The Broadcasting Act blunder series wraps up after a month of posts, two op-eds, and a podcast with a short summary of the case against Bill C-10. Notwithstanding some of the rhetoric, the debate is not whether the cultural sector should be supported (it should) or whether foreign Internet streaming services should contribute to the Canadian economy (they should). Rather, the issue is whether Bill C-10 is the best way to accomplish those policy goals.
Having spent a month dissecting the bill, it will come as no surprise that I believe the bill is deeply flawed. My concerns involve six main issues: Canadian Heritage Minister Steven Guilbeault’s inaccurate descriptions of the bill and its impact, the negative effects on longstanding Canadian broadcast policy, the extensive regulatory approach, the uncertainty that comes from leaving key issues to the CRTC or a secretive policy direction, the questionable data underlying the policy, and its outlier approach compared to peer countries.
First, with all due respect, Minister Guilbeault has consistently made questionable claims about the content of the bill and how it compares to other jurisdictions. He told the House of Commons that the bill contains economic thresholds (it doesn’t), that it excludes news (it doesn’t), that it won’t affect Canadian ownership requirements (it will), that the entire process will be completed by next year (it won’t), and that it is similar to the approach implemented in Europe (it isn’t). These are not inconsequential misstatements. If Canadians are to engage in a reasoned debate about the bill, it should be based on fact, not creative or misleading interpretations of the proposal.
Second, while the Guilbeault trumpets the benefits that come from mandated payments to support Canadian content production (a benefit he massively exaggerates), he fails to acknowledge that this comes at a great cost. Longstanding Canadian bedrock broadcast policies such as Canadian ownership and control of the broadcasting system, removal of policy objectives to make “maximum use” of Canadian creative talent, and the prioritization of Canadian intellectual property are not policies that should simply be discarded when they prove inconvenient to fulfilling promises to “get money from web giants.” Yet that is precisely what Bill C-10 does without even mention of it in the briefing materials.
Third, the government’s claims that the bill does not license Internet services is deceptive in the extreme. The regulatory framework that Bill C-10 establishes is – as Andrew Coyne described it – “one of the most radical expansions of state regulation in Canadian history.” The regulatory framework that includes mandated registration, a host of conditions of operation, mandated payments, discoverability requirements, mandatory disclosure of detailed confidential information including algorithmic data, and the prospect of multi-million dollar penalties for failure to comply is an enormous regulatory edifice that will invariably lead many services to block the Canadian market altogether. Indeed, when Guilbeault says that the government is not determining what Canadians can watch, he fails to address the risk that his policies will reduce consumer choice and eliminate legal access to many services.
Fourth, for a bill that was months in the making, it is remarkable how many issues are left either to the CRTC to decide or will be part of a policy direction to the regulator that remains a secret and that will not be subject to public debate or scrutiny. Bill C-10 is a bill that leaves more questions than answers: who is subject to regulation and who is exempt, what regulation, how much to be paid, how to meet discoverability requirements, what confidential data to provide, and what counts as Canadian content are all issues left for another day. Indeed, the bill is the ultimate “trust us” with Canadians and all stakeholders denied access to the level of detail most would require to make reasonable business decisions (hence the concern that the bill will lead to less production in Canada in the short term).
Fifth, as I have consistently argued, the data simply does not support the claims from the government regarding a level playing field or the state of the industry. The regulated sector enjoys many benefits not available to Internet streaming services and the industry has enjoyed record production numbers (pre-COVID) with foreign streaming services being major contributors. While there may still be room for more regulation, painting the bill as essential for jobs (as Guilbeault has done) when there has been record investment in recent years and much of the “new” contributions are likely to involve re-purposing already planned spending is deceptive and a weak foundation for the bill.
Sixth, Bill C-10 is an outlier when compared to other countries. In the case of the U.S., it could lead to billions in tariff retaliation. In the case of the European Union, the claims that Canada follows its approach 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.
Given the market risks and the costs to consumers in the form of increased fees, reduced choice, and less competition, Bill C-10 needs a rewrite. There are viable alternatives that would allow the government to maintain the long-standing Canadian ownership principles and still ensure that Canada benefits from the presence of foreign streaming companies. The government could guarantee more revenues for Canadian productions from companies such as Netflix through tax policy, including the announced mandating of the collection and remission of sales taxes. It could also use existing tax credit policies that are an essential part of the production sector to mandate that recipients meet new requirements on promotion and adjust current eligibility requirements to make investment by foreign services in Canada even more attractive. Rather than seeking to shoehorn internet streamers into the broadcast system despite obvious differences and significant repercussions, it needs to rethink the evident blunders in the bill.
(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, Day 18: The USMCA Threat That Could Lead to Billions in Retaliatory Tariffs, Day 19: The Misleading Comparison to the European Union)