re:publica15 by Helge Thomas (CC BY 2.0) https://flic.kr/p/scP4LZ

re:publica15 by Helge Thomas (CC BY 2.0) https://flic.kr/p/scP4LZ

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The Broadcasting Act Blunder, Day 19: The Misleading Comparison to the European Union

The Broadcasting Act blunder series has featured several posts raising concerns that Bill C-10 is likely to increase costs for consumers and decrease choice as some services block the Canadian market altogether. Canadian Heritage Minister Steven Guilbeault has regularly cited the situation in Europe as evidence that the concerns are unfounded. For example, he told the House of Commons that “European Union has adopted new rules on streamers resulting in increased investment, jobs, choice of content and ability to assert one’s own cultural sovereignty” and told the media that the European Union has had a requirement since 2018 that 30% of Internet streaming services content must be European content without resulting in higher fees.

Guilbeault’s comparison of Bill C-10 to the situation in Europe is misleading at best. A closer look reveals that after 10 years of regulatory work, less than a handful of EU member states have actually implemented the rules. Those that have done so have opted for much lower obligations with payment requirements that are a fraction of what Guilbeault has in mind. Moreover, scale matters and attempts to compare quotas intended for a market of 450 million people and 28 countries to a single country of 38 million is apples and oranges.

The European Audiovisual Media Services Directive was passed by the EU Parliament and Council in November 2018. The directive was first introduced in 2010, though elements of it date back far earlier. It features at least four elements that bear some similarity at first glance to Bill C-10:

  • The designation of social media platforms as video-sharing platforms. This bring companies like Facebook, Instagram, and YouTube into the same regulatory sphere as Netflix, Apple TV, Amazon Prime and other streaming sites.
  • The imposition of the obligation for all Video on Demand (VOD) services (i.e.: streaming services) to have at least 30% of their catalogue be European works. This means all streaming services operating across European countries must have at least 30% of their country-specific catalogue be European.
  • The 30% obligation is accompanied by a prominence requirement which mandates all VOD services to have an EU works section on their platform so European films and movies are easily discoverable by users.
  • The directive provides each member state the ability to require VOD service providers to invest in EU works. These funding requirements can be applied to service providers targeting audiences in a member state even when they are under the jurisdiction of another member state.

In other words, the directive includes content and discoverability requirements, but does not mandate a funding requirement. In that regard, it is different from Bill C-10, which has emphasized funding over content requirements.

While Guilbeault suggests that the European directive has not had a negative effect on consumers, the reality is that few members states have actually implemented it despite an obligation to do so by last September. At the moment, only four member states – Denmark, Germany, Sweden, and the UK – have transposed the directive and the UK is obviously planning to leave the EU. A full chart of where member states stand can be found here and reveals that the more than 20 remaining member states are all over the map: some are just now consulting and others have legislation in various stages of Parliamentary process. The Guilbeault claims regarding impact are simply misleading given that the vast majority of EU member states have not implemented the directive.

In fact, even those that have implemented the directive have adopted differing approaches. For example, Denmark has only imposed a 2% direct investment requirement, a far cry from the 30% that Guilbeault has been thinking about. As for the 30% content quota, Denmark has ignored that altogether. Meanwhile, the German levy runs between 1.8% and 2.2%. Other countries that are working on the issue also differ: Spain is thinking about a 5% requirement, while France has long had a levy of 15% on services such as Youtube. The overall approach to date suggests that the 30% payment requirement is dramatically out-of-step with what is found in Europe. Given the far higher payment requirements in Canada, the consumer implications would undoubtedly be far greater.

The content requirements are also an inapt comparison to Canada. The 30% requirement covers European content, not content from a single country. Given the size of the European market and the number of member states, the actual per country requirement is effectively just over 1% if divided evenly among the member states. The reality is that services will surely exceed that number locally since (as I have pointed out with regard to discoverability) it is in their interests to do so in order to attract local customers. However, any attempt to compare a 30% requirement that draws on a population of approximately 450 million people and 28 member states with Canada just doesn’t work.

Finally, consider how long the process in Europe has taken (and continues to take). While Guilbeault talks about a regulatory process concluding by the end of next year, Europe has taken more than ten years to develop its rules and the majority of member states still have not implemented them at a domestic level. The European experience highlights that these are complex issues that require careful study, not a “trust us” approach that leaves most of the key issues to a policy directive or the regulator.

There is certainly value in examining the situation in Europe, but Guilbeault’s efforts to assuage concerns about the implications of Bill C-10 based on the European approach backfire badly. If anything, the comparison points to how Canada plans to implement payment requirements far in excess of what is found in Europe with a timeline that bears no resemblance what has occurred with the EU directive.

(prior posts in the Broadcasting Act Blunder series include Day 1: Why there is no Canadian Content Crisis, Day 2: What the Government Doesn’t Say About Creating a “Level Playing Field”, Day 3: Minister Guilbeault Says Bill C-10 Contains Economic Thresholds That Limit Internet Regulation. It Doesn’t, Day 4: Why Many News Sites are Captured by Bill C-10, Day 5: Narrow Exclusion of User Generated Content Services, Day 6: The Beginning of the End of Canadian Broadcast Ownership and Control Requirements, Day 7: Beware Bill C-10’s Unintended Consequences, Day 8: The Unnecessary Discoverability Requirements, Day 9: Why Use Cross-Subsidies When the Government is Rolling out Tech Tax Policies?, Day 10: Downgrading the Role of Canadians in their Own Programming, Day 11: The “Regulate Everything” Approach – Licence or Registration Required, Broadcast Reform Bill Could Spell the End of Canadian Ownership Requirements, Day 12: The “Regulate Everything” Approach – The CRTC Conditions, Day 13: The “Regulate Everything” Approach – Targeting Individual Services, Day 14: The Risk to Canadian Ownership of Intellectual Property, Day 15: Mandated Confidential Data Disclosures May Keep Companies Out of Canada, Day 16: Mandated Payments and a Reality Check on Guilbeault’s Billion Dollar Claim, The Law Bytes Podcast, Episode 73: The Broadcasting Act Blunder – Why Minister Guilbeault is Wrong, Day 17: The Uncertain Policy Directive)

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