THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
OTTAWA, Wednesday, June 22, 2022
The Standing Senate Committee on Transport and Communications met with videoconference this day at 6:31 p.m. [ET] to continue its study of the subject matter of Bill C-11, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts.
Senator Leo Housakos (Chair) in the chair.
The Chair: Good evening. I am Leo Housakos, a senator from Quebec and chair of this committee.
Participating virtually on this committee, we have Senator Jim Quinn from New Brunswick and Senator Bev Busson from the beautiful province of British Columbia. She represents British Columbia, of course, but I’m not sure if she is in British Columbia or not. Welcome, senator.
I would now like to have my colleagues who are present at the committee in Ottawa introduce themselves, starting from the left.
Senator Dawson: Senator Dennis Dawson from Quebec.
Senator Miville-Dechêne: Senator Julie Miville-Dechêne from Quebec.
Senator Cormier: Senator René Cormier from New Brunswick.
Senator Klyne: Good evening. Marty Klyne, Saskatchewan.
Senator Sorenson: Good evening. Karen Sorenson, Alberta.
Senator Manning: Good evening. Fabian Manning, Newfoundland and Labrador.
Senator Wallin: Pamela Wallin from the province of Saskatchewan.
Senator Dasko: Donna Dasko, a senator from Ontario.
Senator Simons: Good evening. Paula Simons, a senator from Alberta.
The Chair: Thank you, colleagues.
We are meeting to continue our examination of the subject matter of Bill C-11, An Act to amend the Broadcasting Act and make related and consequential amendments to other Acts.
For our first panel, we are pleased to welcome with us this evening officials from the Department of Canadian Heritage. We have Thomas Owen Ripley, Associate Assistant Deputy Minister, Cultural Affairs; Michel Sabbagh, Director General, Broadcasting, Copyright and Creative Marketplace Branch; and Amy Awad, Senior Director, Broadcasting, Copyright and Creative Marketplace Branch, Cultural Affairs. I would like to welcome everyone.
I’d like to remind our guests that they have seven to eight minutes for opening statements, and then I will turn it over to my Senate colleagues for Q & A. Mr. Ripley, you have the floor.
Thomas Owen Ripley, Associate Assistant Deputy Minister, Cultural Affairs, Canadian Heritage: Good evening, everyone.
At the outset, I wish to acknowledge that I am joining you today from the unceded territory of the Algonquin Anishinaabe Nation on which the National Capital Region is located.
Thank you very much, Mr. Chair and honourable senators, for inviting us here today to support you in your study of Bill C-11, the Online Streaming Act, as amended by the House of Commons.
Modernizing the legislative and regulatory framework for broadcasting is both a necessity and a priority. Our broadcasting system is outdated and needs to be modernized. The modernization initiative would revitalize the Canadian broadcasting industry, as well as our creative industries. The reform would also continue to support the more than 120,000 jobs these industries generate while serving the interests of all Canadians.
The online streaming act would build on the economic and social benefits that the Broadcasting Act already provides. It is expected to result in ongoing opportunities for Canadian producers, directors, writers, actors and musicians to create music and audiovisual content and to reach Canadian audiences. It will require all broadcasters, including online broadcasters, to help achieve important cultural policy objectives. This means more support for Indigenous voices, original French-language programming and official language minority communities.
Importantly, it supports greater representation of Canadians from racialized communities and Canadians of diverse ethno‑cultural backgrounds, socio-economic statuses, abilities and disabilities, sexual orientations, gender identities and expressions and ages. It will establish a fair and flexible regulatory framework where comparable broadcasting services are subject to similar regulatory requirements, and it will provide the CRTC with both the guidance and the tools it requires to serve effectively as the independent expert regulator in this digital environment.
Modernizing the broadcasting system would allow online players, as well as traditional broadcasters, to support Canadian music and stories by making financial contributions to support, among other things, the development, financing, production or promotion of Canadian audio or audiovisual programming; the promotion and training of Canadian audio or audiovisual program creators; and the participation of individuals, groups or organizations that represent the public interest in CRTC proceedings.
The bill aims for fair treatment of major online platforms that distribute commercial programming. This would include, for example, a service like YouTube, as it is in the business of streaming commercial programs.
Bill C-11, however, does not regulate or censor users. Individual users of social media are not considered broadcasters, which means that conditions of service and regulations would not apply to them.
Why is this reform needed now? Because the broadcasting world has changed. We all know that. Canadians have changed the way they access their music and programming, and gone from traditional broadcasters to online broadcasters. The result is that the system of support for Canadian stories and music is at risk.
Online broadcasters are not required to support Canadian music and stories or any other important broadcasting objective. Thus, as the revenues of traditional radio and television broadcasters stagnate and decline, the level of support for Canadian music and stories, and support for creative professionals, also declines. The status quo is no longer tenable. In particular, the regulatory imbalance keeps traditional Canadian broadcasters at a competitive disadvantage to online broadcasters.
Bill C-11 renews the Broadcasting Act for the digital age and is the first piece of legislation as part of a broader effort under way to modernize our communications framework. This includes Bill C-18, the online news act, which aims to ensure that news services are fairly compensated for the use of their material by online services. It will also include eventual legislation to promote online safety and a safer, more inclusive online environment.
Together, these initiatives aim to establish rules that will make the online world a fairer, more inclusive and safer place, while ensuring that it remains a fertile ground for innovation and free expression.
Thank you, senators. Meegwetch. I’d be happy to take your questions.
The Chair: Thank you, Mr. Ripley.
Honourable colleagues, each senator will have four minutes for questions and answers, so please be succinct in your questioning. I would ask our panel to be equally succinct in their responses. I will try to be as fair as possible and to try to get as many questions in. If you are interested in a second round, please give the heads-up to the clerk.
Senator Dawson: A lot of questions were asked about the regulatory process. If the bill passes, regulations will be made. I wonder how they will be made and what the process will look like. In addition, specific to online broadcasters, can you speak about how the CRTC will set conditions of service? I will also be asking the same question of the CRTC later, I’m quite sure.
Mr. Ripley: Thank you for the question, senator.
The way we see this playing out is that once the bill achieves Royal Assent, the CRTC at that point would begin its regulatory processes and hearings to put in place the necessary regulatory instruments to bring the online streaming platforms into the system. As for what that will look like in practice, the CRTC is skilled in this. They are used to doing these kinds of hearings. They would put up a notice and invite submissions about the forms that those would take. It would be open to all interested parties to participate in those processes, including online streaming services, the creative community here in Canada and groups representing the public interest. Then the CRTC would enter into its decision-making and publish its final decision at the end.
To put in place the kind of changes that we are envisioning, it will be necessary, I expect, for the CRTC to make a number of different decisions. The work ahead involves both bringing the online streaming services into the system and also requires moving away from the system of licenses that are currently in place that governs the traditional broadcasters. Those contributions that are currently articulated in those licenses need to move toward those regulatory instruments, whether they be orders or regulations under the new Bill C-11 approach.
Senator Cormier: My question concerns the employability of Canadian human resources. According to paragraphs 3(1)(f) and 3(1)(f.1), Canadian companies are required to employ and use Canadian human resources to the maximum extent possible. However, foreign online businesses are required to use Canadian human resources to the maximum extent possible. Why make this distinction? Wouldn’t it be appropriate, as several stakeholders have argued, to incorporate the same employment criterion on the human resources side, so as not to create a two‑tiered regime?
Mr. Ripley: Thank you for the question, senator. You are absolutely right. Currently, in the bill, there are two standards. The maximum usage level is the standard that currently exists in the Broadcasting Act. It should be noted that the act currently applies only to Canadian companies. We’re talking about companies that are present in Canada, owned and controlled by Canadians. Their business model is based only in Canada.
With Bill C-11, we are going to bring the big streaming companies, like Netflix and Disney+ into the system. These companies have a global business model. They provide services to Canadians in addition to creating productions for other markets around the world.
So this is not the government’s position and it is not reasonable to apply exactly the same standard to companies that are not based in Canada in the same way as Canadian companies —
Senator Cormier: I’m sorry to interrupt. Does this mean that Canadian companies will be at a disadvantage compared to foreign companies in this case?
Mr. Ripley: I would say that the expectations of paragraph 3(1)(f) remain higher for Canadian companies. For them, it will be a matter of using resources to the maximum. The expectations are very high. Again, that’s because, in practice, these companies are based here. The same is not true for all the other streaming services. For example, Netflix does a lot of production activity in Canada. Another company like DAZN, which offers sports streaming services, does not have the same presence. That is why the CRTC’s job will be to determine, considering the business model of all these services, the appropriate contribution they can make to the Canadian broadcasting system.
