Bill C-10 (Historical)

An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts

This enactment amends the Broadcasting Act to, among other things,
(a) add online undertakings — undertakings for the transmission or retransmission of programs over the Internet — as a distinct class of broadcasting undertakings;
(b) update the broadcasting policy for Canada set out in section 3 of that Act by, among other things, providing that the Canadian broadcasting system should serve the needs and interests of all Canadians — including Canadians from racialized communities and Canadians of diverse ethnocultural backgrounds — and should provide opportunities for Indigenous persons, programming that reflects Indigenous cultures and that is in Indigenous languages, and programming that is accessible without barriers to persons with disabilities;
(c) specify that the Canadian Radio-television and Telecommunications Commission (the “Commission”) must regulate and supervise the Canadian broadcasting system in a manner that
(i) takes into account the different characteristics of Indigenous language broadcasting and the different conditions under which broadcasting undertakings that provide Indigenous language programming operate,
(ii) is fair and equitable as between broadcasting undertakings providing similar services,
(iii) facilitates the provision of programs that are accessible without barriers to persons with disabilities, and
(iv) takes into account the variety of broadcasting undertakings to which that Act applies and avoids imposing obligations on a class of broadcasting undertakings if doing so will not contribute in a material manner to the implementation of the broadcasting policy;
(d) amend the procedure relating to the issuance by the Governor in Council of policy directions to the Commission;
(e) replace the Commission’s power to impose conditions on a licence with a power to make orders imposing conditions on the carrying on of broadcasting undertakings;
(f) provide the Commission with the power to require that persons carrying on broadcasting undertakings make expenditures to support the Canadian broadcasting system;
(g) authorize the Commission to provide information to the Minister responsible for that Act, the Chief Statistician of Canada and the Commissioner of Competition, and set out in that Act a process by which a person who submits certain types of information to the Commission may designate the information as confidential;
(h) amend the procedure by which the Governor in Council may, under section 28 of that Act, set aside a decision of the Commission to issue, amend or renew a licence or refer such a decision back to the Commission for reconsideration and hearing;
(i) specify that a person shall not carry on a broadcasting undertaking, other than an online undertaking, unless they do so in accordance with a licence or they are exempt from the requirement to hold a licence;
(j) harmonize the punishments for offences under Part II of that Act and clarify that a due diligence defence applies to the existing offences set out in that Act; and
(k) allow for the imposition of administrative monetary penalties for violations of certain provisions of that Act or of the Accessible Canada Act.
The enactment also makes related and consequential amendments to other Acts.

[Stéphane Cardin]

Along with the other members of the Motion Picture Association–Canada, we've proposed amendments to subsection 5(2), in Bill C-10, essentially to ensure that the CRTC considers competition, innovation and affordability in its broadcasting decisions, and that regulation should be efficient and proportionate to its purpose.

[Stéphane Cardin]

We support the framework proposed in Bill C-10 as introduced last November 3, but I'm also telling you that we want to do more here in Quebec.

[Marci Ien, Liberal, Toronto Centre, ON]

Mr. Cardin, thank you so much.

Finally, Ms. Dinsmore and Ms. Wheeler, looking through that lens at the importance of news, which you spoke about, what do you see as the short-term and long-term repercussions of enacting Bill C-10?

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

That's perfect.

I have one last question for you.

The Yale report raised a lot of expectations for Bill C-10. The government has decided to go ahead and not act on it. So it ignores the major social networks like Facebook and Google, which have access to many sources of revenue.

Can you explain your situation regarding your subscription revenues? How does it compare to other competitors or companies with different financial frameworks?

[Stéphane Cardin]

I think the main difficulty is simply related to the definition of “Canadian production”.

Let's take the example of the movie Jusqu'au déclin, which was shot in Lantier, in the Laurentians, and was written and directed by a Quebecker, with an all-Quebec film crew and whose entire cast from Quebec. A project like that does not qualify as a Canadian production, since Netflix financed it entirely.

So it's not only about the percentage, but also about what the percentage would be based on. Specifically, the items that were supposed to accompany Bill C-10, which we are awaiting and which the government has indicated as the policy directive or direction to the CRTC, could contain a revision of the parameters that qualify content as “Canadian”.

[Alain Rayes, Conservative, Richmond—Arthabaska, QC]

Okay. Let me continue with this topic.

