A person browses a television menu that includes the streaming services Netflix and Amazon Prime. Last month, the CRTC implemented new rules forcing streamers to pay more to support Canadian content.Giordano Ciampini/The Canadian Press
Ottawa has ordered Canada’s telecom regulator to review a controversial policy forcing foreign streamers to devote more of their revenues to Canadian content, after criticism that the decision constituted a potential trade irritant with the United States.
In late May, the CRTC implemented a new framework which tripled the contribution that streamers would be required to dedicate from their Canadian revenues to funding Canadian and Indigenous programming, from 5 per cent to 15 per cent. That evening, foreign streamers – which were already fighting the lower investment requirement in Canadian court – said the new framework directly violated Canada’s obligations under the U.S.-Mexico-Canada Agreement. The trilateral trade pact is up for a review on July 1.
After the CRTC published its new policy last month, experts said the decision was likely to further provoke U.S. lawmakers as the Trump administration continues on its protectionist course.
The decision was also criticized by Canadian broadcasting organizations, which said the policy reinforced an unfair advantage for streamers, given that traditional broadcasters are required to devote 25 per cent of revenues to Canadian content and funds.
On Monday, the Department of Canadian Heritage said it is requiring the Canadian Radio-television and Telecommunications Commission to review the framework, without directly mentioning trade issues.
“The CRTC’s new requirements would impose new costs on the companies providing these services, which could ultimately fall on Canadian consumers through higher prices. At a time when Canadians face cost-of-living pressure, now is not the time to make culture and entertainment more expensive,” the department said in a release.
Opinion: The CRTC is right to make streaming giants pay more. What comes next, though?
Canadian Heritage said Monday that the government would develop new policy directions to adjust the implementation of the Online Streaming Act. The new policy directions, it said, would aim to keep access to content affordable for consumers, protect choice, ensure flexibility for streamers and broadcasters, and leverage new investment to support Canadian content.
The CRTC’s policy, which also introduced new standardized requirements for spending on news and certain dedicated content funds, followed Ottawa’s introduction of the Online Streaming Act three years ago. This act, passed in response to repeated calls from Canadian entertainment companies to modernizing decades-old content regulations, required the CRTC to impose spending requirements on streamers.
The Online Streaming Act has already been singled out by U.S. Congress as an issue. In March, Republican Representative Lloyd Smucker introduced a bill that promised to investigate the act for discrimination against American companies, with retaliatory tariffs as a potential response.