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Oh, Canada: Always Late to Regulate

Oh, Canada: Always Late to Regulate

Written by
Rebecca Hume
on
February 12th, 2019

Since the dawn of radio in the 1920s, private broadcasters have resisted regulation in the national interest. Yet, each time, after years of government foot-dragging, the champions of Canadian content prevailed. This history shows that it's not too late to regulate Netflix.

Oh, Canada: Always Late to Regulate

Photo: Ferran Feixas

In June of last year, the Government of Canada empaneled the Yale Commission to review the Broadcasting Act, the first in nearly thirty years. Ever since the dawn of radio in the early twentieth century, Canada has periodically set out to rewrite the Broadcasting Act to address new broadcasting technologies that threatened to snuff out Canadian voices. The latest review is no exception; internet broadcasters like Netflix currently dominate the market, yet existing regulations exempt them from Canadian-content spending requirements that their Canadian competitors must comply with. If this unequal playing field persists, it’s possible that the entire CanCon system could collapse. This would be a devastating blow for Canada’s identity, society, economy, and democracy.

Drafters of the 1991 Act anticipated changes in the broadcasting system and tried to future-proof regulations by adopting technology-agnostic definitions of crucial terms like “broadcasting.” But they didn’t anticipate the scope and speed of the changes, like the fact that people would stream more than one billion hours of digital video every day from a website called YouTube, half of it done on mobile phones. Even the word “website” would have been foreign to lawmakers in 1991; the first world wide web servers weren’t launched until six months after the revised Broadcasting Act received royal assent. It wasn’t until 1993 that Peter Mansbridge took to the air to educate Canadians about “a computer network called Internet.” (If you haven’t seen this video, you’re really missing out).

Just based on that, it’s clear how quickly the digital broadcasting revolution has unfolded.

Netflix entered the Canadian market in 2010, and, in just eight years, it has become Canada’s leading broadcaster, counting as customers more than half of Canadian households with internet access. It grows more dominant every day. And with each new customer, Netflix is building allies for opposing any regulation that could conceivably raise the cost of service, especially regulations that would force Netflix to produce and present a minimum quantity of Canadian content.

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Is it too late to regulate? Sure, Parliament has the authority to legislate. And the CRTC is free to regulate. But with more than half the country on its side, Netflix clearly has the upper hand. This being an election year, government action is even less likely, which gives Netflix more time to grow its market share before meaningful CanCon obligations are even proposed—let alone negotiated and agreed to.

Canada has a long history of dragging its feet when faced with the need to regulate new broadcasting technologies. Commercial radio came to Canada in 1920, but the first Broadcasting Act wasn’t enacted until twelve years later. It was a similar story for TV (sixteen years), cable TV (fifteen years), and satellite TV (nineteen years). In each case, private industry and its allies in Parliament argued strenuously against regulation or the imposition of Canadian-content quotas. They branded attempts to Canadianize the broadcasting system as dictatorial, censorious, illiberal, anti-competitive, and even undemocratic. Their resistance was both fierce and unrelenting.

Yet, every time, considerations of cultural sovereignty and Canadian identity won the day. Time and again, policy makers realized that the public interest did not always align with the financial interest of private broadcasters, who preferred to make an easy buck retransmitting popular American shows instead of engaging in the costly, laborious task of commissioning and producing Canadian programs for the Canadian audience. As the Fowler Commission reported in the fifties, regulation was needed because unregulated “free enterprise has failed to do as much as it could in original programme production and the development of Canadian talent, not because of a lack of freedom but because of a lack of enterprise.“ Touché.

The same is true of today’s internet broadcasters, whose contributions to Canadian storytelling are both optional and negligible. Will the Yale Commission and the Trudeau government display the vision and assertiveness of their predecessors, who stood up for Canadian storytelling despite feverish resistance from some of Canada’s richest, most influential private interests? Will they show the same mettle, conviction, and toughness as their predecessors? I suppose there’s only one way to find out.

Canada has a long history of dragging its feet when faced with the need to regulate new broadcasting technologies.

