This article originally appeared in the Globe and Mail.
By Peter Menzies, July 16, 2024
So far, the modernization of Canada’s broadcasting system is going almost exactly as expected, and not at all according to plan.
It’s been a little more than 14 months now since the controversial Online Streaming Act was given Royal Assent. Also known as Bill C-11, it expanded the Canadian Radio-television and Telecommunications Commission’s jurisdiction beyond the 20th-century broadcasting world so that it now has authority over all audio and visual content on the internet.
No sooner had the legislation become law than the CRTC was out of the gate with an ambitious implementation plan. It confidently predicted that a new regulatory framework would, as the government intended, level the playing field between Canada’s cable companies and the offshore streamers to ensure that the latter were also forced to pay into funds to support the creation of official Canadian film and television content. According to the CRTC, all the necessary consultations and hearings would be complete and its up-to-date system would be in place by the end of 2024. There was every reason to believe that fresh, new money from “web giants” would be flowing into the pockets of those whose livelihoods depend upon those official funds before the next election.
The bill’s proponents were happy. Its critics, though, continued to be skeptical. The online streaming world is not the same, they said, as the walled garden the CRTC is used to managing. There is a high likelihood, they contended, that legal challenges and the threat of streamers abandoning the market could lead to years of haggling, gamesmanship, uncertainty and suppressed investment. Still, the CRTC successfully launched its first hearing on schedule last November.
That’s how it started. This is how it’s going.
The CRTC’s first decision this year involved charging online companies fees to cover the costs of their regulation. That resulted in Google filing a court challenge, claiming the CRTC shouldn’t have included revenue from Google/YouTube’s user-generated content (UGC) in its calculations. UGC, it insists, is a content category that the CRTC was directed by Heritage Minister Pascale St-Onge to keep its hands off of.
Next, having mulled over the feedback from its autumn hearing, the CRTC announced it had revised its original plan. The foundations for the new framework would no longer be in place by the end of 2024; it would now take until the end of 2025 for that to happen. It cancelled a couple of proceedings and added others, including one exploring – and I’m not making this up – how the broadcasting system, including social media, can be better at reflecting the government’s diversity, equity and inclusion agenda. What looks to be a massive consultation, followed by a hearing, into the sustainability of the entire Canadian news ecosystem will take place in the spring and summer of 2025, while another process will review the regulator’s practices and procedures to make sure they are “more agile, easier to understand and more efficient.”
So, speaking of efficiency, we’re now looking at 2026 – maybe 2027 – before this gets wrapped up.
But even that may be too optimistic. Last month, the CRTC delivered the verdict from its autumn proceeding: All streamers with $25-million or more in Canadian revenue will now have to pay 5 per cent of that into designated funds.
To no one’s surprise, this was not well-received. Federal Court appeals challenging the decision were launched – the latest one, just last week – by visual streamers via the Motion Picture Association-Canada, which represents Netflix, and by music streaming platforms Amazon, Apple and Spotify.
So, since launching its ambitious plan to have the country’s system modernized by the end of this year, the CRTC has dropped two proceedings, added five more and faces three different court challenges related to just two decisions.
How long matters will be delayed while those get resolved is impossible to predict, though Federal Court matters often take the better part of a year. There’s also always the possibility of further appeals to the Supreme Court.
The industry, meanwhile, is no longer feeling as optimistic as it once was. In its Profile 2023 report, the Canadian Media Producers Association detailed how TV and film production has doubled over the past decade to become a $12-billion business in this country. Sadly, though, it is expecting that bounce to retract.
None of this was in the plan. But all of it was predictable. The era of haggling, gamesmanship, uncertainty and suppressed investment has begun.
Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, a former publisher of the Calgary Herald and a previous vice-chair of the Canadian Radio-television and Telecommunications Commission (CRTC).
