The government today killed the centrepiece of its broadcasting policy, announcing it plans to issue a new policy direction to override the CRTC’s Online Streaming Act decision on Internet streaming service contributions less than two weeks after the Commission released it. The reversal, which undoubtedly reflects the harm the decision caused as part of trade negotiations with the United States, comes at a cost to taxpayers; the government promised a $600 million payout to the audio and audiovisual sectors to cover anticipated lost revenues. Canadian Culture Minister Marc Miller framed the move entirely in terms of affordability and consumer choice, cautioning that the Commission’s requirements could be borne by Canadian consumers through higher prices. That risk has been obvious since the government introduced the legislation years ago. In fact, it is close to word-for-word for the case I made before the Commission in December 2023 that consumer interests, competition, and affordability belonged at the centre of broadcast and Internet policy.

Governments do not move to unwind CRTC decisions within two weeks unless they have concluded that it cannot stand. The Broadcasting Act contains no review-and-vary power over the contribution and expenditure decisions and the Governor in Council’s review authority reaches only licensing decisions. The government therefore cannot simply vacate the ruling and must instead force the result through a fresh policy direction of general application and a new CRTC proceeding, with the $600 million serving as the bridge to keep the sector onside.

The release never mentions CUSMA, trade, retaliation, or the United States, but the CRTC’s approach raised obvious trade risks under CUSMA and opened the door to massive tariff retaliation if the government relied on the cultural exemption to press ahead. Further, it handed the U.S. a “trump” card at the very moment that our most important trade deal is up for review. The U.S. had targeted the issue and, much like the rapid abandonment of the digital services tax, the Canadian government quickly signalled it is prepared to drop the policy altogether.

The $600 million payoff is worth emphasizing because it is an explicit substitution rather than a top-up. The government says the investments will ensure creators, producers, and broadcasters receive the financial support they would otherwise have had as a result of the CRTC decisions, with the level of public investment to be adjusted once the new rules are finalized. The original bill was sold on the promise of making web giants pay, and I argued at the time that consumers would get the bill regardless of the framing. Now the government has established a system in which the public clearly pays.

The government has been careful to insist that the Online Streaming Act itself was and remains a necessary step. But the objectives set out for the coming policy direction, namely affordability, consumer choice, flexibility for streamers and broadcasters, and leveraging public investment, were largely dismissed as priorities throughout the legislative and regulatory process as the government focused instead on extending the cross-industry subsidy model through streamer payments. Better late than never, but what is needed for the next round is a willingness to rethink the foundation of a cross-industry subsidy model that long ago stopped reflecting the realities of Canadian film and television production.