Content quotas and foreign ownership restrictions on telecommunications companies have no place in today’s world, according to one of Canada’s most prominent think tanks.
“The regulatory model for communications providers is ill-suited to current technology that allows users to access whatever they want, however they want, and wherever they want,” authors Benjamin Dachis and Daniel Schwanen said in a new report for the C.D. Howe Institute.
Citing disruptive changes brought about by digital platforms such as Netflix, the authors said Canada regulates its broadcast and communications industries as if it were still in the era of spectrum scarcity.
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Last year, the Canadian Radio-television and Telecommunications Commission began to relax Canadian content regulations, getting rid of daytime quotas for local channels — but the report says the CRTC should go one step further and get rid of them altogether.
Dachis and Schwanen also urge the federal government to end the CRTC’s responsibility for cultural promotion and allow the Department of Canadian Heritage to take the lead on supporting Canadian content.
They argue that the government is better positioned to support domestic production through funding from its own general revenues than are broadcasters. “The only mechanisms that will remain effective in promoting Canadian content in a world of Internet-centric television are either direct subsidies to content producers or through a public broadcaster,” the report said.
“They’re right in that we have everything locked into cable and satellite companies,” Gregory Taylor, a professor of communications at the University of Calgary, said. “That has to change. The funding that our system gets is largely coming from them.”
However, Taylor believes that giving such broad oversight to the Department of Heritage could have negative consequences: “I don’t see how you could do what they’re proposing without politicizing the process. You’d have incredible pressure from lobbyists on the Department to get funding for their projects.”
The authors also urge the government to get rid of restrictions on foreign ownership of communications and broadcast companies.
The Telecommunications Act prevents non-residents from owning more than 20 per cent of a communications operating company, 33.3 per cent of a holding company and 46.7 per cent of voting shares. The Broadcasting Act requires that broadcasting firms with more than 10 per cent of the market share be Canadian-owned and controlled.
“Removing foreign ownership rules for both spectrum and companies themselves would bring Canadian firms into a more integrated global or North American market, whether through new entry or acquisition by U.S. or other firms,” the report said.
Taylor said foreign ownership has increased over time and that it’s an issue that should be allowed to progress gradually: “Once you release ownership controls entirely you don’t get them back.
“There’s a sense in this report of waving the white flag over things like Netflix,” Taylor added. “But Canada isn’t alone in facing the emergence of new technologies. In Europe and Australia, governments are examining whether they should tax Netflix. The idea that governments are helpless in the face of this change is simply wrong.”