On January 29, 2020, the Broadcasting and Telecommunications Legislative Review Panel (the Panel) released its much-anticipated Final Report and recommendations to the Government.
The Report is the first and only public pronouncement from the expert panel, which has been tight-lipped since it began its review of Canada’s communications industries in 2018. The Panel did release an interim report in June 2019, but that was merely a collection of what it heard from stakeholders during consultations. That “What We Heard” Report did not include any recommendations or commentary that gave insight into the thinking of the Panel.
Broadcasting - Supporting the Creation, Production, and Discoverability of Canadian Content
As traditional broadcasters continue to yield revenue to new participants (including internet service providers and foreign content providers) and mandatory contributions to Canada’s cultural sector decline, one of the most critical tasks of the Panel was to provide the federal government with a clear path to replacing that investment.
Messaging from Heritage Minister Guilbeault was clear and direct in the run up to the Final Report: the federal government is preparing to use the stick--and not the carrot--to force internet content providers to invest in Canada’s cultural industries and communities. This approach is consistent with the language in Minister Guilbeault’s new Mandate Letter from the Prime Minister, which directed him to (among other things) ensure that “all content providers, including internet giants, offer meaningful levels of Canadian content in their catalogues, contribute to the creation of Canadian content…[and] promote this content and make it easily accessible on their platforms.”
What the Minister’s messaging and Mandate Letter lacked were specifics on how the federal government would achieve this; the Panel’s Final Report changes that, and offers the federal government with a path forward and political cover, should it agree with the Panel’s recommendations.
Funding and Support for Canadian Content
The Panel recommends bringing all significant media content services within the scope of the Broadcasting Act and jurisdiction of the CRTC, including foreign digital content services.
• Recommendation 51 - Extend the scope of the Broadcasting Act beyond audio and audiovisual content to include alphanumeric news content made available to the public by means of telecommunication. The two categories of “media content” would be:
- Audio or audiovisual content means sounds or moving images, or a combination of sounds and moving images, interactive or not, that are intended to inform, enlighten, or entertain and are made available to the public by means of telecommunications.
- Alphanumeric news content means news about current events that predominantly consists of alphanumeric text that is made available to the public by means of telecommunications. However, this definition does not include such transmission when made solely for performance or display in a physical public place, or images that consist predominantly of alphanumeric text and are not accompanied by sounds;
• Recommendation 54 - Replace the term “broadcasting undertaking” in the Broadcasting Act with the term “media content undertaking”, which would include three distinct types of undertaking, each of which would have their own contribution obligations:
- Media curation undertaking means an undertaking whose primary purpose is to provide a service for the dissemination of media content over which it exercises editorial control. In this context, editorial control means effective control over the creation or selection of media content, including through agreements with rights holders with respect to its creation or dissemination.
- Media aggregation undertaking means an undertaking that, in whole or in part, provides a service that aggregates and disseminates media content provided by media curation undertakings.
- Media sharing undertaking means an undertaking that, in whole or in part, provides a service that enables users to share media content for which the provider does not have editorial control but which the provider organizes or controls.
• Recommendation 55 - Amend the Broadcasting Act to establish that the legislation applies to undertakings carried on in part within Canada, whether or not they have a physical presence in Canada.
• Recommendations 56-58 - Ensure that the existing licensing regime in the Broadcasting Act be accompanied by a registration regime that would require all internet-based media content undertakings to register unless exempted.
• Recommendation 60 - Ensure all media content undertakings contribute to the Canadian broadcasting system in an equitable manner, regardless of where they are located.
• Recommendation 61 - Amend the Broadcasting Act to ensure that the CRTC may impose spending requirements or levies, as well as discoverability requirements, on all media content undertakings (except those whose primary purpose is the dissemination of print news). The Report recommends that mandatory contributions be based on a “simple calculation of the percentage of Canadian-derived revenues”.
• Recommendation 65 - Establish a single public institution tasked with funding the creation, production, and discoverability of Canadian productions on all screens, which will combine the functions of the Canada Media Fund and Telefilm Canada.
• Recommendation 66 - Redirect the regulatory levy that formerly went to the Canada Media Fund to the Certified Independent Production Funds, as well as to other existing or new funds or programs approved by the CRTC.
• Recommendation 69 - Ensure that tax credits and funds are platform-agnostic and are accessible to all Canadian production companies, whether independent or broadcaster affiliated.
• Recommendation 71 - Ensure that some or all of the levies on media aggregation and media sharing undertakings contribute to the production of news content - through a fund.
Regulating Social Media that Disseminates News
• Recommendation 72 - Require that the relationship between social media platforms that share news content and the news content creators be regulated. Empower the CRTC to regulate economic relationships between media content undertakings and content producers, including terms of trade. This would include media content undertakings that make alphanumeric news content available to the public.
Giving the CRTC Power to Impose New Administrative Monetary Penalties
• Recommendation 77 - Amend the Broadcasting Act to include provisions for Administrative Monetary Penalties, similar to the general scheme in the Telecommunications Act, with maximum thresholds set at a level high enough to create a deterrent for foreign undertakings.
Moving to Reduce Piracy
• Recommendation 78 - To address piracy, move sections 9 and 10 of the Radiocommunication Act — which state that it is an offence to decode, retransmit, or operate devices, equipment, or components to receive unlawfully decrypted subscription programs — to the Broadcasting Act and expand them to include all forms of media content.
Equitable Application of Sales Taxes to Both Foreign and Canadian Undertakings
• Recommendation 85 - Ensure that the federal government equitably apply sales taxes by requiring foreign media content undertakings to collect and remit GST/HST, as Canadian undertakings are presently required.
