My series on previously secret submissions to the Broadcast and Telecommunications Legislative Review Panel (earlier posts on Bell, Shaw, and Cogeco) continues with the Rogers submission, also obtained under the Access to Information Act [the other submissions I obtained but won’t post on include the CWTA and Quebecor]. There are several notable aspects to the submission, but perhaps none more than Rogers calling for an expansion of the new tax credit for media organizations by extending the approach to broadcasters and expecting Netflix to help pay for it. The media bailout has attracted considerable criticism, particularly given the government’s implementation that has raised serious independence concerns. Before the recent controversies, Rogers envisioned expanding it:
Consistent with the Government’s tax credit proposal, we believe that a similar mechanism should be adopted for the Canadian broadcasting system. By allowing broadcasters that produce news programming to access labour tax credits, which provide an objective and arm’s length subsidy, we are confident that independent high quality news will continue to be produced in this country.
But the proposal goes even further than simply expanding the government media bailout to broadcasters. It also envisions Netflix and other non-Canadian services that do not produce news paying for the bailout by requiring them to help fund the labour tax credits:
In order to encourage and adequately support the production of professional news in Canada, we are proposing that a new policy objective be added to subsection 3(1) of the Broadcasting Act. The new objective we propose would expressly recognize that the Canadian broadcasting system should include local, regional and national news and information programming produced in accordance with professional journalistic standards. All Canadian broadcasting undertakings would be required to contribute to the production of local, regional or national news in some fashion. Those non-Canadian digital media services that do not wish to make direct investments in Canadian news programming would contribute indirectly by helping to fund labour tax credits.
Expansion of the media bailout money to broadcasters is not the only controversial aspect of the Rogers submission. For example, it opposes a net neutrality-specific provision in the law and backs a full website blocking system built into the legislation with program piracy added to the Broadcasting Act and provision allowing for content blocking by ISPs and wireless providers included in the Telecommunications Act.
Rogers unsurprisingly strongly opposes ISP regulation:
In our view, regulating those who invest in, maintain and operate the networks under the same legislative framework that is used to regulate those who create, produce, exhibit and offer the programming and platforms that use those networks would be inappropriate. This would not only increase the likelihood for market distortion, it would also act as a disincentive for telecommunications service providers to make the investments necessary to maintain Canada’s place as a world-class communications hub.
But it is all-in on regulating foreign online providers, proposing three ways to regulate foreign online providers. First, it calls for amending the existing digital media exemption order by requiring non-Canadian digital media undertakings such as Netflix to comply with obligations such as financial contributions and Canadian content requirements. Second, it wants to establish a licensing system for any service that operates in Canada by other advertising in Canada or receiving subscription fees. Third, it supports creating binding service agreements that establish the domestic obligations that could be modelled on the earlier agreement between the government and Netflix. The second proposal should come with big red warning lights as the company is effectively calling for a licensing system for the Internet in Canada.
Not only does Rogers want more regulation and payments from foreign providers, but, like Bell, it envisions requiring Netflix to pay into the Cancon system but being blocked from accessing the funds:
While non-Canadian digital media undertakings will be required to contribute to the Canadian broadcasting system through commitments made in their service agreements, we do not believe that they should be extended the right to access CAVCO tax credits or funding from the CMF and Telefilm. For reasons of equity and fairness, we believe that only those broadcast undertakings, including digital media undertakings, that are incorporated in Canada and pay and collect taxes in this country should have access to the financial support mechanisms that are largely funded by Canadian taxpayers and used to fund the production of Canadian programming.
However, Rogers wants the rules changed so it can access those funds by removing the distinction between independent producers and broadcasters. Moreover, the company seems to acknowledge that this proposal would prima facie violate Canada’s trade obligations under the USMCA. It responds that the government can rely on the cultural exemption found in the agreement to implement its approach. What it neglects to say, however, is that use of the exemption opens Canada up to retaliatory measures by the U.S. that could result in hundreds of millions in new tariffs.