Bill C10 – Three failures


My colleague Philip Palmer delivered this address to the PIAC conference. Caution – it has a large blast radius.

C-10: Three Failures

There are tomes to be written about C-10, its ambitions and its failings. I would like to make 3 points:

First, the restriction of free speech by the regulation of Internet streaming services as broadcasting cannot be justified under the Charter of Rights.

Second, section 3 of the Broadcasting Act, as amended by C-10, fails as a broadcasting policy for the Internet age.

Third, the expansion the Broadcasting Act to Internet streaming services is unconstitutional both as beyond the powers of Parliament and as contrary to the Charter of Rights.

  1. Is Broadcasting Regulation Justified?

Let’s start with the basics.

Broadcasting is obviously a means of communication.

The Charter of Rights protects “freedom of…expression, including freedom of the press and any other media of communication”. A measure that impinges on freedom of speech can be sustained only if it is demonstrably justified in a free and democratic society.

Up to now, the law has treated Internet content like print. Its content has not been regulated, but liability may arise under criminal law or civil law for content that violates legal norms.

Broadcasting regulation is intrusive. It has everything to do with limiting speech. It limits who can speak. It limits what can be broadcast. It requires that certain programing be aired. It requires the privileging of certain programing over others. It prescribes, for example, when programing must be aired.

Historically, broadcasting regulation has been justified on two grounds:

First, broadcasting regulation arose as a response to the technical limitations of radio frequencies as carrier of content. In short, the crude technology and radio interference issues that plagued early AM radio demanded that few licences be granted in any coverage area. This is the Spectrum Scarcity basis for broadcasting regulation.

Second, and this derives from the first, the limitation in the number of licensees resulted in a then-revolutionary mass communications technology being vested in the hands of very few people. There was a danger that radio, unregulated, could be used to undermine societal norms, interfere in democratic politics and feed misinformation to the public. Content regulation was the answer to that threat. This is what I call the Public Morality basis for broadcasting regulation.

The Internet challenges that model. The real scarcity that is a fact of over-the-air broadcasting gives way in the Internet to not hundreds but literally thousands or millions of “channels”. The only limiting factor is the imagination and linguistic skills of the Internet user. There are no constraints on the type of content that can be heard or viewed; on the range of opinions expressed; or on the social messaging of the programing that is accessed. The Internet service user is in command of what he or she hears or views and when he or she will enjoy it. In short, the constraints that were dictated by the scarcity of spectrum fall away and the user has an infinity of content choices.

The question, then, is how is broadcasting regulation – the stepchild of scarcity and public morality – justified in its application to the Internet – which is the very avatar of abundance and choice?

The Yale panel seems never to have posed the question: There is no explanation of why it recommends regulating the Internet as broadcasting, and the report offers no broader public policy rationale.  

If I had to infer from the Report’s internal logic, I would suggest that the Panel believed

The purpose of regulation is to continue the financing of the supply of “certified” Canadian productions, with an emphasis on certain subsets of virtuous programing such as aboriginal or minority official language programing.

The formulation I set out above betrays a rationale for industrial regulation. I believe it falls far short as a justification for regulation that interferes with freedom of speech.

I can understand, and even support, financial exactions from Internet streaming services that derive revenue from Canada in order to finance Canadian productions. I do wish the Yale Report had left it there.

In my view the case for intrusive regulation has not been made and cannot be made as it applies to Internet streaming services.

  1. A Broadcasting Policy for the 21st Century?

This panel was asked “ Does C-10’s section 3 hit the mark as a 21st century broadcasting
policy for Canada?”. To that question, my answer is an emphatic no!

Communications over the Internet is the most revolutionary development in transforming the psychic space of mankind since the invention of printing. Industry after industry is being transformed by the Internet: people plan and book their vacations online, they buy their clothes and electronics online, they work online, they play bridge or video games online, they join clubs and affinity groups online and and they meet their life-partners online. They now conduct warfare and commit crimes online.

Most importantly for this discussion, people choose what to watch or listen to online, when they want to watch or listen to it, and they choose from whom they will receive the service as well as the device over with they will consume it. The Internet places the individual at the centre of its constellation of products and services on offer.

