Douglas Barrett is a partner and the head of the KNOWlaw group of the Toronto law firm McMillan Binch.

On May 17, the crtc issued its long-awaited Internet or New Media decision. The press gave it one day’s worth of attention, the new media industry sounded relieved and triumphant, and the regulated broadcast industry media had almost no reaction. But was the decision really a one-note wonder? Don’t be so sure.

Unfortunately, the commission set the tone for the reaction with the headline in its own press release: ‘CRTC Won’t Regulate the Internet’. In the text of the chair’s remarks, the point is not only bolded, but repeated. ‘Let me repeat that for those of you who are worried,’ she said. It is almost as if the commission itself saw this as the only point in the exercise. Behind this point, however, is a substantial and fascinating decision prepared after a three-stage written process including over 1,000 submissions, a 13-day oral hearing, and close to 100 presentations.

Given that the vast majority of us haven’t the slightest clue what is really going on with the Internet, the hearing process undertaken by the crtc may have been the most intensive current examination of the phenomenon ever undertaken. The commission’s decision reflects the substance of this process.

Legal analysis

After a careful consideration of the attributes of the new media, the crtc turned to the provisions of the Broadcasting Act which guides the commission in all of its work and made a number of key legal conclusions:

* All of the technology used to deliver information to the home, and all of the boxes used to receive that information in the home, including the Internet and computers, are covered by the current provisions of the Broadcasting Act.

* Not all of the content delivered over the Internet is subject to the Act.

* Everything transmitted over the Internet that is predominantly alphanumeric text is not covered by the Act and is therefore not part of the crtc’s mandate.

* Material received over the Internet which can be customized by the receiving party is more like a private communication; and as it is not intended for reception by the general public, it too is not part of the crtc’s mandate.

* Real programming delivered over the Internet, even ‘on-demand’ programming, which is intended for reception by the public is, in fact, subject to the crtc’s regulatory powers.

Exemption Order

While the headlines said that the commission would not regulate the Internet, the commission actually concluded that it does, indeed, have the authority to regulate certain parts of the Net. The commission dealt with this contradiction by issuing an ‘Exemption Order’ covering new media businesses offering broadcasting services over the Internet in Canada. Under the Broadcasting Act, the crtc has the power to ‘exempt’ undertakings from licensing requirements where such requirements would not contribute ‘in a material manner to the implementation of the broadcasting policy for Canada’.

So, following all of the hearings and submissions, the commission decided that to impose licensing on the new media would not contribute in any way to its development or to the benefits that it has brought to Canadian users, consumers or businesses.

The commission’s decision to issue the Exemption Order was based on a legal conclusion that regulating the Internet would not advance the policy objectives set out in the Broadcasting Act – policies which focus on ensuring the delivery of a wide range of high-quality Canadian programming to Canadians.

The sky won’t fall

The pundits have made much of commentary that the commission is effectively admitting defeat in the face of insurmountable technical obstacles and overwhelming public opposition. The commission’s decision makes no such concessions. It does not conclude that the breadth of the Internet and its pace of change make it effectively unregulatable. It does not conclude that Internet regulation which might advance the objectives of the Broadcasting Act is permanently out of the question. It does not conclude that this decision will have any impact on its traditional areas of regulatory activity where licensing does, in fact, advance the interests of the Act.

What the commission does do is to undertake a careful analysis of all of the big Internet ‘issues’ including user access, presence of Canadian content, impact on conventional broadcasting, impact on traditional media advertising and offensive and illegal content and concludes that if the damn thing is just left alone, the sky will not fall! What a concept.

In fact, the decision offers tremendous insight into Internet issues which could have a big impact on the Canadian film and television production, broadcasting and distribution industries. For example:

* The commission agrees with most participants at the hearing that a number of critical technological developments, some of which might take up to a decade to be economically implemented, are required before new media services are able to compete directly with conventional media.

* It points out that geographic rights markets for Internet material have yet to emerge and casts doubt on whether the economic model that governs traditional broadcasting will ever exist on the Internet.

* While the u.s. studios will be able to put their films on a server and effect worldwide distribution over the Internet, developing a mass-market audience in this manner may not be economically feasible and the current system of territorial selling may remain much more profitable.

* If geographic boundaries for intellectual property on the Internet do emerge, mass-market Internet services might look remarkably like those offered by conventional distributors today, because that is the way consumers seem to like having their information packaged.

* The Internet will offer an array of new, low-cost distribution opportunities for program makers and may enhance the ability of producers to reach niche audiences.

* There is no current evidence that the Internet has had a negative impact on the advertising revenues of regulated broadcasters as a result of the growth in online advertising.

* There is considerable evidence that the use of the Internet does not supplant traditional media but instead is complementary to it – a viewer does not ‘watch’ a website, but might order something over the Internet after having been sent there by a television program.

`No’ doesn’t mean `never’

In taking its decision not to regulate content on the Internet, the crtc has not just said `no’. Instead, it has performed an important service for Canadians in dealing with a big and threatening issue in a well-considered and even-handed fashion. Should the environment change so that regulating the distribution of programming over the Internet is required in order for the policy objectives of the Broadcasting Act to be met, the door has been left open to do so.

The commission’s key point is that the Internet will ultimately be technologically neutral. The focus of any regulator, and of those assessing the work of the regulator, should not be on the means of delivery, but on the substance of what is delivered.

Whenever, and if ever, an economic model is developed for the delivery of packages of program services to mass audiences over the Internet, the distributors of those services will, in my view, be subject to the same rules and regulations as are the current distributors of such services in each country in which they are delivered. The crtc’s Internet decision contains nothing which would prevent this from happening in Canada.

(This article contains general comments only. It is not intended to be exhaustive and should not be considered as advice in any particular situation.)