Category Archives: CRTC

CRTC’s GLR Decision

I gave a fairly polite run down of the Group Licence Renewal decision over at TV, Eh!  Here I want to focus on one particularly wonky part of the decision – data reporting – and why it matters.

For their GLR submissions, the CMPA, ACTRA, DGC and WGC commissioned Mario Mota of Boon Dog Professional Services to review the annual reports of the broadcasters and the applications and assess how the broadcasters had met their CPE and PNI CPE obligations and what it would mean for Canadian programming in general and PNI in particular if the broadcasters were granted their requested changes.  Mario did the best that he could but was stymied by inconsistent and inaccurate reporting.  The CRTC requires the reports but doesn’t review them.

The GLR decision includes requirements for more detailed reporting on a number of categories including original programming, Indigenous programming, Official Language Minority Community programming and women in key creative roles.  There will also be information bulletins to help broadcasters fill out the forms correctly.  There was no mention of a review or compliance regime.

The question, and why this matters, is will these new reporting requirements make it easier for stakeholders to assess broadcasters performance in spending money on and broadcasting Canadian programming?  As long as there is no review process the answer is no.  It looks like broadcasters will still be able to fill out (or not fill out with sections left intentionally blank) the forms any way they want.  When it comes time to review broadcaster performance again in four years and compare it to their promises, the independent production sector may still be doing it with one hand tied behind their back.

That leads me to ask: does the current Commission appreciate the role of the independent production sector in public hearings?  This I wonder.

The independent production sector pointed out that the broadcasters proposals on PNI CPE would allow them to spend less money on PNI.  That was dismissed.  The independent production sector argued that the definition of independent production was being eroded by broadcaster behaviour and as the need for an independent production sector is enshrined in the Broadcasting Act it needed to be protected.  That was ignored.  It pointed out that exhibition requirements in prime time are still relevant as that is still when most people watch television.  That was ignored.  It argued for some kind of protection for children’s programming since Corus is the major children’s broadcaster in Canada but with the removal of genre protection it can walk away at any time.  It argued variously for protections for Canadian feature film, documentaries, development and ensuring that CPE is spent on original programming.

None of these issues were mentioned.  Not reviewed and dismissed.  Nothing.  It comes across as if the Commission thinks that it has all the necessary information and does not need to hear the perspectives of those who create the content that is broadcast.  If this was true, it would undermine the public hearing process where all stakeholders have the opportunity to present evidence.  It is the independent production sector’s job to provide a different perspective than the broadcasters, based on different priorities.  It is the Commission’s job to weigh those different priorities and make decisions based on the public interest as defined in the Broadcasting Act.

I know that the Commission understand what its job is, but by not ensuring that the independent production sector has the tools that they need to do their job well (i.e. the data) and ignoring many of their concerns, it appears as if the Commission has taken sides.  It feels like engaging with the Commission at a public hearing is as useful as hitting your head against a wall.  After a while it hurts too much and you just stop.

The CRTC’s Differential Pricing Practice Decision – for us content people

I posted the following over on TV, Eh!’s Wonk Report today:

Over here on the content side of things most of us are not familiar with phrases such as ‘zero rating’ and ‘differential pricing practices’ so might tune out of a CRTC decision titled “Framework for Assessing the Differential Pricing Practices of Internet Service Providers” but we shouldn’t.  Net neutrality is an increasingly important concept for content creators.

Let’s go through a few definitions first.

Net neutrality is the principle that all data on the Internet should be treated the same.  It costs the same to the user, it is regulated (or not) the same and it is delivered the same (i.e. no throttling of certain kinds of data).  So the video or the game that you create is not treated any differently from email or music or apps etc.

Differential pricing is the practice of offering the same content or services to consumers at different prices.  Examples are:

Zero rating:  the practice of not charging consumers for certain kinds of data.  That could be sports or all video or gaming.  That data would then not be counted towards the consumers data cap and would make that service more competitive.

Sponsored data:  an application provider arranges with an ISP to discount the data associated with its app.

The CRTC’s decision is to disallow these differential pricing practices (and any others that arise, based on a framework that has been developed to assess the practices) in order to maintain net neutrality.

