By Ahmad Hathout
A paper published in the Canadian Bar Review last spring that called federal jurisdiction over online streamers “suspect” was studied by Canadian Heritage, according to heavily redacted briefing material obtained by Cartt, and the author believes the Online Streaming Act is “inevitably going to be challenged” on that basis.
Michael Ryan, a lawyer specializing in Canadian telecommunications and broadcasting law and regulation, told Cartt in an interview that he was “expecting, frankly, somebody to come forward and challenge this law before now [and] they inevitably will.
“It’ll be an American streaming company or somebody else who feels that they’d be better off under provincial jurisdiction,” said Ryan, who also counseled Telus on CRTC-related matters in the past.
Ryan conveyed that it’s a big, less preferred undertaking, but if the foreign streamers lose their challenge to the CRTC’s imposition of the five-per-cent revenue contribution to Canadian content at the Federal Court of Appeal, “they might very well or somebody will ultimately fall back on the jurisdiction point.”
That jurisdiction point is argued at length in a 27-page research paper in the Canadian Bar Review titled The Federal Claim to Jurisdiction Over Online Streaming Services. The gist is that the 2023 Online Streaming Act has, without legal precedent, shoveled online services under “broadcasting,” which case law has determined is a federal jurisdiction because radiocommunication connects the provinces.
Section 92 (10)(a) of the Constitution, which outlines undertakings that are exceptions to exclusive provincial jurisdiction, includes telegraphs and railways that physically cross provincial lines. The author argues that streaming services do not own physical networks and simply rely on the CRTC-regulated internet service providers for distribution.
“Netflix doesn’t connect the provinces in any physical sense,” Ryan emphasized.
Ryan also argues the federal government has not justified why online streaming services being regulated is of “national concern” under the doctrine of Peace, Order, and Good Government, which is often reserved for exceptional issues (e.g. greenhouse gas emissions).
He also argues there is no evidence that the provinces cannot regulate the streamers themselves or that the matter is distinct enough that it must be in the federal wheelhouse or that the provinces’ failure to regulate would have significant national consequences.
The article caught the attention of Canadian Heritage, whose Digital and Creative Marketplace Frameworks Branch prepared a memorandum for the deputy minister summarizing the article. The memo includes the department’s conclusion, its comments and a “consultations” section, which are all redacted under the solicitor-client privilege exemption.
“The Department of Canadian Heritage regularly reviews information and analysis related to its mandate, including on legislation such as the Online Streaming Act,” a department spokesperson told Cartt in response to a question about what this information was used for. “This information supports ongoing awareness, policy analysis, and briefing activities to inform consideration of emerging policy issues.”
From a decision in 1999 to the enactment of the Online Streaming Act in 2023, the CRTC has exempted “new media” from direct regulation. Despite determining that some new media – digital audio and video services –met the definition of “broadcasting” under the Broadcasting Act of 1991, these were services in their infancy whose regulation would not “contribute in a material manner to the implementation of the broadcasting policy for Canada.”
For a while, “the exemption resulted in an uneasy truce between the CRTC and some new media providers, especially foreign entities, over the scope of the CRTC’s authority that continued until the enactment of the OSA,” Ryan writes in his piece.
In 2018, the federal government tasked an external group, in part, to provide recommendations on what to do about the influx of online streaming services in the country. The Broadcasting and Telecommunication Legislative Review Panel – colloquially called the Yale Panel after its chair Janet Yale – concluded in a 2020 report that these services were now disrupting the broadcasting industry as Canadians were increasingly cutting the traditional television cord.
On the jurisdiction question, the Yale Panel pointed to the 2003 Lincoln Report of the Standing Committee on Canadian Heritage.
“The issue of jurisdiction – that is, which level of government has the power to legislate with respect to ‘Internet issues’ – may present some challenges with respect to issues of governance and division of powers,” the Lincoln report noted.
“Despite these preliminary concerns,” the report went on, “some aspects of Internet regulation have emerged as relatively uncontested sites of federal jurisdiction. The only mode of communication that is specifically mentioned in the division of powers sections of the Constitution Act, 1867 is ‘Telegraphs’, which is given over to exclusive federal jurisdiction. Over time, court decisions have ‘extended the reference to telegraphs, so that s. 92(10) now includes telephone, radio, broadcast television and cable television within federal jurisdiction.”
“The CRTC has had to respond to the rapid development of new broadcast and communications technologies; the Internet and new media are simply the latest in this evolutionary line,” the report continued, concluding “broadcasting in whatever format and however carried falls within the jurisdiction of the Broadcasting Act and under the regulatory purview of the CRTC.”
Still, the Yale Panel recommended that that the Broadcasting Act be amended to “establish that the legislation applies to undertakings carried on in part within Canada, whether or not they have a place of business in Canada. This would include undertakings, persons, and entities that disseminate media content by telecommunications to Canadians or make media content available to Canadians for compensation.”
And so here we are.
Former Department of Justice lawyer Philip Palmer, with experience in broadcasting and telecom, has raised a similar argument as Ryan on the matter. When Bill C-11 was called Bill C-10, Palmer, who did not respond to a request for comment for this story, argued before the Standing Committee on Canadian Heritage in February 2021 that the law “raises significant constitutional issues.”
He said “broadcasting” stripped of the radiocommunication component – the interprovincial bridge – is just programs or content.
“Uncoupled from the underlying radio carriage, there is nothing that is sufficiently distinct about programs that they can be brought within federal legislative power,” Palmer said, arguing that these are local concerns in which the provinces have a vested interest.
“The critical factual distinction is that streaming services do not transport their content to listeners and viewers,” as opposed to traditional broadcasters, Palmer said. “Because streaming services do not transport or control the transport of their content, they are not interprovincial undertakings and do not fall within the legislative competence of Parliament on that basis.”
If not the American platforms, then it could be the Quebec government that may step up to the plate and challenge the law in court if prompted, Ryan thinks. Late last year, the province passed Bill 109, legislation requiring streamers to promote French-language content on their platforms. The law has upset American platforms, and it came while the CRTC was publicly consulting on imposing discoverability rules on streamers.
Last month, the CRTC ruled that platforms are expected to increase promotion of Canadian programs, including being able to filter recommendations to find content in French. It was a decision that accompanied another that raised the foreign streamer contribution into the system to 15 per cent of Canadian revenue.
Culture Minister Marc Miller told the regulator earlier this month that it must revisit the decision and that the department would be providing new guidance in a policy direction. It comes during a time when Canada is in talks with the U.S. to renew their trade deal.
That could be one way the feds are looking at the issue. The other: “I think they might very well be aware of the constitutional problem that any of these measures raises,” Ryan said, adding they may not want to irritate the streamers or else. “They aren’t ready to confront it yet.”
Ryan says a challenge on the jurisdiction question — which he noted could seep into new online harms legislation introduced last week — could be brought when the CRTC releases its final order on expenditures. “It’s breaking new ground either way,” he said.
“How the federal claim to jurisdiction is ultimately resolved will have important implications for how Canada addresses the challenges the rapid rise of online streaming services poses, not only for the future of federal engagement in the regulation of audio and audio-visual services, but for the federal government’s constitutional authority to implement other elements of its digital agenda,” Ryan concludes in his piece.
No matter how such a challenge comes about – if it does at all – one thing appears certain: the full implementation of the Online Streaming Act appears a long way away.
