Canadian Government Reverses CRTC Online Streaming Act Decision

A CRTC decision that would’ve tripled the costs of online web services has been killed by the Canadian government.

Last month, I reported on the CRTC jacking up the rates from 5% to 15%. The charges of 5% were already controversial given that it was the subject of one of the lawsuits that was filed. The tripling of the costs would’ve no doubt been even more controversial.

Well, as it turns out, the Canadian government has reversed that decision and, instead, opted to… further issue bailouts for the traditional outlets. From the Canadian government:

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.

To that end, the government will develop new policy directions to adjust the implementation of the Online Streaming Act. The new policy directions will be guided by clear objectives:

• Keeping streaming and broadcasting services affordable for Canadians;
• Protecting choice for consumers by protecting a healthy and diverse audio and audiovisual sector;
• Ensuring flexibility for both online streamers and Canadian broadcasters;
• Leveraging new government investments to maintain strong support for Canadian stories, local news, French-language content, Indigenous storytelling, content created by and for equity-deserving groups and official language minority communities, and services of exceptional importance, including CPAC, APTN, and TV5/Unis.

The additional federal investments will ensure Canadian creators, producers and broadcasters receive the financial support they would otherwise have had as a result of the CRTC decisions. Additional details on these investments will be announced after consultation with the sector. They will ensure strong support for French-language productions. Once the new CRTC rules are finalized, the level of government investment will be adjusted as appropriate.

Who would’ve thought? The Canadian government finally doing something half way sensible in all of this. I don’t know if that’s a first, but if it isn’t, it’s been so long that it really does feel like a first. The only explanation I can think of is the massive pressure coming from the United States. This is something that Michael Geist appears to be thinking as well.

Governments do not move to unwind CRTC decisions within two weeks unless they have concluded that it cannot stand. The Broadcasting Act contains no review-and-vary power over the contribution and expenditure decisions and the Governor in Council’s review authority reaches only licensing decisions. The government therefore cannot simply vacate the ruling and must instead force the result through a fresh policy direction of general application and a new CRTC proceeding, with the $600 million serving as the bridge to keep the sector onside.

The release never mentions CUSMA, trade, retaliation, or the United States, but the CRTC’s approach raised obvious trade risks under CUSMA and opened the door to massive tariff retaliation if the government relied on the cultural exemption to press ahead. Further, it handed the U.S. a “trump” card at the very moment that our most important trade deal is up for review. The U.S. had targeted the issue and, much like the rapid abandonment of the digital services tax, the Canadian government quickly signalled it is prepared to drop the policy altogether.

The $600 million payoff is worth emphasizing because it is an explicit substitution rather than a top-up. The government says the investments will ensure creators, producers, and broadcasters receive the financial support they would otherwise have had as a result of the CRTC decisions, with the level of public investment to be adjusted once the new rules are finalized. The original bill was sold on the promise of making web giants pay, and I argued at the time that consumers would get the bill regardless of the framing. Now the government has established a system in which the public clearly pays.

Indeed, the Canadian government already has enough problems on its hands as it is. The last thing they need is even more problems arising from the long deeply problematic Online Streaming Act. One can only hope that this is just the first step of many towards this awful legislation getting rescinded, but at the very least, it’s a good start. So, that’s something at least.

Drew Wilson on Mastodon, Bluesky and Facebook.