Senator Cormier: Thank you.
Senator Simons: Mr. Ripley, one of the areas of greatest friction in this bill has been the question of what is scoped in and what is scoped out when it comes to user-generated content. The bill begins with quite strong statements saying that a person using social media services to upload programs for transmission is not considered a broadcast undertaking; yet, when we get to 4.2(2), there is an opportunity for the exemption to be exempted if a program generates a certain amount of direct or indirect revenue. I want to understand this very clearly because many people seem to be very confused by this apparent contradiction. At what point does user-generated content fall under the umbrella of an online undertaking? What is the threshold of revenues that would allow someone to be scoped in?
Mr. Ripley: Thank you for the question, Senator Simons.
First, I would at the outset reiterate that point that you made about proposed section 2.1 that clarifies individuals who use social media are not considered broadcasters. There have been questions put to witnesses on the House of Commons side about individuals having to contribute 30% to a contribution fund, et cetera. That cannot happen under the bill in light of 2.1. Individuals who use social media, no matter how much money they might earn as a YouTube or TikTok star, cannot be put before the CRTC and subject to that kind of requirement. The question then shifts to the second half of your question, which is about the content that is then posted on a social media service. It is true that a service — a service like YouTube, for example — may have to make contributions to the system based on the content that is placed on their service.
The challenge we have is a very technical one. I will be very careful about the wording that I use here. Proposed section 4.1 talks about users uploading content to a social media service. I talk about user-uploaded content. The challenge that we have when it comes to a service like YouTube is that a record label uploading songs to YouTube is considered a user. An artist uploading songs to YouTube is considered a user. A digital-first creator, which we’ve heard a lot about, uploading content to YouTube is considered a user. You or I, when we put something on YouTube, are considered a user.
The challenge that we have is that YouTube has a powerful business model, but it’s a business model that is used in a variety of different ways. One of the ways in which it is used is for Canadians to use it as a streaming service, to stream what the government has called commercial content. In our discussions with YouTube, what they have shared with us is that approximately 50% of the content on YouTube is what they would call organic content, which is content created by YouTubers and put there. The remaining 50% is commercial content, and that would be split. Approximately 25% of the 50% would be music content, and the other 25% would be content made by other media companies, such as broadcasters, for example. CBC Radio-Canada has YouTube channels, et cetera.
The government’s objective is to make sure that YouTube, because it is such a popular destination for Canadians to stream commercial content, contributes to the system in the way that we’re going to ask Spotify or Apple Music to do. The three factors that are set out in the bill are designed to get to that point.
The technical challenge we have is that most of the content on YouTube, unless it’s put on YouTube by YouTube itself, is user uploaded in one way or another. The challenge we have is to do with what the indicators are around that commercial content so that the CRTC has clear guidance about the kind of content the government believes should be scoped in. That is what those three factors are designed to do.
I am trying to respect the chair’s direction to be brief here, but I would highlight that this is not about each individual piece of content. The way this plays out in practice is that for 4.2 to kick in, the CRTC actually has to make a regulation. It is through that regulation that the CRTC will articulate quite clearly the corpus of content. What we are talking about is a corpus of content on YouTube. It’s not about each individual piece of content running through these three factors but, rather, the CRTC saying to a service like YouTube, “Here is the corpus of content that we expect you to contribute.”
Senator Simons: Because I only have four minutes, I just want to interject here —
The Chair: Senator Simons, you are well over the four‑minute time —
Senator Simons: Second round, if there is one.
Senator Manning: Welcome to our witnesses.
I have a couple of questions. First of all, how will platforms know and verify if content is Canadian? For example, over 500 hours of content is uploaded to YouTube every minute. How would that system identify what content is Canadian and subject to whatever promotion requirements the CRTC imposes?
Mr. Ripley: Thank you for the question, Senator Manning.
This relates to the previous answer in that the government’s objective as it relates to a service like YouTube is to include commercial content only. This isn’t about online creators who have expressed — the government respects that they do not wish to be forced into a points system where their content is evaluated. It is not about that kind of content.
The kind of content this is about is commercial content where YouTube is acting as a substitute for another streaming service like, again, Apple Music or Spotify. That kind of content is already evaluated as to whether it’s Canadian or not. On the music side, for example, we have the MAPL system where you look at the songwriter and the lyrics, and on the audiovisual side, you have the ten-point system. When you come back to the question of commercial content, there is already a point of reference for that. It is not about extending that point system to the 50% of content that I mentioned to Senator Simons that sits on YouTube that is generated organically by online creators.
Senator Manning: Will creators have to upload proof of residency or citizenship, and will the CRTC verify their eligibility for the platforms or will the platforms have to share their information with the CRTC in order to establish eligibility? How do you determine the eligibility criteria?
Mr. Ripley: How does this work on a practical level? A service like YouTube already has a very sophisticated content ID system such that when anyone uploads something to YouTube, YouTube evaluates whether that is a piece of content that is protected by copyright. They can actually trace it back to the copyright owner. When we are talking about that commercial content, there is actually a way for a service like YouTube, for example, to identify whether that is a Canadian recording or a Canadian program because they can actually identify the original copyright owner of that content being uploaded.
Again, I would just stress and reiterate that this is not about online creators — YouTubers making content explicitly for the platform — having to fit into a particular box. The government’s objective is not to subject that kind of content to the regulatory framework.
Senator Manning: Would an American who uploads content in Canada be eligible for promotion as a Canadian program?
Mr. Ripley: If the American as a user was uploading a Canadian recording by — pick your Canadian artist — maybe The Weeknd, what happens is that when that upload takes place, YouTube identifies that you or I are trying to upload a song that actually belongs to The Weeknd. They actually give the copyright owner the choice about whether to ask that the recording be removed from YouTube or whether to keep it up and then the copyright owner benefits from the monetization of it.
The question is not about the user. It is actually about the piece of content that is being uploaded, and if it is a commercial piece of content that meets the definition of Canadian, then potentially, yes, YouTube would have certain obligations with respect to that.
Senator Manning: Thank you.
The Chair: My question to Mr. Ripley and your colleagues has to do with the regulatory framework, which on a bill like this is so important. I heard the answer to the question that was posed by Senator Dawson at the beginning. Wouldn’t it have been prudent to work out the regulatory framework in advance of this bill coming through Parliament in order to give us a clearer understanding on some of the concerns that so many stakeholders across the country have? Why has the government not consulted the CRTC, the officials and everybody required in order to make the regulatory framework public and open to scrutiny by this and other parliamentary committees?
Mr. Ripley: Thank you, chair, for the question.
As you may know, in the previous Parliament, there was a version of the policy direction that was shared with the Standing Committee on Canadian Heritage. We received lots of feedback from stakeholders and parliamentarians on that version.
The bill actually modifies the process through which the government issues a policy direction to the CRTC and institutes a more transparent standard regulatory process. If the bill gets Royal Assent, the mechanism for issuing that policy direction is what we would commonly see in other regulatory frameworks where the government would pre-publish that in the Canada Gazette. Everybody would have an opportunity to let the government know their feedback on that proposed regulation before it gets finalized as final direction to the CRTC through final publication in Part II of the Canada Gazette.
The government’s view is that there is an open process coming by which everybody will have an opportunity to participate. That is the appropriate forum for the government to take on board the feedback that is received in a very clear and transparent way rather than during the parliamentary process around the bill where the focus should be on the policy objectives of the bill, which ultimately gets translated into that regulatory framework.
The Chair: Mr. Ripley, that’s precisely one of the problems. That is not very comforting. Wouldn’t it have been a lot more transparent and open to make the regulatory framework public right now so it can be scrutinized by legislators, both in the House of Commons and in the Senate, and open for public scrutiny and debate? It would probably give us a more robust framework, which would probably strengthen the legislation and address some of the major concerns. Don’t you believe it would be a lot more transparent to put the horse ahead of the carriage in this particular instance and allow us as legislators the opportunity to scrutinize that? After the fact, once this bill has been given Royal Assent at some point in time, the train will have left the station and it is a done deal. Good luck trying to wheel back the bureaucracy of the CRTC and the government who, of course, more often than not think they are right.
Mr. Ripley: I really do appreciate the strong interest in the policy direction from all parties.
The challenge is that the bill still remains a bit of a moving target. We came out of the House where changes were made, and the ultimate form of the bill will shape what that policy direction looks like. We saw, for example, changes in the House giving greater emphasis to supporting racialized communities and broadcasting by racial and ethno-cultural communities. That is an important material change, right?
