Timothy M. Denton

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CRTC vs Netflix: Apocalypse Now?

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The CRTC vs. Netflix fight is beginning. Its conclusion - unless the Commission backs off -will  mark the end of its claim to regulate the Canadian portion of the Internet.

The CRTC is convinced that the Internet is "broadcasting" when it carries full motion video and is otherwise associated with Canada's territory. Its "exemption order" is really a form of regulation carried out under the misleading rubric of exempting from regulation an Internet activity that satisfies the CRTC it is conforming to the order. It is like a parent allowing a teenager to drive a car: permission is given by an authority and can be yanked. The important point is that it is be permission that the activity takes place.

In 1999, the Commission decided not to regulate "broadcasting" when it was delivered by the Internet. Here is the text of that order. It bears notice that the Commission could not get the word "Internet" past its collective lips, that the thing under discussion was called "new media". If the Internet was already 30 years old in 1999, it is now (2014) forty five years old. Yet it was still "new media" to the CRTC in 1999. By 2012, the Commission recognized that it was no longer "new media" - after I had an outburst to this effect at a Commission meeting. See paragraph 6 of the 2012 Decision.

"In this regard, the provision of broadcasting services that are delivered and accessed over the Internet or delivered using point-to-point technology and received by way of mobile devices is no longer a new phenomenon"

so that the term became "digital media". Such progress!

Here is the 1999 Exemption Order:

Appendix A to Public Notice 1999-197
Exemption order for new media broadcasting undertakings
The Commission is satisfied that compliance with Part II of the Broadcasting Act (the Act) and applicable regulations made thereunder by the class of broadcasting undertakings described below will not contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1) of the Act.
Therefore, pursuant to subsection 9(4) of the Act, the Commission exempts persons who carry on, in whole or in part in Canada, broadcasting undertakings of the class consisting of new media broadcasting undertakings, from any or all of the requirements of Part II of the Act or of a regulation thereunder. New media broadcasting undertakings provide broadcasting services delivered and accessed over the Internet, in accordance with the interpretation of "broadcasting" set out in Broadcasting Public Notice CRTC 1999-84 / Telecom Public Notice CRTC 99-14, Report on New Media, 17 May 1999.

The order was significantly added to and amended in 2012, and to be fair the word "Internet" is used (Broadcasting Order 2012-409). The condition for the Order to apply is:

 

2. The undertaking provides broadcasting services, in accordance with the interpretation of “broadcasting” set out in New Media, Broadcasting Public Notice CRTC 1999-84/Telecom Public Notice CRTC 99-14, 17 May 1999, that are:

a) delivered and accessed over the Internet; or

b) delivered using point-to-point technology and received by way of mobile devices.

 

The conditions of this second order were made necessary to ensure competitive fairness between broadcasters who are vertically integrated, that is, which own transmission facilities (cable systems, satellite, optical fiber etc) and those which do not.

What is the basis of the belief that full-motion video over the Internet constitutes "broadcasting"? The CRTC's reasoning in the original 1999 Report on New Media is informative.

The Report reads:

The Commission considers that the majority of services now available on the Internet consist predominantly of alphanumeric text, and, therefore, do not fall within the scope of the Broadcasting Act and are thus outside the Commission's jurisdiction.

Among the services that also do not fall within the scope of the definition of broadcasting are those where the potential for user customization is significant, i.e., services where end-users have an individual, or one-on-one, experience and where they create their own uniquely tailored content. The Commission considers that these types of services do not involve the transmission of programs for reception by the public and are, therefore, not broadcasting.

The proceeding also made it clear that some new media services fall under the Broadcasting Act's definitions of "program" and "broadcasting." These include digital audio services and audio/visual signals.

What saved the Internet from the imposition of CRTC jurisdiction over all of it (in Canada at least) was a bandwidth limitation; it was only capable of alpha-numeric content. But if it were a "program" it would be captured by the Broadcasting Act.

