Senate Standing Senate Committee on Transport and Communications

Pre Study of Bill C-11

Tuesday June 21, 2022

Opening Statement of Konrad von Finckenstein, Q.C.

Chair of the CRTC 2007-2012

Thank you for inviting me to comment on Bill C-11 as passed by the

House of Commons.
As you probably know, I was Chairman of the CRTC for 5 years. I thus
commend the government for tackling the problem of integrating
streamers into the Canadian regulatory system for broadcasting. They
are clearly broadcasting in Canada, earn large revenue in Canada and
are presently exempt from the regulatory system.
However, I certainly do not agree with the way it was done and the
concept behind it. I think more targeted legislation dealing with the
specific problem of streamers would have been preferable to
potentially encompassing any transmission of music or video or both,
over the internet. This approach results in giving CRTC vast new
powers to impose conditions or exempt on line undertakings based on
the vague concept of whether they “contribute in a material manner to
the implementation of the broadcasting policy set out in s.3 of the Act”.
However, the government chose this course and the question now
arises as to how to improve C-11 to make it workable and limit the
collateral damage to the great engine of innovation, the internet. I
would like to make 5 points
I
Vesting such large powers with such vague parameters will prove
extremely onerous for the CRTC. Every single stakeholder will come
forward with specific requests and argue it falls within the vast powers
given to the CRTC. One cannot forget that the CRTC is a court of record,
which identifies issues, in response to petitions or on its own initiative,
seeks input from affected parties and stakeholders, holds a hearing viva
voce or on paper and then issues a decision. All this has to be done in
accordance with due process and can be judicially appealed.
Consequently narrowing the powers will allow the CRTC to make good,
timely and targeted decisions. The goal, of course, is to protect and
strengthen Canadian broadcasting and foster the Canadian production
industry. Hence the legislation should target only large streamers who
can meaningfully compete with established broadcasters. Small
innovative internet players should be able to give their innovative
drives full reign to contribute to the overall productivity of the
Canadian economy.
Consequently, I would urge you amend to the Act adding a section 2.4
stating:
This Act applies only to on line undertakings which have more than
100,000 subscribers in Canada or revenue in excess of $100 million
from Canada.
II
There is no intention to cover user generated content and thereby
restrict the freedom of speech of Canadians. User generated content,
while is generally exempted, can be made subject to the act by the
exception to the exception built into s. 4.1(2). Clearly this section was
meant to deal with hybrid streamers such as You Tube. But there are
great fears that it may affect others, so called digital first broadcasters
who produce programs solely for the internet as well as ordinary users
uploading their videos or music. Consequently s. 4.1(2) should be
limited by the following:
Regulations made under subsection (b)
i) only apply to on line undertakings with paying subscribers or
embedded advertising that transmit both their own or
commercial content and user generated content, and
ii) must not affect user generated content.

III
While the purpose of the Act is to protect, promote and foster
Canadian broadcasting and production, the CRTC should not forget that
it is Canadian consumers who choose what they want to watch. This
choice is driven by market forces and only modified where necessary by
regulatory mechanisms. This principle should be included in section 3 of
the act which spells out the broadcasting policy of Canada. Section 3(1)
should be amended to provide:
3 (1) It is hereby declared as the broadcasting policy for Canada
that…
(d) the Canadian broadcasting system should…
(i.1) reflect and be responsive to the preferences and interests of
its audiences;
(i.2) to the extent possible rely on market forces to ensure that
Canadians obtain the programming of their choice;
IV
Section 9.1 gives the CRTC basically the same powers regarding on line
undertakings as it does regarding licensed broadcaster while sections
10, and 11 apply to both on line broadcasters and licenced
broadcasters. When exercising these powers, the CRTC must keep in
mind the difference between these broadcasters.
Licenced broadcasters offer programs on a fixed schedule and their
program offerings are driven by such factors as audience appeal, time
slots and potential advertising revenue. On line broadcasters, on the
other hand, offer programs for subscription or for free with embedded
advertising . However when programs are viewed, where and on what
device is totally in the hands of viewers. This difference must be borne
in mind when imposing conditions on or making regulations regarding
on line broadcasters with the purpose of fostering the offering of
Canadian programs. In no way should the ascertainment of viewers’
choices be influenced by conditions or regulations. However, the
Commission can compel online broadcasters to offer Canadian program
alternatives particularly when it comes to discoverability and
showcasing.
An amendment to address this point would amend section 11 by adding
a subsection 2.1 providing:
Conditions imposed or regulations made by the Commission
regarding on line undertakings pursuant to sections 9.1, 10 or 11
1) shall
a) not compel on line broadcasting undertakings to change the
methods by which they ascertain viewer’s choice
b) respect viewers choices and leave them unaltered
2) may however require on line broadcasting undertakings to offer
Canadian program alternatives as an addition to viewers’ choices
V
The CRTC has the power to make regulation requiring on line
undertakings to make expenditures and contributions to funds for the
production of Canadian content. Most likely there will be
requirements to make contributions to funds like the CMF. Entitlement
to the benefits from such expenditure should not be limited to
Canadian ownership or control of producers or Canadian ownership of
intellectual property rights. Under CUSMA such restrictions, while
falling under the cultural industry exception (thus not breaching the
agreement), allow our CUSMA partners to take retaliatory measures of
equivalent commercial effect. Since most streamers are US based,
requiring them to pay into a fund from which they cannot benefit will
surely provoke the self-help action set out in CUSMA.
A subsection should therefore be added to section 11.1 clarifying the
eligibility of foreign programs
5.1Where a foreign owned online undertaking is required
under section 11.1 to pay an expenditure to a person or
organization, or into any fund, that undertaking shall be
eligible to the benefits available from any such person,
organization or fund as if it were Canadian owned and
controlled.

Finally, the internet is a fast-moving ever-changing phenomenon. I note

that s. 53 provides for a mandatory review after 5 years. This is a long
time in the world of the internet and I sincerely hope that if needed,
such a review will take place much earlier.
Thank you for your attention. I shall gladly answer any questions.
Text of the amendments suggested are attached as Annex A.