The structure of the act has been — and it continues under Bill C-11 — that Parliament sets out the broad policy objectives, and then it is over to the CRTC to give effect to those. The policy direction mechanism does still include a tabling in both houses, giving parliamentarians an opportunity to engage with that process, should they wish, because we agree that it is important that parliamentarians know when the government is using that policy direction power.
The Chair: Thank you, Mr. Ripley.
Senator Wallin: Let me just echo Senator Housakos’s concern. Asking us to sign up for the game without knowing the rules of the game is a little concerning because it will affect, potentially, every single Canadian who uses the internet.
I want to try to come back on the Canadian content question. Your point system is already confusing and a little messy, and it allows what would be considered foreign content in as Canadian content and vice versa. We are being asked to give a government-appointed body the power to decide what material will be promoted online and what material will fall down the scale there based on Canadian content, Quebec content or Saskatchewan content. I’m not sure what. When and how are those rules going to be defined more clearly? Is that, too, after the fact?
Mr. Ripley: Thank you, Senator Wallin, for the question.
There is a definition right now of a Canadian program on both the audiovisual side and the music side. The minister has been very clear and recognizes some of the shortcomings that you alluded to in your question there about the need to — it’s time to look at that definition again and the streaming services that will now be part of the Canadian ecosystem. It’s got to be functional and work for them.
The way that would work is the CRTC would do a regulatory hearing looking at that definition and how it should be modified, so that’s an opportunity for folks to come forward. These asks are well known in that some of the creative community want the contributions of show runners to be recognized in that point system, for example, on the audiovisual side. We know there are also calls to recognize that when creators use a Canadian work as the underlying story, whether that be a book —
Senator Wallin: Margaret Atwood, say, for example.
Mr. Ripley: Exactly, that should count. So that’s the opportunity to do that, and the CRTC would do that through an open process where everybody could put forward —
Senator Wallin: But it’s after the fact again. This is, “Pass the legislation, and then we’ll figure out what all the rules are that will affect everybody that is participating in life online.”
Mr. Ripley: It is, although what I would point to is right now, there’s actually no texture to what constitutes Canadian program in the legislation. The bill — and this is a change that was made in the previous parliament by parliamentarians — actually does provide more texture about what is expected. I’m sorry, I’m just trying to find the relevant provision. If you look at —
Senator Wallin: I have one more question, and I know time is short here.
Mr. Ripley: — proposed section 10(1.1), you’ll see there’s a list of things that includes, for example, Canadian cultural expression.
Senator Wallin: Right, but this is all very subjective. Even the point system is extremely subjective.
The other question I had is we’ve also been looking in a very rushed way at the copyright legislation, and in fact, what we’re told is that we have a very weak registration system. There’s no mandatory participation in that. Yet, you’re using that as one of the fallbacks in the protections and the factors in decision making about what qualifies as Canadian content or content that will be promoted by the CRTC.
The Chair: Thirty seconds for the response, please.
Mr. Ripley: Thank you, chair.
What constitutes “Canadian program” doesn’t rely on the copyright registration system. Those two things are distinct.
Senator Wallin: I understand, but you were talking about that being one of the protections. If somebody tries to upload a Weeknd song, then you will rely on copyright, which is very weak.
Mr. Ripley: I was referring to YouTube’s content ID system, as it’s called. The way that works, it’s a large database. If you’re a record label and you own the copyright, you can say to YouTube that you own the copyright in The Weeknd’s recording, and you upload a recording of it. Then, when anybody tries to upload that, it matches it in their database.
Senator Klyne: Welcome Mr. Ripley. I think that most people would agree that the promotion and support of Canadian content is a laudable goal. It seems, however, that this bill may not achieve that aim, and I need you to pour some milk on my ulcer in that regard. Please explain to this committee how this bill would make sure that programs are showcased to Canadians in other markets, including the U.S., and more specifically, how will CanCon be made more discoverable than it is already?
Mr. Ripley: Thank you for the question, senator. That’s a new expression for me, I confess.
There are a lot of assumptions that are being made or there is a lot of focus on the question of search results and algorithmic recommendations. When it comes to discoverability, I always remind folks that there is a variety of different tools that the CRTC can bring to bear on that question. We have all had the experience of logging into Netflix, for example, and Netflix surfacing Canadian films. There are things that —
Senator Klyne: Can you explain to the committee how this bill will make CanCon more discoverable than it is today?
Mr. Ripley: In short, what we expect is the CRTC, through dialogue with those big services, will put that challenge to them. The expectation is that French-language music from Quebec or official language minority communities be able to be found on a service like Spotify or Apple Music or YouTube.
Senator Klyne: Your ministry reports that you’re updating our laws so online streamers have to contribute in a similar way and an equitable way, so that’s kind of like it’s all about the money question that I’m going to ask. What are you doing with this bill that’s updating laws on online streaming so that they have to contribute in a similar and equitable way? What does that mean, and how will they — it’s not going to come through penalties, but there will be some type of schedule of how they pay monies into this?
Mr. Ripley: The way it would work in practice is that the equitable part would look at, okay, if you’re a Canadian broadcaster who is in the business of commissioning content, and if you’re an online streamer in the business of commissioning content, then those two services should be subject to the same kind of contribution to the system if they have similar business models. That’s what we’re driving at so that Canadian broadcasters no longer face the competitive disadvantage that they currently do.
In the case of businesses that generally commission content, their contribution right now in the system takes the form of what is called an “expenditure requirement,” which means they have to spend a certain percentage of their revenues every year on Canadian programs.
Senator Klyne: I’ll accept that. And where are those monies going to go?
Mr. Ripley: If it’s an expenditure requirement, those monies remain under the control of the business. They get to decide the kind of content they invest in, as long as it meets the regulatory requirements. So the CRTC —
Senator Klyne: The revenues that you will be collecting, where is that going? Is it going back to creative services for production of more content?
Mr. Ripley: A second form of contribution that is different than an expenditure requirement could be a contribution to a production fund, and right now those are the kinds of contributions that cable and satellite companies make in Canada, and those monies go to funds like the Canada Media Fund or certified independent production funds that then reinvest those in Canadian stories.
Senator Klyne: Thank you.
Senator Dasko: Thank you, Mr. Ripley.
My question is about the diversity mentions or requirements, statements, goals, et cetera. I’m glad you mentioned the diversity amendments coming out of the other place, and I’ll get to that in a minute.
We have strong statements about serving the needs and interests of all Canadians, including those from racialized communities, as well as Canadians of diverse ethnocultural backgrounds, socio-economic statuses, abilities, disabilities and sexual orientations, among others. How will that actually get implemented? What form does that take? I also noticed that it was an important part of your messaging when you made your statement at the beginning. You mentioned diversity quite a bit. I understand this is an important message that the government of Canada is trying to tell Canadians and that this is an important part of what you’re doing here. How will these be actually implemented on the ground? What kind of requirements will there be with respect to diversity issues?
I’m glad you raised the topic of the amendments that were coming out of the other place, which, of course, we don’t have, because unfortunately, we’re dealing with the pre-study in this committee. I know a number of them are on the topic of diversity, so could you tell us what changes they will make to the bill and that we don’t have before us? What will they do? You said the changes are going to strengthen diversity, so could you give us a sense of what that is? I would really appreciate that. Thank you.
Mr. Ripley: Thank you for the question, senator.
On your first question, practically speaking, there are a couple of ways this plays out. I was describing the difference between an expenditure requirement versus a contribution to a production fund.
On the expenditure side, for example, there could be services that step up to the plate or services that the CRTC thinks are well suited to work with certain kinds of communities. There may be services that say, “Actually, we have a strong interest in working with Indigenous communities and helping them tell their stories,” for example. That’s one way it could play out, and that could be part of that service’s expenditure requirement.
The other way it could play out is on this contribution side, where some of those monies that could be directed toward production funds could go toward, for example, an organization called the Indigenous Screen Office. That organization, if it were to become certified, could be the recipient of some of those contributions, and then they invest in and work closely with their constituent Indigenous communities to tell Indigenous stories. So there are a couple of ways the diversity requirement plays out in practice.
On your second question — again, I’m mindful of time, chair — the big change on the racialized and ethnocultural front made in the House of Commons was a change to the policy objectives that require support for broadcasting services that are controlled by those communities. In the previous version of the bill, it only spoke primarily to programming, and the government and parliamentarians heard clearly from those communities that it’s not just about programming. It’s actually about having services, whether they are third language services or services that specialize in ethnocultural content, that are supported by the broadcasting system. That was the big change that I would highlight for you.
Senator Dasko: It just takes this to another level.
