By Konrad von Finckenstein
THERE IS LITTLE DOUBT that Bill C-11 will be enacted by the government in substantially the same form in which it was passed by the House of Commons.
Once it is enacted it will be up to the CRTC to implement it. The purpose is clear; integrate streamers such as Netflix and Amazon’s Prime Video, into the Canadian broadcasting system and have them contribute their appropriate share to the production and promotion of Canadian programs. The CRTC is given new, wide discretionary powers to do so.
The act will apply to online broadcasting undertakings that transmit programs. Given that the definition of programs under the act encompasses virtually any transmission of sound and images or combination, the first task will be to scope the universe it will regulate. It is given new, wide discretionary powers to regulate. However, the only guidance regarding the exercise of such power that can be found in the act consists of:
- mandating the CRTC to implement the broadcasting policy set out in s. 3(1) of the act, and
- obliging the CRTC to exempt any online broadcasting undertaking whose compliance with the act would not contribute in a material manner to the implementation of said policy.
The CRTC’s first task should be a scoping hearing wherein it will seek submissions as to:
- Which online broadcasting undertakings should be required to register with the CRTC? What should be the threshold, should it be based on annual revenue or number of subscribers or both? Should the obligation be limited to Canada’s official languages?
- Who should be exempted from the act altogether? On what basis? What conditions do online broadcasting undertakings have to meet to gain exemption and to maintain exemption?
- How should it exercise its exceptional authority found in s. 4.2 of the act to regulate user generated content? The use of this exception needs to be explained and tightly circumscribed given the general non-applicability of the act to user generated content posted on social media. Should it be used only to deal with online broadcasting operations that have both commercial and user generated content (such as YouTube)? If so, how? Are there other situations where this exceptional power should be used?
Key Issues Hearing
Once it has these hearings and rendered a decision, thereby defining the universe it seeks to regulate, the CRTC will be able to hold a hearing on the substantive regulatory scheme that it will impose on online undertakings. Among the most contentious and difficult issues will be:
- What constitutes Canadian programming under the act? Should the present definition used by the CMF and CAVCO be discarded in favour of a model along the British lines? Should the requirement regarding Canadian ownership of productions and IP rights be abandoned?
- What fees will be paid by online broadcasting undertakings? How will it be calculated so as to comply with the act’s requirements not to exceed cost of regulation?
- What expenditures will online broadcasting undertakings have to make to support the Canadian Broadcasting system in terms of productions, promotion, development and public participation? In what amount/payable to which organization or fund?
- Requirements to be followed by online broadcasting undertakings regarding proportion of Canadian programs being transmitted, the discoverability and showcasing of Canadian programs and priority listing of Canadian programs.
All decisions to be reached need to take into account:
- The constitutional issues: Defenders of freedom of speech will undoubtedly contest any perceived encroachment when in requirements touching on social media and/or user generated content.
- Canada’s obligations under CUSMA: While the agreement has the so-called cultural exemption, any party (i.e., the US) may take a measure of equivalent commercial effect in response to an action by another party (such as Canada) that would have been inconsistent with CUSMA but for the exemption. As past experience has shown trade disputes involving cultural industries can be brutal and should be avoided at all costs.
- Any directions given by the Governor in Council: The direction power has been considerably enlarged by Bill C-11 and can now deal with most aspects of CRTC decision making.
- The new requirement set out in s. 5.2 for mandatory consultations, information provision, consideration of opinions and post decision feedback with official language minority communities on decisions that could adversely affect them: A way will need to be found to accommodate this requirement within the normal public hearing process to avoid this process morphing into a veto or a second hearing.
Implementation of Bill C-11 will pose conceptual challenges, will be time consuming and heavily contested. There are legitimate doubts whether the present structure and resources of the CRTC will be up to the task. It already has a full plate with regulating telecommunications and it will soon get responsibility for C-18, the Online News Act. All of this should logically lead to a rethink and reform of the present structure and functions of the CRTC.
Konrad von Finckenstein is a past president of the CRTC and commissioner of competition.