Bill C-11, An Act to amend the Broadcasting Act – also known as the Online Streaming Act – (the Act) would clarify that the Act applies to online streaming and on-demand services, and would add online undertakings as a distinct class of broadcasting undertaking subject to regulation by the Canadian Radio-television and Telecommunications Commission (CRTC).
Bill C-11 is currently before the House of Commons, and is in the last stages of debate and consideration before it is slated to be passed into law. With the legislative process almost complete, many stakeholders are taking a closer look at the proposed next steps to put the new regime in place.
Direction to the CRTC
The government has repeatedly indicated that once Bill C-11 has received Royal Assent, the Governor-in-Council (Cabinet) will issue a policy direction to the CRTC to guide how it implements the Act’s new framework and provisions. Before the proposed direction is formally issued, it will be subject to a public consultation for a minimum 30 day period, separate government consultations with the CRTC, and will be laid before the House of Commons and Senate (see sections 7 and 8 of the Act and clause 8 of Bill C-11). While the government has not provided a draft direction under Bill C-11, a draft was released under the earlier Bill C-10 in 2020, which suggests the types of broad brush strokes we may see again. Cabinet may issue directions “of general application on broad policy matters”, which is intended to leave more specific decisions to the CRTC. That being said, the direction has the potential to shape how the CRTC will bring the new policy objectives into effect, and use its new tools, under the Act as amended.
The CRTC has been preparing for updated legislation for some time. An important early step in the process was its 2018 report Harnessing Change: The Future of Programming Distribution in Canada, which followed the government’s announcement of a review of the Broadcasting Act, and fed into the development of the bills to amend it.
Five years, two bills and many hearings, briefings and consultations later, the Minister, the CRTC and stakeholders are anticipating rolling up their sleeves on the new regime. The February 6, 2023 Mandate Letter from Minister of Heritage Pablo Rodriguez to Vicky Eatrides, the new Chair of the CRTC, stated that:
[t]he passage of the Online Streaming Act would represent a watershed moment and an opportunity to craft a forward-looking, flexible regulatory framework for online broadcasting in Canada. […] Once the policy direction process has concluded, you can expect interested parties to quickly look to the CRTC to provide a roadmap for when and how the key regulatory questions will be considered.
The same Mandate Letter emphasized the importance of “timely decision making”. The 2020 draft Policy Direction would have directed the CRTC to implement certain major elements within nine months, and the broader regulatory scheme within two years.
The CRTC will implement the new regime primarily by making regulations and orders. For example, the CRTC will make regulations to define “Canadian content”, and it may make regulations to set blanket obligations for certain classes or types of services, such as expenditures (new section 11.1) and program standards (section 10(1)(c) as amended). It may make orders to impose specific obligations (effectively conditions to operate in Canada) on certain services or classes of service, with respect to matters such as contributions to production funds, the exhibition and discoverability of Canadian content, and accessibility (new section 9.1). It may also make orders to exempt services from obligations, with or without conditions.
The Act requires the CRTC to conduct public processes before finalizing regulations (new section 9.1(4)) and orders (section 10(3) as amended). While many of these proceedings will be in writing, the CRTC can be expected to conduct major consultations as public hearings, with both written submissions and appearances by stakeholders and other interested parties.
An updated definition of “Canadian content” will be one of the key elements of the regulatory framework under the new regime. Bill C-11 would require the CRTC to consider copyright ownership as a factor to determine whether content is “Canadian”, which could have implications for deals to produce and exploit content made with Canadian partners. The CRTC would also consider whether key creative positions in program production are held by Canadians, whether a program “furthers Canadian artistic and cultural expression”, and collaboration by online services and broadcasters (as the case may be) with Canadian producers (new section 10(1.1) of the Act). While the Senate proposed an amendment to Bill C-11 to provide that no one of the above factors is determinative, the Minister (on behalf of the government) rejected this attempt to add some flexibility to the CRTC’s considerations on what is “Canadian”.
New revenues into the Canadian system
In appearances before Parliamentary Committees, officials from the Department of Canadian Heritage and from the CRTC responded to questions about new financial contributions from online services to the Canadian broadcasting system. The figure of CA$900 million was repeatedly raised, and while this was originally referenced as new revenues, officials later clarified that this would not necessarily be a new injection of funds; and that who will contribute, and how much, would be the subject of an evidence-based future public proceeding:
This is not taking $900 million away from those streaming services and saying the government is now going to use that for alternate purposes. In the modelling, the vast majority of that are expenditure requirements where those companies will continue to have decision-making power over how that is used with the understanding that those investments go into Canadian programs because that’s what this bill is about — making sure that those streaming services are investing in television, film and music that involves Canadian creators and tells Canadian stories. (Thomas Owen Ripley, Associate Assistant Deputy Minister, Canadian Heritage)
First, we need to be able to collect data, figure out who is who, and doing what, and what kind of revenues and what lines of business they are in. Then, in the context of an open, transparent public hearing, we need to talk about contribution frameworks. How much should they contribute, to what, what would further the objectives of the act and what is an equitable arrangement as between existing licencees and new members of the club, so to speak? They may not want to be part of the club, but so be it. Both the amount and the target of those contributions will be subject to a future public proceeding. We need to reflect the various lines of business and different ways in which different players can contribute to the system. (Ian Scott, then CRTC Chair)
The CRTC will continue to have the power to exempt services from regulatory requirements if “it is satisfied that compliance with those requirements will not contribute in a material manner” to implementing the broadcasting policy under the Act (section 9(4) of the Act). Usually, a business or group will make submissions to the CRTC that its broadcasting activities do not warrant close regulatory oversight, or the type of significant contributions to the system (expenditure, exhibition, etc.) that are borne by larger or more commercial businesses. The CRTC has invariably imposed conditions of exemption on these services – in some cases, quite extensive conditions – and can be expected to continue to do so going forward under the Act as amended. For reference, the CRTC’s current list of Broadcasting Exemption Orders is available here. The government has, to date, resisted all proposals to impose a revenue threshold for exemption under the Act itself, preferring to defer to the CRTC to determine whether and how to set one under an exemption order.