In practical terms this means that immediately Vidéotron’s Unlimited Music Service, which excluded the data used by that music streaming service from certain mobile plans, was offside.  What it means for content creators is that ISPs cannot distinguish themselves on the basis of what content they have to offer – no exclusive access or zero-rated access to Netflix, or CraveTV or gaming.  No fast lane for CanCon (an idea that has been floated from time to time).   They can compete on price and speed and size of the data caps but not content.  Look at this quote from the decision:

“The Commission considers that any short-term benefits of differential pricing practices would be greatly outweighed by the negative long-term impacts on consumer choice if ISPs were to act as gatekeepers of content through their use of such practices.”

Gatekeepers.  Does that sound familiar?  This is why the decision should be of interest to content creators, particularly those who are moving away from broadcasters as gatekeepers to offer their content directly to consumers.  The Differential Pricing Practices decision means that you will not be moving from broadcaster to ISP as gatekeeper.  For digital content creators it means that the ISP cannot insert itself between you and your audience.

 

 

Why Do I Do What I Do

I know, I’m a little behind in my blogging.  I wrote up a little summary of some of the highlights of the Group Licence Renewal hearing for TV, Eh!.  I thought long and hard about saying a bit more about my personal reaction to the hearing and decided that yes, some things deserve to be said, over here on my own blog.

I feel that I play a role in media policy discourse.  It is a role that has not existed in the past and some players in this world may not understand it.  Here’s what I think it is.  Media policy, whether it is from the CRTC, Heritage, provincial agencies or other policy makers, can be a dense, convoluted world full of laws, policies, rules, regulations and acronyms that need to be translated and decoded.  This byzantine world affects each and every member of the independent production community.  It also affects everyone working at the broadcasters and BDUs but I have spent my entire career on the production side of the industry and that is my perspective.

I know that while many in the independent production community know that media policy affects them, and quite a few try to follow it and understand it, very few actually have the time to read decisions, listen to hearings and put it all into the necessary context.  That’s what I do.  I translate, decode and put it into context.  I started doing this as an employee of the Writers Guild of Canada as a service to its members.  I continued after leaving because, well, I enjoy it and it forces me to stay up to date so that I can offer my clients the best service possible.  You guys benefit.

Am I a reporter?  No.  I make no attempt to provide even-handed coverage but to share the things that I think other people in the independent production community would find interesting.  I comment on what I see and read so the most appropriate analogy in mainstream media is columnist.  Each tweet or blog post is an opinion piece meant to inform and enlighten and maybe even amuse a little bit.

I also write submissions for clients, under their names.  When I think my clients might impact my blogging I will disclose it (see my CIPF – Digital Media post) but I am not a spokesperson for them.  I try very hard to amplify the message without bias while acknowledging that as a human being I do have biases.  I do not see myself as sitting on the sidelines but as an active participant in the process ensuring that there is a wider audience and greater participation by those impacted by media policy deliberations and decisions.

You guys keep telling me you like it so I will continue.

The CIPFs and Digital Media

In my last post I went over the ‘permissions’ and ‘requirements’ of the CRTC’s new regulatory framework for Certified Independent Production Funds (“CIPFs”).  Since then you have heard a lot about the decision to reduce eligibility for Canadian productions from 8 points to 6 points. However, there is another issue that has been quietly bubbling away and now is generating a great deal of concern.

First, a little context.  In CRTC 2010-833, the CRTC amended the existing regulatory framework for CIPFs to formally allow CIPFs to fund digital media associated with television programming and to allow funding of standalone digital media provided that it was limited by a cap of 10% of the revenues received by a CIPF from a BDU.

“the Commission is of the view that there is little cause for concern over permitting the funding of new media projects linked to television programs as any new media content created as a result of such funding would still serve to support traditional television production. The Commission also concludes that the existence of a link to a television program will create a self-limiting process in that the producers and broadcasters will want to ensure that sufficient amounts remain for television production and development and will therefore make decisions in their own best interest. It will also be at the discretion of the funds whether they choose to fund program-related new media projects. As such, the Commission considers that a cap on such new media projects is not necessary.” [para 17]

So it was very confusing to read the new framework and see the phrase “the Commission will maintain a 10% limit on funding that can be allocated to non-programming digital content” [para 45] when there had been no cap on associated ‘new media’ to maintain.  Now, the definitions have been updated so that digital no longer includes digital-first linear video, but the result of the new wording is that all other digital media associated with a television program is now limited to 10% of BDU revenues.

