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Netflix, other streaming services should be forced to create CanCon, pay digital tax: panel

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WATCH: After 18 months of consultations, the Broadcasting and Telecommunications Legislative Review panel has made 97 recommendations to drastically reform Canada's broadcasting and telecommunications sector. David Akin explains what the independent group is calling for.

Netflix, Spotify, Apple and Amazon could soon be forced to create and showcase Canadian content — and for the first three, pay sales tax — under an extensive new report one expert calls “stunning in scope.”

After a year and a half of study, the Broadcasting and Telecommunications Legislative Review Panel issued nearly 100 recommendations it argues will modernize Canada’s broadcasting and communications landscape amid the expansion of digital streaming giants and global news access.

Among the proposals are for CBC to wean itself off of advertising over the next five years and rely solely on the more than $1 billion it gets yearly from taxpayers, with the panel urging the broadcaster transform itself into “a public media institution with a singular focus on serving a public rather than a commercial purpose.”

“Moreover, its focus on advertising puts it directly on a collision course with private broadcasters and even print media, as all pursue a dwindling pot of traditional advertising revenues and compete with giant foreign operators for the online business,” the panel warned.

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“Reducing CBC/Radio-Canada’s reliance on this dwindling pot can provide some useful breathing space for the private broadcasters.”

Click to play video 'Broadcasting review panel recommends Netflix, other media services must invest in Canadian content' Broadcasting review panel recommends Netflix, other media services must invest in Canadian content
Broadcasting review panel recommends Netflix, other media services must invest in Canadian content

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The panel also wants to see streaming giants prioritize Canadian content on their platforms and for the Canadian Radio-television and Telecommunications Commission (CRTC) to get sweeping new powers to both oversee those giants and force news aggregators like Yahoo to prioritize what it deems “trusted” Canadian news sources.

Those recommendations will guide changes the government plans to make to the regulations governing telecommunications and broadcasting in this country, but some are already raising questions.

“That’s one thing we’re concerned about, is there may be a shifting of roles and what you see and where you see it and how much it costs, but we can’t predict it at this point because there’s too many moving parts,” said John Lawford, executive director of the Public Interest Advocacy Centre.

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He said while there could be some benefits in terms of content production jobs in the country, a lot still depends on how the platforms targeted in the review will react.

“It probably will help the Canadian production industry and keep those jobs in Canada, but we just don’t know. The reaction of foreign providers will be key and I don’t know what they will say on this.”

Doug Murphy, the president and CEO of Corus Entertainment, said that media company is encouraged by the report and plans to look closely at the details.

“We are encouraged by many of the recommendations contained in the panel’s report and applaud their call for urgent action,” said Murphy.

“We have long been concerned by the undue regulatory burden faced by Canadian broadcasters versus foreign internet broadcasters and we are hopeful that the government will move forward with creating a more equitable competitive environment.

“We look forward to commenting further on the panel’s report in the upcoming weeks as we take a closer look at the details.”

Corus Entertainment is the parent company of Global News.

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It also remains to be seen whether some of the recommendations made by the panel could create conflict with the NAFTA trade deal.

Lawford raised that possibility, saying there could be some complications when it comes to forcing the foreign companies to produce and pay into a fund to support the creation of Canadian content.

Michael Geist, one of Canada’s leading experts on internet regulation, also raised concerns about how the recommendations might infringe on the obligations under the new NAFTA trade deal.

Legislation to ratify the renegotiated deal was introduced in the House of Commons just hours after the report was released to the public.

In a series of tweets posted about the report, Geist called its work “even worse than imagined with an astonishing series of recommendations to create the most regulated Internet in the OECD.”

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Lawford said it’s difficult to tell right now what the impact of additional regulations could be on consumers in terms of higher costs for services or less access to foreign services.

But he said a lot of the questions will likely depend on the specifics of whichever proposals the government chooses to implement — for example, whether foreign companies that pay into a Canadian content fund will have access to that same fund.

“That would be to me the important part, because if they just try and make people contribute without getting access back to funding if they do create what’s called Canadian content, then I can see how Netflix might not be so interested,” he said.

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Janet Yale, who chaired the panel, said during Thursday’s press conference that she doesn’t think the changes would result in higher prices for consumers.

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Broadcast review panel recommends CBC get out of selling advertising

Canadian Heritage Minister Steven Guilbeault and Innovation Minister Navdeep Bains issued a joint statement following the release of the report, thanking the panel for its work.

They said they plan to look at everything the panel recommended and act soon.

“We will carefully consider each one of the panel’s recommendations and act as quickly as possible to modernize Canada’s legislative framework in the broadcasting and telecommunications sector,” the statement said.

“Reforms are needed to level the playing field on which conventional broadcasters and digital media companies compete. Our priority is to ensure that all media companies that operate in Canada develop Canadian content and contribute to the Canadian system.

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“Canadian stories should be accessible to all.”

Lawford said the panel seems to be placing a similar emphasis on the importance of Canadian content.

“This panel is clearly saying Canadian content’s a good thing, we should continue to fund it, it’s now being delivered in new methods and just because you’re not from Canada doesn’t mean you shouldn’t contribute to the Canadian content machine,” he said.

“Whether that’s the right choice or not is a completely different matter and I presume at some point Canadians will weigh in.”

Global News has reached out to Netflix, Spotify, Apple and Amazon for comment.

This story will be updated with any response.

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