Netflix announced that it has invested $2.5 billion in Canada since 2017. If you do the math as a percentage of revenues, I think that would be more than 30%.

You seem to be pointing out that the way the government or the CRTC does the math doesn't do justice to the investments your company is making in Canada. Why is that?

Is the business model different? Since it's a new business model, should Bill C-10 take that into account?

Is it a misunderstanding on the part of [technical difficulties] the reality of conventional broadcasters compared to digital broadcasters?

[Susan Wheeler]

We have five recommendations to improve Bill C-10 and the government's policy direction to the CRTC that will follow the legislation.

First, include a provision that will ensure regulatory fairness between Canadian companies and foreign streaming services. Bill C-10 should direct the CRTC to impose comparable obligations on all media players drawing revenues from the Canadian broadcasting system. It is critical that Canadian domestic broadcasting companies do not have more onerous obligations than U.S.-based tech giants.

Second, dismantle the regulatory silos. Whereas U.S. streaming services are viewed as single entities despite their roles in both content creation and distribution, Rogers' broadcasting and distribution arms are not. Each is subject to a different set of regulatory obligations that prohibit us from evolving our business models and provide no incentive to invest in content creation. Rogers would like the act to give the CRTC the flexibility to regulate our broadcasting and distribution divisions as a single entity. This could take the form of conditions of service, as has been suggested by the CRTC in its “Harnessing Change” report.

Third, make local news and information a priority in the act. The act should allow Canadian broadcasters to prioritize the production of news programming over all other programming.

Fourth, eliminate part II licence fees from the Broadcasting Act. These fees are not directly tied to broadcasting and are not levied on foreign streaming services. The current bill proposes to keep these fees for Canadian broadcasters while letting the U.S. streamers off the hook. We think that is simply unfair.

Fifth, provide stronger protections to combat online content theft. If steps are not taken to address illegal online streaming, the objectives and debate around Bill C-10 will be moot, as the Canadian content ecosystem will fail.

Detailed amendments to implement these recommendations will be available in our written submission to the committee.

We thank you for your time and look forward to your questions.

[Pam Dinsmore, Vice-President, Regulatory Cable, Rogers Communications Inc.]

Mr. Chair and members of the committee, thanks for inviting us here to discuss Bill C-10. My name is Pam Dinsmore. I am vice-president, regulatory cable, and with me is Susan Wheeler, vice-president, B2B distribution and regulatory, for Rogers Sports and Media.

At Rogers, we are committed to leading our industry in broadcasting innovation, as well as in celebrating and amplifying Canada's culture and identity. We provide platforms for a diversity of voices and deliver rich local content that engages Canadians across the country. Through our 54 radio stations, seven local Citytv stations, five OMNI-branded multicultural and third-language TV stations, and our OMNI Regional service, we entertain and inform citizens from Medicine Hat to Waterloo, Gander to Victoria.

Across our cable footprint in Ontario, New Brunswick and Newfoundland, we have 30 community TV channels that provide Canadians with coverage of local events and community issues in both official languages. Through these local outlets and our Sportsnet-branded channels, our celebration of community and sport brings Canadians together, transcending gender, age and ethnicity.

We welcome Bill C-10's proposed reforms and urge all parties to work towards a swift passage of the bill, notwithstanding any amendments that might need to be made. We also believe more needs to be done, and quickly, to address the immense disruption happening in Canada's media ecosystem that has put Canada's private broadcasters at a distinct structural disadvantage. This is especially true when it comes to producing national and local news programming, which plays an increasingly important role in democracies as newsrooms shrink and disinformation proliferates across multiple platforms.

Above all, we would like to leave you with an understanding of how profoundly our business model has shifted since the current Broadcasting Act was introduced 30 years ago. The Internet has, over the past decade, turned the economics of broadcasting upside down. Foreign digital competitors operating without oversight or regulation have undercut revenues, splintered audiences and driven up our operating costs. The legislative and regulatory frameworks governing broadcasting in Canada have not kept pace with these changes. In fact, they have disadvantaged Canadian broadcasting companies that compete with foreign streaming services, which have no regulatory obligations.

To address [Technical difficulty—Editor].

[Stéphane Cardin, Director, Public Policy, Netflix]

Mr. Chair, members of the committee, thank you for the opportunity to address you today.

Last September marked Netflix's 10th anniversary in Canada. We're grateful that over the last decade around seven million Canadians have welcomed us into their homes.