Senator Quinn: Thank you, witnesses, for appearing this evening and participating in the pre-study. It’s great to have you folks here.
I’m sure the department and the minister are receiving as many letters as we are in the Senate. To say we’re inundated would be understating the number of letters that have come in. The majority, of course, are expressing concern with respect to this bill infringing on their right to freedom of speech or freedom of selection, things of that nature. We also heard from others that there’s concern about the CRTC having too many powers, potentially, and that freedom of speech is being impeded and so on and so forth.
My question is, other than the commentary you made on the Canada Gazette Part II — which I think one of my colleagues referred to it as a “perhaps the horse is already out of the barn” type thing, and we know it’s more difficult to participate and to cause change — how do you suggest we as parliamentarians respond to folks who have expressed concerns about their rights being infringed upon? I’m curious how you would respond to that.
Mr. Ripley: Thank you, senator.
The Broadcasting Act is fundamentally about promoting cultural expression. It’s about promoting Canadian cultural expression. You have all those policy objectives that sit at the front end of the act that are being updated to reflect modern-day Canadian society and values. The Broadcasting Act is fundamentally about promoting those voices and making sure they’re part of the system. This isn’t about limiting speech. That would be my answer to your question. There’s a long-standing provision in the existing act that talks about how the act has to be applied in a way that respects creative and journalistic independence and freedom of speech.
The House of Commons did actually add a change to proposed section 4, and I appreciate that this is a pre-study and not the actual study yet, but they did make a change to 4.2 to be absolutely explicit that the regulations at 4.2 must be done in a manner consistent with freedom of expression. The CRTC is bound by the Charter. Freedom of expression is something that is guaranteed by the Charter, and there have been a lot of markers put down in the bill to make sure it’s applied in a consistent way.
Senator Quinn: Thank you.
Your earlier commentary included something along the lines of this being all about having the kind of content that the government feels should be there. When I heard that, I thought, “Wow. Where is that going? It sounds almost like the beginning of a censorship role by the federal government and, subsequently, by the CRTC.” Again, I’m going to come back to say that considering your answer, I don’t doubt that it’s about promoting Canadian content, but it is making it more difficult for people to choose, and that could be construed as an infringement on people’s rights.
Mr. Ripley: Thank you, senator.
What I was trying to communicate is that when it comes to YouTube, we need to recognize there are many different kinds of content on the platform. The debate has been about where that line is on a service like YouTube, so what I was expressing is that the government is not interested in that full corpus of content with respect to YouTube in terms of it being considered commercial content for the purposes of the Broadcasting Act. However, at the same time, the government recognizes that YouTube is a streaming service that, based on some reports, over two thirds of Canadians use to stream music, just as they would use Spotify or Apple Music. Therefore, there’s a fundamental fairness issue about why YouTube, for example, should get a pass when it’s being used in the same way that a service like Apple Music, Spotify or QUB musique out of Quebec is being used.
Senator Quinn: Thank you.
Senator Miville-Dechêne: For my part, I would like to hear you respond to the criticisms of former CRTC Chairman Konrad von Finckenstein. Among the recommendations he made, he mentioned that the government is taking on too much. The CRTC will not be able to do everything at once, and he recommended that online broadcasters and content producers with revenues of less than $100 million be excluded. Why not start with the biggest players rather than trying to regulate them all and not getting there, because it will be a huge challenge?
Mr. Ripley: Thanks for the question, senator. Indeed, it is a question that was put to me in the House of Commons. A threshold will need to be established to determine which large platforms are subject to the law.
My response to members of Parliament was that it is possible for smaller services to be able to make a very significant contribution to the system. I think of public broadcasters like GEM and ICI.TOU.TV, which make $100 million a year, but CBC/Radio-Canada is well positioned to contribute to the system. GEM and ICI.TOU.TV are online companies like Disney+ or Netflix.
There needs to be some leeway for the CRTC to determine which services are well positioned to contribute.
Senator Miville-Dechêne: The current chair of the CRTC is complaining because he’s asking how we can regulate if we don’t have the right to set terms and conditions, as we have the right to do now for broadcasters. You expect there to be promotion of Canadian content. We know that you don’t want algorithms to be used, but the CRTC doesn’t have the right to set terms and conditions.
I would like to echo the criticisms of my colleagues. Aren’t we completely in the dark about how all this will be done, if we have no idea what the possible terms and conditions are and if the CRTC doesn’t have the right to set them?
Mr. Ripley: Certainly, the government has made some decisions about what economic powers the CRTC should have in this new digital world. Certain powers are granted, such as the power to have a financial contribution; there are discoverability powers, which we just discussed; powers are granted to force certain online services to distribute Canadian channels, such as Amazon Channels.
As you pointed out, the CRTC is not given the power to regulate the economic relationship between certain online broadcasters and other broadcasters, and that’s because it’s not the same market we currently have in Canada with the companies, which we refer to as vertically integrated. So because there are so many more companies that will participate in the Canadian broadcasting system, you are right to say that these same powers haven’t been given to all in the CRTC.
Senator Miville-Dechêne: Thank you.
The Chair: I will lead off the second round with a very brief question.
A number of stakeholders have questioned the veracity of the figure $900 million that will be added into the marketplace because of this legislation; a number of individuals, including the former chair of the CRTC and others, have questioned the math on that. It seems that, in the House, there hasn’t been a clear explanation of how that has been calculated.
Mr. Ripley: Thank you, senator.
That figure is intended to be illustrative of the potential impact of the bill on the system. The way that we did that methodology was using the current system as a point of reference. We looked at the revenues of online streaming services operating in the Canadian market and their expected growth over the coming years, and we identified whether they were closer to what we would consider a broadcaster right now, where they’re subject to an expenditure requirement, or if they closer to a distributor, where they would be subject to a contribution to the production fund, for example. That methodology, in the case of the broadcasters, assumed a 30% expenditure requirement, which is what our big ownership groups, like Bell, Rogers or Quebecor, are subject to, in some instances, and it’s an assumed 5% contribution in the other instances. That’s how we get to that figure. The figure is not written in stone because it uses the current model as a starting point.
We recognize that even the big streaming services are not the same as your traditional broadcasters that do news, sports and things like that, so the job of the CRTC will be, in the case of Netflix, say, to figure out what makes sense for Netflix in terms of whether it’s an expenditure requirement or contribution to the system.
Senator Cormier: I would like to come back to the issue of discoverability, which is the subject of much criticism. My question is quite simple. Why hasn’t this been defined in the legislation? If your argument is that this concept will be defined in regulations, why not have established certain parameters in the act, as Parliament did for Canadian programs? That would clarify the issue.
Mr. Ripley: Thank you for the question.
It’s because discoverability is expected to continue to evolve over time. There may be things that we don’t expect will be possible in the future.
As I mentioned earlier, the contributions that services can make to discoverability may not necessarily be the same thing.
It’s possible, for example, that you have one service that is really well positioned to make investments in promotion and marketing. You may have another department that is in a better position to advertise on their service, because they are also running an advertising company. It’s also possible to have some changes to services on the user interface to promote certain Canadian titles. We’ve already seen this with Canadian films, for example. The idea was to keep all of this on the table to give the CRTC a chance to have this dialogue with the services and stakeholders about how best to promote Canadian stories and music on these services.
Senator Cormier: Thank you.
Senator Simons: I don’t wish to belabour the point, Mr. Ripley, but I want to come back to 4.2(2). I think everybody understands that if you are a large commercial record label or a movie that is being streamed on YouTube, then they would be scoped in. What I want to know is what happens to the larger digital creators. How do you separate the sheep from the goats? What is scoped in and what is not?
Mr. Ripley: The three factors are designed to be —
Senator Simons: I understand the three factors, but there is no threshold. It just says “revenues.” Does the government have a direction in mind for the CRTC that there’s a certain revenue threshold? I think this is what is engendering so much of the misunderstanding and the apprehension about this bill. Despite all the places where it says that user-generated content is not included, this appears to be the back door to scoping in people who are very worried about what that will mean for their production model.
Mr. Ripley: The question is whether the content is being monetized. We saw those three factors such that it’s not a question of applying one factor and excluding the other two. From our perspective, those were three factors that were designed to point to the indicators of that corpus that I mentioned to you in my earlier answer.
The question of content being monetized is one indication that it’s commercial content, but then you’ve also have to look at whether it is a sound recording with an internationally recognized sound recording code associated with it. Also, is it a substitute? In other words, is that a sound recording or a piece of content that you will find on another service? The three factors were intended to be clear to the CRTC about getting to that concept of commercial content.
