Shaw Go Wifi by Mack Male (CC BY-SA 2.0)

Shaw Go Wifi by Mack Male (CC BY-SA 2.0)


No Mandated Netflix Cancon Payments: Shaw Argues Success Lies in More Regulatory Flexibility in BTLR Submission

Yesterday’s post on the still-secret broadcast and telecommunications review submissions obtained under Access to Information focused on Bell, which proposed extensive new regulations for Netflix that would result in hundreds of millions in payments that could spark a trade battle with the United States. The major Canadian communications companies are not united on this issue, however.  While there are similarities on wireless (most oppose mandated MVNOs), the broadcast perspectives differ significantly. This post reveals some of the details in Shaw’s submission to the BTLR, also obtained under ATIP.

Shaw argues that broadcast distributors such as cable companies already contribute to Canadian content by investing in its distribution through its networks. It therefore recommends the removal of the mandated 5% contribution by BDUs and opposes the creation of a new ISP tax. Indeed, it identifies many negative effects of an ISP tax, including affordability, reduced network investment, and harm to innovation.

Interestingly, Shaw also rejects a mandated Netflix Cancon contribution tax:

Shaw submits that the imposition of legacy regulatory models onto OTT platforms would not be in the best interest of consumers or the overall Canadian broadcasting system. A regulatory framework that depends on foreign OTT services to achieve the cultural objectives of Canada’s domestic broadcasting system will likely lead to issues of enforcement as well as inconsistent and unsatisfactory results.

Instead, Shaw argues that the Broadcasting Act objectives are best achieved through a “more flexible, market-driven approach”. As for a Netflix contribution, Shaw argues it would be better to emphasize discoverability of Canadian content, a measure that could be imposed on all OTT providers – both Canadian and foreign – thereby avoiding potential violations of Canada’s trade agreement obligations. Shaw also supports the imposition of sales taxes on Netflix and the avoidance of new carriage fees for broadcast signals.

Shaw maintains that the Canadian market would be better served by opening up to foreign investment. It argues that for Canadian broadcasters and BDUs to compete, they need access to capital, expertise, and technology, all of which would be facilitated by access to foreign investment. Given the role that foreign providers (such as Netflix) already play in the creation of content in Canada, opening the market would help preserve the strength of the Canadian broadcasting system.

As for other issues, Shaw believes that net neutrality is already protected under Canadian law without the need for further provisions and that website blocking should be permitted through reform to the Copyright Act. While the Bell submission adopted an extreme self-interest approach, Shaw’s vision is consistent in favouring a lightweight regulatory model premised on more competition, better pricing, and a shift away from mandated payments.