What is the hallmark of the Internet commerce? it is a demand driven.  Unless someone wants it, money does not flow over the Internet. This is true for Netflix. It is true for PornHub. It is true for YouTube. It is true for BritBox.

The Yale panel was asked to explore, basically, how to respond legislatively to the challenges posed by the Internet. Its response, in respect of Broadcasting was, basically, to double down on the existing regulatory regime.

The section 3, the Broadcasting Policy for Canada does not once use the word “individual”, or “audience” or “consumer”, or “viewer” or “listener”. Nor does it refer to “choice” or “market”. This is the great missed opportunity of C-10. It fails as a response to the most revolutionary phenomenon of our time – and it does so spectacularly.

In the C-10 model, the heart of the Canadian broadcasting system is not the audience: it is the Regulator. Programing is produced not to respond to market demand, but to satisfy the Regulator. In order fill content quotas for Canadian programing, broadcasters buy US programs that are profitable and take a loss on Canadian prime time content. Backed with simultaneous substitution to inflate the value of US programs, Canadian broadcasters clear a profit, but the nexus between Canadian producers and their audience is lost.

The C-10 system does not measure success by audience acceptance – it measures it by inputs.

This is entirely misguided.

Imagine if section 3 had been worded:

It is hereby declared as the broadcasting policy for Canada that the Canadian broadcasting system be responsive to programming choices of its audiences.

A broadcasting policy that put Canadians at the heart of the broadcasting system would have encouraged a change in regulation. Instead of burdens on broadcasters, the system would have looked to lightening the burden, making the system more audience responsive and encouraging risk-taking.

Rather than revitalizing the broadcasting system to compete in the Internet world, section 3 is all supply side. What the supplier must provide: what the supply must look like: who can be accredited as a supplier. The possibilities for growth and change are foregone in an effort to prop up a system that has largely failed to produce a prime time product that finds audiences either domestically or abroad.

The reason Canadians fail where the Danes and the Israelis succeed is not our lack of talent or craftsmanship: it is our stifling regulatory system.

The revised section 3 fails to enunciate a broadcasting policy that advances the interests of either audiences or the industry: it perpetuates what is broken.

  1. C-10 is Unconstitutional.

Streaming services over the Internet are unlike broadcasting in important ways. Those differences take Internet regulation outside the legislative authority of Parliament and so preclude their regulation under the Broadcasting Act.

First, Internet streaming services have no transmission facilities. Unlike spectrum based over-the-air broadcasters, cable companies and telecommunications carriers, the Internet platforms are not providing a service that, under s. 92(10)(a) of the Canada Act, 1867, are a work or undertaking that connects one province with another.

The streaming services are not providing telecommunications services – they are providing services using telecommunications. So do law firms, architects, engineers, chain department stores, online stores, and virtually every other industry and business in Canada. The mere fact of being a service delivered by means of telecommunications does not render that service subject to the legislative authority of Parliament.

Railways and pipelines are regulated under the authority of Parliament. Freight forwarders and gas producers are not. That is the proper parallel.

Internet service providers fill the telecommunications pipelines, but it is telecommunications carriers that are the work or undertaking that delivers that content over interprovincial or international boundaries. That distinction is vital.

It is not enough that the Broadcasting Act defines broadcasting and hence extends the Act to  “any transmission of programs …by radio waves or other means of telecommunications.” Those last words being the critical ones. Parliament cannot create constitutional jurisdiction through the mere adoption of legislation, nor can it survive constitutional challenge just because a legislative measure has stood unchallenged for many years.

The assertion of broadcasting regulatory jurisdiction over streaming services also engages the Charter rights of the content streamer. As we have discussed already, Internet services have generally been treated like printed matter: they are not subject to regulation but are subject to laws of general application, such as the Criminal Code or the laws of defamation. Canada is now proposing to treat internet streamers as if they represented the kind of threat to public morality that the over-the-air broadcasters once did. That is a remedy in search of a problem. There exists no rationale that would justify the intrusion into the freedom of speech of the streaming service provider.

C-10 is unconstitutional on grounds of the Division of Powers and violates the freedom of speech guarantees of the Charter of Rights.

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