I’ll ask if my colleague Amy wants to add anything on this, as she’s the expert.
Amy Awad, Senior Director, Broadcasting, Copyright and Creative Marketplace Branch, Cultural Affairs, Canadian Heritage: I would say the same thing but would add that the fact that it generates revenue may be a way for the CRTC to incorporate in its regulations ways of excluding smaller broadcasters — smaller, traditional broadcasters — with content that essentially is not generating a lot of income but might meet the other criteria. You have to look at them all three together and realize that the CRTC will take these and put them into regulations. That is what I was going to say. You cannot ignore that second criteria; it is really important.
Senator Simons: I feel that there is so much anxiety about this bill. As Senator Quinn expressed, our inboxes are filled with thousands and thousands of emails from people who honestly believe that this is a form of censorship. I do not believe it is, but the language in 4.2(2) is still not clear in a way that would set at ease Canadians who are concerned that smaller content producers who monetize, sometimes extremely successfully, their streaming content on YouTube will be captured.
Mr. Ripley: Thank you, senator.
It was a challenge crafting that provision. I come back to the challenge I described at the beginning. With a service like YouTube, the problem we face is everything on YouTube is user uploaded except for what YouTube puts there itself. We certainly appreciate the Senate reflecting on this. How can you clearly articulate what the government says it’s interested in, which is the question of substitutability when YouTube is being used in a manner that is acting as a substitute for another commercial streaming service that will be subject to the act?
Senator Wallin: Just to follow Senator Simons’s point here about the concern that people have, which you are not giving us much peace or comfort on here, what is the sum? You might do a podcast sponsored by your local church group versus a podcast that is being brought to you by Rogers or Telus. That is why we need the rules before we have the legislation. It is not just for the clarity of parliamentarians; it is for everybody who uses the internet, which encompasses pretty much all Canadians in one way or another. They need to know what is or is not about to happen to them. Is there any way to get some clarification on these rules, instead of saying that the CRTC will hold some hearings, figure out some rules and then decide subjectively whether anyone in that category is encompassed, scoped in, roped in, whatever it may be?
Mr. Ripley: Thank you, senator.
This provision often gets talked about as if it will operate at an individual piece of content level. Someone creates a video that they put on YouTube, and the question is then whether that piece of content meets the regulations. Until the CRTC does this, nothing on a service like YouTube is scoped in. Let’s be very clear that 4.2 only kicks in if the CRTC actually passes the regulation. Otherwise, all user-uploaded content is out.
We’re asking the CRTC to do its job as an expert regulator and work with industry to actually articulate that in a meaningful way that makes sense for industry. It is in that regulation that you will see greater specificity, for example, that our expectation here is commercial sound recordings with these kinds of characteristics. Then it is over to a service like YouTube to actually apply that.
The CRTC is not involved in assessing individual pieces of content. That is not what is happening here. The CRTC’s job is to concretely tell services that operate a social media service what their obligations are, and then it is over to a service like YouTube to actually put that into practice and make that evaluation of what commercial content on their service is subject to that regulation.
The Chair: There are three more senators left on the second round, and we are a little bit over our one hour timeline and have another important group of panellists lined up. Having said that, all of the questions have been very relevant. I will give a minute to Senator Klyne, Senator Quinn and Senator Dasko each to ask their questions; and maybe, Mr. Ripley, you could take three or four minutes at the end to respond to each and every one of the remaining senators so we can get everyone in.
Senator Klyne: The ministry is preparing to update or modernize the act so online streamers have to contribute in a similar and equitable way as Canadian broadcasters, and focusing on this equitable piece, are or will online streamers be required to support Canadian culture at the same level as Canadian broadcasters, no more, no less?
Senator Quinn: We heard earlier that apparently no other country attempts to regulate content. Are we in fact trailblazing in that regard? The second piece of that is that if we are trying to regulate content, how do we ensure that the content within Canada is balanced? I’m from the Maritimes. How I do ensure that regional content is protected as is content from the international scene?
Senator Dasko: You mentioned something about online safety at the very beginning. I just wanted clarification. Is there something in the bill that I missed that deals with online safety, or were you referring to government’s future plans in this area? Thank you.
Mr. Ripley: With respect to Senator Klyne’s question about equitable, yes, that reference in (f.1) where we have the conversation about the different standards, maximum use versus the one that would apply to non-Canadian services, the equitable is precisely to the point that you raised about making sure that, at the end of the day the contribution made by those foreign players is equitable to what the Canadian players are making. It may need to take a different form, depending again upon the footprint of that player in the Canadian marketplace, but the goal is, yes, that they should be subject to similar contributions to the system.
With respect to the second question, with respect to a modernized broadcasting framework, the European Union has the Audiovisual Media Services Directive that has required online streaming services like Netflix, for example, or Disney+ or others, to contribute to cultural policy objectives. In Canada, the question that has been raised is around social media services. To my knowledge, what Canada is seeking to do in this space is new. I would highlight that this is primarily driven because of fairness. We have to recognize that a service like YouTube operates at different levels, and I come back to the fact that they consider half of the content on their service to be commercial content. This ensures that they are being treated fairly.
To the question around how you make sure that within the Canadian context that content is being treated fairly, that is a more complex question. As that definition of Canadian content or Canadian program gets renewed and there are questions around cultural expression that will have to be looked at, there is an opportunity there to ensure that the full diversity of Canada’s regional populations gets reflected.
With respect to the last question on my comments in my opening remarks, there is nothing in this bill that relates to online safety, no. My comment was that this is a part of a broader legislative agenda and that a future bill is coming with respect to online safety.
The Chair: Mr. Ripley and the officials from Canadian Heritage, thank you. I apologize for making you work overtime this evening, but there were many interesting questions from my colleagues. We thank you for coming before us, answering our questions and doing it on such short notice.
Honourable senators, we are now resuming our pre-study of Bill C-11.
For our second panel, we are pleased to welcome officials from the Canadian Radio-television and Telecommunications Commission, the CRTC. We are joined by videoconference by Ian Scott, Chairperson and Chief Executive Officer; Scott Hutton, Chief of Consumer, Research and Communications; Sheehan Carter, Director General, Strategic Policy; and Rachelle Frenette, General Counsel and Deputy Executive Director.
Welcome, and thank you for joining us this evening. Six to seven minutes are allotted for opening remarks from our panellists, and then we will go to questions and answers with my colleagues. Mr. Scott, the floor is all yours, and thank you for appearing before us tonight.
Ian Scott, Chairperson and Chief Executive Officer, Canadian Radio-television and Telecommunications Commission: Good evening, senators, and thank you, Mr. Chair.
I will just say at the outset that while we do not always see eye-to-eye with departments, I think that I should find Mr. Ripley a job inside the CRTC. He did such a great job in responding to questions about what the commission might do or might confront in certain areas.
Thank you, Mr. Chair, for inviting us to appear before your committee today. We are pleased to speak about the need for Bill C-11.
Honourable senators, the modernization of Canada’s Broadcasting Act is long overdue. Created in the early 1990s, the act is a product of its time. Although it served its purpose well for many years, it did not foresee the technological and societal change that has occurred since its inception. New legislation must recognize the reality that audio and audiovisual content are increasingly being distributed and consumed over the internet. A framework must be created to allow industry players to succeed in this new environment, and to harness opportunities for Canadians.
Bill C-11 proposes new tools that can help to ensure that Canadian stories and music can be enjoyed by audiences in Canada and across the globe. It would also allow the CRTC to respond quicker than ever before to changing market conditions.
In our view, Bill C-11 does three important things.
First, it builds on the existing Broadcasting Act to clarify the CRTC’s jurisdiction regarding online broadcasters. It would give the CRTC new regulatory powers to deal with online broadcasting services, including non-Canadian ones. These powers include giving us the ability to obtain data from online broadcasters.
Second, it would give us a flexible approach to regulation. The current Broadcasting Act does not specify how traditional players in the Canadian broadcasting system must contribute to the act’s policy objectives. That is left to the CRTC’s discretion. Bill C-11 would allow us to make similar determinations regarding online broadcasters and put in place the regulatory frameworks to support those goals.
Finally, it would modernize the CRTC’s enforcement powers.
Although the Telecommunications Act allows us to impose administrative monetary penalties to address non-compliance, no such provisions exist in the Broadcasting Act.
Honourable senators, I would add that Bill C-11 is not without its critics, but the point missed by many of those who have spoken against it is that the bill addresses the pressures that are inherent in our broadcasting system today. The bill will enable the creation of a new regulatory framework for the broadcasting industry that addresses those pressures and which, critically, will enable the system to better achieve public policy objectives. That means that Canadian stories will be told, greater global success for Canadian productions and artists and more choice for consumers.
