Canadian Heritage Committee on March 26th, 2021

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Of course, it's the carrot and the stick.

What methodology and criteria will you use to define an online company, and how will you decide which ones will be required to either spend or pay royalties to fund Canadian content?

[Ian Scott]

I have to be careful in how I respond to that.

This is looking at a future regulatory environment. It wouldn't be right for me to predict what it will look like. That should come after we hold the public proceeding and we hear the evidence and develop the record.

I need to be careful not to—

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Perhaps I'll frame it as what you would like to see.

[Ian Scott]

I would like to see one that achieves the objectives I mentioned earlier.

I'm not sure how to answer it beyond saying that we would ensure....

You really have me stumped in terms of what I can say about a prospective regulatory framework without hearing about it nine months from now, when someone says, “You said before a committee that it would include this or that.”

[Heather McPherson, NDP, Edmonton Strathcona, AB]

That's fair enough.

[Ian Scott]

I'll repeat what I said earlier: It really can be a combination of incentives and prescriptive rules.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

As you develop this and go through this policy, will there be models operated by other countries that you either have been looking at or will look at, and could you comment on which countries, which models, and why?

[Ian Scott]

We have been studying it. Needless to say, these aren't new issues to us.

We're very pleased that legislation has been proposed. The challenges brought about by new players have been, obviously, going on for some time. We have been studying various approaches taken by regulators around the world.

We truly need a made-in-Canada solution. We are unique. We are unique in that we have a bilingual broadcasting system; we have to reflect indigenous peoples, and we are next-door neighbour to the world's most powerful content creator. The English-language market in Canada is particularly impacted by the proximity of the United States.

The short answer is that it will be made in Canada, but we certainly study quite carefully the various approaches taken to content regulation around the world.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Can you give us an example of one or two of the countries you have been looking at and taking some lessons from?

[Ian Scott]

There are a number of leading regulators that we have very regular contact with. We certainly look at what Australia does. We look at what France does in the promotion of culture, in particular. They have a very strong regulatory regime. We look at the U.K., and they have done some interesting work. They have a large, strong public broadcaster as well. Those would be three examples.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

I know I am running out of time, but I want to thank you for your time today. I look forward to hearing back about how the consultations go, assuming Bill C-10 goes forward.

Mr. Chair, I will pass it back to you.

[The Chair, Liberal, Scott Simms]

Thank you, Ms. McPherson. You will get a second chance to ask questions, because we are going to do a second round.

I'm going to be strict on time, folks. We have four questioners, for five, five, two and a half and two and half, which gives us 15 minutes.

Now let's go to Mr. Waugh, for five minutes, please.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

I want to thank all four from the CRTC who are with us here today.

I just want to ask you a question, if you don't mind, Mr. Scott, being the chair.

We've heard some say that actually today you have the power to regulate the streamers like Netflix, Disney+ and Amazon.

Do you have that authority here today, in 2021, to regulate it?

[Ian Scott]

It's an interesting question. Thank you.

I'm going to give a heads up to my legal counsel that she may want to add to my answer.

The fact of the matter is that today, as we read the Broadcasting Act, we have regulation over all programming. Programming is very widely defined. The commission has looked, I think three times in total, dating back to 20 years ago, at whether or not it would be desirable or necessary to regulate content delivered over the Internet. In the past, the commission has concluded that regulating it would not meaningfully contribute to the broadcasting system.

Now the world has changed. As I said in my opening remarks, the extent, the volume and the significance of over-the-top programming makes that not the case today. We have exemption orders in place that require them not to be licensed, but they fall under our jurisdiction.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

That's interesting because I know a lot of former broadcasters who are now on Facebook doing an hour show. They're selling commercials. They're not licensed. Here they are actually competing against traditional broadcasters. It's just a free-for-all on Facebook and other social media. I just wonder why we can't control this in this country.

Do you have the capacity, once this bill passes, to control this and to force these people to have licences? They're taking in much revenue, a lot of them are. It's just a boondoggle right now, to be honest with you. It's a free-for-all out there.

[Ian Scott]

As I mentioned in my opening remarks, there are for me three key things about the legislation, and number one in my list of three was that it brings greater clarity or certainty over our regulatory authority over all players involved in broadcasting.

Again, that's the short answer. Yes, with the passage of this legislation, with the addition of the ability to gather data so we know who's doing what, and with the necessary enforcement tools, I believe we will have the tools we require to effectively regulate the broadcasting sector.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

The Department of Canadian Heritage, of course, gave this number of $830 million that they think they can generate by 2023.

Did they ever sit down with you and ask about that? Where did they get the number, and did they talk about the calculation of that with you? I know you're a regulator, but where did the calculation method come from?

[Ian Scott]

I hope I am not misunderstanding. I think that when the department appeared, they provided an explanation of how they developed the number.

No, as you point out, we're an arm's-length regulator. We have an arm's-length relationship with the department. We didn't provide them. They have the same data available to them as we do.

As to what is the number, I don't know. I'm going to revert back to my answer to Ms. McPherson, and I hope it doesn't sound tired for all of you. It is that if I were to predict that today, I would be closing my eyes or closing my mind to whatever we hear based on evidence in the future.

I don't want to predict what it will be. We will gather data. We will develop a regulatory framework. Based on that, we will find equitable contributions from among the various broadcasting players.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Does the CRTC today have the capacity to do this? There are many on the conventional side who say you're overworked and now this is coming forward. What will it take to get up to speed as a regulator and to tackle the whole bill and move on?

[Ian Scott]

Am I going to be able to employ you to assist me when I have to go to Treasury Board?

[Voices]

Oh, oh!

[Ian Scott]

We are busy. My team works incredibly hard in the public interest. We will need some additional resources. The ministry is aware of that and will support a request to Treasury Board for the necessary resources.

[The Chair, Liberal, Scott Simms]

Thank you, Mr. Scott.

Next is Ms. Ien for five minutes, please.

[Marci Ien, Liberal, Toronto Centre, ON]

Thank you so much, Mr. Chair, and thank you to our witnesses who have joined us here today.

Mr. Scott, I'm going to direct this to you, but please feel free to involve others on your team as you see fit.

Thank you to your team for being here as well.

You have talked about the need for equitable solutions. Depending on who you hear from, the CRTC is given too much power or too little power in this bill to regulate the online streamers and to come to some sort of equitable solution. I'm just trying to drill down here. In your opinion, from the commission's perspective, what is your biggest challenge?

[Ian Scott]

That's a wonderful question. I don't think I did a very good job of answering Mr. Champoux at the beginning in response to his very first question.

To be honest, I'll say two things. First, we're a regulator, and what we do, by definition, is that we make those difficult decisions. Our job is to balance competing and sometimes conflicting parties and measures to reach an equitable, fair outcome. That's exactly what we will have to do as we balance the various pros and cons of different regulatory approaches.

In a short answer to your question, the hardest thing we will face is defining what is equitable. When you say to a traditional broadcaster—I'm making something up here—that we want in particular a focus on news or we want in particular a focus on original French-language programming, how will that compare to an OTT provider simply giving money—contributing financially, but not in terms of actually developing or distributing Canadian stories?

It will be the different lines of business, the different things they bring to the market, in how one reaches a determination about what is equitable. I'm being very candid, but that, I think, will be the biggest challenge.