The CRTC yesterday released its much-anticipated Online Streaming Act decision that has been years in the making. Given the likely opposition from many stakeholders, it is virtually certain to lead to protracted trade and legal battles. From the moment the government introduced Bill C-10 in 2020, its goal was to impose regulatory obligations on Internet streaming services, treating them as online broadcasters and mandating that they pay into the Canadian system. This week’s ruling puts a number on the payments, building on an earlier 5% interim levy with an additional 10% in expenditure requirements. The combined 15% places Canada among the most expensive operating jurisdictions in the world for streaming services, with consequences that will undoubtedly affect consumer streaming prices. Moreover, with the streaming services already challenging the interim 5% levy in court, they will undoubtedly challenge this one as well. In fact, the battle will not be limited to Canadian litigation. The U.S. government, which has become increasingly vocal in its opposition to the Online Streaming Act, will view this decision as a provocation and escalate pressure on Canada to drop the legislation altogether. Culture Minister Marc Miller appeared to hedge in his reaction to the decision, suggesting that the government sees the headaches that lie ahead.
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The Online Streaming Act in Jeopardy: U.S. Takes Aim at the CUSMA Cultural Exemption With Threats of Bill C-11 Retaliation
From the moment it was first introduced as Bill C-10 in the fall of 2020, it was readily apparent that mandated payments by foreign streaming services to support Canadian content would face a trade backlash with the U.S., with the real prospect of trade retaliation. In fact, I wrote about the issue days after the bill was tabled, warning that an uneven playing field for benefits – foreign companies required to contribute but banned from benefiting – was a risky approach. Those warnings were dismissed by the government, cultural lobby groups, and supporters of the bill who assured critics that Canada’s cultural exemption under CUSMA provided a shield against U.S. retaliation.
It took years for Bill C-10 – later Bill C-11 – to become law as the Online Streaming Act, but now the bill has come due. Weeks after the U.S. Trade Representative (USTR) specifically identified Canadian digital laws as a target in CUSMA renegotiations, House Republicans introduced the Protecting American Streaming and Innovation Act, a bill that would mandate an investigation into the Canadian law and open the door not only to trade retaliation but also to a change in how the cultural exemption is applied.
Carney’s Digital Recalibration: How the Government is Trending Away from Justin Trudeau’s Digital Policy
Digital policies did not play a prominent role in the last election given the intense focus on the Canada-U.S. relationship. Prime Minister Mark Carney started as a bit of a blank slate on the issue, but over the past few months a trend has emerged as he distances himself from the Justin Trudeau approach with important shifts on telecom, taxation, and the regulation of artificial intelligence. Further, recent hints of an openness to re-considering the Online News Act and heightened pressure from the U.S. on the Online Streaming Act suggests that a full overhaul may be a possibility.
Quebec’s Streaming Regulation Bill 109: Unconstitutional, Unnecessary, and Unworkable
The federal government’s plans to regulate internet streaming services such as Netflix and Spotify through the Online Streaming Act have been mired in regulatory battles and court cases for many months. My Globe and Mail op-ed notes that the government’s plans finally took a small step forward last month, as Canada’s broadcast regulator, the Canadian Radio-television and Telecommunications Commission, completed weeks of hearings into what counts as Canadian content, or “Cancon.”
Yet in the midst of the latest hearings, the Quebec government threw a monkey wrench into the entire process. Not content to wait for the CRTC process to play out, the provincial government introduced its own streaming regulation bill that is likely to spark a constitutional challenge. Quebec’s Bill 109 contemplates government intervention into how content is presented to subscribers, and would introduce unprecedented quota requirements that could lead to blocked services in Quebec or the removal of thousands of non-French titles from content libraries.
The Law Bytes Podcast, Episode 234: “Solutions Aren’t Going to be Found Through Nostalgia”: Mark Musselman on the CRTC Hearings on Canadian Content Rules
The CRTC recently wrapped up a two-week hearing on the Online Streaming Act that featured most of the usual suspects, though notably not the large streaming services. The Commission grappled with foundational issues such as modernizing the definition of Canadian content, instituting IP requirements, and introducing new discoverability rules into Canada’s broadcasting regulatory framework.
Mark Musselman is a former entertainment lawyer, longtime Canadian movie producer, current PhD student focused on cultural and legal policy, and the author of the White Paper Black Coffee substack. Having appeared many times before the CRTC, he joins the Law Bytes podcast to discuss the recent Cancon hearing, breaking down the major issues of debate and identifying what was missing from the discussion.
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