There is one misconception about the bill that I would like to address. Some have suggested — and you just had a discussion on this matter — that Bill C-11 would give the CRTC regulatory power over user-generated content online. We take a different view. The bill draws a bright line between the users of social media and the platforms themselves. The powers granted to the CRTC under the proposed legislation would require us to, for example, ensure that social media platforms support the development of Canadian programs and make content discoverable and accessible to persons with disabilities. They would not, however, extend to regulating individual users.
All of that said, it is not a perfect piece of legislation. I do not know if I have ever seen one or if the members of the Senate have ever seen such a thing. With the utmost respect for the legislation’s drafters, we do have a few concerns as an administrative tribunal that will be tasked with implementing the bill. In effect, there are some possibilities for unintended consequences. If I may, I would like to draw your attention to three issues in particular.
The first contains the English and French linguistic minority communities. The bill would require the CRTC, when we make decisions that could adversely affect these groups, to afford them special procedural rights that are not accorded to other parties. We at the CRTC have worked very hard and very closely with those communities. Our view always has been that no single party, though, is more important than any other when we conduct our work. We are a quasi-judicial tribunal. The additional steps described in that particular section of Bill C-11 do run contrary to fifty years of well-established legal principles and precedent, and we would recommend the committee remove that provision.
A second concern is that we have identified some gaps between our powers to address certain situations in the traditional system with similar situations in the digital environment. For instance, the CRTC currently helps resolve a variety of disputes through mediation and arbitration services. Under Bill C-11, we would not have the same ability to support the industry in its negotiations and address imbalances in bargaining power. It would make it much more difficult to resolve complaints quickly and efficiently.
In addition, Bill C-11 would give the CRTC the ability to require that online broadcasting services offer Canadian programming services, but, unlike our current powers, we would not be able to set terms and conditions. This provision under the Broadcasting Act has served us well and the whole system, as evidenced by channels such as APTN and AMI-tv. In our view, programming services that are able to gain access to online streaming platforms should be ensured to be able to do so under fair and equitable terms.
The good news is that the solutions to these are simple amendments. We would be happy to provide further information to the committee if it is their wish.
The last concern I would raise is one that is, again, very much a question of unintended consequences. In order to try to promote transparency, the act would require the commission to consult with Canadians and review its regulations and orders every seven years. The idea, as I said, is to make us more accountable. We’re fully supportive of the notion of accountability, but I would mention that all of our work is done in full view of the public, with the public interest and the collective interest foremost in mind. There are mechanisms in place to ensure regular reviews of our regulatory framework to ensure they remain relevant. If we were required and mandated to do a review every seven years, that would require us to consult with Canadians over some — well, I will give you an example. In the past seven years, we had 1,400 decisions and almost 1,000 licence renewals. They would all be subject to review under that particular provision. Reviewing each would misdirect energy, time and resources, and I do not think it’s necessary in that form. Should such a policy direction be required, Bill C-11 could be amended to give the government the authority to require the CRTC to review specific regulatory policies at its pleasure, but as drafted now, I think that it’s troublesome, if not unworkable.
Honourable senators, thank you again for the opportunity to speak with you today. Let me close by reiterating that we are largely supportive of Bill C-11 and the changes it proposes to modernize Canada’s broadcasting system. My colleagues and I would be pleased to answer your questions.
Senator Dawson: Mr. Scott, I want to clarify comments you made a few weeks ago about proposed section 4.2 that would give the power to regulate user-generated content. What did you mean by the term “regulate” at that time? Has the CRTC ever regulated actual broadcast service, that is, what is seen or was said, rather than what is just distribution? Would CRTC control what Canadians see and hear online or censor unacceptable views? Could you comment?
Mr. Scott: Thank you very much for the question, senator.
The simple answer is, of course, no, and a clear no. We don’t dictate, haven’t, wouldn’t, won’t — I don’t know how many forms I could put in the negative — try to dictate what Canadians watch. The idea and the regulatory framework that the commission has in place and any new framework to be developed are meant to fulfill the objectives of the act. To put it in the most simple terms, we want to ensure that Canadian stories continue to be told, published, produced, distributed and found by Canadians. It is not in any way, shape or form an attempt to dictate what is seen.
Senator Dawson: I just wanted that statement to be clarified because it has been commented upon a few times, and I felt that it needed clarification.
Senator Miville-Dechêne: Like many people here, I’m interested in discoverability, also known as showcasing. I would like you to help me understand this issue in concrete terms. If you don’t use the algorithms, how are you going to convince the YouTube community to discover, for example, French-language content?
I’ll be even clearer. On platforms like Spotify, we heard a Quebec expert tell us that there is no problem and that there are French songs. That isn’t the problem; it’s that they aren’t recommended. You’re getting into extremely complex details of platforms that definitely do not recommend a lot of francophone content. How are you going to do this? I want a concrete answer. I don’t want you to tell me that we’ll see later.
Mr. Scott: Thank you for the question. It’s a big challenge, and the issue is equally complex.
You are looking for specifics. It’s always dangerous or difficult for a regulator to tell you what we will do in the future, so I just need to caveat my answer with that, to begin.
We will hold; we will issue notices; we will gather evidence. All Canadians, all forms of stakeholders, will have an opportunity to give us their best advice, and then we will render decisions that are in the public interest.
Senator Miville-Dechêne: But you must have an idea of how this can be done?
Mr. Scott: I understand the question. I am not trying to avoid it. I just wanted to clarify that we don’t bind ourselves in terms of saying, “This is what will happen,” because we need to develop and rely on the record. But your question is very important and well understood.
You may be familiar with a report we were asked to produce by government almost four years ago. We produced a report called, Harnessing Change. In it, we outlined some of the issues that are now addressed in the legislation. One of the things that we talked about is the use of incentives and also to reflect different lines of businesses and the rapid changes that take place.
A lot of that can be characterized into saying we are focused on outcomes. You quite properly put it as saying that the desired outcome is to ensure Canadians could find Canadian music or Canadian stories. There will be a number of ways that the industry can do that. I will give you simple examples. Instead of saying — and the act precludes this — “We will make changes to your algorithms,” as many European countries are contemplating doing, we will say, “This is the outcome we want. We want Canadians to find Canadian music. How best to do it? How will you do it? I don’t want to manipulate your algorithm. I want you to manipulate it to produce a particular outcome.” Then we will have hearings to decide what the best ways are, and we will explore them.
I hope that’s concrete enough.
Senator Miville-Dechêne: Not really, but I think I’ll leave it at that.
In your opinion, is the idea of recommending content and not just making it available interesting?
Mr. Scott: Yes, and it exists today.
To be clear, YouTube highlights Canadian content, as do Spotify and NetFlix. They have tools today where people can go and say, “I want Canadian music or a Canadian artist.” They can be better. The simple question is, what else can be done? It is not just so that they can be seen or be promoted, as you have just said.
Senator Miville-Dechêne: Yes.
Mr. Scott: There are a variety of mechanisms to pursue what we call discoverability. I call it allowing Canadians to find Canadian stories and music. It’s not only listing them. You are quite right. It can also be advertising, awareness — any number of mechanisms — and we will explore all of them.
The Chair: Thank you, Mr. Scott.
Mr. Scott: I will try to be more brief, chair.
Senator Manning: Given the number of creators and the amount of content that Canadians create on these platforms, how will the CRTC process the certification requirements for their content? What level of resources would you require to certify individual pieces of content uploaded by, likely, hundreds of thousands of Canadian creators?
Mr. Scott: As explained by Mr. Ripley earlier, we won’t be. We won’t be examining individual pieces of content. We will be working with the platforms, and we will establish a regulatory framework that will set guidelines and objectives for the platform, and they will. Mr. Ripley described how YouTube, for example, identifies who the copyright holder is and ensures that they are aware that it’s being uploaded. We would have a set of rules, and whether it is a YouTube or a Spotify or a CBC, they will need to adhere to them.
Senator Manning: I am hearing in the conversation that basically we are looking at online streaming platforms that broadcast in Canada should have an obligation to support Canadian music and stories in a fair and equitable way. How is the CRTC planning on measuring this? What are your sticks today for measuring it? Are there changes in Bill C-11 that will give you additional opportunities to measure it? How do you measure whether the streaming platforms are living up to what we’re asking them to do?
Mr. Scott: It would depend on what measures we’re discussing. In the future, subject to a fulsome public proceeding, there may be contribution requirements. Those are obviously measurable, auditable and trackable.
