MATT HARTLEY AND GRANT ROBERTSON
From Wednesday's Globe and Mail
March 10, 2009 at 10:03 PM EDT
Setting the stage for a potential courtroom battle over who controls the Internet, Canada's biggest cable companies told federal regulators Tuesday that a proposed consumer levy to support Canadian content online is against the law.
The challenge from Rogers Communications Inc. [RCI.B-T], later echoed by Shaw Communications Inc. [SJR.B-T], came during the third week of hearings being held by the Canadian Radio-television and Telecommunications Commission into the future of new media.
The regulator is contemplating whether small fees should be added to monthly Internet bills to support the creation of Canadian programming online. Concerned that Canada's culture is being drowned in a sea of online video from around the world, federal regulators are looking at setting up a $100-million fund to support homegrown programming on the Internet.
Groups representing Canadian producers, writers and directors endorsed the idea when hearings began a few weeks ago. But Tuesday several cable and telecom companies, which are among the biggest Web service providers, issued a veiled threat that the matter would end up in court.
Such a levy “would be unlawful,” Rogers vice-chairman Phil Lind told the hearings, adding that Internet providers “are pipes, not broadcasters,” and therefore should not be required to support Canadian programming the way TV networks do.
Internet service providers, or ISPs, “do not buy, package or sell programming or any other Internet content,” Mr. Lind said.
His remarks were met with a stern rebuke from CRTC chairman Konrad von Finckenstein.
“The courts will decide,” said Mr. von Finckenstein, who is a former judge. He later told the hearings that since there are differing legal opinions on the matter, he would not give his own opinion on whether the levy is lawful.
The proposal, which is aimed at staking out a more distinct national identity online, has pitted the television production community against Canada's Internet service providers, who would ultimately have to foot the bill, or pass those costs on to customers.
The Canadian Film & Television Production (CFTPA) Association has argued that online video should be treated no different than television, and presented the CRTC with a legal opinion from McCarthy Tétrault LLP suggesting the regulator has the authority to implement such a proposal.
“We respect Rogers' opinion, but our own legal opinion shows otherwise,” Mario Mota, vice-president of broadcasting policy and regulatory affairs for the CFTPA, said Tuesday in an interview.
He suggested a large amount of the content moving over Internet providers' lines is similar to broadcasting content, so the levy could be implemented under the Broadcasting Act.
Shaw Communications has presented opinions from two law firms, Stikeman Elliott LLP and Torys LLP, that the company says show the regulator does not have authority to establish a levy. Shaw chief executive officer Jim Shaw said the company would fight the idea.
“The Internet is about the World Wide Web, not the Canadian Wide Web,” he told the hearings. “There is no problem that needs to be fixed; no one has provided any evidence that there is a lack of Canadian content on the Internet.”
Internet providers don't pay close attention to what type of data is moving over their networks, whether it is video or not, Mr. Shaw said. “We can only tell you how many bits are coming in or out. We don't know what kind of bit it is, it could be anything from an e-mail to a porno … we don't know that,” he said. “We spend no time trying to figure out what bits are going to your house,” he said.
Also at the hearings, Rogers proposed a new online portal that would carry television programming, similar to the popular Hulu.com service in the U.S.
The new website, however, would only be available to Rogers' cable-TV subscribers. Rogers said it would be open to collaborating with other broadcasters, and later Tuesday, CTVglobemedia Inc. said the two companies had informally discussed such a partnership in the past.
