Netflix must contribute to Canadian content, CBC should be free of advertising, panel says in sweeping review

Online streaming giants such as Netflix should contribute to funding Canadian content and pay sales tax. Legislation should be introduced to address harmful online material. The CBC should be free of advertising. And a government tax credit to support local journalism should not just be extended, but also applied to broadcast media.

These are just some of the sweeping recommendations in the highly anticipated 235-page report “Canada’s Communications Future: Time To Act” released by a legislative review panel Wednesday.

“The single most important message to convey on behalf of Canadians is one of urgency,” said panel chair Janet Yale in a letter to Innovation Minister Navdeep Bains and Heritage Minister Steven Guilbeault. “Our panel knew we had to think big and consider what would serve Canadians today and years into the future.”

The panel, created in 2018 by Justin Trudeau’s Liberals, was created by the Canadian heritage and innovation ministries with a mandate to modernize antiquated broadcasting and media laws in the digital age.

It deliberated over more than 2,000 written letters and submissions before filing their final report.

“Advanced technology is transforming the ways we communicate,” Yale said in a statement. “These unprecedented opportunities also expose us to significant risks including the growing — and global — threat of privacy breaches, the spread of harmful content and the impact of Big Data on all dimensions of our lives.”

The comprehensive report looks at The Broadcasting Act, the Telecommunications Act and the Radiocommunications Act, the first time that the three have been reviewed together.

Significant recommendations include a remake of the Canadian Radio-television and Telecommunications Commission (CRTC) to give the regulator more teeth and a bigger mandate in dealing with the digital giants.

That includes making online streaming companies such as Netflix, Apple TV and Disney+ mandatorily contribute to Canadian content, a requirement that had long been sought by many Canadian producers and the media industry.

“Culturally, the framework must ensure that Canada’s creators continue to have the means for Canadians to be told and discovered in a world of so many choices,” said the report. “Netflix and other online streaming services would be required to devote a portion of their program budgets to Canadian programs.”

In a related issue, the panel said that taxes, including the GST and HST, should be required to be collected by foreign service providers. Currently only Quebec and Saskatchewan require at least provincial sales taxes to be collected on streaming sales.

“This would eliminate the disadvantage to competing Canadian providers,” says the report.

Reflecting the importance of national broadcaster CBC/Radio Canada, the panel recommended that the Broadcasting Act be amended to ensure long term funding commitments of at least five years. It also recommended that the CBC “gradually eliminate advertising on all platforms over the next five years, starting with news content.”

Recognizing the importance of local news in a democracy, the panel also recommended that the $ 595 million journalism labour tax credit be extended beyond its five-year mandate which started in January of 2019, “in order to strengthen the capacity of news organizations over the long term.”

It also says that the credit, which has mainly benefitted print media, should be applied to news on all platforms including broadcasting.

Crucially, the panel says that an uneven playing field exists between social media platforms such as Facebook and news media organizations, a tilt that should be corrected.

“As a result of the imbalance in their bargaining power, news content creators are unable to individually negotiate terms over the use of their content by social media platforms,” says the panel.

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Newspaper publishers have long called for more information behind the closely guarded algorithms that the digital giants use to determine what articles are most read. This information, says the panel, could be made public to the publishers.

“They could also include requirements to make audience data available to current producers. This information is key to helping Canadian producers create compelling and competitive content for home and abroad,” said the report.

In terms of privacy and data breaches, the panel called on the federal government to harness the power of their collective agencies to examine the scope of the problem.

That includes Statistics Canada, The CRTC, The Competition Bureau, Office of the Privacy Commissioners and other relevant regulatory authorities.

The regulators should be charged with examing “The use of Big Data by dominant online platform providers and potential threats to privacy, competition, consumer protection, cultural sovereignty, democratic institutions, and taxation, and make recommendations on legislation.”

The panel also examined the role of advanced networks such as 5G. It did not go into whether Huawei equipment should be used in Canadian networks, the source of much controversy. Canada and China are at odds on what the United States says is a security risk.

However, it says Canada needs a “much stronger research and analytical capability.” And a new streamlined approach is needed including access to all forms of public property and passive infrastructure to install crucial equipment from all levels of government.

Despite the detailed recommendations, the government will ultimately pick and choose which ones they wish to push forward and who they will partner with given their minority status.

And while it will take months if not years to overhaul legislation, the panel says that urgency is needed now.

In the case of the rapidly changing digital information and media universe, the situation is so serious on its impact on Canadian culture that the panel says government should not wait for legislation to be tabled before acting. They recommend that the government “issue a new exemption order to impose legislation on internet programming undertakings” under the direction of the CRTC.

Tony Wong
Tony Wong is the Star’s Television Critic and is based in Toronto. Follow him on Twitter: @tonydwong

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