Digital legislation’s Gordian knot

The partisan antics during the review of Bill C-11 in Canada’s Parliamentary Heritage Committee was embarrassing to watch. The bill has now passed in the House and moves to the Senate for review. Sadly, I’m not convinced the Chamber of Sober Second Thought will restore my faith in constructive democracy in action.

It is as though some of our politicians are portraying caricatures of themselves in a poorly acted dramatization of Parliamentary affairs – somewhat ironic since Bill is fundamentally for capturing more sources of funding for Canadian media production.

Two months ago, I wrote “Re-Engineering Canada’s digital legislation”, observing that successive Canadian governments have funded certain social objectives “off the books”, without touching the federal treasury. Since its inception, Canada’s communications regulator has been charged with operating a system of cross-subsidies in telecom and broadcasting, outside of the Federal budget process, such as urban phone rates subsidizing rural, broadcasters subsidizing creation of content.

As long as telecom and broadcast distribution were somewhat universal, monopoly services, what difference did it make? Sure, the subsidizing services were priced higher than necessary, but it was all in the national interest. And the public would get upset at phone companies and cable companies for over-priced services, rather than raise taxes and getting the voters upset.

But, competitive forces started to get in the way. Those services could avoid the costs of the hidden taxes and offer lower prices. As fewer households subscribe to the former monopoly services, the funding would either shrink, or rates would need to increase for the remaining subscribers. That could only lead to an bigger arbitrage spread, increasing the incentive to leave the “system”.

Unlike many opponents of the digital bills (C-11 and C-18), I don’t dispute the need to fund Canadian cultural activities and media development. However, I do have concerns about the potential for unintended consequences arising from many of the measures set out in the legislation.

Have we considered cutting the Gordian knot – boldly restructuring the system of subsidies and regulatory measures imposed on legacy businesses?

Recognizing the political risks of different priorities for different governments, why aren’t we funding these important social objectives from the federal treasury? Isn’t that properly the mandate of elected governments, not an expanded regulator operating an off-the-books tax system?

As former CRTC Chair Konrad von Finckenstein told the Senate Committee, the issue of “discoverability” is very different for online content compared to traditional broadcasting. In traditional broadcasting, we impose certain content requirements for airing during various times of the day. But the regulator can’t make people watch those programs. In the case of streaming, the viewer is in front of the screen and has made a selection to watch what they want when they want to. I suspect that offering additional Canadian choices means interfering with the services’ algorithms. But, the core message is that at the end of the day, the viewer will watch what they want to watch.

To date, there has been a measure of naivete on display on both sides of the debate, and an unwillingness to listen to opposing viewpoints, regardless of how condescendingly they may have been expressed. Perhaps we can remain optimistic that the Senate review will be more productive and enable a more complete evidentiary record to be established.

The digital economy is based on complex global forces, operating with unprecedented freedoms that promote innovation. There are certain to be unintended consequences from the proposed legislation. That is at the root of my concern.

As I have said before, shouldn’t Canada approach internet regulation with a greater sense of humility?

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