• Executive Summary: The Panel explicitly rejects an “ISP tax” as a means of funding Canadian content, as it does “not believe …internet service providers should be required to contribute to the support of cultural policy objectives.”
Telecommunications - Affordable access to advanced telecommunications networks
The Panel also had to provide recommendations on telecommunications in Canada against the backdrop of a busy regulatory landscape for both wireline and wireless services. Notably, the CRTC has been engaged for the last year in a public consultation that may shape the future of the wireless industry in Canada, with a public hearing scheduled for the second half of February 2020.
The Panel provides a multitude of recommendations for amendments to the Telecommunications Act. The following are some of the key recommendations:
Amending Key Definitions in the Telecommunications Act
• Recommendation 16 - Replace the definition of “telecommunications service” in the Telecommunications Act with “electronic communications service”, which would include:
- the provision in whole or in part of telecommunications facilities and any related equipment by sale, lease, or otherwise;
- connectivity service, a service whose principal feature is the conveyance of intelligence by means of telecommunications facilities; and
- interpersonal communications service, a service that enables direct interpersonal and interactive exchange of information via telecommunications facilities between a finite number of persons. The persons initiating or participating in the communication determine its recipients.
• Recommendation 17 - That the definitions of “telecommunications common carrier," "Canadian carrier," and "telecommunications service provider" be eliminated from the Act, with consequential amendments.
Prioritizing Competition and Market Forces over Wholesale Regulation
• Recommendation 28 - The Panel endorses the principle of competition and reliance on market forces as the preferred option, but notes that efficient and effective regulation is appropriate “where required”.
• Recommendation 29 - Amend the Act to explicitly require the CRTC to monitor and assess the state of competition in key electronic communications markets to ensure just and reasonable rates.
• Recommendation 30 - Continue to require forbearance of rate regulation where the market is sufficiently competitive to protect the interests of users. As a condition of that forbearance, the Panel calls on the CRTC “either mandate supply of related wholesale inputs or explain why it is unnecessary or inappropriate to do so.”
• Recommendation 39 - Allow the CRTC to assume sole jurisdiction to mandate and establish terms and conditions of access to wholesale wireless services.
• Recommendation 31 - Consolidate the CRTC’s over tariffing, renaming tariffs as “reference offers” and ensuring they set out rates but also required terms and conditions, details of associated operations processes and service supply and quality conditions.
Deploying Facilities and Ensuring Access to Infrastructure
• Recommendation 34 - Amend the Act to require those providing electronic communications services to the public to grant access to their support structures at “fair and reasonable rates and on a non-exclusive basis to persons who own or operate transmission facilities” to provide connectivity to the public.
• Recommendation 35 - Amend the Act to prohibit any exclusive arrangement for the use of passive infrastructure.
• Recommendation 36 - In light of the drastic increase in the locations at which telecommunications facilities must be installed for the deployment of advanced (5G) networks, the Panel recommends:
- ensuring the CRTC's authority over passive infrastructure clearly includes access to all public property capable of supporting such facilities, such as street furniture;
- ensuring the scope of access includes radiocommunication facilities (and the telecommunications facilities necessary to operate them), as well as non-discriminatory access to support structures of provincially regulated utilities;
- authorizing the CRTC to mandate access to inside and in-building wire, support structures, and rooftops within and on multi-dwelling unit buildings;
- transferring operational oversight of antenna siting policies from the Minister of Industry to the CRTC, including interactions with municipalities.
Spectrum Management and Radicommunication
• Recommendation 41 - To facilitate the shared use of radio spectrum, amending the Radiocommunication Act to empower the Minister to establish mechanisms to facilitate trading or leasing of licences, administer a database that governs the use of radio spectrum in specific classes of licences, and to delegate that administrative power to any person.
Ensuring Universal Service Expansion of Contributors to the National Contribution Fund
• Recommendation 25 - Amend the Act amended to enable CRTC to draw from expanded range of market participants (all providers of electronic communications services) in designating required contributors funds that deploy advanced telecommunications.
• Recommendation 27 - Amend the Act to require the Minister of Industry to submit an annual report to parliament on the status of broadband deployment, including in rural, remote and indigenous communities.
Safeguarding Net Neutrality
• Recommendation 48 - Amend the policy objectives of the Telecommunications Act to reflect the CRTC’s duty to safeguard open internet access in Canada as well as adding legislative provisions allowing the CRTC to review unjust discrimination in the provision of electronic communications services by any person.
What’s in a Name?
• Recommendation 1 - The very first recommendation in the Report is to change the name of Canada’s communications legislation and regulator to better reflect modern terminology and the expanded scope. It recommends changing:
- The Canadian radio-television and Telecommunications Commission to the Canadian Communications Commission;
- The Broadcasting Act to the Media Communications Act; and
- The Telecommunications Act to the Electronic Communications Act.
The Path Forward - A Call for Immediate Action
The Panel emphasizes that it takes time for government to develop and enact new legislation, so it calls for immediate action in these specific areas:
• To have an immediate impact on the lives of Canadians that lack connectivity, governments across the country that have committed funds for broadband expansion should move promptly and in coordinated fashion to release this funding.
• Require the CRTC to hold hearings to issue a new exemption order that requires foreign online content curators deriving revenue from Canada (yet still exempt from licensing) be made to contribute to Canadian content through spending and discoverability requirements.
• Immediately end the sales tax disadvantage facing Canadian companies by applying the GST/HST to media communications services of foreign online content providers.
Fasken will continue to monitor critical developments in telecommunications and broadcasting and provide updates once the government determines which of the Panel’s final recommendations will move forward.