign over-the-top providers, as soon as the evidence warrants.”

When combined with the government’s full submission, it becomes clear that the “evidence” is a reference to foreign online providers hitting the thresholds, not the comments of other presenters.  Moreover, the call for creating thresholds now would itself involve the creation of new regulations.


  1. It would be interesting to hear the Ontario minister’s thoughts on the role of technological neutrality. His views seem to indicate that technological neutrality would mean that both cable companies and OTT companies should contribute in some way to Canadian programming.

    I think he is missing an element, however. Cable, at its core, reproduces channels, where someone else is making the minute by minute programming decisions. Netflix does not do that, and thus are much more like a video rental store. They could easily be considered to be closer to a video sale than a rental, because of the way that they allow consumer choice among a large selection, all without advertising support.

    From that point of view, technological neutrality would indicate that if Netflix is going to contribute, then so should Redbox, Best Buy and Playdium – all kiosk rental providers.

    Moreover, given that almost any video sales store makes a decision about what to carry and what not to carry, they have an effect on the distribution of Canadian programming. As such, large DVD/Bluray retailers like Best Buy, Future Shop, and Walmart should also be contributing.

    The problem that he appears to want to solve is the loss to Ontario industry. The problem I foresee is that simply having all these various companies contribute will not help in an environment where people watch what they want. They are now their own channel programmers, and the volume of Canadian content does not matter. What matters is whether or not people want it. If they want it, then the problem should solve itself, as I expect Netflix is always looking for new material. If people don’t want to watch some item, OTT companies will not spend anything to put it on the list of options.

    • Netflix is moving more into the content creation side. It just announced at TIFF it will be creating doc series.

  2. I find this stance by the Government of Ontario quite stunning in its idiocy, and was very tempted yesterday to write a letter to my MPP and the minister about it. I still might. What does the minister think is going to happen if you attempt to put an extra tax on an international company like Netflix? It’s simple: they’ll abandon the Canadian market. It’s the same reason why Verizon didn’t end up buying Wind Mobile. The Canadian market just isn’t big enough to be worth the extra expense and regulatory headache.

    Google wasn’t kidding when they said the CRTC is going to have to be careful not to do anything to stifle innovation in the Canadian market. Netflix has already scared Big Telecom into creating their own competing services. If the government insists on repeatedly putting up roadblocks to foreign competition, they can’t at the same time cry about how little competition/innovation/investment there is in the telecom industry.

  3. Pingback: Ontario’s bid to impose a Netflix or YouTube tax « Quotulatiousness

  4. Canadian content has never been that important to Canadians. Most just what to see transparency as far as public privacy attempts and costs when compared to other countries. One area that could be questioned is the misuse of political bias within the existing publicly paid for broadcasters. One gets tired of how shorted most news stories are and how so-called political debate shows are so timid and politically aware more of government ears than the need to demonstrate critical thinking based on factual accounts of subjects or events.

  5. I love the part about “decreasing regulatory imbalance” by increasing regulations. Instead of adding more regulation to hit the high watermark of regulation, how about decreasing it? That would seem a better way to bring balance.

    Canadian content laws might make some sense in the context of a scarce resource that belongs to the public (bandwidth over the air waves), but when it comes to the Internet where there is no broadcast, each video stream is wholly independent and capacity for storing shows is essentially infinite, it makes no sense. The playing field is already level in terms of being able to reach an audience and the only regulation required to keep it that way is strong net neutrality laws (needed due to lack of competition at the ISP level).

  6. My question is why the Gov’t of Ontario is getting involved in this question and advancing this kind of position in the first place. Said otherwise: what are the interests driving this position? The best answer I can come up is that it might be some backdoor method for trying to stabilize the long-term future of Ontario TV/film production outlets. Any other guesses?

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