We are continuing our special coverage of the Bill C-11 hearings at the Canadian Senate. This covers the first segment of hearing 14.
Our special coverage of the Bill C-11 hearings being held at the Canadian Senate is continuing. We are, indeed, trying to keep up with our limited resources, though as you can imagine, the amount of text that is involved with these hearings is quite significant. Nevertheless, we are doing everything we can to make a reasonable effort to keep up.
For those who are curious, here is the coverage of the previous hearings:
Hearing 1 – Privacy Commissioner and Global Affairs/Justice Department
Hearing 2 – Digital rights organizations and lobby groups (1)
Hearing 3 – Lobby groups (2) and platforms (1)
Hearing 4 – Lobby groups (3) and lobby groups (4)
Hearing 5 – Lobby groups (5) and lobby groups (6)
Hearing 6 – Music Canada / platforms (2) and lobby groups (7)
Hearing 7 – Scholars/researchers (1) and digital first creators (1)
Hearing 8 – Digital first creators (2) / lobby groups (8)
Hearing 9 – Digital first creator (3) / lobby group (9) / platform (3) / Lobby group (10)
Hearing 10 – Record Label / Lobby Groups (11) and Scholars/Researchers (2)
Hearing 11 – Scholars/Researchers (3) and Lobby Groups (12)
Hearing 12 – Scholars/Researchers (3) / Digital First Creators (4)
Hearing 13 – Statistician / Lobbyist (13) / Canada Media Fund / Lobby Groups (14)
As usual, the video we are following can be found on SenVu. As always, in terms of being thorough, nothing will beat the official video or official transcript. Nevertheless, we are happy to provide our own summary and add in our analysis of what was said. So, with that, let’s get inside this hearing.
Opening Statements
Robert Fenton of the CNIB (Canadian National Institute for the Blind) opened with his statement. He said that he supports Bill C-11, however, has some proposals for improving the bill. He notes that set top boxes do have voice assistance, however, it requires the aid of a sighted person to enable this. He wants those devices to be able to be set up without the aid of a sighted person. He also calls for news content over TV broadcasters as well as content available on services like Amazon Prime to have described video available. From there, he admits that this may be beyond the scope of the legislation, but also to increase access to print media on the internet.
Jean-Christophe J. Lamontagne of h264 opened with his statement. He spoke about aggregation and discoverability on platforms and how his technology aids in this.
Sam Norouzi of ICI Television opened with his statement. He said that Bill c-11 puts independent channels such as his at risk. He spoke about three areas that need clarification. The first is mandatory carriage. For the second, he mentions who this bill applies to. Third, he raises the issue of international trade risks.
He goes into detail about mandatory carriage and says that online services does not mandate terms of payments and, instead, leaves it to the streaming platforms to negotiate.
After that, he talked about who will be affected. He mentioned how Canadian broadcasters are moving their streaming services online where there are fewer rules. He wanted this amendment so that the CRTC can continue to regulate broadcast undertakings.
Finally, he said that there is comments about the CRTC imposing terms and conditions would increase Canada’s trade risk. He said that they believe this is a red herring (it’s not a red herring if the risk is real). He said that there is nothing in CUSMA that prevents the CRTC from setting terms and conditions (No, Bill C-11 is a violation of CUSMA). There is no clear trade risk with the amendment (Ambassador Tai and the non-discrimination provisions for the cultural sector disagrees). If you don’t amend the bill, you are putting at risk the future of Canadian public interest TV.
Questioning the Witnesses
Senator Leo Housakos opened the question and answer section. He noted that Norouzi supports the bill, but admits that the bill isn’t really getting it done.
Norouzi said that they support Bill C-11.
Senator Housakos commented that the terms and conditions are already at the purview of the CRTC. Norouzi agreed. They then spoke about where they land on the dial. They also talked about licensing. Senator Housakos asked about the new online players.
Norouzi responded that as more and more people are cutting the cord and transition to online streamers, he wants to still be available (start a YouTube channel. It’s free.). He said that he is asking that they be available on these streamers and that streamers pay their fair share to Canadian broadcasters. He feels that if they operate in Canada, that they should contribute to the Canadian broadcasting system in the same way traditional broadcasters do.
Senator Housakos commented that more and more broadcasters are turning to internet streaming. So his concern is that they need to adapt too. So, if they don’t make an arrangement with those streamers, wouldn’t they be left behind?
Norouzi responded that C-11 already deals with the issue of carriage. His service is already available online and you can stream it anywhere through their website. So, the only issue they are dealing with is how they are going to be distributed.
Senator Housakos said that now that they are up and streaming, is the revenue up?
Norouzi responded “no”.
Senator Housakos asked why not.
Norouzi responded that it’s because they are essentially a free service.
Senator Julie Miville-Dechene asked about the kind of power they have over platforms and discoverability. She asked about numbers of Quebec viewers.
Lamontagne commented that he has a certain level of influence. He spoke about licensing and Crave TV. He also spoke about working with streamers to, for instance, add a new section to their website for a documentary that he felt was important.
Senator Miville-Dechene notes that quotas in France are in place for French works that are produced. She asked about the quotas.
Lamontagne spoke about quota’s for francophone content and content for the European union. It was clarified that this does apply to Netflix.
Senator Paula Simons turned to Fenton and asked about described video. She said she heard that American streamers are currently ahead of Canada with online streaming.
Fenton confirmed her observation. He said that in order to avoid duplication, he asked for TV broadcasters to obtain the rights of described video.