We filmed our first series in Canada in 2012, and our activity has grown ever since. In 2017, we signed an agreement with the government to establish Netflix Canada under the Investment Canada Act, which enabled us to hire Canadians directly. In return, Netflix made substantial commitments, including to invest a minimum of $500 million over five years in production activity across the country. Canada is one of our top production countries globally, and since 2017 we have in fact invested more than $2.5 billion here.

This includes our original series and films, as well as collaborations with independent producers and broadcasters in English and French. We also continue to acquire series and films, most recently Le guide de la famille parfaite.

Netflix also contributes to the vitality and competitiveness of Canada's audiovisual industry through long-term leases for stages, collaborations with leading animation and VFX studios, and the hundreds of vendors we work with across the country.

Earlier this month, we shared great news about our plan to open an office and hire a dedicated content executive in Canada. Netflix is excited to expand our connections with the Canadian creative community and to continue strengthening our local work and partnerships.

Our track record over the past decade is clear. Netflix is committed to Canada, and our message to you is equally clear. We will continue to bring Canadian stories to the world.

We understand that policy-makers must consider the nature of contributions from all players in Canada's entertainment ecosystem. To the extent that Bill C-10 aims to create a flexible framework that will enable the CRTC to tailor conditions of service applied to online undertakings and to recognize the different ways that online services contribute, we think such an approach makes sense.

However, simply imposing the regulatory obligations of licensed Canadian broadcasters onto online entertainment services would not be an appropriate approach to ensuring contributions from this otherwise vibrant sector. Services like Netflix do not perform the same roles as traditional broadcasters, nor do we have the same content strategies.

We look forward to discussing these issues at public hearings before the CRTC at the appropriate time. For now, we note our concern with an approach that would impose a uniform 30% Canadian programming expenditure requirement to the Canadian revenues of online video entertainment services.

Such an approach would not create a level playing field, nor would it be fair and equitable. Netflix seeks no regulatory benefits. Nor do we offer news or live sports programming—the categories that enable Canadian broadcast groups to meet the majority of their spending obligations.

Canadian consumers have more entertainment options than ever. An overly burdensome regulatory framework could result in reduced choice for Canadians. As new global services are launched, some may decide not to enter the Canadian market at all, while others may avoid regulation by providing their content through a Canadian intermediary instead of setting up here.

The government has stated its ambition to create a world-class communications sector for Canada and highlighted the importance of enabling and promoting Canadian culture, contributing to economic growth, and safeguarding the interests of Canadian consumers.

In order to achieve that ambition and build a well-balanced, forward-looking and resilient model, let's acknowledge the contributions of each participant in the system and enable them to play to their strengths for the benefit of Canadian stories, workers and consumers.

Thank you, Mr. Chair. I'd be happy to take your questions.

[The Chair, Liberal, Scott Simms]

Thanks, everyone, for joining us again on our second round. This is our analysis of Bill C-10 before we proceed with clause-by-clause.

I'd like to introduce our guests at this time. From the Fédération des télévisions communautaires autonomes du Québec, we have Amélie Hinse, director general, accompanied by Catherine Edwards. From Netflix, we have Stéphane Cardin, director of public policy. From Rogers Communications, we have Pam Dinsmore, vice-president of regulatory cable, and Susan Wheeler, vice-president of regulatory media.

As we've mentioned, you get up to five minutes. I'm going to be a little strict, because I'd like to get a couple of rounds in. Following that, we get into the questions.

Let's start with the federation. You have up to five minutes.

I believe, Ms. Hinse, you're starting.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you very much, Mr. Chair.

Thank you to all the witnesses for being here. I'll do my best to get to everyone, so I'll keep things quick.

I want to address first Madame Côté from SOCAN.

We all know that the future of music is streaming. It's just too convenient for listeners, and it's too profitable for some to ever think that anything is going back. Real-world earnings on recorded materials have dropped, and you gave us the numbers as to how significantly they have dropped.

Right now, all that's left for a lot of these artists is live performances and licensing of their music to commercials, movies and TV, plus the streaming. We all know that live performances are gone right now. Every stage in the world is dark, so, really, the share of revenue that has been lost is overwhelming for creators in that field.

Most of the discussions are about the platforms. The platforms will continue to change. They're changing, and they'll continue changing, so the legislation we have has to able to support these changes and into whatever is next.