Given the seriousness of this change, various organizations have been in touch with the CRTC to confirm that indeed this interpretation is correct. The potential consequence is significant as it would mean that most of the CIPF funding for digital media that both digital media and television producers have relied on will have to be re-allocated to  only television programming.  At a time when digital media is an essential element in discoverability this is a puzzling development.  Affiliated digital media drives audiences to the television, extends their experience with the television program and the broadcaster, builds both brands, and helps to sell the television show internationally.  Digital media can help documentaries extend their reach and their impact.  In some genres, most notably children’s, international buyers rarely license the television program unless there is associated digital media.

A few years ago I authored a study on co-production opportunities in digital media and in that study I learned that few countries around the world have any funding for digital media associated with television programming.  With the funding that we have, Canadians have become leaders in the field and are sought after for co-productions not just for their potential access to funding but also for the expertise that they have now developed.  Companies like Shaftesbury, Breakthrough, Secret Location, DEEP, DHX Media and Xenophile have developed international reputations as talented television and digital media producers and been able to compete in international markets because of the early and consistent support of the Bell Fund.  Is this not what the CRTC said it wanted?

Moreover, at a time when Minister Mélanie Joly is in the middle of the #digicancon consultation, the timing of limiting the ability of the Canadian broadcast system to leverage digital media to drive audiences to the broadcast platforms and to make foreign sales is hard to understand.  The CRTC seems to be taking two steps back while Heritage is trying to take one step forward.

The Bell Fund has asked for a transition period to be able to react to the new rules, as the decision was effective September 1, 2016.  They have also asked for an increase to the 10% cap, given the significant potential damage of such a small cap.  The CRTC has said that it cannot make amendments to an existing decision but instead it turned the request into a Part 1 application which is now a public consultation.  If you wish to comment on the Bell Fund’s request you can do so through the link on that page.  The deadline is November 28, 2016.   There is no guarantee that any changes will be made but at least there is a forum for industry feedback.

Full disclosure – I have a working relationship with both the Bell Fund and Interactive Ontario, the trade association representing interactive digital media producers in Ontario.  I am not speaking for either of them with this post but trying to explain for you guys what is going on – as I do.  If you would like more information you can reach out to either of those organizations.

New CIPF Regulatory Framework – But What Does It Mean?

Yesterday, August 25, 2016, the CRTC released its new Broadcasting Regulatory Policy (2016-343) – a Policy Framework for Certified Independent Production Funds (“CIPFs”).  There are some minor and major changes to how CIPFs will be managed and the kinds of productions they will be able to fund going forward.

First, the framework sets the rules for how a CIPF has to be set up in order to be certified by the CRTC.  A fund needs to be certified to allow BDUs to allocate some of their mandated contribution to it.  A fund does not need to be certified if it does not need or want those contributions.  For example, while the Independent Production Fund is certified as a CIPF, its funding is based on an endowment so its management is outside of this framework.  However, most of the CIPFs do rely on BDU contributions so will need to abide by the new framework.

There are two types of changes to the framework:  1) new requirements in order to be certified and 2) new permissions which a CIPF may wish to take advantage of.  With that in mind, let’s look at each of the changes in turn.

Requirement: Eliminate Licensed Broadcaster Commitment

Going forward, CIPFs must no longer require a broadcast licence or development commitment from a licensed broadcaster as a condition of funding.  This is to allow greater flexibility in funding by producers as they can access OTT services provided that those services are accessible to Canadians (so yes to Netflix Canada but no to Hulu).  However, tax credits still require a licensed broadcaster so there will not be many productions that will be able to take advantage of this new flexibility at the moment.  It may provide more opportunities for web series, however.  Additionally, CIPF funding is awarded as part of a subjective assessment and each one may decide that in its assessment it will reward a licensed broadcaster commitment with more points as evidence of greater potential audience.  It may be difficult, though not impossible, for a project with a non-traditional broadcaster to be competitive with projects with traditional broadcasters.

