The Sessions podcast transcription: Episode 2

This is a transcript of Episode 2 of The Sessions, presented by Playback and The Creative School. The special four-part series examines how Canada’s media industry is leaning into the global, online era with the new legislation called the Online Streaming Act, also known as Bill C-11.

This transcript is intended to increase inclusivity and accessibility, and has been edited for clarity and brevity. We’ve tried our best to accurately reflect exactly what was said on the podcast, while keeping in mind ease of reading. We encourage you to listen to the audio interview, if possible, to experience the full nuance of the conversation.

SPEAKERS: Host Irene Berkowitz; Konrad von Finckenstein, former CRTC chair from 2007 to 2012; Peter Menzies, former CRTC vice-chair and president of Telecommunications from 2013 to 2017.


Irene Berkowitz 0:36

Hi, everyone. Welcome to The Sessions presented by Playback and The Creative School, a four part series that unpacks the history being made right now as Canada’s media industry leans into the global online era, or not. Join us as key stakeholders weigh in on Bill C-11, the Online Streaming Act. I’m your host, Irene Berkowitz.

Today we’re discussing the Online Streaming Act and the CRTC, the Canadian Radio and Television Commission. If C-11 passes, the CRTC’s job will be to implement the bill with regulation and policy. With the current CRTC planning to weigh in after the House of Commons’ Heritage Committee reviews the bill, we chat today with two CRTC icons and hear their advice.

Konrad von Finckenstein was CRTC chair 2007 to 2012. During his term, CRTC became the first regulator in the world to establish a net neutrality policy. Konrad has been head of Canada’s Competition Bureau, justice of our Federal Court, and founding chair of the International Competition Network.

Peter Menzies was CRTC vice-chair and president of Telecommunications from 2013 to 2017, and previously CRTC commissioner from Alberta and the Northwest Territories and president and CEO of the Calgary Herald newspaper. He’s now a senior fellow at MLI, the Macdonald Laurier Institute.

For transparency I’ll just add that Peter and I collaborated on a report for MLI last fall about how Canada can become a leader in digital communications, and Peter and Konrad just released an MLI report that solves the online harms puzzle, the next big thing on our national media agenda.

But back to C-11. Warm welcome to you both. So here we go. The future of Canadian media is here, or is it? What are each of your hot takes on the Online Streaming Act?

Konrad von Finckenstein 2:46

So a host of regulatory and subsidy measures, and why the whole internet, which is a huge innovator, an engine of innovation, of growth, of economic wealth, et cetera. Why do you try to subject them to this? You may stifle innovation, you may also have unintended side effects, et cetera.

I just do not understand why they chose this. And secondly, if you actually implement the present Act, I don’t think CRTC as constituted with the present resources could possibly manage this. It would take years of litigation and hearings. It is just a backward approach to a very simple problem: to bring the streamers, i.e. the people who broadcast over the internet, into the system and make them contribute.

Peter Menzies 3:35

What they’ve tried to do is throw a harness around change in that sense and rein it in. I’m more inclined to say ‘Here’s change. How can we figure out how to ride it? How can we figure out how to make this into something really special?’

What they need to do is carve out the part that worries them. Define the problem. And the problem is probably companies that make more than $100 million a year. And if folks want money, just carve that out and go get the money.

Konrad von Finckenstein 4:05

All the powers that you’re giving the CRTC under 10.2 to register, over 9.1 to impose should be limited. Don’t add interest in the small fry. You are interested in the people who run it as a business and limit the Act to that. And then you have dealt with the problem.

And by the way, you have no more problem about freedom of speech and user-generated content, et cetera. You can actually leave the act as it is. You just say that those who we can insist that they be registered and those who can insist that they contribute to the system of various things are limited to this class of people.

Leave the rest of the internet in peace. What you’re trying to do? You’re trying to protect the existing system against the Hulus and Netflix.

Peter Menzies 4:56

This legislation creates so much hesitancy. And the one thing markets dislike is uncertainty. They need to know if they’re going to invest and you’re going to get prosperity and innovation and all the sorts of things you want in the economy, you have to have some sense of certainty.

