David Kent is a partner in the Toronto law firm of McMillan Binch and a member of its Litigation, KnowlawTM and Competition Groups.

The government promised to act decisively to deal with the controversy over JumpTV’s plan to retransmit conventional television signals over the Internet. It then introduced Bill C-48 in December 2001. The question is whether the proposed legislation resolves the debate or simply defers it to another day.

JumpTV’s plan

JumpTV wanted to take over-the-air TV signals and stream them over the Internet. The controversy came from the fact that JumpTV did not want to ask anyone for permission. In fact, it wanted to retransmit signals and programs in the face of objections by the broadcasters and content owners.

JumpTV announced that it would do an end run around the broadcasters and content owners by sheltering under the compulsory licence provisions of Section 31 of the Copyright Act. These provisions allow certain retransmitters to retransmit without consent in return for paying a royalty set by the Copyright Board.

Copyright Board hearings

JumpTV did not actually launch its conventional television retransmission service. Instead, it applied to the Copyright Board to set a special royalty for Internet retransmissions. By inference, it was asking the Copyright Board to confirm that Internet retransmissions fell within the Section 31 compulsory licence scheme. Broadcasters and content owners from Canada and the U.S. immediately filed objections to JumpTV’s application.

JumpTV’s approach to the Copyright Board was an indirect attempt to resolve the legal question of whether Internet retransmitters are entitled to the Section 31 compulsory licence. But the Copyright Board never got a chance to rule. In October, on the eve of its deadline for providing information about its proposed business and technical operations, JumpTV simply withdrew its retransmission licence application. JumpTV stated only that it was abandoning the banner advertising model upon which its application had been based, and that the details of any new model were not yet clear.

Retransmission regime

The Section 31 retransmission compulsory licence has historically been used by cable operators and, more recently, by DTH satellite services. It took effect in 1990 as part of Canada’s Free Trade Agreement obligations to the U.S.

The retransmission scheme was not designed to give cable operators access to previously inaccessible signals and content. To the contrary, cable operators had been freely retransmitting signals since the first systems were established. And that was the problem – they were getting their content for free. The system was implemented at the request of the U.S. and was meant to get cable operators to begin paying for the (largely U.S.) broadcast television programs with which they were generating their revenue.

Government consultations

The threat that the retransmission compulsory licence might be used to gain access, rather than enforce payment, and that it might be expanded from closed architectural, regulated, geographically defined retransmitters to the Internet was predictably controversial. And the debate was not restricted to the Copyright Board. The federal government began a consultation process which attracted a wide range of submissions. Those submissions included calls from broadcasters and independent producers to clarify the Copyright Act to ensure that Internet retransmissions would not be permitted without consent. They argued that the Act was never intended to cover Internet retransmissions, and that any ambiguities in the legislation ought to be clarified to eliminate any misunderstandings.

Bill C-48

In late October, after JumpTV had pulled the plug on its Copyright Board application, the minister of Canadian Heritage publicly announced that the government would act to fix the potential loophole in the retransmission compulsory licence. That ‘fix’ arrived on Dec. 12 with the introduction of Bill C-48.

The trick, however, is that the amending legislation does not actually fix anything. Instead, it establishes a regime giving the government the power to solve the problem later.

In particular, what C-48 does is require anyone who wants to retransmit conventional television or radio signals to meet certain ‘qualifying conditions.’ Traditional cable and DTH operators are grandfathered and thus exempt from this requirement. And all retransmitters, including cable and DTH operators, must now comply with additional ‘applicable conditions.’ But the bill is silent about what these new conditions are. Instead, they are to be established by regulation.

The problem is that no regulations have been implemented. In theory, the government could set qualifying conditions which require a retransmitter to not retransmit over the Internet and solve the problem in that way. Alternatively, it could require retransmission only through closed architecture systems, mandate simultaneous substitution or Canadian signal preponderance, or restrict retransmitters to entities subject to CRTC oversight. But until draft regulations are presented, the question of whether the government has fixed the Internet retransmission problem is unknown. All it has done so far is defer the answer to that question.

What next?

And the issue is not likely to disappear. While JumpTV has filed no new applications with the Copyright Board, its CEO was recently quoted in the Washington Post reiterating JumpTV’s intent to soon begin retransmitting ABC, CBS and NBC to Canadian viewers.

Watch for the legal fur to fly if that happens.

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

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