Requirement:  Redefining “new media project”

I find this one odd.  “New Media Project” has now been re-categorized as “non-programming digital content” by removing programming content such as webisodes from the definition.  While the Notice of Consultation asked intervenors to consider whether the current definition of “new media project” needed to be updated and many said that it did (mobisode anyone?), the CRTC makes no reference to any intervenor asking for “new media project” to be redefined in that way.

It is more troubling because those who work in interactive digital media (“IDM”) know that most IDM associated with television includes video content either as clips or even within the IDM.  Walls between forms of content are breaking down and this redefinition feels like a belated attempt to put up a wall that the industry does not need or want.  Those in Ontario are currently experiencing a similar challenge with changes to the Ontario Interactive Digital Media Tax Credit draft regulations which attempt to remove streaming sites from eligibility but went too far and remove digital media with any form of video from eligibility.  Standalone web series may still be financed through the change to the broadcaster requirement (and because IPF is outside this framework) but as the new definition (‘innovative projects such as story-driven videogames, interactive or customizable web content, apps and all other similar types of non-programming content’) is very brief it is not clear whether the inclusion of video within ‘non-programming digital content’ will exclude it from eligibility.

Requirement: Maintain cap of 10% on non-programming digital content

CIPFs were limited to spending no more than 10% of their fund on ‘new media projects’ or now ‘non-programming digital content’.  A number of the CIPFs wanted greater flexibility to allocate more or less of their funds to digital media while on the other side the broadcasters wanted to keep the cap to ensure that most of the funds stayed within the licensed system.  The cap is being maintained, though for the more restricted definition of non-programming content.

Permission:  Canadian content certification points

Sigh.  How many times do we have to talk about this?  OK, so the CIPFs can now fund projects with a minimum of 6 CAVCO points.  But will they?  The decision says, without evidence, that the current limit of 8 points ‘excludes many productions that could otherwise be of high quality and qualify as Canadian’.  What exactly isn’t getting funded?   Bueller?

For those of you who were around during the Canada Media Fund review in 2008 (which excludes all of this current Commission), you will recall that when parties argued that CMF needed to lower its point count because lower point count shows would sell better, lots of evidence was presented to show that in fact 10/10 point Canadian programs sell better than 6 point (what we used to call ‘industrial’) programming.  It is hard to get more Canadian these days than “Murdoch Mysteries” and it sells all around the world.  When we used to produce a lot of 6 point productions there was a market internationally for “Andromeda” and “Mutant X” but it has pretty much dried up as international markets focus more on domestic production.  A high quality production that reflects a distinct domestic voice such as “Murdoch Mysteries” or “Motive” but also “Doctor Who” or “The Bridge” or “Wentworth” sells better internationally. It just does.

On a more practical note, how will these 6 point projects get financed?  For one, CMF still requires 8 points. Will the 6 point projects be competitive in the selection process with 8 and 10 point projects with greater sales potential?  A key sentence in the decision is “CIPFs will continue to have the discretion to finance the productions of their choice, based on their expertise and measurements of success”.  So only time will tell as to whether this change will have any real impact.

Permission:  Eligibility of Co-Ventures and Co-Productions

While the discussion in the decision is about treaty co-productions and co-ventures, the actual decision is only about co-ventures, this current Commission’s pet project.  This is probably because treaty co-productions are not actually ineligible for CIPF funding, though the CIPFs have rules to ensure that only majority Canadian co-productions benefit from Canadian funding.  Co-ventures have not been eligible.  Few productions use co-ventures (a system that allows Canadian producers to partner with non-treaty producers, i.e. from the U.S.) because they are too hard to finance. As well, the control that is then given over to the U.S. partner is not that attractive.  The Canadian partner must have 50% of creative control and profits but realistically co-ventures are U.S.-driven projects.

Time will tell whether CIPFs will actually allocate more funds to co-ventures or whether this is flexibility they really did not want or need.