And this C-11 — used to be C-10 — it creates so much uncertainty and leaves so much up to the CRTC to define. And the powers that it grants are so sweeping, even once the CRTC fences it off once, which they’ll have to when they go through it the first time, people will still be wondering how solid the fence is.

Irene Berkowitz 5:39

You’re both talking about the whole of internet scope, the need to limit the scope according to a well-defined purpose. Where would this change ideally happen? Now, in the bill while it’s proposed legislation or down the road at the CRTC? What do you recommend?

Konrad von Finckenstein 6:04

Oh, now, absolutely. This is a government decision. This is not something that you give to an appointed body. I cannot see how you will leave this to the CRTC. It’s not a body that’s capable of doing this.

This is a government decision. The government should decide, ‘Yes, we want to go after large-scale streamers. These are the streamers, and this is what you can do, CRTC.’

Peter Menzies 6:29

Near as I can tell, the proponents want two things: that they’re not going to lose the financial support they’ve had to create Canadian content and have built their business models on.

So why don’t we just take all of that stuff off the table and just deal with the big streaming companies and have a discussion about how much they’re investing in Canada, how much they’re taking out of Canada, and how much we want to make sure is reinvested, because it’s kind of crazy that you’d let anybody in any other industry come in and take a billion dollars a year, or I’m just picking that out of the air, in revenue and not leave anything behind.

Konrad von Finckenstein 7:06

And there is a second problem. Even once you establish any kind of funding that we have, you have to be Canadian owned and controlled, and you have to own the IP rights.

So you establish a new regime, Netflix is fine, and they pay whatever it is — they can’t access it [the funding] because they’re not Canadian owned and controlled and of course they want to own the IP rights so they can sell it anywhere. But no, it has to be owned by Canadians.

So if you’re going to do this, you actually have to do the second step. You have to somehow provide that they can also access it. So if they want to produce a Canadian movie, with Canadian actors, filmed in Canada, based on a Canadian screen, they are still not eligible because they’re not Canadian owned and controlled.

And by the way, as I pointed out many times, this is going to fall smack into the Canada-Mexico-U.S. agreement. There’s no way that this is going to stand up. You can’t force people as part of regulation to pay into something to which only their competitors have access, but they don’t.

Irene Berkowitz 8:14

So I’m glad you’re bringing this up, because I had wanted to ask you about two questions on this exact thing you mentioned, Canadian content. It was actually never conceptually defined. So it sort of got a procedural definition, the CRTC 10-point system.

But post C-11, and this gets into what you were just saying. Konrad, how will CRTC manage to define Canadian content?

Konrad von Finckenstein 8:42

Well, unless they abandon the whole existing structure — right now, as you know, you can get funding from the Canadian Media Fund. You can get it from the CRTC, you can get it from Telefilm Canada, or you can get a tax credit if you comply with CAVCO.

All four of them have the same rule. You’ve got to be Canadian owned and controlled, and you have to be the owner of the IP rights. So unless the CRTC says ‘We’re going to establish a whole new subsidy regime which takes this away,’ which I cannot see them doing, and besides, I can’t imagine the outcry there would be. I have no idea how they are going to do this.

Peter Menzies 9:24

There’s a broader issue here, too, that has never been resolved, and the CRTC has struggled with it forever. What is the point of Cancon? Is it cultural or is it an industrial subsidy? Decide what your primary purpose is and focus on that. It’s kind of like, pick a lane.

Irene Berkowitz 9:41

This is also connected to what I’m calling, the great unhooking from legacy broadcasters. Momentum is said to be building for producer-accessed, platform-agnostic funding. How will CRTC even begin to implement that?

Peter Menzies 9:58

One of the tricky things with this is that it decouples, as is being said, Canadian ownership from the traditional Broadcasting Act definition of the necessity of being Canadian owned and controlled. So in a sense, you’re kind of outsourcing your cultural funding.

American companies are going to be providing funding for Canadian culture. It’s not irrational, but you are outsourcing it and the opportunities there.

