The Broadcasting Act has been amended to clarify that it applies to online streaming and on-demand services and to 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, otherwise known as the Online Streaming Act, received Royal Assent on April 27, 2023. In its news release on the bill’s long-awaited passage, the Department of Canadian Heritage has stated that “the Online Streaming Act requires streaming services to contribute to the creation, production and distribution of Canadian stories in a way that is flexible and fair [and…] aims to level the playing field” with respect to investment, industry jobs and sharing Canadian culture.
As we recently explained in Next steps for Bill C-11, An Act to Amend the Broadcasting Act, the next steps include a Cabinet policy direction to the CRTC on the Act’s implementation and the CRTC’s roadmap to set out when and how it will consider the key regulatory issues.
Under the Act as amended, the draft Cabinet direction will be subject to a minimum 30-day public consultation and 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 did not publish 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”, leaving 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.
While government statements in committee meetings on the bill, and the Minister’s Mandate Letter to new CRTC Chair Vicky Eatrides, contemplated that the CRTC would provide its roadmap after the policy direction process has concluded, the CRTC appears poised to move ahead sooner. The CRTC has in fact 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. The CRTC Chair recently issued a statement indicating that “[w]e will share our detailed plan and launch the first public consultations shortly. We will adapt our approach in light of any future policy direction.”
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 had 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 the question of 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, former 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 frequently 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.
For further background on how the Broadcasting Act and the CRTC has addressed digital media in the past, and how the new amendments propose to provide a framework to regulate “foreign web giants”, please see Implications of the Broadcasting Act – to be amended – for non-Canadian online media services.
For more information on this topic, please contact the author Margot Patterson.