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Regulation debated for dispute between CRTC and Netflix

Posted on October 15, 2014 by Taber Times

By Trevor Busch
Taber Times
tbusch@tabertimes.com

The current dispute between Netflix and the CRTC, which may ultimately be decided in court, highlights the need for the deregulation of Canada’s broadcasting industry, according to new essay released by the Fraser Institute.

“With the rising popularity of Netflix and other online broadcasters, Canada needs to readjust what was already a fundamentally flawed attitude towards broadcasting,” said Steven Globerman, Fraser Institute senior fellow and Kaiser Professor of International Business at Western Washington University, as well as author of Canadian Content Is Dead; Long Live Canadian Content!.

The taxpayer-funded Canadian Radio-television and Telecommunications Commission (CRTC) regulates all Canadian broadcasting and telecommunications activities. Conventional broadcasters (such as TV stations) must adhere to CRTC rules, which include Canadian content quotas and mandatory funding of homegrown entertainment.

Broadcasters such as Netflix operate outside CRTC rules, and aren’t currently subject to the costs associated with CRTC compliance, and therefore enjoy a competitive advantage over conventional broadcasters.

Globerman argues the CRTC should not be allowed to regulate Internet broadcasters to level the playing field with TV broadcasters.

Tasking the CRTC to essentially regulate the Internet would require a massive expansion of CRTC size and scope, not to mention the increased cost to taxpayers, while the CRTC’s practical ability to regulate the web remains an open question.

“If the CRTC were to impose content restrictions online, it would be censoring the Internet — a concept many Canadians would likely oppose,” said Globerman.

The CRTC has also failed to achieve its stated mandate — even when dealing with a relatively small group of conventional broadcasters.

“I think that the regulatory function of the CRTC is increasingly an anachronism,” said Globerman. “Whether it is being faithful to the tenets of the Broadcasting Act — which is the basis for its regulatory activities — is unclear, primarily because the goal of promoting Canadian identity is so vaguely defined. The ‘big broadcasters’ are part of the system of indirect taxation to subsidize the Canadian entertainment industry. My guess is that the big broadcasters increasingly would be better off being deregulated than being ‘protected’ from foreign competition but (at the same time) obliged to carry a substantial amount of Canadian content and also contribute to funding Canadian programming.”

“Any subsidizing of Canadian programming should be done by the taxpayer much as national defense is paid for by taxpayers.That way Canadians can more easily identify what Canadian content is costing them.”

According to the CRTC, it promotes Canadian content and strengthens Canada’s “national identity,” a concept not clearly defined by the CRTC.

Yet evidence finds that Canadians do not consider Canadian entertainment programming prominent symbols of national pride.

The claim that Canadian producers can’t compete with their U.S. counterparts ignores advances in digital technology, which have significantly decreased the costs of producing and distributing entertainment content.

However, notes Globerman, Canada’s conventional broadcasters have a legitimate complaint. The CRTC imposes regulation on them — but not on Internet broadcasters.

“I am advocating not only that the broadcasting industry be deregulated but that restrictions on foreign ownership in the sector be removed,” said Globerman.
“That way, competition through both new entry and expansion can be leveraged to the benefit of Canadian consumers.”

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