This article originally appeared in the Hub.
By Peter Menzies, November 22, 2024
It was almost exactly a year ago when it became obvious that the predictions critics of the Online Streaming Act had made were going to come true
Then, the Canadian Radio-television and Telecommunications Commission (CRTC) was about two-thirds of the way through its first public hearing aimed at implementing the act (also known as Bill C-11) since it came into force in the spring of 2023.
In addition to the usual suspects ranging from large, vertically integrated companies like Bell and Rogers to creative trade unions such as ACTRA and the Writers Guild, there were a number of new players on hand at the three-week hearing in Gatineau. These were foreign music streamers such as Spotify and video streamers like Netflix, Disney+, and others who, as a result of Bill C-11, were now subject to CRTC regulation.
They dutifully presented themselves as fully prepared to work with the CRTC to “modernize” its regulations to conform to an internet-based communications universe no longer rooted in the finite world of licensed over-the-air broadcasting and the allocation of spectrum, a scarce Crown resource.
Notwithstanding their goodwill—if a bit naïve—commitment to contribute to a process of policy modernization, surely they realized what had already become obvious in the hearing: none of the other participants had any interest in modernizing anything.
Maybe they did and they were just being polite but what they were participating in—and while predictable it was nevertheless alarming to watch—was a CRTC hearing just like any other over the past 40 years. The only thing “being modernized” was that it was they—foreign companies—who would be assigned the role of primary suppliers of the cash required to fill up the funds that ensure the nation’s official creative class is cared for. The debate was entirely about how much and to whom.
No one on the panel of CRTC Commissioners seemed remotely interested in how streamers might already be investing in the domestic film and television production industry or how—without the CRTC’s involvement—Canada’s creators had just experienced the most prosperous decade in their history and how could that be sustained. No one cared to inquire into how YouTube and TikTok had allowed for more genuine expression of the nation’s culture by people of all backgrounds than had decades of CRTC hectoring and coddling. No one seriously asked about the tens of thousands of Canadian jobs that had been created by entrepreneurs accessing global audiences.
The very idea that the goals of the Broadcasting Act could be achieved through market mechanisms and without the earnest coaching of the regulator is simply beyond the CRTC’s institutional ability to consider, let alone comprehend.
If the new kids didn’t know that then, they sure know it now. Because the most substantial decision that came out of that hearing was that, as of Sept.1, all streamers earning more than $25 million in Canada have had to pay 5 percent of that total income into funds to, as the CRTC put it, support “areas of immediate need in the Canadian broadcasting system such as local news on radio and television, French language content, Indigenous content and content created by and for equity-deserving communities, official language minority communities and Canadians of diverse backgrounds.”
Yes, citizens might well wonder why their streamer bills will go up to support local radio news in Flin Flon or what kind of country favours income redistribution over innovation. Certainly, the streamers are not pleased as they have launched three court challenges to the CRTC’s first two decisions stemming from that hearing.
Netflix has shut down funding for training initiatives upon which it had so far spent $25 million. Spotify blamed the CRTC for at least part of its recent price increase and the Digital Media Association—which represents the likes of Amazon, Apple, Spotify, and YouTube/Google—launched a “Scrap the Streaming Tax” protest campaign. The Canadian Media Production Association, meanwhile, has forecast lower levels of investment in the industry going forward.
Things, in other words, aren’t going the way of those who were targeted by the legislation.
Nor are they for the CRTC. Critics of Bill C-11 may have forecast it would lead to years of regulatory and legal haggling, but the regulator and the government had countered that grim vision with cheerful confidence the “modernization” process would be substantially complete by the end of 2024. That date has now been pushed back by at least 12 months—to after the next election—with some procedures set for 2026 which means there’s a good chance matters will drag on into at least 2027.
And that was announced before two of the three court challenges were launched.
The reason for the delay appears to be that the CRTC may have recognized what the authors of the Online Streaming Act did not: that trying to stuff foreign 21st-century companies into a regulatory straitjacket designed for cable and over-the-air domestic companies is not just really hard, it’s probably destructive.
Commissioners may also be coming to grips with the fact that streaming companies—unlike domestic broadcasters licensed by the CRTC—don’t depend upon the regulator for their existence. They are global entities and, if pushed too far, retain the (albeit nuclear) option of packing their bags and leaving. Canada is a lucrative market but a relatively small one. It seems a stretch, but it’s not impossible that companies could leave and, should that happen, better that be after an election than before. Or so it is assumed the thinking goes.
Further complicating matters is that the CRTC hearing of a year ago was hijacked by repeated demands for news subsidies. That has led to plans for a massive hearing currently penciled in for the summer of 2025 that will involve radio, television, and online news organizations. Expect everyone who shows up to articulately explain why they deserve access to other people’s money. And by other people, they will mean foreign web giants. The CRTC’s decision on the size of this expected wealth transfer to Bell, Rogers, and others won’t be known until after the election.
Which brings us to the Americans. The Biden administration has been polite but firm in expressing its concern the Online Streaming Act could discriminate against U.S. companies, particularly should they not be able to access content made possible by the 5 percent levy the CRTC has imposed on them. With Donald Trump returning to the White House and Republicans in control of the Senate and the House of Representatives, it seems likely there will be less patience in Washington for what might be viewed as regulatory shenanigans in Ottawa.
To be fair, the Online Streaming Act has indeed accomplished its oft-stated goal of getting money from web giants.
It has also introduced a lengthy period of regulatory uncertainty which, in turn, slows innovation and investment at a time when both are desperately needed for companies navigating a period of rapid technological change.
That, in turn, is helping bring to a close years of dynamic growth in the national film and television programming industry while—if the CRTC is to fully achieve its goals—inevitably reducing choice and increasing costs to consumers.
Meanwhile, dying legacy components of the broadcasting industry remain fatally shackled to increasingly irrelevant 20th-century regulations.
Bill C-11 is, in other words, performing exactly as predicted.