I know that the foreign Internet broadcasters are increasing their revenue through subscriptions and through advertising, but the fraction of the royalties these creators are making is not even trickling down to the artists—we're talking fractions of a cent—and we all know this.

What is in Bill C-10, or what else can we do to strengthen Bill C-10, to support those creators who seem to get less and less of the pie as it's divvied up?

[Martin Champoux, Bloc, Drummond, QC]

Thank you very much, Mr. Chair.

I'd like to thank the witnesses for being with us today and giving us their time.

I'd like to start with Mr. Lavallée and Mrs. Côté, from SOCAN.

Mr. Lavallée and Mrs. Côté, your recommendations for amendments to Bill C-10 highlight the transparency of data from web giants, which could provide access to certain consumer information. Could you shed some light on that and provide some clarification?

[Geneviève Côté]

In closing, there is another element of Bill C-10 that seems to us to require clarification, maybe even a correction, and that is the possible exclusion of certain social media activities from the application of the Broadcasting Act. Social media are enabling platforms used for music discovery. In all their iterations, digital media recommend content and generate “programmed” viewing. Platforms manage the user uploaded content and the access to it.

As other organizations have mentioned to this committee, notably the Coalition for the Diversity of Cultural Expressions, we believe the Canadian creative ecosystem would benefit more from Parliament, rather than excluding these services from the scope of the act, giving the power to the CRTC to determine how to better regulate social media under the Broadcasting Act.

In our opinion, the Canadian legislator should not focus on who uploads the content that Canadians turn to, but should rather target those whose line of business it is to recommend that content and monetize access to it, so that in the end, these giants share with content creators, the value they get from the use of their creation, of our Canadian music.

[Martin Lavallée, Senior Legal Counsel, Society of Composers, Authors and Music Publishers of Canada]

SOCAN deals primarily with copyright issues as well, so we pay particular attention to any modification to the Copyright Act that would affect the rights of our members or play a disruptive role in our negotiations with users. Therefore, the proposed amendments that Bill C-10 introduces into the Copyright Act in respect of ephemeral recordings, which would add online undertakings to this exception, are simply unacceptable and go contrary to the intent of this bill.

An ephemeral recording is a copy of a program made by a TV broadcaster, for example, to permit them to broadcast the same program at the same time of day in different time zones. This is called time shifting. The proposed amendment wants to extend this exception to online undertakings, which, in our experience, should not be the case. In the digital realm, you can always choose what you see at the time of your choosing, so doing this broadens the scope of what is generally understood and applicable as of now. Neither online undertakings nor TV broadcasters have, to our knowledge, used this exception or even raised it in a negotiation.

As we saw when a plethora of exceptions were introduced in the act back in 2012, these exceptions triggered what we predicted: legislation by litigation. We've spent a significant amount of money and time to defend any overreaching interpretation of these exceptions. At the same time, technical giants resisted our effort to have them pay fair value, since they were claiming that such and such exception could be interpreted in their favour.

History must not repeat itself today in this very bill that aims at providing a means from which money will flow to creators. The proposed amendment to the Copyright Act is anything but status quo. In order to truly be status quo, the ephemeral exception absolutely needs to remain as is—limited to radio and TV—or clearly specify that those provisions do not include online undertakings.

[Geneviève Côté, Chief Quebec Affairs and Visual Arts Officer, Society of Composers, Authors and Music Publishers of Canada]

Good afternoon. We are before you today on behalf of SOCAN. We represent the rights to musical works of our 160,000 members, songwriters, music composers and music publishers. In short, we grant licenses, and collect the rights arising therefrom, notably from traditional broadcasters—radio and television—and digital audio and audio-visual platforms, for the use of music as part of their business.

Because of this, we see the two perspectives of the economic value of music, the value for rights holders and the value for music listeners. It seemed important to us to come and testify before you to make a few points of clarification.

From the outset, like many players in the music ecosystem, we welcome Bill C-10. We believe that subjecting digital platforms to the same legislative and regulatory conditions as those applicable to all Canadian broadcasters will end the distinction that the music industry has been decrying for years.

When we compared distributions made to Canadian music rights holders with what was distributed to foreign writers in regard to uses in media, we came to a devastating conclusion. In digital media, royalties paid to Canadian creators were three times lower than those related to uses in traditional media. The average percentage for traditional was 33.9% over the past six years—