Cable & Telecom

ANALYSIS: Five questions need answers before we set new policy for a digital Canada (Question #4, the role of the CRTC)

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WE’VE HEARD NOTHING but discussion and debate since the official launch of the review of the Broadcasting Act – along with the Telecom and Radiocommunication Act – and with another year of discussion and debate on the horizon, the best first course of action to solve the tricky and complex policy challenges ahead is to ask (and answer) the right questions in the right order – and right now.

I’ve thought of five extremely important questions which should be answered first, ahead of anything else. I’d argue much of the discussion around proposals such as combining the two Acts should come far later, after we address these more fundamental issues. I outlined the first three questions earlier (1. Do we still have a system?; 2.What are the “Elements” of The System?; 3. What do we do about the Digital Media Exemption Order?), and here’s the fourth important query:

4. What’s the role of the Regulator going to be?

As I mentioned at the outset, the Broadcasting Act declares the best way to achieve the objectives of Broadcasting Policy, and to ensure that the all of the elements contribute appropriately etc., is to have the system regulated and supervised by a “single independent public authority”, namely the CRTC.  This move, establishing an independent regulatory tribunal, effectively takes all of the relevant decision making out of the hands of the politicians and the government departments and delegates it to an arm’s length agency in the hopes that political winds can’t affect fair policy

There is a whole area of administrative law that deals with the establishment, operation, decision-making practices and authority of these tribunals.  There are dozens of them active within the federal government, and they are a tried, true and effective machinery of government mechanism.

Let’s have a look at why this is the case.  First, in any governmental licensing or rights-granting process it is very convenient for politicians to point to an independent body in order to avoid being drawn in to the merits of individual cases.  Imagine the political pressure, and possible corruption opportunities if this were not the case.  The CRTC makes many hundreds of critical decisions each year and, believe me, no politician wants to get involved in any of that work.

There is also the matter of expertise.  The CRTC has hundreds of highly knowledgeable professionals on its staff.  The questions it tackles are tremendously complex and the answers affect many dozens of highly motivated, well-funded and intensely interested stakeholders.  Finding a path through the mist is a tricky balancing act.

It is because of this that courts so rarely overturn a CRTC decision.  It is said the CRTC’s success rate in court is well over 80%.  The general attitude is that they are the experts and we, the courts, should tread lightly in any second-guessing we might contemplate.  It’s the same with cabinet appeals.  While they are sometimes permitted, the cabinet usually wants to offer no encouragement and generally turns them away.

So to my mind, an independent regulator must be a vital component of any system going forward if, of course, there is going to be a system.  Its job is and will be the implementation of the edicts of the Broadcasting Act or its successor, and it is patently ridiculous to posit that the CRTC has outlived its usefulness and should be dismantled.  As long as there is a Broadcasting Policy there will be, and must be, a CRTC.

I can’t conclude this commentary, however, without discussing the potentially serious storm clouds moving in.  Once again, it has to do with Netflix.  In her Creative Canada announcement, Minister Joly indicated she was pushing for commitments from “foreign platforms” who benefit our digital industries, and proudly announced an “agreement” between the Government of Canada and Netflix.  Under the agreement, Netflix will create Netflix Canada, a permanent film and television production presence in Canada, along with a commitment to invest $500 million in original productions in Canada over five years.

“What is at the heart of this deal?  I’d say it’s some kind of permission to operate in Canada (or agreement not to interfere with the operation) in return for a contribution to Canadian production.”

Now this Netflix deal has been extremely controversial for a number of widely documented reasons, especially in Quebec.  I’d like to add a new criticism to the pile.

What is at the heart of this deal?  I’d say it’s some kind of permission to operate in Canada (or agreement not to interfere with the operation) in return for a contribution to Canadian production.  Pretty simple.

What’s at the heart of a CRTC licence?  Well, it’s a permission to operate in Canada on certain terms and conditions (generally specifically tailored for each licensee) and always as part of that package, various commitments to Canadian production. All of it transparently public.

Think about that.  The Minister, a politician, seems to have formally, on behalf of the Government of Canada, assumed the role that belongs under the Broadcasting Act to the CRTC, the independent regulator.  If we look at this from the perspective of a Bell Canada, would it rather have its many licenses from the CRTC with all of the attendant costs and administrative headaches, or an “agreement” directly (and confidentially) with the Minister?

Why, if you’re a foreign programming powerhouse, do you get to make your regulatory deal in private directly with the Minister, but if you are a regulated Canadian programmer you must go through the cumbersome and very public processes with the CRTC?

To my mind, this is a bit of a legal affront to the regulated businesses, to the Regulator, and to all the stakeholders and elements of the system which rely on the transparency and fairness of the regulatory process, no matter what their perspective may be on individual issues.

So, there needs to be recognition that this type of two-track regulation, whatever its political value, is legally tainted and needs to step back in favour of the Act.  If the Minister wants to have the authority she is exercising, then Parliament needs to amend the legislation to give it to her and take it from the CRTC.

Watch this space Tuesday for the final question: What should a reformed system deliver to Canadians?

Doug Barrett is a veteran of over 30 years in the Canadian media and entertainment industries and since 2008 a professor in Media Management Schulich School of Business of York University. He is also the Principal of Barcode SDG, a strategic advisory firm. He was also president and CEO of PS Production Services from 2006 to 2013 and prior to that spent 20 years as one of Canada’s most successful entertainment lawyers, serving as senior partner at McMillan LLP. From 2004 to 2008, he served as chair of the board of directors of the Canadian Television Fund. He has also served on several additional industry boards, including the Banff Television Festival, the Feature Film Project of the Canadian Film Centre and the Canadian Film and Television Production Association.  He was also a key founder of the Alliance Atlantis Banff Television Executive Program.

(Ed note: Doug knows what he’s talking about and has spent a long time thinking about this industry.)

Original artwork by Paul Lachine, Chatham, Ont.