Permission: Script and Concept Development

Previously, the requirement for a broadcast licence prevented CIPFs from funding early stage development except through non-BDU funds (i.e. endowments).  The removal of the requirement for a broadcast licence automatically frees up CIPFs to allocate more funds to early stage development, or even slate development, if they so wish.

Permission:  Promotion Funding

CIPFs have not been able to specifically fund promotion, an increasingly important part of any production in the crowded marketplace.  However, the CIPFs have limited funds and many stakeholders are concerned about money being reallocated from production to promotion.  It is therefore up to each CIPF as to whether it wants to reallocate any of its limited resources specifically to promotion.

Requirement:  Measurement of Audience Success

CIPFs each make subjective assessments of projects and decide to fund the ones that meet their criteria, including the greatest potential for success.  CIPFs were concerned that any formalization of that process would impede the subjective analysis but also attempt to standardize what are inherently non-standard funds which cover many different niches of programming and audience.  The CIPFs are likely relieved that the decision is instead to require the CIPFs to report on the audience success criteria used rather than to change them in any way.

Requirement:  Accessibility

CIPFs will now have to ensure that all programming that they fund is closed captioned and includes described video.  They are not required to fund it but to disclose it.  While broadcasters require closed captioning and described video, by requiring CIPFs to ensure that a project has it before it is funded, the theory is that this rule will ensure that productions are developed with accessibility guidelines in place rather than dealt with after the fact in post-production.  This will have little effect on CIPFs except as a check box on their application form but may have a positive effect on production planning for accessibility.

Requirement:  Reflection of OLMCs

There are no requirements currently to reflect in any way Official Language Minority Communities (OLMCs).  The new framework will require that one person on the selection committee for a CIPF will be responsible for ensuring that OLMCs are properly reflected in decision making.  Annual reports will now have to track OLMC projects.  There is no quota system so it is not clear how the Commission will define ‘properly reflect’ and what penalty there might be.  Many CIPFs already fund OLMC projects on a regular basis so this may only be an added reporting requirement.

Requirement:  Governance

The Notice of Consultation hinted at possible major changes to the governance of the CIPFs, which worried many intervenors who could not see any problems that needed to be fixed.  However, with vertical integration there were some concerns about how the Boards of the CIPFs were constituted in order to ensure that they remain independent of their contributors.  Two thirds of Board members must now be independent, rather than previously no more than one-third could be members representing BDUs.  The definition of independent excludes employees, officers, directors etc. of a contributor or its affiliates.  For example, an employee of CTV would be independent of Bell under the old rules but not under the new rules.

Additional wording was also added to the conflict of interest language to require that decisions are made ‘absent of actual or perceived conflicts of interest’ but without setting any specific criteria to abide by.

Requirement:  Reporting

While most CIPFs publish annual reports there was no requirement to do so nor any criteria for those reports.  This is now standardized with few additional criteria beyond what most CIPFs already report on.  They will also have to submit audited financial statements.  The Commission understands that this could be an administrative burden for smaller funds which might not be able to cover the cost of an audit, particularly with the cap of 5% on administration costs.  These smaller funds can apply for an exemption from the audit if they can prove it would be unduly burdensome.

 

This revised policy framework will go into effect September 1, 2016 however it will take time for the funds to review and implement the changes into their guidelines, and have those changes approved by their boards.  There are no transition rules so it is not clear how quickly the CIPFs will have to change those parts of their guidelines that must change, before the Commission declares them offside of the new policy framework.  The only real penalty is being de-certified so hopefully the Commission will give the CIPFs at least one fiscal year to implement all the necessary guideline changes and possibly even board changes.

#TalkBroadband CRTC Hearing – Why I’m Listening*

The CRTC is currently in the middle of a three week hearing on basic telecommunications services , which has been hashtagged as #TalkBroadband because it really is about whether broadband should be regulated as a basic telecommunications service (“BSO” – basic service offering) and at what capacity.  It’s pretty telecomm and I don’t do well with telecomm (Bram Abramson did promise me a ‘Telecomm for Dummies’ tutorial or series of blog posts and I will pin him down to do that at some point) but the discussions have been far ranging and quite interesting even for a content policy wonk like myself.

