The Broadcasting Act Blunder, Day Three: Minister Guilbeault Says Bill C-10 Contains Economic Thresholds That Limit Internet Regulation. It Doesn’t.
The Broadcasting Act Blunder series continues this week with posts focused on the uncertainty fuelled by a bill that was months in the making, yet leaves numerous issues unanswered (prior posts in the Broadcasting Act Blunder series include Day 1: Why there is no Canadian Content Crisis, Day 2: What the Government Doesn’t Say About Creating a “Level Playing Field”). Canadian Heritage Minister Steven Guilbeault tried assure the House of Commons last week that the bill features several “guardrails” against over-broad regulation. In particular, he stated:
entities would need to reach a significant economic threshold before any regulation could be imposed. This keeps the nature of the Internet as it is. It simply asks companies that generate large revenues in Canada to contribute in a fair manner.
With all due respect, this is simply false. There is no specific economic threshold established by the bill. The starting point is that all Internet streaming services carried on in whole or in part within Canada are subject to Canadian regulation. In other words, if you have Canadian subscribers, the law applies regardless of where the service is located.
Guilbeault is presumably referring to the fact that the law gives the CRTC to the power to exempt services from regulation. Section 6(4) of the bill provides:
(4) The Commission shall, by order, on the terms and conditions that it considers appropriate, exempt persons who carry on broadcasting undertakings of any class specified in the order from any or all of the requirements of this Part, of an order made under section 9.1 or of a regulation made under this Part if the Commission is satisfied that compliance with those requirements will not contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1).
The CRTC could certainly establish some thresholds for regulation following the enactment of the bill, the approval of a policy directive, and a full hearing on the implementation issues. Moreover, the government could include further specifics within its policy direction, though that direction will not come until after the bill has been enacted into law.
The possibility that the CRTC could create thresholds is not the same as Guilbeault claiming that the law contains significant economic thresholds, however. In fact, it is likely that the CRTC will not limit the regulatory model to “companies that generate large revenues in Canada”, whatever that means. In order for the CRTC to determine who might be exempt, it is likely to require even smaller foreign services to register with the regulator and to provide it with confidential subscriber and revenue data.
The uncertainty of who is caught by the regulation is sure to have an impact on the market. Internet streaming services thinking about the Canadian market may put those plans on hold until they have some visibility over what they face from a regulatory perspective, leading to less competition and less choice for Canadians. Should the CRTC establish an economic threshold, that too could have an unexpected impact. If it sets a high threshold that is limited to a handful of large, U.S.-based streaming services, it invites the possibility of a trade challenge. If a low threshold becomes the standard, foreign services may avoid the Canadian market altogether given the regulatory costs. Either way, Bill C-10 in its current form creates considerable uncertainty that is compounded by inaccurate claims from Minister Guilbeault.