Canada’s History with Broadcasting Technology

Canadians have long been early, speedy adopters of new broadcasting technologies, and regulators could never keep up. Ninety years ago, the government of the day empaneled the Aird Commission to review Canada’s broadcasting system and determine how radio broadcasting in Canada could most effectively be carried out in the interest of Canadians. When the commission began its hearings in 1929, an estimated three hundred thousand radio receivers were licensed in Canada—basically a receiver in every household. By 1931, the radio receiver penetration rate had essentially doubled.

This story has more or less repeated itself with every new broadcasting technology. When TV came on the scene in 1940, Canadians were also quick to adopt the technology. About thirty thousand TV sets were sold in the country in 1950, mostly in Toronto where American signals were widely available. By 1955, sales jumped to well over seven hundred thousand units. Only then did the federal government appoint a Royal Commission to update the Broadcasting Act accordingly. By the time it was revised in 1958, 71 percent of Canadian homes were already enjoying television, along with the steady diet of American shows and ads it delivered.

In the 1960s, Canadians adopted cable faster than any country in the world, and we fell in love with the American programs that travelled down the wire. By 1970, Canada had a higher rate of cable TV penetration than the United States. The same is true of the internet. Despite paying some of the highest prices on Earth, Canadians are among the most avid consumers of digital media. This means that regulators have always faced fierce opposition from mature industries whose private interests are seldom aligned with Canada’s national interest.

A Bit of Spine Goes a Long Way

By the time Members of Parliament began debating broadcasting issues in the House of Commons in 1928, there was a well-established, well-developed radio market in Canada. As the industry grew more entrenched, it became harder to regulate; the mature commercial realities were increasingly difficult to dislodge. That’s what happens when government allows regulation to fall so far behind technology.

The key issue at hand was the overwhelming prevalence of American programming on Canadian radio. Some MPs recognized the direct threat this posed to Canadian national identity. They proposed a national public broadcaster to provide Canadian content to Canadian audiences: a civic counterbalance against market dynamics that failed to deliver on Canada’s cultural policy objectives. Some MPs, like the Labour Party’s James Woodsworth, weren’t totally comfortable with a government monopoly on broadcasting, but given that the only alternative was even further Americanization of Canadian popular culture, they came to support it. “I may be afraid of handing power to any one government,” Woodsworth said in 1928, “but I would rather trust our own Canadian government with the control of broadcasting than trust these highly organized private commercial companies in the US.”

Parliamentarians recognized that broadcasting wasn’t just another industry: it was a critically important mechanism for maintaining Canadian independence.

Canada’s broadcasters, all of them private corporations, strenuously opposed government regulation of their extremely profitable businesses. Knowing that Canadians favoured the maintenance of a uniquely Canadian national identity, they did not oppose Canadian content rules directly. Instead, they opposed public broadcasting, the vehicle for delivering it. Arthur Dupont, the radio director of CKAC Montreal (owned by La Presse), advocated for a privately owned and advertiser-funded system, arguing that “competition results in better programs, whereas public ownership [or regulation of any kind] would result in political meddling.” While the politicians gabbed, American content became more and more entrenched. By 1929, the most influential stations in Toronto were actually becoming affiliates of major American networks: Rogers joined CBS, while Gooderham and Worts joined NBC, bringing iconic programs like Amos ’n’ Andy to Toronto audiences.

While private industry clearly had the upper hand, the balance eventually tipped towards Canada’s national, cultural interest. Citizen activism was a big reason why. A vocal, prodigious, and extremely well organized lobby emerged to promote the Canadianization of the broadcasting system. Led by Alan Plaunt and Graham Spry, this group of culture crusaders simply refused to accept the Americanization of Canada’s airwaves and, through them, the Americanization of Canadians themselves. Plaunt and Spry co-founded the Canadian Radio League (in many ways the predecessor to FRIENDS), speaking eloquently of broadcasting as a public service with huge potential to shape of public opinion. Spry was passionate in his belief that “our national problem of creating a distinct nation [...] can be enormously hastened and facilitated by the new weapon science has given us—the radio.”

Spry brought his message to the Aird Commission, and the message got through. In its 1928 report, the commission stated that in a country as vast as Canada, broadcasting would “undoubtedly become a great force in fostering a national spirit and interpreting national citizenship.” The commission was rightly concerned that overexposure to American programs, with next to no Canadian programs in the mix, would “mould the minds of the young people in the home to ideals and opinions that are not Canadian.”