A cynical person would take a look at it and say, ‘Well, that’s an opportunity for the Canadian companies to lessen their funding burden’ and ask for that in exchange, where they would go in and say, like, right now, 30% is the ask of your revenues for Bell. I think it’s lower for Rogers, but for Bell, 30% of your revenues have to go into the production of Canadian programming, right.

It would be very easy for them to go into that upcoming CRTC hearing whenever it happens and say, ‘Well, look, now you’ve got all this money you’re going to get from Netflix. You’ve got all this money you’re going to get from these guys. You don’t need 30%. That’s more money than people can spend. That’s way more money.’

I mean, there’s going to be a lot of money in there if you look at it with current formulas. So at the end of the day, it could be a lesser commitment from Canadian companies being replaced by a larger commitment from non-Canadian companies.

Konrad von Finckenstein 11:27

Well, Peter, in all fairness, the logic, whether you accept it or not, is that you want to expose Canadians to Canadian content. Nobody but Canadians will produce it.

So therefore, you have to subsidize a Canadian industry, production industry in order to get Canadian content. That’s the logic that has been advanced and the CRTC sticks to it.

Irene Berkowitz 11:52

Does that logic make any sense in the 21st century when lots of countries, including some Canadian shows, are killing it on the global stage? Let’s talk about discoverability and whether that can even be regulated.

We have Kim’s Convenience and Schitt’s Creek and many other shows that are really popular on the global stage. Is the logic that you need to incentivize creation valid?

 Konrad von Finckenstein 12:25

I would think, no. I mean, somebody, let’s say Netflix, wants to make money in Canada. If there is a demand and if there is a desire for people to watch something that reflects Canada, of course they will produce it because of the Canadian market. But they will produce it in such a way that they can also sell it in other markets.

Besides, again, they know they are not going to produce something only for Canada, but they will produce it, but I don’t see why they would not. If it’s a good story, they can see the potential for it, it’s selling, sure. No problem. If it sells in Norway, wonderful.

So there is this very narrow view that actually only Canadians can do it and you have to subsidize, otherwise you won’t get any stories out of Canada. In today’s age, I just think it doesn’t make any sense anymore.

Peter Menzies 13:19

First of all, making hits in film or TV is a really risky business. It’s like one of the worst businesses you can possibly go into if you’re looking for a guaranteed return on investment.

That said, the best way to do it, I think, is on a market basis, where you are creating programming that appeals to people, because there’s not much point in creating it unless you’re just designing it for purely industrial subsidy. There’s not much point in creating it unless somebody’s going to watch it. It’s a cultural failure unless you do.

And you have to understand that probably eight out of 10 aren’t going to achieve the sort of audiences you want it to. But as Konrad said, if it’s a good story, well told, it will succeed.

Konrad von Finckenstein 14:07

I would go further than Peter. I would say that the internet is really the centre of the new digital age, and so the commissioners should understand the internet.

This is what’s driving our new digital economy, et cetera. This is the centerpiece. You have to understand how it functions and your decisions have to reflect your knowledge of that. And on that basis, it should be chosen.

Peter Menzies 14:31

Actually. And that’s a good point, it’s not the first time I’ve been corrected by Konrad and it won’t be the last. But I think it was a good correction. That’s one of the real flaws when we get into C-11 and that sort of stuff is the big missed opportunity.

You could have come up with a new Canadian Communications Act. You could have redesigned the whole commission, done something visionary and forward looking that captured the 21st century. But now we’re dealing with the internet as kind of an annex to the broadcasting world. Broadcasting is just a teeny, teeny, tiny part of the internet.

Irene Berkowitz 15:09

If you were the leadership, chair or vice chair now of the CRTC, what would you do? What’s your advice?

Konrad von Finckenstein 15:17

Let’s reduce the scope. Only those people have to register with these criteria so you catch the big streamers. The other ones, clearly say ‘You’re exempt. I don’t want to deal with you. It doesn’t make sense. And how to apply the Broadcasting Act to you makes no sense. So here in my universe.’ That would be the very number one.

And then hold a hearing and have them all appear and say, ‘What is it you can do to help us meet the goals as set out in this legislation? And what does this capability mean in terms of streamers? What is the reflection of the Canadian arena? What would you do, et cetera?’

