Find middle ground on ISP broadcast levy or prepare for legal battle, Telus exec warns

A top executive from Telus is urging broadcast content producers and ISPs to find a middle ground on the contentious proposal for a CRTC-imposed ISP levy or risk a standoff in court over the issue. Speaking at the Third Annual Entertainment Summit in Toronto this week, Michael Hennessy, Telus VP, wireless, broadband, and content policy, reiterated a long-standing opinion among ISPs that the CRTC does not have the authority to impose such a levy under the Broadcasting Act and called for a way out of a potential legal tussle. “We either collaborate or we will fight,” he said, adding that ISPs will take the fight to the courts and to the Prime Minister’s Office. The idea of a CRTC-imposed levy on ISPs – akin to what BDUs are required to pay – is a proposal long championed by broadcast content producers who argue that ISPs are increasingly functioning as BDUs and need to pay for content. However, ISPs contend that what they do is not broadcasting and that they do not function as BDUs as defined in the Broadcasting Act. Ian Kelso, president and CEO, Interactive Ontario, also called for a middle ground, saying an ISP levy will have an adverse effect on the creative industries. Calling the levy proposal a “non starter”, Kelso says it’s highly unlikely the idea will materialize with a minority federal government. Industry stakeholders also didn’t see eye to eye on the future policy environment for new media. Some of the potentially contentious issues discussed—such as the levy on ISPs—provide a snapshot of what could be expected at the CRTC hearing on new media on February 17 next year. Another hot button issue was the question of bolstering and creating Canadian content, which drew several responses from participants. In the wake of several cuts in funding for arts programs, Maureen Parker, executive director of the Writers’ Guild of Canada, said the CRTC hearing should also focus on high quality Canadian content on new media, a move she says requires government funding incentives, promotional requirements, and an ISP levy. “ISPs made $5.7 billion last year and we are not alone, the rest of the world is making it . This is not about forcing but choice,” she said, adding that the move requires innovative funding which combines both public and private initiatives. Guy Mason, president and CEO of the Canadian Film and Television Production Association, reiterated his industry’s call for strengthening of Canadian content creation through more public and private contributions, more BDU funding to the Canadian Television Fund, and a competitive tax regime. Since 1999, there’s been a significant drop in support for original Canadian programming—especially drama—and it’s time to focus on a remedy that should include a fee-for-carriage regime to raise revenue, said Monique Lafontaine, general counsel and director of regulatory affairs, Directors’ Guild of Canada. In June, the CRTC said direct-to-home satellite TV (DTH) and multipoint distribution systems (MDS) increased their revenues from $1.7 billion to $1.85 billion between 2006 and 2007, representing an 11.4% growth. Last year, cablecos generated a total of $7.1 billion, which represents a $ 1-billion increase over 2006. In terms of Canadian content for new media, Kelso said funding prospects remain bleak because of the small amount of money available through the Canada New Media Fund, which he said is becoming “less meaningful.”

Find middle ground on ISP broadcast levy or prepare for legal battle, Telus exec warns

Broadcast | October 24, 2008

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