The government’s launch of Bill C-10, the Broadcasting Act reform bill, was careful to note that it was not creating a new licensing system for Internet services. For example, the Canadian Heritage FAQ states “Canadians will still be able to watch all of their favourite programs and access their preferred services. This Bill in no way prevents online streaming services from operating in Canada, or requires them to be licensed.” Previous posts have explored why this is unlikely to be the case with the new rules leading to less consumer choice as services choose to avoid the Canadian market given the new costs and requirements imposed by the government. The Broadcasting Act blunder series continues today with the first of several posts unpacking the shift from licensing to regulation, concluding that for many services, it could be a distinction without much of a difference.
Bill C-10 is clear that in contrast to conventional broadcasters, online undertakings such as Internet streaming services will not require a licence to operate in Canada. Section 31.1 states:
(1) A person shall not carry on a broadcasting undertaking unless
(a) they do so in accordance with a licence issued to them; or
(b) they are exempt, under an order made under subsection 9(4), from the requirement to hold a licence.
(2) Despite subsection (1), a person may carry on an online undertaking without a licence and without being so exempt.
In other words, while conventional broadcast undertakings (ie. programming undertakings) require either a licence or an exemption from the CRTC, online undertakings do not require either. Yet given the regulatory requirements, the absence of a licence will mean little for services operating in Canada, thinking about operating in Canada, or simply having Canadian users. For them, Bill C-10 provides a whole new regime that replaces licensing or exemption with “registration” subject to “conditions”.
Bill C-10 creates this new regime through amendments to sections 9, 10 and 11 of the Act. These new powers will allow the CRTC to:
- require registration of any broadcasting undertaking (section 10(1)(i))
- impose, by order, conditions that are virtually indistinguishable from licensing requirements (s.9.1(1))
- implement a wide range of additional regulations (sections 10 and 11).
Section 10(1)(i) gives the CRTC the power to establish regulations that could require all broadcasting undertakings – including online undertakings – to register with the Commission. Given how broadly the bill defines the jurisdictional scope, this includes smaller streaming services, video news sites, podcasters, or even user generated content sites that include anything other than user generated content. Unless the CRTC decides to establish new thresholds or exemptions, all of these sites and services are caught by the bill and subject to Canada’s new registration requirement.
The regulatory power extends beyond registration requirements, however. The CRTC can establish registration fees (the bill limits the fees to the costs incurred by the Commission) as well as regulations on Canadian programming, advertising rules, and audit rules that would allow the CRTC to examine records and books of any registered entity. These are all regulations that specifically can be targeted at online undertakings such as Internet-based services. To be clear, failure to comply with these regulations carries the possibility of stiff penalties. Section 33 provides:
Every person who contravenes any regulation or order made under this Part is guilty of an offence punishable on summary conviction and is liable
(a) in the case of an individual, to a fine of not more than $25,000 for a first offence and of not more than $50,000 for each subsequent offence; or
(b) in the case of a corporation, to a fine of not more than $250,000 for a first offence and of not more than $500,000 for each subsequent offence.
Further, Section 34.4 establishes the possibility of administrative monetary penalties (AMPs) for contravening these regulations that can run into the millions of dollars. So while the government argues that it is not licensing Internet services, it is creating a regulation system that includes registration, mandated audits, and Cancon conditions all backed by millions in potential penalties for failure to comply. In fact, mandatory registration and additional regulations are only part of the “regulate everything” approach. An upcoming post will examine the specific conditions that can be imposed on the services if they choose to operate in Canada.
(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 Policy, Day 10: Downgrading the Role of Canadians in their Own Programming)