Canada’s telecom regulator will announce this week whether or not it will impose a “Netflix tax” — a levy on streaming video services meant to support the creation of Canadian content.
Although even its supporters often concede it would be unpopular, a “Netflix tax” (a term coined by its opponents) has gotten the backing of many entertainment and media industry groups. The CBC and even the Ontario government have backed the idea, although Ontario has since indicated it is backing off from that position. (The entertainment and broadcast industries are big employers in Toronto.)
Many industry groups say Canadian media content is at risk in the new digital world, and some have suggested instituting CanCon requirements on streaming services, which could include paying into a TV development fund and some sort of quota system for Canadian TV shows and movies.
University of Ottawa e-commerce law professor Michael Geist, a leading voice on digital issues in Canada, says it’s unlikely the CRTC will decide to impose a tax on so-called “over-the-top” streaming services.
But “it will not be for lack of lobbying on the issue,” Geist wrote.
Just this week, the Canadian Association of Film Distributors and Exporters (CAFDE) told the House of Commons heritage committee it would like to see the CRTC regulate Netflix and other streaming services.
“One of the most difficult challenges we face is that these [streaming] services are not subject to regulation in Canada and the Canadian broadcasters, who are their competition, are,” said Richard Rapkowski, senior vice-president for Entertainment One, as quoted at Cartt.ca.
The presence of streaming services “creates a very un-level playing field and it’s very difficult because your only option is either to require less Canadian content from the Canadian broadcasters, regulate the [streaming] services, or leave an un-level playing field,” he said.
“Neither of those options are great. It’s a very complex issue and I don’t have a solution to it but it is something we need to look at it because it does have the potential to erode the fabric of what we’ve established.”
For its part, Netflix has argued it does support Canadian content, pointing to a roster of Canadian shows and movies on its service and even some Canadian-produced original content. But the company is adamant it should remain exempt from paying for the creation of Canadian content.
In its own submission to the CRTC, the U.S.-based streaming service said a “Netflix tax” would force the company to raise prices for Canadian consumers. The company argued it’s unfair for it to pay into CanCon funds such as the TV fund when it cannot draw on it to finance its own original programming.
The tax "might translate into an increase in price without … a commensurate benefit for Canadian content, its producers, or Canadian consumers," Netflix said.
Relations between the CRTC and Netflix have been strained of late. The telecom regulator told Netflix (as well as Google) that its submissions to the CRTC would be ignored because the streaming service would not provide viewership data that would back up its claim Canadian content is doing well on streaming media.
The CRTC is expected to announce a new framework for TV regulation in Canada in the coming weeks, with decisions on content expected this Thursday. Decisions on issues such as pick-and-pay TV and channel bundles are expected a week later, Cartt.ca reports.
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