I glaze over at discussions of bandwidth and speed.  I shouldn’t but as ‘good enough’ is a constantly moving target I find the discussion of what should be the minimum a bit of a mug’s game.  As soon as the CRTC sets a goal or mandates minimums they’ll be out of date.  It’s important to be fast enough and for the network to be able to handle the capacity no matter where you live but I’ll leave it to others to decided what those goals or mandated minimums should be and how often they should be updated.

As a content policy wonk I’m more interested in the discussion about affordable universal access because I know that before long everyone will need access to broadband to have the choice to watch a variety of entertainment programming.  I don’t want to see anyone left behind because they can’t afford it, there isn’t appropriate infrastructure or they don’t have the necessary digital literacy to take full advantage of this world or even know that they should want it.

Until recently, the government and the CRTC have been focused on ensuring that rural and northern communities were connected and a lot of the discussion during the #TalkBroadband hearing has continued to focus on it.  During this hearing there has been a broadening of the discussion though to include urban affordability both on the part of intervenors and through questions raised by commissioners. If access to broadband is essential to citizenship then the CRTC has to consider establishing rules or guidelines to ensure that all Canadians have access, that they can afford, to broadband regardless of where they live.

I’ve been working with Syrian refugees recently and it really brought home to me how important broadband is to citizenship and how difficult it is to pay for it on a reduced income.  Social assistance barely covers rent in Toronto plus food and electricity.  Families also need at least two mobile phones and an Internet connection to be able to communicate with each other, access government and settlement services and keep in touch with family back home.  I would also like them to be able to access Canadian programming to help them settle in their new country.  Cable is just too expensive but at least with an Internet connection they can access CBC.ca and other (possibly less Canadian) broadcaster websites as well as content in their own language.

From this experience I am even more convinced of the importance of broadband to citizenship but it doesn’t stop there.  I’ve also been listening at this hearing to great examples of the importance of broadband to isolated communities in the north, minority language communities and rural communities.   I look forward to other examples over the course of the hearings from other stakeholders.

The Commission is also starting to talk about digital literacy and the fact that it isn’t good enough to just present access but we need to ensure that everyone knows how to access broadband and why they should want to.   Should there be funding from stakeholders or the government and how should it be implemented to ensure that no one is left behind.  Interesting discussions.

To bring it back to content creators and providers, as we move into a multiplatform or platform neutral world, we need to ensure that the entire country has the opportunity to chose Canadian programming on whatever platform it is presented.  We should be struggling with the issues of regulation or not, contributions to Canadian programming or not, and not have to wonder if any segment of the population has been left out of the system that we are trying to create.

That’s why I’m listening.

 

*I gave up on watching it on CPAC because, ironically, the online feed kept breaking up so I’ve just been on the CRTC’s audio feed.

The CRTC’s Wireline Wholesale Decision and the ISP Levy

I bet you didn’t think those two were related. If you’re primarily interested in broadcast policy (as I am) you probably didn’t even read the CRTC’s Wireline Wholesale Decision. I will freely admit that telecomm feels like another world and another language to me so I don’t tend to read the decisions and rely instead on the summaries in the news. Then Sasha Boersma pointed out to me Mark Goldberg’s tweet about Commissioner Raj Shoan’s dissent to the decision and I got excited and I just need to share that.

First, the decision. Wholesale wireline services are the part of their network that major telecommunications companies (e.g. Rogers, Bell) have to make available to small independent services (e.g. TekSavvy, VMedia) at a regulated fee to allow the independents to provide competitive voice, broadcast and internet services to their customers. The hearing was to review the policy framework to ensure that it contributed to competition and choice. You can read the press release here for a brief summary – the major issues are expanding the network that must be made available to include fibre and disaggregating the services so that an independent doesn’t have to take all services if they only want, for example, Internet.

