Bill to Regulate Internet Misses the Mark, Critics Say

The Netflix sign is seen at the company’s headquarters in Los Gatos, California, in a file photo. Justin Sullivan/Getty Images

The federal government’s proposed legislation to make American streaming services pay to produce Canadian content could create more problems than it solves, critics say.

Bill C-10 aims to place American online streaming services such as Netflix, Spotify, and Disney+ under the same obligations as domestic broadcasters and cable TV providers, which must invest between 25 percent and 45 percent of their Canadian revenues in local content.

The federal government estimates that Bill C-10 could funnel more than $800 million to Canadian content creators by 2023.

Peter Menzies, former vice chair of telecommunications with the Canadian Radio-television and Telecommunications Commission (CRTC), critiqued the legislation in a recent policy paper for the MacDonald-Laurier Institute.

He told The Epoch Times that the legislation is narrowly focused and fails to address some of the most pressing issues related to telecommunications in Canada, such as availability and affordability.

“One of the unintended consequences of this legislation will very likely be that the sector it is trying to help will actually be hurt by it because there’s no evidence that it needs help,” Menzies said.

“The Canadian film and television industry has grown in the last 10 years by 80 percent, and a great deal of that has come from the investment of companies like Netflix.”

CRTC chair Ian Scott said in January that Netflix is “probably the single largest contributor to the [Canadian] production sector,” along with Amazon and Disney. In 2017, Netflix committed to spending $500 million on production in Canada over five years. In 2019, just two years later, it said it had already exceeded that total.

Menzies says new regulations could stop that investment.

“If they’re already spending that money [by a levy], will they say, ‘OK well, forget it then, we'll just give you the money and we’ll shut down [Canadian production]’? At the end of the day, you’re no farther ahead.”

If passed, the bill could make streaming companies prioritize Canadian films in their search algorithms, but “that isn’t an issue,” he said, at least regarding Netflix.

“Netflix has this search button and all you have to do is type ‘Canadian’ in there and you will get a full suite of Canadian programs, some of which are very good.”

The CRTC designates a TV program or series as Canadian if it meets certain conditions. The producer must be Canadian. At least one of either the director or screenwriter must be Canadian, and at least one of the two lead performers must be Canadian. At least 75 percent of program expenses and 75 percent of post-production expenses must be paid to Canadians or Canadian companies for the services they provide. In addition, a points system is used to ensure that the production team includes a sufficient number of people in key creative positions who are Canadian.

This policy is more about protecting industry than promoting culture, according to David Taras, professor of communication studies at Mount Royal University.

“It’s an employment strategy, so it’s not like we’re going to see a lot of shows about Canadian heroes or Canadian cops or Canadian spies or any of that,” Taras said in an interview.

“Is ‘Ice Road Truckers’ a Canadian theme? Yeah, I guess so. Is it something Canadians would care about? I don’t know, but basically, historically speaking, Canadian content is about producing jobs.”

Bill C-10 complicates the Canadian story by placing new ideological filters on the Broadcasting Act. Section 3 of the act says programming should “serve the needs and interests of all Canadians — including Canadians from racialized communities and Canadians of diverse ethnocultural backgrounds, socio-economic statuses, abilities and disabilities, sexual orientations, gender identities and expressions, and ages — and reflect their circumstances and aspirations, including equal rights,” with special emphasis on indigenous peoples.

Taras says any additional cost imposed on the streaming networks will be paid for by consumers.

“One of the Netflix strategies has been to pay a tax by imposing a tax,” he said. “When the costs in Canada become somehow excessive or [if] they see them as untenable or unfair, they merely hike the price for Canadians.”

Michael Geist, a professor of law at the University of Ottawa, says Bill C-10 could trigger trade sanctions, as the Canada-United-States-Mexico Agreement includes a “culture ‘poison pill’” that was absent in NAFTA. CUSMA allows retaliatory measures of “equivalent commercial effect” when the industries of other countries are disadvantaged. When France imposed a tax on Google, Amazon, and Facebook last year, the United States threatened to impose tariffs on French imports—including on cheese, lipstick, handbags, and wine—worth up to US$2.4 billion.

In a recent post on his website, Geist said Bill C-10 “will cause harm in the short term, increase consumer costs in the long term, and leave behind a market that perpetuates unfortunate perceptions of Canadian content as a weaker product reliant on government-mandated support.”