 

“program”

« émission »

“program” means sounds or visual images, or a combination of sounds and visual images, that are intended to inform, enlighten or entertain, but does not include visual images, whether or not combined with sounds, that consist predominantly of alphanumeric text;

 

So if it is a "program" - to make along story short- it is "broadcasting", and there's an end to it as far as the Commission is concerned. Ergo, they can regulate those portions of the Internet within Canada that distribute programs.

 

Three fairly obvious arguments suggest that this view will not be upheld in the Supreme Court. I will concede that the Broadcasting Act, as written, gives the Commission every confidence that their interpretation is correct, as long as you can ignore reality. And the Constitutional division of powers. And the ultimate authority of Parliament to control speech.

 

  1. Suppose I give a legal opinion in full motion video, and the transmission crosses provincial boundaries. Does that bring the legal profession under federal jurisdiction?
  2. Suppose I upload a youtube video within Canada? Do I need a licence, or am I subject to an "exemption order"?
  3. Suppose I write a blog, and it incorporates a video and an audio element?
  4. Suppose my youtube video is regularly scheduled? Or even irregularly scheduled?

According to the CRTC, these are all "programs" subject to their jurisdiction.

a) freedom of speech

Just as clearly, this involves a vast extension of state power (through licensing) over speech. So the first argument I would make against the CRTC is that it is a freedom of speech issue. Video and audio used to be limited to people with very large pocketbooks, and the scarcity of those signals caused them to be licensed and subjected to public interest regulation.There are 4.8 billion IPv4 Internet addresses and an unimaginably large number of IPv6 addresses. Yet the CRTC is claiming authority over them all if they serve to upload or download audio-visual material in Canada.

 

And why? The CRTC is claiming authority over video and audio content arriving in or deriving from the territory of Canada, all to save a "broadcasting" system, which was predicated on a limited number of signals, a closed distribution system, and high production costs. In a society of seven or twelve broadcast "speakers", it made sense to regulate them. In a society of audio-visual "speakers" as numerous as the Canadian population, licensing them will be resisted as an infringement on Charter rights.

b) federal competence

The competence and authority of the federal government does not extend to the regulation of the uses of "broadcasting" content (case 1 above) if they are transmitted over the Internet.

c) it is not "broadcasting"

Many lawyers will disagree with me, but I continue to maintain that the reception of signals by the Internet is "on demand". If it is received only "on demand" then the theory that captures the undertaking for federal regulation is that it is "unitary" - that the undertaking also sends programming out by broadcast means as they are usual understood: over the air or by cable. Absent a unitary structure of genuine broadcasting with Internet distribution, I doubt that the Supreme Court will uphold the view that Internet video is "broadcasting"

My thinking is influenced by the Supreme Court decision in relation to the value for signals proposal of the CRTC.

Establishing any link, however tenuous, between a proposed regulation and a policy objective in s. 3 of the Act cannot be a sufficient test for conferring jurisdiction on the CRTC.  Policy statements are not jurisdiction-conferring provisions and cannot serve to extend the powers of the subordinate body to spheres not granted by Parliament.

Of course, the question at issue is whether Parliament intended to grant, and did grant, such jurisdiction. I do not wish to assume the truth of what is at issue, but if something as close to a broadcasting objective as a value-for-signal regime was turned down, what about the far more radical,expansionist, and comprehensive proposals of the CRTC to regulate the Internet?

A blog is not the place for free legal advice. Nevertheless, as asteroid Internet collides with the Broadcasting Regulatorium, I foresee a giant legal and political fight.

Political, you ask? well if Usage Based Billing could ignite Canada's Internet users, what about the CRTC exerting jurisdiction over your blog? Your video uploads and downloads?

So I do not think I am being apocalyptic when I state that the legal fight will be the beginning of the last chapter of the CRTC's broadcasting jurisdiction. To be clear, it will retain jurisdiction over "broadcasting" properly so called, but its limitless expansion into the Internet will be rebuffed.

 

 

 

 

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Timothy Denton is a lawyer by training who practices principally in telecommunications and Internet policy and domain name issues, with a strong concentration on explaining what the technology is and what it means.

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Guest Tuesday, 19 November 2019
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