CMPA, broadcasting industry, large ISPs meet to discuss regulation of Netflix

OTTAWA—Concern about the role of over-the-top broadcasting service Netflix in the Canadian broadcasting system is mounting as broadcasting and telco industry leaders met behind closed doors Friday to discuss regulating online broadcasters. Industry sources told The Wire Report that the Canadian Media Production Association (CMPA), film and television industry leaders, and representatives from major Canadian Internet service providers (ISPs) were meeting Friday afternoon to look at ways that online broadcasters like Netflix could make monetary contributions to the Canadian broadcasting system. In December Shaw Communications Inc. told the House of Commons heritage committee that the CRTC should step in to regulate online distributors like Netflix, which launched its Canadian online streaming service in September. Shaw told the heritage committee that Netflix traffic comprised about five per cent of downloading on its network. “If they are using our network to get Canadians out of the system, that creates a concern for us. That should create concerns for the government because people are abandoning the system,” Shaw president Peter Bissonnette told the committee. Bissonnette added that ISPs should “get a return” for carrying services like Netflix and that those services should make contributions in support of Canadian broadcasting. Rogers Communications Inc., which also appeared at the committee meeting in December, said the commission should consider the regulation of online broadcasters at its vertical integration hearing in June. The CMPA and groups such as the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) have also said online content services should be required to contribute to the Canadian broadcasting system. Under Canada's current regulatory regime, online broadcasters benefit from a regulatory exemption so that, unlike regulated television channels and broadcasting distributors, they do not have to contribute a portion of their revenues to support the production of Canadian content. In 2009, the CRTC said it would review its regulatory exemption for new media in 2014. The meeting between industry executives Friday comes as the CRTC is planning a set of invitation-only meetings with key stakeholders on March 23-24 in Ottawa, where online broadcasting will be a senior issue. “The objective of this event is to understand the changing landscape of the communications industry, and to evaluate regulatory approaches in a digital economy that is increasingly converged, innovative, globally competitive, and provides greater choice for consumers,” CRTC spokeswoman Patricia Valladao said via email. “Key representatives of industry, academia and government are invited to share their experiences and perspectives during a full day of panels and discussions. Senior officials from international regulators will also be participating. Outcomes of the discussions will be considered for the CRTC’s second ‘Navigating Convergence’ report to be published in the spring.” A list of invitees for the meetings was not available but The Wire Report has confirmed that a Netflix representative will attend. Speaking at the CMPA's annual Prime Time in Ottawa conference Friday morning, CRTC chair Konrad von Finckenstein reiterated that the commission has no regulatory control over online broadcasters, even as they increase in popularity. “We don't control . We can't influence it. Our primary means of controlling, determining and regulating is slowly going,” he said. Steve Swasey, a spokesman for Netflix Canada, noted in an interview Friday afternoon that Netflix is not a broadcaster and does not have to make contributions. He said the service already offers, voluntarily, significant amounts of independent, Canadian content and continues to add it to its repertoire. “Even though we’re a great friend of the independent filmmaker and a champion of independent film, we’re a distributor, not a broadcaster,” he said. He said Netflix personalizes its library to the tastes of users and tries not to present it in a way that caters to a particular culture. “We showcase movies and TV shows to people by what they’re interested in, not by the director or the stars,” Swasey said. Speaking at a panel discussion about over-the-top services at the Prime Time conference Friday morning, David Purdy, vice-president of video product management at Rogers Cable, described online distribution services as having a “tremendous impact” on the broadcasting system, adding that the incumbents should be quicker to respond. “They're sharks in the tank and they're trying to change the business,” he said. “This new world is going to mean the system cannot kick off the same kind of support it historically has.” Purdy called for lighter regulations for on-demand television services so that incumbents can better compete with over-the-top platforms. “The challenge we have right now on the on-demand platform is dealing with regulations and restrictions that the online space doesn't have. The sooner we could actually get some liberation, if you will, for the on-demand platform, the more efficient we can make our networks,” he said. Purdy also raised the issue of availability of Canadian content, arguing that consumers searching for content online are often directed to illegal torrents rather than legitimate services. Panellist and Canada Media Fund (CMF) president and CEO Valerie Creighton agreed that the availability of Canadian content is key. “I think the worst thing we could do right now is respond to fear. Netflix, all of these other applications, are definitely a signal from the market. Let's just assume people want good, compelling content, and they want good compelling Canadian content in that mix,” she said. “Can we figure out a way to make sure that, when a consumer is looking for stuff, they can access Canadian content readily, quickly and that it's in the mix so you don't have to search forever to find it.” Alan Sawyer, a consultant and founder of Changing Channels Entertainment, said during the panel discussion that, failing to impose contribution requirements on online broadcasters, they should have to promote Canadian content on their services. “At the very least, shouldn't we be forcing them to somehow promote Canadian content? And we're not doing that even,” he said. But Jacob Glick, Google Inc.'s senior policy counsel in Ottawa and a speaker on the panel, noted that Canadian content is already available on Netflix, adding that there is no need to regulate the sector. “The question here is: is Netflix even going to carry ... and do we need mechanisms to force carriage? I think the answer clearly in that context is no,” he said. Glick said content creators will benefit from a more open broadcasting model facilitated by the Internet. Such a system will create broader opportunities to distribute content, he said. —With files from Simon Doyle kfournier@thewirereport.ca

CMPA, broadcasting industry, large ISPs meet to discuss regulation of Netflix

Broadcast | February 18, 2011

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