Conservative Prime Minister R. B. Bennett got the message too. Following incessant lobbing by Spry and his coterie, Bennett was convinced that radio had the potential to be an extremely effective instrument in nation-building, so long as it was controlled and operated by Canadians. So, in 1932, Bennett created the Canadian Radio Broadcasting Corporation, Canada’s first public broadcaster and predecessor of the CBC. In a House of Commons debate in 1932, Bennett called the newly formed corporation “a great agency for communication of matters of national concern and for the diffusion of national thought and ideals.”

Bennett’s proposition enjoyed the support from some members of the opposition, cementing the importance of cultural objectives as the highest priority for Canadian broadcasting; Bennett himself was completing a project set in motion by his Liberal predecessor. Years later, when speaking about television regulation in 1951, Liberal James McCann echoed Bennett in expressing the view that TV should be developed with the aim of benefiting Canadians, ensuring an adequate amount of suitable Canadian programs.

Parliamentarians recognized that broadcasting wasn’t just another industry: it was a critically important mechanism for maintaining Canadian independence, in the most literal sense. Responding to McCann, one MP categorically stated: “there are no more serious problems facing Canada than the gradual control of the press and radio... Unless the tide [of American control] can be stemmed or reversed, another generation or two will witness the absorption of our country by our powerful neighbour.”

This could not be achieved without public broadcasting.

The means have differed over time, but the desire to retain the Canadian character of the broadcasting system has endured for ninety years.

Where to from Here?

Throughout the broadcasting age, Canadians have bickered over whether the system should prioritize commercial or civic concerns. And with every major legislative review, we came to the same conclusion: that broadcasting is a vital instrument of national identity that cannot be treated like any other industry. As one blue-ribbon panel put it, the broadcasting system is on the same level as the railroads in terms of it being a critical element of Canadian civic life. “Had the fathers of Confederation been able to add this means of communication to the ribbons of steel by which they endeavoured to bind Canada in an economic whole,” the Aird Commission proclaimed, “they would have accomplished a great deal more than they did, great even as their achievement was.”

This principle has endured over generations. Speaking in 1951, MP James Coldwell summed up the central principle of Canadian broadcasting legislation:

No government we have had in Canada, whether Conservative or Liberal, since the first broadcasting legislation was introduced in 1932, has sought to change the original conception. That original conception was that, because of the peculiar nature of the country, because of its great distances, because of the scattered population, because we have two great peoples with different cultural origins, the only manner in which we could have a satisfactory system of broadcasting was to have one owned and controlled by the people through their government.

His words are still true today. But will they be continue to be so?

Radio was a staple of Canadian life for twelve years before the government moved to regulate it. At this point, Netflix has been operating in Canada for eight years. It has come to dominate the Canadian market in that time, and it is almost certainly true that this economic reality weighs on the minds of the Yale Commission members, tempering their idealism and pressuring them to find a practical compromise between Canada’s cultural needs and the seemingly implacable status quo.

It certainly doesn’t help that the government’s instructions to the commission prioritize economic concerns over cultural conservation, asking them to “modernize the legislative framework in a balanced way that takes into account the realities of consumers and businesses” (emphasis added). The government’s instructions speak of the “creative sector” in predominantly economic terms, reaffirming their determination to develop export opportunities for creative industries that bring “the best of Canada to the world.”

The government’s myopic, commercial focus could not be more different to the priorities passed down by the Aird, Massey, Morand, and Fowler Commissions, to name but a few. These commissions demonstrated that Canada’s cultural objectives can and should be established on their own merits.

The means have differed over time, but the desire to retain the Canadian character of the broadcasting system has endured for ninety years, taking all manner of technological and social transformation in stride. Yet the outcome of each panel was far from inevitable. Time and again, privateers in industry and their fellow travellers in government beseeched these expert panels to relax their emphasis on Canadian content and national character. Yet, each time, the defenders of Canadian content and character prevailed.

Rather than concede to the powerful forces that dominate the market—a supposedly practical compromise at the expense of Canadian culture and identity, with potentially severe consequences for Canadian society and democracy—it is imperative that the Yale Commission continue to defend our heritage, just as its predecessors have done.

Netflix isn't required to pay one cent to support Canadian culture.