Canada’s cultural industries greeted the election of a new Liberal government with considerable excitement, hoping to the turn the page on a decade of Conservative policies that were widely viewed as prioritizing consumers over creators. The Liberal platform was silent on major regulatory changes, but it did promise to reverse cuts to the CBC and to increase allocations to the Canada Council for the Arts, Telefilm, and the National Film Board.
The cultural sector will undoubtedly welcome the infusion of millions more in taxpayer support, but the bigger fight will be over legal reforms to treat telecom and Internet companies as cultural businesses and require them to make Canadian content contributions similar to those paid by conventional broadcasters.
My weekly technology law column (homepage version) notes that the prospect of telecom and Internet provider payments has been part of a long-standing campaign from cultural groups who fear that a shrinking broadcast sector will ultimately mean smaller handouts for Canadian content creation. The campaign has thus far failed to bear much fruit: the Supreme Court of Canada ruled in 2012 that Internet providers were not subject to the Broadcasting Act and last year the Conservatives led the charge against a “Netflix tax” that would have required the popular online video service to make Canadian content contributions.
While the “Netflix tax” issue is supposedly dead – all political parties indicated early during the election campaign that they did not support such a tax – many are still hoping to find new sources of private sector funding and the telecom and Internet industries offer the juiciest target.
Indeed, the prospect of new revenue sources is often what lies behind calls for a re-examination of the governing statutes, criticism that the Canadian Radio-television and Telecommunications Commission (CRTC) has abandoned sound policy in favour of popularity, suggestions that Industry Canada and Canadian Heritage merge on communications policy, or claims that telecom and Internet companies be treated as “cultural distributors” who should be required to pay their fair share.
This back to the future approach may sound reassuring to an industry that relied for years on legislative protections and mandated payments, yet it reflects a bygone era of regulation designed for a world of scarcity where broadcast spectrum and consumer choice was limited. This led to a highly regulated environment that used various policy levers to shelter the Canadian market from external competition, limited new entrants, and imposed a long list of content requirements and advertising restrictions.
As a result, a dizzying array of regulations kept the entry of new competitors to a minimum, enshrined genre protection so that Canadians were treated to domestic versions of popular foreign channels such as HBO and ESPN, and firmly supported simultaneous substitution, a policy that allows Canadian broadcasters to simulcast U.S. programming but substitute their own advertising. The Canadian cultural sector supported the system in return for steady payments to support new productions along with guarantees that a small slice of the broadcast schedule would be reserved for Canadian content.
The Internet forever changed the rules of the game, creating a world of abundance that ushered in new competitors and unlimited consumer choice. Recent CRTC data confirms what is increasingly obvious to anyone familiar with the viewing habits of teenagers and younger adults: 58 per cent of anglophone Canadians between the ages of 18 and 34 now subscribe to Netflix, which helps explain why conventional television viewership is declining among younger Canadians.
Recognizing that its relevance was at risk, the CRTC took steps last year to shift toward this new world, focusing on maximizing consumer choice, preserving net neutrality, and giving Canadian creators the tools to succeed in a global market.
The change in government has opened the door to new speculation that a renewed focus on cultural support might also mean a re-examination of CRTC policy and government telecom regulation. The Liberals smartly avoided promises to undo the shift in cultural policy, perhaps recognizing that the CRTC reforms were right not because they were popular. They were popular because they were right.