ISPs are broadcast distributors, cultural groups argue at Federal Court of Appeal

OTTAWA—The question of whether Internet service providers (ISPs) should be regulated as distributors under the Broadcasting Act has reached a boiling point as cultural groups and ISPs have put their arguments on the table at the Federal Court of Appeal. The CRTC referred the legal question to the Federal Court of Appeal last summer. The Wire Report obtained the parties’ memorandums of fact from the court, which were filed April 1. On one side of the debate are Canada’s largest cultural groups: the Canadian Film and Television Production Association (CFTPA), the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), the Directors Guild of Canada (DGC), and the Writers Guild of Canada (WGC), which argue that ISPs, as distributors, should fall under the Broadcasting Act. “ is clear that when audio and audiovisual content is transmitted through the Internet, from a host server to an ISP to an end-user, all of the elements of ‘broadcasting’ have occurred,” said the group’s memorandum of fact, prepared by Thomas Heintzman and Bram Abramson of the McCarthy Tétrault law firm. “It does not matter what technology is used, nor whether it involves atoms, molecules, electrons, packets, or whatever.” The cultural groups argue that ISPs have a responsibility to support Canadian content just as the broadcasting distribution undertakings (BDUs) do through a contribution regime, in which they must give a certain percentage of their revenues to cultural funds. “The principle is that ISPs generate revenue from the distribution of content and they are akin to broadcasting,” Norm Bolen, president and CEO of the CFTPA, told The Wire Report. “Some portion of the revenue that they generate from their activities should go to supporting content.” On the other side of the debate are Canada’s largest ISPs: Bell Aliant, Bell Canada, Cogeco Cable Inc., MTS Allstream Inc., Rogers Communications Inc., Telus Corp., and Videotron Ltd., which argue that they only provide access to a network—the Internet—and that they should not fall under the the Broadcasting Act. “Unlike programming undertakings, ISPs in their role as Internet access service providers neither create their own programming nor license others’ programming,” said the ISPs’ memorandum of fact, prepared by Joel Laskin and Sarah Huggins of the Torys law firm. “They do not produce or generate programs or exercise control over the content of what is transmitted to their customers through the Internet.” Ann Mainville-Neeson, Telus’ director of broadcast regulation, said consumers would have to pay increased fees if ISPs fell under the Broadcasting Act and were forced to pay into cultural programming funds. “It would be another devastating blow to consumers,” she told The Wire Report. “If, as we expect, the Federal Court determines that ISPs are considered broadcasting undertakings, the first thing the CRTC is likely to do, is do tax through the contribution regime, as broadcasting distributors already pay.” Bolen said the word “tax” is a matter of semantics, and that the current contribution regime for television can be looked at as a “tax”—or as a social responsibility. “In order to be able to produce more original, high-quality, professional Canadian online content, we need new sources of funding,” Stephen Waddell, ACTRA’s national executive director, said in an email statement. “ISPs are reaping huge financial rewards from the fact that Canadians are paying for more and more bandwidth to access the audiovisual content that the ISPs are broadcasting.” Mainville-Neeson equated the Internet to a storefront for content, noting that brick and mortar stores are not required to contribute to Canadian content. “Even accessing videos over the Web, we contend, is not broadcasting, because it’s no different than going to your video store,” she said. ISPs could face more than direct contributions to cultural funds if the court rules in favour of the cultural groups. Exhibition and spending requirements for Canadian content—which support Canadian television under the Broadcasting Act—could be applied to ISPs. Right now, broadcasters must spend 30 per cent of their production funds on Canadian content. Of that, five per cent must be dedicated to dramatic and documentary programs. Under the scheduling quotas, licensed broadcasters must also ensure that at least 60 per cent of their content per year is Canadian programming, and that 50 per cent of it is aired in the evening. Bolen said a similar regime could be applied to producers of professional content online. But he said the cultural groups do not yet have a specific model in mind. “At this point we don’t have a specific model that we’re putting forward because the model will come after we have an agreement on the principle,” Bolen said. The Federal Court of Appeal will hold a hearing on the matter June 1, 2010. Some say a decision could be issued as early as the fall. jmigneault@thewirereport.ca

ISPs are broadcast distributors, cultural groups argue at Federal Court of Appeal

Broadcast | April 9, 2010

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