Does Canada’s Bill C-10 Infringe on Free Speech?

Since its introduction in November of 2020, Bill C-10 has generated significant controversy. Although its stated intent is to modernize existing legislation, some members of Parliament and the public are objecting. The bill, if passed, would place streaming platforms such as Netflix, Spotify, and Amazon Prime, under the jurisdiction of the Canadian Radio-television and Telecommunications Commission (CRTC).

Today, online streaming and social media platforms are not subject to the Broadcasting Act. Some believe it gives them an unfair advantage over traditional distribution channels such as cable and radio. But is that true?

A Little History

For most Canadians, the CRTC is a government agency that regulates how the industry operates. Many believe it is responsible for broadcast content, but that responsibility falls under the jurisdiction of the  Canadian Broadcast Standards Council (CBSC). The CRTC’s primary task is to ensure a fair and equitable environment for the Canadian broadcast industry.

Formed in 1968, the agency was renamed in 1976 when telecommunications was added to its responsibilities. Most of CRTC’s authority comes from the Broadcasting and Telecommunications Acts with legislative instructions from the federal government. In 1999, audio and video transmitted via the internet were brought under the CRTC’s control. Text-based transmissions such as emails were excluded.

The proposed legislation is based on the following regulations:

  • Conventional broadcasting companies must pay a percentage of their revenue to promote Canadian artists.
  • Canadian broadcasters have precedent over non-Canadians operating on the same frequency or channel.
  • Advertising must provide an equitable platform for Canadian products and services.
  • A percentage of Canadian content must be broadcast.

These rules were designed to protect the Canadian market from unfair competition against larger media outlets, especially from the U.S.

Current Environment

Canadians are consuming more movies, music, and television shows through online streaming services or mobile apps. By excluding online services from CRTC control, the industry is losing out on a significant revenue stream to support Canadian artists. According to the CRTC’s latest monitoring report, the cable television sector generated the most revenue in 2019 at $4.4 billion (data for 2020 is not available). However, that was a decline of 2.1% from 2018. Most of the broadcast revenue comes from discretionary services rather than basic product offerings.

In contrast, the report estimated that internet-based audio and video services generated $5.0 billion, none of which was subject to the Broadcasting Act regulations. Because many of the online streaming services compete with the discretionary services of cable providers, the competition will increase, especially after a year when more and more people relied on online services.

When the Minister of Canadian Heritage, Steven Guilbeault proposed the bill in 2020, he viewed it as a way to ensure the integrity of the Canadian culture by applying the same distribution rules to internet and online streaming services. However, critics of the bill say it will limit the type of content available on those platforms.

Heritage Tax

As noted earlier, online platforms do not contribute to the fund that supports and promotes Canadian artists. With the passage of Bill C-10, that would change.  All online platforms would be forced to contribute a percentage of their revenue.

None of the major platforms such as Google, Amazon, Spotify, or Disney have commented on the change; however, having to contribute up to 20% of their annual revenue from Canadian sources will have an impact on their existing business models.

It is estimated that online platforms could pay close to $1 billion by 2023. For Canadian artists, the increase in funding provides additional opportunities for their creations to be published. Many Canadians feel this financial support is the only way to level the playing field.

Jérôme Payette, general manager of the Association des Professionnels de l’édition musicale, was concerned that the amended Bill C-10 would allow YouTube to circumvent regulations, depriving artists of possible revenue.

As a representative of French-speaking music publishers, Payette believes the bill will bring transparency to what is happening on YouTube. Individuals may upload content that was professionally generated, which would bypass CRTC oversight. Once the industry has visibility, it can determine the appropriate course of action.

Janet Yale supports regulating streaming and social media platforms. As chair of the Broadcasting and Telecommunications Legislative Review Panel, she believes that making the platforms fund and promote Canadians is the only way to make the industry equitable.

Advertising

Social media sites such as Facebook would also be subject to the rule change. They would be required to allocate a percentage of advertising to Canadian products and services. Broadcasters are required to set aside one or two minutes per hour for local promotions.

It’s not clear if online platforms would be required to adhere to that same standard. If so, Facebook and others would have to modify existing algorithms to ensure that they complied with the time requirement. These changes would add to the cost of doing business in Canada.

Content

Perhaps the most significant change comes from the requirement for playing Canadian content. For example, radio stations are required to play Canadian artists for about 50% of their air time. Precisely, how that standard would be met by services such as Spotify is unclear. Streaming services may be forced to reduce non-Canadian content to comply with the regulations.

The same would hold true for services such as Netflix or Disney. For most Canadians, Netflix has become the channel of choice for primetime viewing. Would Bill C-10 require the company to ensure that at least 30% of its available content is from Canadian sources?

Critics

Critics believe the amendments give the CRTC the power to regulate content available to Canadians. As written, the amended act provides the CRTC with significant latitude in how the rules are implemented, which raises concerns of regulatory overreach.

Of concern is the CRTC’s ability to control user-generated content. In his opening statement to the Canadian Heritage Committee, Michael Geist stated:

There is simply no debating that by removing Section 4.1 [exclusion section], the bill now applies to user-generated content since all audio-visual content is treated as a program under the Act.

Google, which owns YouTube, objects to the regulation on the grounds that it may have unintended consequences of infringing on Canadians’ expressive rights as it pertains to videos posted to YouTube.

Critics suggest that any attempt to regulate online platforms should be narrowly focused and explicitly defined. For them, the bill, as drafted, does not provide the necessary clarity.

Current Status

The heritage committee is conducting an extensive review of Bill C-10. It may recommend revisions, leave the legislation as is, or suggest the modifications to the Broadcasting Act be eliminated.  For businesses, the legislative outcome will impact what videos can be posted to YouTube, what advertising can appear on platforms such as Facebook, and what audio-visual content can be shared. To learn more about how Bill C-10 could impact your business,  contact Compunet Infotech.

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