In terms of the broader question, if I understand your question properly, it’s how will we best achieve or better achieve the objectives of the act to ensure there are lots of Canadian stories? Well, by supporting the various mechanisms. Canadian music is a success because of a number of the elements in the regulatory framework that allow for investment in Canadian artists. That investment will continue, and I expect Canadian artists and music to flourish in the future, as it has in the past. More is just better contributions and better work from the commission and the framework and from the parties who participate in the industry.
Senator Cormier: Welcome, Mr. Scott. With all due respect, I must express my deep concern about your recommendation to delete clause 5.2 of Bill C-11, which deals with consultations with the French and English language minority communities, since we know that for years there have been challenges related to consultation between these communities and the CRTC. I’m not going to refer to the Official Languages Act, because that is another debate. You’re talking about 50 years of well-established precedents and legal principles that make you believe that this provision isn’t needed. Can you give us concrete examples of the precedents and legal principles that are leading you to make this recommendation?
Mr. Scott: Yes, thank you very much. I’ll ask my colleagues to respond, Ms. Frenette on the last point, and then Mr. Hutton.
Rachelle Frenette, General Counsel and Deputy Executive Director, Canadian Radio-television and Telecommunications Commission: Thank you for the question. With respect to the consultation provided for in clause 5.2 of the bill, the requirement raises two important legal issues. First, it undermines procedural fairness for other participants in our processes. These are equally important groups in the CRTC’s decision-making process, such as indigenous groups, groups advocating for greater diversity and inclusion in the broadcasting system. We must also not forget the people on whom a commission decision has a direct impact, those who will be subject to specific regulatory obligations.
Allowing a third round of consultations with OLMCs after the public record of a proceeding is closed grants procedural rights to these groups that are not granted elsewhere.
This is reflected in the wording of section 5.2. By allowing these groups to have access to decisions that haven’t yet been finalized, the provision allows OLMCs to have a say in draft decisions, which violates the secrecy of deliberations. This is a fundamental principle in the decision-making of an administrative tribunal.
Senator Cormier: This will allow us to delve deeper. We know that the CRTC currently conducts public hearings, particularly when awarding licences. Clause 9.1 of the bill states that orders imposing conditions on the operation of broadcasting undertakings will not be subject to a public hearing process before they are issued, but rather will be published on the commission’s website, and interested individuals may make submissions.
We also know that Bill C-11 intends to replace the commission’s power to impose licence provisions with the power to make orders imposing operating conditions on broadcasting undertakings.
Tell us about these hearings. What are the advantages and disadvantages? Do you think the approach to publishing the orders on your website and receiving submissions is complete? Wouldn’t it be desirable to conduct a hearing process? If not, why not?
Scott Hutton, Chief of Consumer, Research and Communications, Canadian Radio-television and Telecommunications Commission: While there are various provisions related to licensing and procedural matters in terms of public hearings, we intend to use the same procedural bases that we have always used, depending on the scope of the regulations, the scope of the condition attached to the licence or the scope of the conditions that may be imposed by order. Naturally, hearings must be held where necessary.
Senator Cormier: Okay. Thank you very much.
Senator Klyne: I have three quick questions for anybody on the panel. I’m sure, Mr. Scott, you’ll direct them.
There was reference earlier to the $900 million being added to the market. If that’s to come incrementally from online streamers, will that be on the backs of audiences or subscribers being charged more? Where will revenues or contributions be directed or purposed? That’s two, and hopefully I’ll get a third question in.
Mr. Scott: As Mr. Ripley described, that was a method of identifying what some of the potential contributions would be. First, we need to be able to collect data, figure out who is who, and doing what, and what kind of revenues and what lines of business they are in. Then, in the context of an open, transparent public hearing, we need to talk about contribution frameworks. How much should they contribute, to what, what would further the objectives of the act and what is an equitable arrangement as between existing licencees and new members of the club, so to speak? They may not want to be part of the club, but so be it. Both the amount and the target of those contributions will be subject to a future public proceeding. We need to reflect the various lines of business and different ways in which different players can contribute to the system.
Senator Klyne: My fear is that the shareholders won’t be giving up the money, so the audiences or subscribers will have to pay.
You mentioned something in your opening remarks about APTN and AMI-tv, and I’ll throw into the mix The Weather Network. Those are all free broadcasting networks, I think. Now that you’re going to open up the act, would you do something to have some money or contributions flow to those free networks? They’re losing over the years here, with no revenue.
Mr. Scott: To be clear, they’re not free. They’re subject to a provision in the current act, section 9(1)(h), where the commission can require the mandatory carriage of services and also set the rate that those services will receive. Rather than leave it to commercial negotiation, in those special circumstances we establish how much is paid to them to ensure their economic viability. That is done, again, in a transparent, public proceeding. That still exists. The question is more one of how will we deal with that in the future in relation to online platforms where we have the ability to tell them to carry but not the ability to set terms and conditions.
Senator Klyne: Now would be the time, when you’re opening up the act, I guess. Thank you.
Senator Wallin: I think we’re going to have to revisit the issue of user-generated content one more time. I know that you, the minister and other officials insist that you’re not regulating user-generated content, but I think there’s a bit of parsing the words. You will regulate the platforms, and then the platforms will impose your rulings and directives, as you said. You won’t manipulate the algorithms; you will make the platforms do it. That is regulation by another name. You’re regulating either directly and explicitly or indirectly, but you are regulating content.
Mr. Scott: You’re right. Thank you, senator. It’s a pleasure to see you. We sat on a board together a long time ago.
Senator Wallin: Indeed.
Mr. Scott: I’m not sure I’ve seen you since then.
Where do I begin? I can turn to my legal counsel, but I think you’ve already heard how the commission is tightly constrained. I take your point, and the word “regulation” in that sense, as you’re using it, is very broad. We’re subject to all kinds of regulation daily.
The point that I’m trying to make — and your reference to the algorithm is a good one — is to say that we don’t need to, if you will, dig into a company’s algorithm and manipulate it, as is being done in a number of countries. In fact, the act precludes it. What I was making reference to is that regulation in this case is driven by what we are trying to achieve. What is the desired outcome? Then we set a framework to encourage those providers to deliver on that outcome. We do that today with conditions of service. We don’t tell CTV what to produce, but we tell them that we want them to invest a certain amount of money into Canadian programming, or the cable industry providing a specified amount of money to the Canada Media Fund. It’s that nature of regulation, at the level writ large, not regulating users at all or the uploading of user-generated content. I hope that clarifies it further.
Senator Wallin: It’s hard to imagine that you can regulate a platform without regulating what is on it, because it’s kind of one and the same.
Let me ask a question about the time frames for these platforms who do not know what the rules will be. You are supposed to be sorting that out over, again, I don’t know how long a time. I think that some of the fears are that the platforms are going to say that it may not be worth it. They are going to have to invest a whole lot of money, and they may not be sure that, in the end, they’re going to be allowed to do what they do now, so maybe they’ll just exit Canada in that way. The other side is that they’re going to continue to err on the side of caution in terms of implementing your proposals, and that tends to punish not the big players but the smaller players.
Mr. Scott: Perhaps I have more faith in the power of the Canadian market and Canadian consumers than that statement would entail. I don’t think anyone is going to leave Canada, and I don’t think there will be anything in a future regulatory framework that will drive them away. Netflix, to use them as an example, or Amazon Prime — I can use others, both Canadian and non-Canadian — are deriving significant revenues. They’re also making significant contributions in Canada already in terms of the actual programs, in terms of their investment in production and post-production and so on. They’re making investments. They are already contributing. The question is finding what an equitable contribution would be for a Netflix versus a Quebecor or a Bell. How can they contribute in an equitable manner to best fulfill the objectives of the act? I believe we can do that. Again, it will be in the context of an open, transparent, public process.
The Chair: Mr. Scott, I’m looking at this legislation and at the Broadcasting Act, which hasn’t been amended in many years, and I get the sense — and correct me if I’m wrong — that we’re trying to bring traditional legacy media platforms into a situation where they’re competing with modern day platforms. You have a circumstance where you have some old dinosaurs when you’re looking at the Canadian audience. I have faith in the Canadian market as well, and they are going away from legacy media platforms. They’re embracing these new technologies and new modern day platforms. You’re having a race right now between old, slow dinosaurs and modern, quick stallions. My sense, and the view of many stakeholders, is that we’re trying to regulate something that has left the barn, and we’re going to be dragged along without really trying to get an outcome that you might want, or government might want or parliamentarians might want. Do you agree with the statement that we need to adapt to these modern day platforms and not have these platforms adapt to an archaic way of trying to protect Canadian culture?
