More regulation not the solution to the dispute between CRTC and Netflix

VANCOUVER—The current dispute between Netflix and the CRTC, which may ultimately be decided in court, highlights the need for the deregulation of Canada’s broadcasting industry, finds a new essay released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

“With the rising popularity of Netflix and other online broadcasters, Canada needs to readjust what was already a fundamentally flawed attitude towards broadcasting,” said Steven Globerman, Fraser Institute senior fellow, Kaiser Professor of International Business at Western Washington University, and author of Canadian Content Is Dead; Long Live Canadian Content!. The taxpayer-funded Canadian Radio-television and Telecommunications Commission (CRTC) regulates all Canadian broadcasting and telecommunications activities. Conventional broadcasters (TV stations, for example) must adhere to CRTC rules, which include Canadian content quotas and mandatory funding of homegrown entertainment. Meanwhile, broadcasters such as Netflix operate outside CRTC rules, aren’t subject to the costs associated with CRTC compliance, and therefore enjoy a competitive advantage over conventional broadcasters. So shouldn’t the CRTC be allowed to regulate Internet broadcasters, to level the playing field? No, says Globerman, for a couple of major reasons.

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Firstly, tasking the CRTC to essentially regulate the Internet would require a massive expansion of CRTC size and scope, not to mention the increased cost to taxpayers. (And even then, the CRTC’s practical ability to regulate the web remains an open question, to say the least.) “If the CRTC were to impose content restrictions online, it would be censoring the Internet—a concept many Canadians would likely oppose,” Globerman said. Secondly, the CRTC has failed to achieve its stated mandate (even when dealing with a relatively small group of conventional broadcasters). For example, according to the CRTC, it promotes Canadian content and strengthens Canada’s “national identity,” a concept not clearly defined by the CRTC. Yet evidence finds that Canadians do not consider Canadian entertainment programming (or entertainers, for that matter) prominent symbols of national pride. And the often-repeated claim, that Canadian producers can’t compete with their U.S. counterparts, ignores advances in digital technology, which have significantly decreased the costs of producing and distributing entertainment content. However, notes Globerman, Canada’s conventional broadcasters have a legitimate complaint. The CRTC imposes regulation on them—but not on Internet broadcasters. So what’s the solution? “If policy-makers want to level the playing field and allow fair competition among broadcasters in Canada, they should deregulate the conventional broadcasting sector, so it can compete, unfettered, with Internet broadcasters,” Globerman said. “The Netflixs of the world are here to stay, and it’s unrealistic to enforce narrow rules such as mandatory Canadian content and foreign ownership restrictions on an increasingly globalized industry.” MEDIA CONTACT: Steven Globerman, Senior Fellow, Fraser Institute, Kaiser Professor of International Business, Western Washington University, Steve.Globerman@wwu.edu