And then on the basis of those hearings, et cetera, you can then construct the policy, but you have a manageable universe.

Peter Menzies 16:14

Very much the same sort of instincts. The first thing you would want to do — and you would want to signal it right away because you don’t want to risk it. The legislation itself will create uncertainty.

A lot of those small YouTube creators and that sort of stuff, they’re really scared right now, from what I can understand. They’re really nervous. They don’t have enough money to get into this, but they’re really scared and nervous.

So the first thing is to signal that, okay, we’re going to fence this off and we’re going to — just from an operational point of view, like if you’re running that, make sure whatever you’re going to do, you can do well.

And if you spread your resources too thin, you’re going to create confusion, dry up investment, and you’re going to do harm. So it’s almost, I guess, going back to the medical thing to rephrase Konrad: It’s like first, do no harm, but fence it off, get the piece you want. You might be tempted to take more, but just take what you can chew.

Konrad von Finckenstein 17:13

User-generated content is off the table: ‘We don’t want to deal with it. We have no intention to deal with it. It has nothing to do with broadcasting. And so anybody who’s worried about us touching free speech, that’s not on the table.’ I would take that off at the very beginning.

Peter Menzies 17:31

Yeah. A regulator really never wants to be in the news. You don’t want to be the story any more than a referee wants to be the story from a hockey game. Figure out the rules, keep it simple, apply them fairly.

Konrad von Finckenstein 17:41

When we’ve seen everything, when you come, please address the following points, sort of six or seven, et cetera, clearly showing what our thinking was and what you wanted. So just to narrow things and get people to focus and they can see, ‘That’s where our concern is.’ I think that would be very helpful in this case too.

Irene Berkowitz 18:00

With all we have discussed, this is about missed opportunities that don’t come along very often because legislation is a very big deal. C-11, pass or no pass, and why?

Peter Menzies 18:13

I think it’ll pass because Minister Pablo Rodriguez has said that ‘We’ll listen to people.’ They’ll show some flexibility. Whether that goes the way I want it to or whether it goes the other way, I don’t know. But he said he’s open to amendments.

Konrad von Finckenstein 18:30

Unfortunately, I agree with you. I think it will pass, but two things. One, it has a much better exemption for user-generated content than C-10 did, and that will take a lot of steam out of the opposition, I think.

Secondly, under this bill, the government gets a huge power of direction, far more than they have in the present legislation. I think they are now committed to doing it this way. I’m just hoping that both the Senate and in light of public pressure, there will be some sensible directions coming out limiting the vast power that’s being given to the CRTC.

Peter Menzies 19:08

But whatever happened to the government’s innovation agenda? This government, like five years ago, that’s all you heard about was what we’re going to do about innovation and that sort of stuff. And maybe they’re doing it someplace else, but on this file, there’s nothing innovative about it.

Konrad von Finckenstein 19:23

Why has the minister of heritage become the minister of internet? I just don’t understand it. And most other governments have either formed a new department or minister and given specific responsibility for this. It made sense 30 years ago. It doesn’t fit now.

Irene Berkowitz 19:40

I can only hope that the two of you will be front and centre, if not in those conversations in the House of Commons and in the Senate and I hope that the government will listen to you.

Peter Menzies 19:54

Well, Pablo Rodriguez did say they listened to experts and I’m hoping the three of us are included in his definition. (Laughs) I’m not sure we will be, but I hope.

Irene Berkowitz 20:07

Well for sure you two are. I want to thank you both for your truly valuable time, your incredible depth of expertise and your amazing wisdom. It has been just so fabulous chatting with you.

Peter Menzies 20:23

Thanks. I really enjoyed it.

Konrad von Finckenstein 20:24

Thanks for inviting us.

Irene Berkowitz 20:25

For previous episodes of The Sessions, transcriptions, show notes and more coverage on the Online Streaming Act, please follow the link from the Playback website. And because our mission is to inform and future proof Canadian media policy, we would love it if you could spread the word about this podcast to your colleagues, friends, and on social media. Thank you so much for listening. I’m Irene Berkowitz and this has been The Sessions.