Mr. Scott: You said a number of things there, so I’m a bit challenged to say whether I agree or disagree. Let me elaborate.
I’ll take issue with the characterization of the Canadian industry as dinosaurs. I think they fulfill their conditions of licence. They contribute in a very meaningful way to achieving the objectives of the act.
You are absolutely right, though, when you say the world has changed. That is what our Harnessing Change report was all about. Consumers have driven that change, and technology has driven that change, and what we need is an act that gives us the flexibility to look at all of those players and treat them in an equitable manner. Right now, part of the industry is subject to what you referred to as archaic rules, and the other part is virtually unaffected by any of those rules. That is what needs to change. We need change. The act provides the flexibility, and I think there should be a greater degree of trust put in the CRTC as an experienced regulator that we can, in fact, as you put it, figure out a racetrack that doesn’t make it dinosaurs against young colts.
The Chair: Thank you.
Senator Dasko: Thank you, Mr. Scott, for being here with your colleagues.
I know we’ve covered this topic of Canadian content, but I’d like to drill down a little bit more. I’m looking at the concept here of a level playing field and also the current requirements for Canadian content from Canadian broadcasters in the system and how it will work, and also measurement of Canadian content. Is it fair to say that it is likely that the existing regulations on Canadian broadcasters will change in light of your principle of equitability and a level playing field? Is it likely that those requirements will change and the measurement of Canadian content will change?
Mr. Scott: Let me answer it slightly differently. Will we need to redefine and re-examine what the definition is of Canadian content for both audio and audiovisual programming? The answer is yes.
Senator Dasko: Right, and those regulations for existing broadcasters are likely to be, shall we say, less onerous. They’re not going to increase; they’re probably going to decrease. Obviously, you know, because you’re the chair of the CRTC.
Mr. Scott: I hope I’m not misunderstanding, but I think we’re conflating two slightly different issues. One is the definition of “content,” and that serves a number of purposes. You might say, “You must produce so many hours of Canadian content or spend so much money,” in which case, the definition of Canadian content is very important so that it either qualifies or it doesn’t.
The other thing I understood from the question is whether one side will contribute more and the existing players contribute less. The answer is that it is to be worked out. However, equity is important, because right now, the obligations are asymmetrical, and we need to find a fair and equitable balance.
Senator Dasko: To get back to what you said originally and what I asked, it is likely that the Canadian content requirements for existing regulators will change and probably will be more flexible or looser or whatever.
Mr. Scott: I won’t predict what the outcome will be. As I mentioned at the beginning, as a quasi-judicial tribunal, that wouldn’t be appropriate. However, you’re right that it will be one of the first issues to be examined, and I want to be clear that we’re talking about the definitions of Canadian content, for example, the ten-point system for audiovisual content or MAPL for audio.
Senator Dasko: Yes, but I’m asking both about the measurement and the requirements for a percentage of revenue, as well as the exhibition requirements and so on. That’s what will be changed.
Mr. Scott: Yes, I believe it is.
Senator Dasko: Can I ask —
The Chair: Unfortunately, Senator Dasko, time is up. I have to move on to Senator Simons. I apologize for that.
Senator Simons: I’m going to try to squeeze in two quick questions.
The first is about the kinds of deals that the different over‑the‑top streaming services are going to have. Our understanding from the minister and the ministry is that each big player — Disney, Netflix, Spotify, Apple, Prime Video — will have its own unique deal with the CRTC for how it will meet its obligations. My first question is: How long is that going to take? What kind of resources are you going to need to use so that each individual OTT service gets its own unique deal that matches their program model?
Secondly, with so many smaller players coming into the mix, will there be any effort to improve funding for the Broadcasting Participation Fund so that people who have concerns and question will be able to bring their cases before the CRTC?
Mr. Scott: Thank you, senator. Let me start quickly with the second one, and I will try to be faster with my responses.
There is provision for us to have cost awards in Bill C-11, which currently don’t exist. We have it under the Telecommunications Act but not under the Broadcasting Act. That will assist us in applying cost awards for public interest intervenors.
On the first question — I’m sorry, I’ve lost my train of thought. Could you —
Senator Simons: If each —
Mr. Scott: How long for each one?
Senator Simons: Netflix is different than Disney, and Disney is different than Spotify. It could take months or years, I presume, to work these out.
Mr. Scott: The point in the minister’s comments — and we certainly raised it in our Harnessing Change report — is that there could be elements that are unique to various players. That doesn’t mean that there will be a unique, comprehensive agreement with each, and that will need to be determined during public proceedings. There may be a standard element, for example, that everyone contributes and then, secondarily, ways to customize it, but those are all specific details to be worked out by parties and Canadians with a variety of interests — consumer interests — all to be considered. I think the statement could be — and I might regret it in the future — all of those things will be on the table.
Senator Simons: If I can come back to the cost awards, would those only be for people — I mean, usually when someone is awarded costs, it means that they won in some way, but —
Mr. Scott: Not in ours. In ours, it is that they made a contribution to the issues in the hearing. That is how we assess cost awards, that they have in fact addressed the issues pertaining to the proceeding and that they made a contribution to the understanding of the issues.
Senator Simons: Will that take the place of the Broadcasting Participation Fund or complement it?
Mr. Scott: The Broadcasting Participation Fund was created because there was no cost award system. I can’t speak to what the commission will do with it in the future, but it has in the past been funded primarily through benefits that came about when mergers took place. There has been a decreasing number of mergers and, therefore, a decreasing amount of money that has been going into the fund. It is important that consumer and public interest intervenors are supported, and there are a number of ways, including, potentially, direct support from government or the Department of Justice. There’s a lot of room for improvement in that area.
Senator Simons: Thank you.
The Chair: I’ve been told, colleagues, that we have a vote that is scheduled for, if I’m not mistaken, 8:36 p.m., so we will go until 8:30 p.m. Obviously colleagues are free to leave before, but unfortunately, I will have to wrap up by 8:29 to give colleagues time to go and vote.
Senator Quinn: Quickly, I’ll simplify it. Increasing Canadian content or the exposure to Canadian content will suppress other content, I would imagine. I think of the young people today, and if they want to get the latest and greatest hit that’s a U.S. hit or a U.K. hit, they’re going to find it. How much more difficult is it for them to do that, or is it difficult at all?
Mr. Scott: If you mean is it difficult to find Canadian content?
Senator Quinn: No, Canadian content suppressing other content. Is it easier or more difficult for them to find the latest hit that they want to hear?
Mr. Scott: I don’t think it ever suppresses. We’re talking about making it findable, discoverable. That doesn’t suppress other alternatives, in my view.
Senator Quinn: Thank you.
Senator Busson: Thank you, Mr. Scott, for being here.
Mr. Scott: My pleasure.
Senator Busson: You’re a regulatory agency, obviously, and a great deal has been said by you, other witnesses and elsewhere throughout this conversation and this study. In your expert opinion, how long will it take after the Royal Assent of Bill C-11 for regulations developed by your agency, the CRTC, to be implemented, and will there be an opportunity for those regulations to be reviewed before — or after — they’re implemented? I’d like to have your comment, please.
Mr. Scott: It’s difficult to put specific time frames on it, and again, I don’t bind the commission’s future decisions. However, reasonably, if the act receives Royal Assent, then the government will have to issue its policy direction, assuming it’s going to issue one. That will take some time. There are, as Mr. Ripley described, consultative mechanisms that have to go before both houses of Parliament and be subject to public debate and scrutiny.
Let me go back to the discussions during Bill C-10 and a proposed policy direction. At that time, they suggested that nine months to a year for some of the major elements and two years for implementing the broader regulatory scheme, including some transition elements, would be rough indicators of how long it will take the commission.
Senator Busson: Thank you very much.
The Chair: Colleagues, that brings us almost to 8:30 p.m. First of all, on behalf of the committee, Mr. Scott and the whole crew that is here from the CRTC, thank you very much for coming on short notice before our committee. As you can see from the number of questions and the quality of the questions, we take the work on this legislation seriously. I can tell you there is a number of senators that had still more questions on second round. We will be looking at this legislation well into the fall, so I hope we might have other opportunities for my colleagues to put some of those questions to you, both formally and informally.
Mr. Scott: If I may, Mr. Chair, I was going to say that it is our pleasure and privilege to assist the Senate and this committee. We’d be happy to continue to do so, and if you’d like to invite us back, as the old saying goes, we’ll be there with bells on.
The Chair: By popular demand, we will. Thank you very much again.
Colleagues, this meeting is adjourned.
(The committee adjourned.)