OTTAWA – Can Canada maintain a rights market of its own for cultural content in the face of rampant and rapid technological change? If so, how? Should we? At what costs? What would any new rules say?
These very difficult, complex questions, along with Heritage Minister Mélanie Joly’s recent announcement that our aged legislation covering Canadian content rules will soon be getting an overhaul, were front and centre during the first morning of the Law Society of Upper Canada’s Biennial conference into new developments in communications law and policy at the Shaw Centre in Ottawa.
For example, Telus VP of broadcast policy and regulatory affairs Ann Mainville-Neeson noted during one session that a number of carriers now allow their pay-TV customers to access Netflix on their in-home set-top boxes, right along side linear TV channels, Canadian OTT services and the carriers’ video on demand offerings. How can anyone explain to the consumer that Netflix, despite the fact it is available on their TV box, is exempt from the regulations governing the others and the reason that Netflix doesn’t have the same content here is because those other Canadian options have purchased the content for the Canadian market because copyrights are still sold based on geography.
Going further, Canadians also don’t understand the economics of the industry and that continues to be one of the biggest challenges facing the industry. During the Let’s Talk TV proceeding and since, said Kevin Goldstein, Bell Media’s VP regulatory affairs for content and distribution, “one of our biggest issues… is expectations… Any time you talk to a Canadian consumer about what choice is going to mean, the answer is always the same: ‘I pay $100 for 100 channels and I only watch 20, therefore it’s going to be $20.’ It was never going to be $20. It was never going to be close to $20 and I think one of the biggest issues with that is the general public don’t understand the economics of operating in this industry, from a BDU perspective, or a programmer perspective or a producer perspective.”
But, what if, with the federal government’s impending review of broadcasting and telecom law, the entire system is blown up? What if we can no longer protect a Canadian rights market in the new reality of our always-connected cross-border world? Are there technological or other means to keep a level playing field?
Given our proximity to the United States, “it’s a bit of a miracle we ended up with a Canadian rights market after all,” said Fasken Martineau DuMoulin partner Jay Kerr-Wilson, who presented a paper on our rights market with Fasken associate Ariel Thomas. Kerr-Wilson detailed the history of our system where Canadians have always used various means, beginning with rabbit ears and antenna towers in the 1950s and ’60s, through to black and grey market satellite gear in the 1990s to online methods now to circumvent copyright.
Cable’s simultaneous substitution helped with the border bleed of off-air U.S. stations, and better digital encryption rendered all the black and grey market satellite gear useless, but what will be the technical solution to online content piracy? Is there one?
As Canadians, we often see “the uploader has not made this video available in your country” when clicking on certain videos, meaning someone, somewhere is paying attention to the copyright regime. But, using a VPN or other technology to hop over the geo-blocking techniques used to protect online content, has become commonplace for many Canadians. So common, many don’t believe they are doing anything wrong – even though the 2012 amendments to the Copyright Act make using tech means to circumvent protections illegal, said Thomas.
While we search for a better technical solution, if there will ever be such a thing, Thomas also noted that the Canadian companies which own the rights to content here have a job, too, in that they “have to convince Canadians that the content they seek” is easily available – and affordable, without illegally hopping any digital borders.
“We’ve taken the door off the hinges and burned it.” – Jay Kerr-Wilson, Fasken Martineau DuMoulin
As for doing anything about Netflix like blocking it or taxing it, Kerr-Wilson doesn’t believe that’s even possible anymore. While it’s important, he said, to maintain a Canadian rights market, forcing Netflix to contribute to the Canadian system by paying into the Canada Media Fund or taxing it some other way, is just not an option. The horse has not only left that barn for that scenario, “but we’ve taken the door off the hinges and burned it,” he said.
Entertainment lawyer Stephen Stohn, partner with Stohn Hay Cafazzo Dembroski Richmond (and, it should be noted, executive producer of Degrassi: The Next Generation and co-owner of Epitome Pictures with his wife Degrassi co-creator Linda Schuyler, before it was sold to DHX Media), said he believed Canada missed the boat on Internet regulation 20 years ago. He told conference attendees that he told the CRTC back then “we really need to start thinking about regulating the Internet,” but that the Commission asked him to come back when he could show it was making an impact – and now that it is disrupting everything, it’s much too late.
Stohn had harsh words for the CRTC for its decision to maintain the 1999 Digital Media Exemption Order, which says the Commission exempts online broadcasters from regulation. That was a mistake, he added, which should have been addressed during the 2015 Let’s Talk TV proceeding, but was not touched. “I don’t think it’s the role of the regulator to oversee the demise of the system,” said Stohn.
We need, he added later, for Netflix to be forced to pay into a compulsory licensing regime of some sort in order to “balance the playing field” in Canada (because, of course, our own broadcasters have many regulatory costs Netflix does not face). Such rules are not contrary to free market thinking, but proper intervention because this is a “case of a total failure of the free market,” he said.
However, Stohn also added that Netflix is also a real boon to entertainment companies because with, essentially, a click of a button, he said he can send new content to the platform and have it available to 190 countries nearly immediately, earning revenue just as quickly.
So, while folks at the conference are happy to have the minister at least open the debate on the system, its future and the laws governing it, there’s quite a bit of uncertainty about whether or not anything can really be done to maintain the Canadian rights market we know especially, as university of Ottawa law professor Jeremy deBeer said: “It will take a decade before it is resolved.”
If it does take that long, that would be disastrous (particularly when you consider that Facebook and YouTube have only been around a little over a decade and have wreaked havoc with everything in this sector.)
DeBeer added later: “If Canada tries to regulate Netflix or Apple or Google Play or Hulu – they’re not going to go down easily,” and besides, we don’t really know how much the OTT services are already spending here for Canadian content, supporting the industry already. Netflix, for example, wants to be important everywhere and is investing in local content in every country it enters.
“Netflix may be reinvesting more in Canada than we realize,” said deBeer, “but we don’t know the numbers.”
