CRTC wants internet providers, Netflix to contribute to Canadian content

CRTC wants internet providers, Netflix to contribute to Canadian content

Canada’s broadcast regulator wants internet providers, wireless carriers and streaming services such as Netflix Inc. to pitch in to fund Canadian content as more consumers access music and video online.

In a report released Thursday, the Canadian Radio-television and Telecommunications Commission recommended legislation that “clearly and explicitly” requires equitable contributions from any audio or video service provider — whether it’s foreign or local, traditional or new — that makes money in Canada from providing access to content.

The report titled Harnessing change: The future of programming distribution in Canada comes amid disruption to the traditional broadcast system. As it stands, broadcasters and television providers contribute a percentage of revenue to made-in-Canada programming. But funding has dwindled due to stagnating advertising and subscription revenues as consumers increasingly forgo television packages to access content over the internet.

In the name of preserving the cultural sector, the Governor in Council ordered the CRTC to report back on how to fund Canadian content in the digital era. While the CRTC’s proposals are only suggestions — Ottawa will have the final say when it reviews the telecommunications and broadcasting acts — they come despite the government’s repeated pledges not to tax Netflix or the internet.

Canadian Heritage Minister Mélanie Joly, who along with Prime Minister Justin Trudeau has definitively said there will be no internet service provider tax, did not address the CRTC’s suggestions for levies (or, as the regulator called them, “contributions.”)

“We thank the CRTC and all of the experts that have participated in this work. At the end of the day, our objective is to modernize our laws for the 21st century in order to protect and promote our culture, and we will have more to say on this soon,” Joly’s press secretary Simon Ross said in a statement Thursday.

There’s sure to be a debate about the CRTC’s proposals, but there’s no debate the internet has fundamentally altered Canada’s broadcast system.

Broadcasters have argued it isn’t fair for them to bear the cost of funding Canadian content as eyeballs shift online. Content creators also want the government to mandate more funding sources.

The CRTC’s suggested funding model would reduce the burden on broadcasters and spread it among broadband providers. It said its model would be “revenue neutral,” indicating the same amount of money would be in the system but from a variety of players.

“This approach recognizes the fact that the vast majority of the demand for telecommunications services and the associated growth in their revenues is driven by video and audio content,” the report states.

It pointed out that most telecommunications services are vertically integrated — BCE Inc. and Rogers Communications Inc., for example, operate as broadcasters, television service providers and broadband providers, so they’d pay less from one envelope and more from another.

While Canadians rely on the internet for a variety of activities, be it work, education or community, the CRTC argues the “true driving force behind the rise of broadband Internet in this country is demand for real-time entertainment, and particularly video, which accounts for two-thirds of the capacity of fixed networks and one-third of the capacity of mobile networks.”

When it comes to online services, the CRTC said the contributions could be non-monetary such as through promoting content. One of its main pushes is for “discoverability,” as in making Canadian content stick out from an ocean of choices.

It’s not clear exactly how the CRTC will compel new players such as Netflix to participate in the new system. It described the current system as rigid, and recommended new regulations that are tailored to specific companies or groups of companies.

“Nimble regulatory approaches, such as binding agreements that clearly and transparently set out obligations, would better incent constructive participation and secure essential commitments from all participants,” it stated.