Last month, we appeared in front of Parliament’s Standing Committee on Canadian Heritage to present Rogers’ position on Bill C-10. The Bill seeks to amend the Broadcasting Act, which governs broadcasting policy in Canada. A key objective of the Act is to support Canadian content and culture, but its last meaningful update took place in 1991. It was a time when we watched TV programs on specific channels, at a specific time, heard new music on the radio or bought CDs, and read paper-based copies of the newspaper. Much has changed since then, as Netflix, Spotify and YouTube have now become household names, but they have effectively escaped regulation.
Bill C-10, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts, a mouthful, was tabled by Heritage Minister Steven Guilbeault in November 2020 in an attempt to bring these US tech giants into the Canadian broadcasting system.
Concerns around contributions to cultural content by foreign streaming giants is not limited to Canada. Europe and countries such as Australia continue to wrestle with similar issues. While undeniably popular, foreign streaming giants have operated in Canada for about 10 years without oversight or regulation. This stands in stark contrast to Canadian broadcasters and distributors who compete with them while shouldering a myriad of regulatory obligations. Changes to the regulatory framework to reduce or eliminate this asymmetrical regulatory treatment is long overdue. It is also clear that without significant regulatory change, Canadian broadcasting companies will continue to operate at a significant disadvantage to their much larger and well capitalized global competitors. In this light, Rogers has asked the committee to adopt the following recommendations:
First, there should be regulatory fairness (equity) between Canadian broadcasting companies like Rogers and foreign streaming companies like Amazon Prime, Netflix and Disney+. That means foreign streaming companies should fall under the purview of the industry regulator, the CRTC, and like Canadian companies, should be required to support and promote access to Canadian content. However, it will be next to impossible to saddle the foreign streamers with the same regulatory obligations as Canadian companies so regulations must “level the playing field” by rethinking the current regulatory regime and ensuring it applies equally to all players operating in the system.
Second, eliminate regulatory silos. Under our current regulatory regime, Canadian companies like Rogers that have both content creation and distribution arms are treated as separate businesses resulting in each being subject to a different set of regulatory obligations. This regulatory treatment prohibits us from evolving our business models and provides no incentive to build on our investment of $683 million in Canadian content creation. Foreign streaming companies, despite the fact they are a direct competitor and have similar businesses models (advertising and subscription), will not suffer the same treatment. For example, Netflix will likely be given the flexibility to invest its Canadian programming contributions on programs that are carried on its service, which will, in turn, allow it to enhance its content offer and grow subscriptions. Under the current rules, a vertically integrated company like Rogers must pay into third-party funds that largely benefit our competitors and detract from our ability to invest in our own content. While many of these decisions will be up to the CRTC, we must ensure that the Act allows the regulator to consider our regulatory contributions on company-wide basis, similar to how they will consider the contributions of the foreign streamers.
Third, all Canadian broadcasters should be allowed to prioritize the production of news programming over all other forms of programming. Rogers produces 46,000 hours of local news annually, reaching 28 markets, and supporting 400 full-time jobs. OMNI and Citytv operate 12 conventional TV stations yet must spend a portion of their required Canadian programming investment on non-core programming such as dramas and documentaries. At minimum, we need the flexibility to invest in content that aligns with our programming strategy and focus which is local news, sports and third-language programming.
Fourth, all participants in the Canadian broadcasting system are required to pay Part 1 licence fees. These fees pay for the CRTC’s activities as a regulator and the Act properly proposes that these fees be levied on the foreign streamers. However, Canadian broadcasting licensees also pay an additional fee (“Part 2 fees”) that go directly to the Treasury. Since the Act does not propose to levy this same fee on the foreign streamers, we believe it would be unfair to continue to levy this fee on Canadian companies.
Fifth, online piracy and theft continue to pose one of single largest threats to the Canadian broadcasting system. Strong protections must be incorporated into the Act to limit illegal online streaming. If everything worth watching keeps being made available for free by online pirates, it will undermine the creative marketplace, rob creators of the opportunity to be paid for their for their work, and remove all incentives for broadcasters or streaming services to produce content. In other words, it will render the Act moot as we will have no Canadian broadcasting system left, or if we do, it will be severely weakened.
Canadian content is at the heart of the Canadian broadcasting system and essential to our social and cultural identity as Canadians. Rogers has been a proud contributor to the Canadian broadcasting system for over 50 years. We hope to build on this legacy but to do so, we require a regulatory framework that applies equitably to our competitors and that provides us with the flexibility to invest in content we believe will resonate with Canadians. Consequently, we fully support the government in its aim to modernize the Broadcasting Act and urge it to do so with both speed and an eye to how Canadian companies can continue to play an important role in the Canadian broadcasting system of the future.
Pam Dinsmore is Rogers VP Regulatory, Cable; and Susan Wheeler is Rogers VP Regulatory and B2B distribution