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Telus urges support for broadcast distributors as CRTC hearing set to wrap up

Telus Corp. says that in a "dramatically" changing broadcasting landscape, the CRTC should make changes to the regulatory framework to account for subscribers and revenues shifting from the traditional system to foreign streaming services. The Telus offices are seen in Ottawa on Friday, Aug. 4, 2023.THE CANADIAN PRESS/Justin Tang Telus Corp. says that in a "dramatically" changing broadcasting landscape, the CRTC should make changes to the regulatory framework to account for subscribers and revenues shifting from the traditional system to foreign streaming services. The Telus offices are seen in Ottawa on Friday, Aug. 4, 2023.THE CANADIAN PRESS/Justin Tang
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Telus Corp. is urging the CRTC to address a "dramatically" changing industry landscape, echoing its Canadian broadcasting rivals, as the federal regulator's three-week hearing held in response to the Online Streaming Act winds down.

The company made a presentation before the commission on the penultimate day of the CRTC's hearing, which was launched after Ottawa's passage of the law formerly known as Bill C-11.

The hearing, which gathered feedback from Canada's major broadcasting companies, foreign online streamers, concerned advocacy groups and other stakeholders, is set to wrap up Friday.

Just as Rogers Communications Inc., BCE Inc. and Quebecor Inc. did before it, Telus representatives said the CRTC should make changes to the regulatory framework to account for subscribers and revenues shifting from the traditional system to foreign streaming services.

"Right now, it's not just a matter of backfilling. It's a matter of actually stopping the bleeding that we're seeing too," said Lecia Simpson, director of broadcasting policy and regulatory affairs for Telus.

"It's not just adding funds to something that was stable to start with. We're trying to get funds from a group that hasn't paid funds before while the funds that do exist are plummeting every year."

The Online Streaming Act, which received royal assent in April, is meant to update federal legislation to require digital platforms such as Netflix, YouTube and TikTok to contribute to and promote Canadian content.

It has prompted the regulator to explore whether streaming services should be asked to make an initial contribution to the Canadian content system to help level the playing field for domestic companies already required to support Canadian content.

Telus said that as a first step, foreign streamers should be required to contribute three per cent of annual Canadian revenues to the system.

"That contribution will help stabilize funding as subscribers continue to transition from the traditional system to online services," said Adam Lipper, the company's senior strategy manager.

Telus also urged the regulator to lower the current mandated contribution level of five per cent for traditional broadcast distributors, which Lipper said is "no longer sustainable."

Telus' position was generally aligned with that of its Canadian broadcast competitors, many of which also recommended the CRTC use some of that money to create a dedicated fund which could help subsidize their struggling news operations.

Meanwhile, streamers that presented to the CRTC panel throughout its consultation have largely urged the regulator to hold off on imposing such contributions.

Streaming giant Netflix argued the CRTC should recognize the role it already plays in helping fund Canada's broadcasting industry and reject calls to mandate an additional payment from the company.

But if the regulator does move ahead with requiring foreign streamers to contribute money to the Canadian content system, Netflix said that burden should be no more than two per cent of annual revenues, in line with other jurisdictions.

Audio streaming platform Spotify said requiring it to make a contribution could force the company to cut its existing investments in order to maintain its financial viability.

The commission also heard Thursday from a coalition that included OpenMedia, an advocacy group that promotes internet accessibility, the Public Interest Advocacy Centre, which advocates for Canadian consumer interests, and the National Pensioners Federation.

In their joint presentation, the groups recommended both traditional broadcasters and online streamers face the same rules when it comes to contribution levels.

Currently, licensed broadcasting distributors are required to contribute 4.7 per cent of their previous year's gross broadcasting revenues to Canadian programming, while 0.3 per cent are allocated to the Independent Local News Fund.

Under their proposal, the Canadian programming contribution would decrease to 3.7 per cent of revenues, while maintaining the 0.3 per cent ILNF payment -- from both traditional broadcasters and online streaming companies.

"All parties must compromise," said John Lawford, executive director of the Public Interest Advocacy Centre.

"Our approach seeks to avoid the dangers on both sides."

He said if asked to pay too much, foreign online streamers might "exit the Canadian market, raise subscription prices considerably, trim service options and catalogues, increase surveillance and ad-tech and resist timely payment of assessed contributions."

But he said giving them "too much flexibility" would compromise the CRTC's ability to meet its new mandate set by Ottawa.

"On the other hand, denying any relief for traditional broadcasters might lead them to cut broadcasting services to Canadians who rely upon them, or to reduce their programming choice, quality or originality," Lawford said.

"But giving players too much flexibility means uncontrolled abandonment of the system, which also must continue to serve Canadians during this delicate period of transition."

The CRTC is aiming to make key decisions about its new regulatory framework for the sector during the current phase of its work, with an eye toward implementing new rules in late 2024.

This report by The Canadian Press was first published Dec. 7, 2023.

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