Commissioner Shoan’s dissent wasn’t about those two main points but about the decision’s narrow focus on the Internet as a provider of alpha-numeric data and the missed opportunity to revamp policy, or take a first step towards revamping policy in recognition that broadcasting and telecommunications are no longer separate silos. Shoan’s position is that so much evidence was provided by intervenors that broadcasting is now part of the services that the independent providers offer to customers that the Broadcasting Act should have also applied. The world is rapidly evolving to one where there is only one pipe to the home providing all of our communications services and that is not reflected in the policy framework:

“In essence, under the current legislative framework, the Internet, through market forces, consumer use, and industry development, is evolving from a telecommunications service into a broadcasting service. The implications of this evolution are profound for not only the Commission’s regulatory frameworks, but all Canadians and the public interest.”

Commissioner Shoan breaks down Internet services into really three types of services:

  • licensed or exempt IPTV broadcasting (television channels delivered over the Internet by companies like VMedia and Zazeen)
  • exempt broadcasting delivered over the Internet (OTT services like Netflix)
  • non-broadcast Internet (websites, email etc.)

IPTV was a hot topic at the hearing with many independents looking for access to fibre to be able to provide customers with an IPTV offering. They need the bandwidth and speed. IPTV is broadcasting. Shoan’s analysis is that the Commission cannot use the Telecommunications Act to provide access to broadcasting. The Broadcasting Act must apply, specifically s. 9(1)(f):

s.9(1) Subject to this Part, the Commission may, in furtherance of its objects,

(f) require any licensee to obtain the approval of the Commission before entering into any contract with a telecommunications common carrier for the distribution of programming directly to the public using the facilities of that common carrier;

The exempt broadcasting services are exempted by the Broadcasting Act under the Digital Media Exemption Order. S. 28 of the Telecommunications Act provides an obligation on the Commission to regulate the transmission of programming over telecommunications services to guard against undue preference or unjust discrimination (i.e. incumbents favouring their services over the independents). Shoan sees a missed opportunity here to identify what would be undue preference or unjust discrimination “as high-speed networks rapidly transition to becoming predominantly video distribution platforms”. This was an opportunity to create a framework to address problems before they occur rather than after.

Now back to the ISP levy. When the CRTC reviewed the New Media Exemption Order (as it was then called) in 2009 there was a call from creator groups for the CRTC to impose an ‘ISP levy’ on ISPs who were increasingly providing consumers with access to programming without making any contribution to the creation of that programming. The levy would go to fund more programming and replace lost BDU revenues to the CMF and the other independent production funds as consumers increasingly cut or shave the cord. During the hearing the BDUs challenged the CRTC’s jurisdiction to impose such a levy and the CRTC referred the question of jurisdiction to the Federal Court of Appeal.

The Federal Court of Appeal decided in 2010 that ISPs were not broadcasters and therefore the CRTC did not have jurisdiction under the Broadcasting Act over the ISPs (and could therefore not impose a levy under that Act). The decision was appealed by the creator groups (ACTRA, CMPA, DGC, and WGC) to the Supreme Court of Canada, who agreed in 2012 based on their interpretation of the facts that ISPs were not broadcast distribution undertakings [EDIT: earlier version said ‘broadcasting’ but it is more accurate to say broadcast distribution undertakings – sorry for any confusion]. They are merely passive conduits that ‘take no part in the selection, origination, or packaging of content’.  You can find the history of the Digital Media Exemption Order and the Federal Court of Appeal decision here and the Supreme Court decision here.

Now we have a CRTC hearing where independent ISPs looked for access to fibre so that they could provide BROADCASTING services. Shoan’s dissent makes a very good case for applying the Broadcasting Act to ISPs.  [EDIT:  It has also been pointed out to me that there have been some changes in how ISPs operate including how they promote the video content they carry that could justify a re-examination of the case and to what extent they really are only passive conduits.  As well, the growth of IPTV renders the question of whether ISPs are broadcast distribution undertakings moot at least for those services.]  I’m not a telecomm lawyer so there could be flaws in the argument that I can’t see. Perhaps telecomm and broadcast people should have a conversation because Shoan’s analysis undermines the factual underpinning of the Supreme Court’s decision. If anyone is up to the cost of another reference, it could be time to challenge the Supreme Court decision or (and this is less expensive) encourage the CRTC to take a bold step toward creating a regulatory framework that better reflects the services being offered to Canadians and ensures that Canadians will continue to have the choice to watch Canadian programming on those services.