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.
Related posts:
From Levy to Liability: Why Canada Risks Facing Hundreds of Millions in Retaliatory Tariffs Due to the CRTC’s Online Streaming Act Ruling
Carney’s Digital Recalibration: How the Government is Trending Away from Justin Trudeau’s Digital Policy
The Online Streaming Act Bill Comes Due: Why the CRTC’s Latest Ruling Guarantees Years of Trade and Legal Battles
$600 million here, $600 million there, and before long you’re talking serious money.
Why should they care when it’s free (aka taxpayer) money?
Who is “they”?
Affordability, consumer choice and flexibility are all baked into the amended Broadcasting Act and the Policy Direction – it is misleading to say otherwise – moreover the CRTC’s decisions have allowed streamers a range of choices of how to contribute. So much so that the pre-Trump era head of the Motion Picture Association lauded its flexibility.
See:
Broadcasting Act – Broadcasting Policy for Canada
– 3(1)(d)(iv) [Broadcasting system should] promote innovation and be readily adaptable to scientific and technological change,
– 3(1)(d)(v) reflect and be responsive to the preferences and interests of various audiences, and
– 3(1)(e) each element of the Canadian broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming;
– 3(1)(f) & (f.1) – sets a lower standard for foreign undertakings’ use of Canadian creative and other human resources – ‘maximum use’ vs ‘greatest practicable use’
– 3(1)(q)(iii) [online undertakings carrying third party services should] ensure delivery of programming at affordable rates
– 5(2) – Regulatory policy recognizes nature and diversity of services, impacts, and different contributions to meet the goals of the Act
2023 Policy Direction
– s4 – requirements must be equitable given the size and nature of foreign vs. Canadian undertakings
– s8 – requires flexibility and adaptability in regulatory approach, including (a) minimizing regulatory burden where appropriate and (c) respecting audience choice and where possible increasing options available
– s12 – (b) recognize diversity of services provided, (c) consider providing flexibility in expenditure requirements
Global streaming companies enjoy Canadian revenues of $6-7 billion a year, hundreds of millions in production tax credits, and pay minimal corporate income tax. Shooting films in Toronto set as New York shouldn’t let them off the hook for contributing – in a flexible manner – to Canadian creators & local expression.
Matthew;
The difficulty here lies in the very first word – broadcasting.
One of the key establishing cases for the federal regulation of content was “Re C.F.R.D. and Attorney-General of Canada et al.” (1973) which indicated that the regulation of the medium and regulation of the content were inseparable. Since the medium was federally regulated, it followed that the content was also federally regulated. This decision explicitly mentions and follows from the Radio Reference decision (1931), which explicitly laid out the need for federal regulation because transmissions in a province would cross both provincial and national boundaries, making regulation of such undertakings a matter of federal responsibility.
This essentially comes down to the laws of physics. A electromagnetic transmission (in the language of the day, using Hertzian waves) leads to the federal regulation, which in turn leads to federal regulation of content.
The alternative would be to consider these undertakings as provincially regulated, as almost all businesses are today. Moreover, much regulation of content is, and remains, provincial. When I go to see a movie in a cinema, the rating on that movie is set by way of provincial authority. Quebec enforces online content regulations covering material being available in French. Online streaming services already operate under provincial regulation – the monies paid for such a service are taxed according to the provincial regulation, varying by province.
Online streaming, however, is not broadcasting as defined in the Radio Reference decision. It communicates over private connections. The content of those connections is no more subject to federal regulation than the content of telephone calls. With this break in the line of logic, it appears that there is no basis for federal regulation of online streaming content.
Looking at the nature of an online streaming undertaking, the closest model would be a subscription service at a private DVD store. Such businesses do exist, and they are entirely and solely subject to provincial regulation.
The only factor which can bring federal powers into scope regarding content is criminal law. Content that breaches criminal law will be subject to the federal power, as the constitution places that responsibility with the federal government.
In summary, the flaw is not in the details of the act or the regulations, but in stepping across the constitutional separation of powers.
It seems quite possible that at some time in the future, the Supreme Court of Canada may have to rule that the federal government cannot simply step in and choose what to regulate. It is bound by the separations laid out in the constitution, and as such, its powers cannot be extended into the online streaming domain.
I found your comments on the CRTC’s decision extremely thought-provoking, notably the shift of accountability from online companies to taxpayers. It reflects my own experiences utilizing scratch games online services and recognizing how expenses might unexpectedly spread throughout our communities.