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Federal Election 2019 | Bulletin

No More Free Rides for Large Online Digital Media Services

Fasken
Reading Time 5 minute read
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Technology, Media and Telecommunications Bulletin

Calls to require online digital media services to contribute to Canadian culture have been a political issue for almost a decade.  Those calls have grown louder in recent months as Canadians have come to rely increasingly on (foreign) digital platforms to access television programming.The issue is alive in the current federal election, in part, because Heritage Minister Pablo Rodriguez has stated that “there will be ‘no more free rides’ when it comes to digital platforms and their contributions to Canadian culture.”[1]

 

Background

For much of the past decade, the federal government has resisted calls to require online digital media services to contribute to Canadian culture.Initially, there was little evidence that these digital platforms were having a material impact on the Canadian broadcasting system and its key stakeholders, including Canadian broadcasters, distributors and producers.That has all changed in recent years.Canadian distributors (cable, IPTV and DTH) are witnessing a declining subscriber base with a household penetration rate that fell from 81.5% in 2013 to 72.3% in 2017.[2] Canadian conventional television broadcasters have experienced a revenue decline of more than 4% in each of the past three broadcast years, while PBIT (profit before interest and taxes) margins have declined by almost 9% in the 2018 broadcast year.[3] 

These and other changes to the Canada broadcasting system have increased concerns not only with respect to the health of the Canada’s distribution and broadcasting industries, but also in respect of the Canadian production sector, which relies on expenditures and contributions from these industries to fund the production of Canadian programming.

In April 2016, the Minister of Canadian Heritage initiated a consultation to strengthen the creation, discovery and export of Canadian content in a digital world.The following year, in September 2017, the Minister launched Creative Canada, a new policy framework that positioned the creative industries at the core of Canada's cultural identity and economy.[4] Following that announcement, the Canadian government appointed a panel of experts in June 2018 to review the legislative framework governing the broadcasting and telecommunications industries.That panel is to issue a report to the government before the end of January 2020.  All of these initiatives were implemented, at least in part, with a view to determining the contributions that all stakeholders, including foreign online digital media services, should make to the production and exhibition of Canadian programming

 

The Position of the Parties

Liberal Party: In the lead up to the election campaign, Heritage Minister Pablo Rodriguez told The Star in early September that there will be “no more free rides” for digital platforms, adding that “anyone who benefits should contribute, and that includes the big internet players.”[5] The Liberals have confirmed that they will move forward “with legislation that will take appropriate measures to ensure that all content providers – including internet giants – offer meaningful levels of Canadian content in their catalogues, contribute to the creation of Canadian content in both official languages, and promote this content and make it easily accessible on their platforms.”[6]

Conservative Party: The leader of the Conservative Party, Andrew Scheer, has said that “the Conservative platform would include measures to ensure foreign digital platforms are subject to additional tax” by ensuring that, in “the same way all Canadian companies pay a certain percentage of their revenue in taxes to the federal government… that foreign multibillion dollar corporations who are collecting hundreds of millions of dollars’ worth of revenues in ad revenues or subscription fees pay their fair share”.[7] More recently, Mr. Scheer also committed to a “new administration” for digital media.[8]

New Democratic Party: The NDP has committed to making sure that “digital media companies play by the same rules as Canadian broadcasters,” which “means paying taxes, supporting Canadian content in both official languages, and taking responsibility for what appears on their platforms, just like other media outlets.”[9]

Green Party: The Green Party has committed to applying a corporate tax on transnational e-commerce companies doing business in Canada by requiring the foreign vendor to register, collect and remit taxes where the product or service is consumed.[10]

People’s Party of Canada: The leader of the PPC, Maxime Bernier, has indicated that “big web giants should pay the HST like anyone else,” and committed to reinvest revenues collected into the arts sector once the federal budget is balanced.[11]

Bloc Québécois: The Bloc Québécois has proposed that Canada take inspiration from France and require global technology giants to pay a 3% tax on revenue derived from Canada.[12] The Bloc Québécois will also introduce legislation that will ensure the Canadian government recognizes the existence of a Québec culture and promotes it on digital platforms to give more space to Québec creators in their algorithms.[13]



[1] The Star, “No more free rides for Big Tech, heritage minister says”, September 2, 2019.

[2] Communications Monitoring Report, 2018, CRTC, at page, 263

[3] Conventional Television Statistical and Financial Summaries - 2014-2018, CRTC Consumer Affairs and Strategic Policy, at page 1.

[4] Launch of Creative Canada - The Honourable Mélanie Joly, Minister of Canadian Heritage, Canadian Heritage , 28 Sept 2017.

[5] The Star, “No more free rides for Big Tech, heritage minister says”, September 2, 2019.

[6]  Forward - A real plan for the middle class, Liberal Party of Canada, page 49.

[7] The Wire Report, “Liberals, Conservatives promise new rules”, Sept. 30, 2019.

[8] Cartt.ca Newsletter, “Making digital giants pay was on all leaders’ minds in final debate”, October 11, 2019.

[9] A New Deal for People: New Democrats’ Commitments to You, NDP, page 85.

[10] Honest. Ethical. Caring. Leadership. Election Platform 2019, Green Party, page 33.

[11] Cartt.ca NewsletterMaking digital giants pay was on all leaders’ minds in final debate”, October 11, 2019.

[12] Le Québec, c’est nous: Plateforme politique du Bloc Québécois, Bloc Québécois, page 6.

[13] Ibid., page 7.

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