The Canadian Radio-television and Telecommunications Commission issued a notable decision last month involving the creation of an annual digital media survey that likely provides an advance preview of how it will address Bill C-11 if it becomes law. That is a cause for concern, since the Commission apparently sees few limitations in its powers despite obvious doubts that it is operating within the boundaries of existing law. Those powers, which will be increased should Bill C-11 be enacted, lead to its position that any broadcasting from anywhere in the world is subject to its jurisdiction so long as there is a Canadian nexus to the activities. There is no requirement that the service be located in Canada in order to qualify and little practical guidance on what constitutes a Canadian nexus.
Given the broad scope, it is no exaggeration to say that Bill C-11 will extend Canadian broadcasting regulation to the world, leaving it to the CRTC to establish thresholds that may exempt some services. Further, if the process into establishing the digital media survey is any indication, the vast majority of foreign services will not even participate in these regulatory processes, creating significant questions about CRTC enforcement and potential blocking of the Canadian market.
In 2019, the CRTC launched a proceeding saying it intended to expand an existing market survey to include digital media owned by licensed broadcasters (thereby including services such as Crave and CBC Gem) but were explicit they would not include free-standing foreign digital media services such as Netflix. However, two years later, in the wake of Bill C-10’s demise in Parliament, the CRTC decided it was not going to wait for legislation to regulate digital media and that it would instead apply its powers directly to the Internet. In an uncharacteristically short proceeding with minimal notice to potentially implicated Internet companies around the world, it decided to begin collecting confidential data from digital media broadcasting undertakings (whether based in Canada or abroad) as part of a new annual survey of digital media.
It was not at all clear that the CRTC has the jurisdiction to take this approach. Indeed, the FRPC noted that the Commission cannot require digital media undertakings to submit information to it since those services fall outside of the licensing system (that may change with Bill C-11). Yet the CRTC rejects that argument in this decision, sending a clear message that it adopts an aggressively expansionist approach to its jurisdiction but doing so in a rushed and perfunctory way without making much of an attempt to disentangle the complicated questions that accompany regulation of online content.
First, it takes the position that broadcasting includes Internet transmissions, which is far from certain under the current Act. Indeed, part of the rationale for Bill C-11 is to expand the law to cover Internet undertakings. Yet the CRTC states:
Section 2 of the Act broadly defines the term “broadcasting” to mean any transmission of programs, whether or not encrypted, by radio waves or other means of telecommunication for reception by the public by means of broadcasting receiving apparatus, but does not include any such transmission of programs that is made solely for performance or display in a public place. Whether this broadcasting takes place over the Internet or a more traditional method does not affect the determination in this case of whether the Commission has jurisdiction over a particular broadcasting undertaking.
Having dispensed with the Internet issue that lies at the heart of current reform, the CRTC then adopts the position that broadcasters everywhere – now including Internet services – fall within its jurisdiction:
Subsection 4(2) states that the Act applies to broadcasting undertakings carried on in whole or in part within Canada. The location of the person operating the broadcasting undertaking is not determinative of whether a service is carrying on in whole or in part in Canada. Rather, it depends on the existence and extent of any nexus (i.e. a real and substantial connection) between Canada and the undertaking in question, based on non-exclusive factors. Where the Commission determines that broadcasting is occurring within the Canadian broadcasting system, it has the authority to regulate such broadcasting and the relevant broadcasting undertakings. This authority extends to non-Canadian undertakings (including DMBUs) broadcasting within Canada.
The implications of the expansive approach to both the Internet and its jurisdiction? The CRTC says it therefore follows that:
all broadcasting that takes place in Canada falls within the regulatory purview of the Commission. Where the Commission determines that broadcasting is occurring within the Canadian broadcasting system, regardless of method or location of origin, it has the authority to regulate such broadcasting and relevant broadcasting undertakings. It can determine whether to license or exempt them pursuant to the Act, subject to the Commission respecting the Direction.
Once subject to regulation, the CRTC maintains it has the power to do pretty much anything:
Regarding the terms and conditions of exemption, the Commission can adopt any terms and conditions so long as it deems them appropriate. This is in keeping with the broad discretion accorded under the Act to regulate and supervise the broadcasting industry…The Commission retains wide discretion in determining the scope of any request for information, the frequency of the reporting requirement and the form of the response.
The CRTC proceeds to leverage this assertion of power over Internet broadcasting by establishing new requirements to participate in its annual survey, requiring disclosure of detailed information related to revenues, subscribers, and other commercial data. The Commission does establish thresholds: $25 million in Canadian revenues for audio services and $50 million for audio-visual services. Those thresholds could be used as thresholds for other regulatory requirements should Bill C-11 become law.
Many observers may not have much concern with requiring market participants to disclose information to the regulator. However, the decision does point to some significant concerns that will only be exacerbated by Bill C-11. First, the CRTC’s expansive regulatory approach will be enhanced by the bill, confirming that concerns about jurisdictional over-reach are not theoretical. The CRTC really does believe it is entitled to regulate all services everywhere and then decide whether – and on what terms – it may exempt some from regulatory requirements.
Second, the CRTC comes from a world of conventional radio and television, where audio and audio-visual services are relatively easy to discern. But Internet services are far more complex. News services such as the New York Times integrate popular audio and video content. Is it subject to these survey requirements? How is it to calculate the revenues that may arise from the Daily podcast? What about Peloton or other web services with audio-visual components? Internet services do not fit neatly within the CRTC’s conventional framing, yet it relies on that framing to determine who is subject to its rules.
Third, the CRTC provides little guidance or analysis on essential issues related to jurisdiction and the scope of Commission powers. For example, the CRTC could have provided guidance on jurisdiction in this decision since “real and substantial connection” is open to interpretation with online services, but declined to do so. The failure to provide guidance points to the prospect of an information void in Canada: the government provides few specifics on how to implement Bill C-11 and the CRTC declines to provide details in its decision.
Fourth, it is instructive that few foreign services participated in this process. In fact, there were only three non-Canadian intervenors: AMC, MPA-Canada, and Netflix. The non-participation in the CRTC process speaks volumes as it creates a new form of regulatory theatre in which foreign services are said to be part of the “Canadian broadcast system” but play no role in its processes. Indeed, this confirms that while Canada may adopt the view that it is entitled to regulate hundreds of services worldwide, many of those services are likely to reject that view. In response, the services will either simply refuse to comply with Canadian regulations, practically daring the CRTC to find a way to enforce the rules. Alternatively, those services may simply block Canada altogether, leading to fewer consumer choices and higher costs.