Canadian Con(tent) Artists: "Just Give Us the Money"

After two days of hearings last week, the Canadian Radio-television and Telecommunications Commission (CRTC) resumed its hearings yesterday on whether to apply traditional broadcasting-style regulation to the Internet. As described in my post of Feb. 16, Canadian cultural groups want the CRTC to mandate new taxes on the customers of Internet Service Providers (ISPs) and wireless carriers, with the proceeds being given to these groups to produce Canadian content.

Of the 15 parties that have appeared so far, almost all have been Canadian cultural groups. Later in the proceeding, ISPs and wireless carriers will have the opportunity to present their views on why their customers (most Canadians) should not be taxed to pay for Canadian content.

Two small and fleeting moments of clarity emerged during last week's sessions where the cultural groups pressed their case for new taxes. In response to questions from the CRTC, a spokesperson for the actors' union cut through the thin veneer of the Canadian content mantra and confessed that their position essentially amounts to saying "just give us the money".

The second highlight was a representative of the Canadian Conference of the Arts stating that "consumers are not my concern".

Boil it all down and that is the main issue in this proceeding: Canadian cultural groups want money from consumers, but have no interest in what consumers think. And in Canada, it can happen if the CRTC says so.

A little bit of background will explain why the cultural groups appearing before the CRTC want broadcasting-style regulation applied to the Internet: they are major beneficiaries of the current broadcasting regulations that govern Canadian television and radio.

In the regulated broadcasting system, the two central pillars are the programming entities and the distributors (e.g., cable and satellite TV companies). A comprehensive set of intertwined regulations devised by the CRTC governs these entities and directs money to the cultural groups currently appearing before the CRTC.

Companies providing television and radio programming are required to produce significant amounts of Canadian programming. Canadian programming is produced by individuals who are virtually all members of cultural unions (e.g., actors, writers, directors) or trade associations (e.g., film and TV producers). These groups receive a significant percentage of every dollar spent in the regulated broadcasting system, where the dollars come from advertisers and from consumers who subscribe to programming services such as TSN offered by cable and satellite companies.

Broadcasting regulations also require that cable and satellite TV companies carry a majority of Canadian TV services as well as pay 5% of their revenues to produce Canadian programming. The bulk of the money collected from consumers by cable and satellite TV companies is passed on to Canadian programming entities.

Currently, no broadcasting-style regulation is applied to the Internet. (The CRTC previously considered the idea, but rejected it in 1999.) As a result, the Canadian cultural groups appearing before the CRTC do not receive any government-mandated advantages or privileges in producing content for the Internet. Nevertheless, they have the same freedom as all other Canadians to produce content for the Internet.

Many Canadians are using the Internet as a medium to distribute a wide range of content to Canadian and international audiences. The large majority of this content is not broadcasting. Increasingly, however, Canadians are broadcasting over the Internet.

This should be cause for celebration. When Canadians broadcast over the Internet they do so without having to ask a government agency's permission (when you have to seek permission, government bureaucrats restrict what you can say and how you say it based on the politically correct dictates of the time). Moreover, broadcasting over the Internet is typically being done without taxpayer funding. And it is no less Canadian because it is being done by any Canadian that wants to do it rather than the Canadians anointed by government bureaucrats.

Any form of broadcasting-style regulation of the Internet would be detrimental to virtually all Canadians except the small group of cultural insiders that benefit from the regulations that govern traditional forms of broadcasting. The CRTC is the central player in the traditional broadcasting world and is facing intense pressure from the core cultural groups in this world to apply broadcasting-style regulation to the Internet. The CRTC had the courage to say no to the idea in 1999. They should do so again.

Canadian Con(tent) Artists Are Reaching for Your Wallet

A few short weeks after the federal budget lowered income taxes to spur economic activity, a parade of cultural groups begin appearing tomorrow before the Canadian Radio-television and Telecommunications Commission (CRTC) in an attempt to have new taxes imposed on Canadians' Internet and wireless bills.

In 1995 the CRTC imposed a hidden 5% tax on cable and satellite TV bills to help support the production of Canadian programming, ranging from cable community channels to programs on the Canadian conventional and specialty channels. The CBC is the major beneficiary of this tax (see my Feb. 12 post).

Citing this tax as a precedent, a wide range of Canadian cultural groups (ranging from the actors' union to film and TV producers to the Canadian Conference of the Arts) want the CRTC to impose taxes on the revenues of Internet Service Providers (ISPs) and wireless carriers. The tax rates proposed range up to 6% on ISP revenues and up to 0.6% of the revenues of wireless companies.

Like the 5% tax on cable and satellite revenues, the cultural groups want these new taxes to be hidden in the charges of the ISPs and wireless companies (Why let the public know. They'll only get upset and complain). Guess who would be the exclusive recipients of the proceeds of the new taxes? That's right, the cultural groups that are proposing the new taxes.

Internet access revenues in Canada were $4.6 billion in 2007. A 6% tax on this base would amount to $276 million. Wireless revenues in 2007 were $14 billion. A 0.6% tax on this base would amount to $84 million. The total in new taxes proposed: $360 million.

New taxes in the midst of a recession. Only in Canada you say. Pity (Canadians).

If you haven't already done so, don't bother contacting the CRTC with your views on the proposed taxes. The CRTC's window for comments from the public has closed. Your options are to contact your MP, or the federal Ministers responsible for the CRTC ( Tony Clement at Industry Canada and James Moore at Canadian Heritage), or all three. The Ministers can't stop the CRTC from reaching its own decision, but they can overturn a CRTC decision to impose the new taxes.

Getting Your Money to the CBC Without You Knowing It

The CBC receives close to $ 1 billion annually in taxpayer money directly from Parliament. This subsidy is visible and relatively well know. Very few Canadians know that the CBC receives over an additional $215 million annually of their money via the actions of federal government bureaucrats.


My post of January 19, 2009 outlined how all cable and satellite TV subscribers (90 % of all Canadian households) are forced to pay for the CBC's Newsworld and RDI services. This generates approximately $120 million annually for the CBC.


In addition, the CBC is the major beneficiary of a 5% tax that is built into the bills of cable and satellite TV customers. Unlike the provincial and federal sales taxes, which are explicit line items on bills, the 5% tax is hidden in the various charges of the cable and satellite TV providers.


This tax was mandated by the Canadian Radio-television and Telecommunications Commission (CRTC) - the federal regulator of broadcasting and telecommunications - in 1995. The proceeds are used to fund Canadian programming, from cable community channels to programs on the major Canadian television networks.


The bulk of the proceeds from the 5% tax are handed over to the Canadian Television Fund (CTF). In recent years the CTF has also received $120 million annually in taxpayer money from the federal government.


In the fiscal year 2007-08 (ending March 31), the CTF dispensed $242 million for the production of Canadian programming. The CBC was the largest beneficiary by far of this $242 million, receiving $97 million or 40% of the total.

Adding the $97 million from the CTF to the $120 million in compulsory fees for Newsworld and RDI provides the CBC with $217 million in taxpayer money above and beyond the explicit $1 billion annual parliamentary appropriation. That is over 20% in additional taxpayer subsidies for the CBC that few Canadians know about.