Senator Simons said that when Senators began the process of understanding C-11, they were thinking of services like Netflix and Disney+ which showed their proprietary content. Throughout the course of their study, they noted the rise of platforms like Apple not only show their content, but other people’s content as well. The issue of CUSMA was raised. They had Global Affairs in to clarify the CUSMA issue, but despite many attempts, do not understand what it is that is in violation. (This was in reference to the very first hearing and Global Affairs was absolutely useless in that hearing.)
Lamontagne responded that he didn’t know. He asked for clarity.
Senator Simons said that when they proposed that streamers have a requirement to carry, the issue is that we would be creating an unfair trade advantage for Canada. Her staff had a meeting with Canadian Heritage and she still can’t establish what the CUSMA friction point is. (Section 19.4)
Lamontagne responded that things are moving fast in this field. He also mentioned the acquisition strategy of platforms. He said that every platform he’s met with has interest in Canadian content. Further, he comments that it has becoming increasingly difficult to reach out to platforms and have a channel open for dialogue.
Norouzi chimed in and said that he also doesn’t know what the issue is (still Section 19.4). He said that the issue was brought up previously when this legislation was known as Bill C-10 by the Parliamentary Officer without really explaining what the issue was. His colleagues commissioned a large law firm to find an issue and they didn’t find an issue (get a refund because they clearly failed you in what should have been a very easy task). So, there’s constantly this issue coming up, but nobody seems to want to explain what it is (way ahead of you on that one) and when we come up with an explanation that there isn’t any, they don’t go beyond that. So, they really don’t know what the issue is. They firmly believe that there is no issue (trust me, there is a very obvious issue), but for some reason, it just keeps coming back up (because there is a legitimate issue to be had).
He added that amendment that he is proposing doesn’t even affect the large streamers like Disney+. It only affects broadcast undertakings of other broadcast undertakings.
Senator Pamela Wallin said that she won’t get into trade issues, but she thinks it has to do with subjecting foreign based services to domestic laws (Ding! correct). They’ve seen this fight play out on a number of issues. She pointed out that the chair of the CRTC told them that he will require streamers to make broadcasters like ICI discoverable. So, really, what we are talking about is the money component. So, you really want money mandated to go to you from the streamers.
Norouzi responded, “yes”.
Senator Wallin then asked how he would judge that because it’s not the same contribution as, say, the CBC.
Norouzi responded, saying that obviously, it’s not the same. Different streamers have different business plans, so it’s not a blanket coverage. It’s about the ability for the CRTC to mandate.
Senator Wallin said that forcing streamers to contribute to a fund is going to happen regardless.
Norouzi responded that he doesn’t like the word forcing (well, it is accurate), but it’s requiring (kind of the same thing, isn’t it?).
Senator Walling said “asking”
Norouzi said that it’s requiring streamers to play by the rules that apply to broadcasting undertakings in Canada.
Senator Wallin said that it’s the money piece that he’s concerned about. Norouzi agreed.
Senator Wallin turned to Lamontagne said that his service is an aggregator and acts as a service for the platforms, correct?
Lamontagne responded that this is correct. He says that they act as a gatekeeper between the platforms and the content owners.
Senator Wallin noted that there are different platforms. A conversation with Netflix is very different from a conversation from YouTube.
Lamontagne responded, “100%”. He explains that the business models are very different, so depending on that business model impacts how they negotiate with the platforms.
Senator Wallin then asked what he wants the government role to be in that discussion of platforms of all different kinds. A question of price?
Lamontagne responded that he doesn’t think it’s a question of price. He commented that he couldn’t communicate with Google and was instead referred to the American headquarters.
Senator Wallin said that this is the distinction. She noted that discoverability is separate from the money issue.
Lamontagne responded “exactly”. He said that this is the first issue. He wanted to be able to also direct the placement of content.
Senator Wallin said that this is the issue. How does the government make his negotiations with Google go better?
Lamontagne responded by saying that it’s about being able to communicate with them because they refuse to work with them.
Senator Wallin asked what would he want government to do? Phone Google and say that they must talk to these people and the 500 or 5 million other people that are content creators?
Lamontagne responded that he doesn’t think it’s an issue of phoning them. It’s a question of whether they are able to deliver content to them. He’s not a lawmaker, but he thinks that there are ways to facilitate having Canadian companies who can deliver to Google. In regards to negotiations, he says that it’s very difficult to sign licenses. He doesn’t know if quota’s are the sole solution, but he said that negotiations with organizations represent a big portion of content creators in this country. None of them have access to those distributors.
Senator Wallin pressed and said that if he wants content up on YouTube and he wants french language content, he can just put it up.
Lamontagne responded to that by saying yes and no. You can put it up for free, but if you want the transactional part of it where you can rent or buy, you need to become a Google approved aggregator.
Senator Wallin said that she’s just trying to figure out what this bill, or some other bill, would force companies to negotiate over content. She doesn’t see how that would happen. Platforms, besides YouTube, get to choose what they put up, what they buy, what they invest in, what they show, that’s their model.
Lamontagne responded that he thinks that having a minimum of representation on the platforms or quota’s would be a solution and asking Google to acquire Canadian content through Canadian companies would be the way to go.
Senator Rene Cormier said that he is trying to better understand the business model. He wanted an explanation of the business model and guessed that he acts as an intermediary.
Lamontagne responded by saying that he takes a commission off of the sales and rentals of the content.
Senator Cormier asked if he could provide percentages.
Lamontagne responded that it’s 20% aggregators and 80% rights holders. For VOD, it’s 30% aggregagots and 70% rightsholders (oof, that’s steeper than I was expecting).
Senator Cormier asked if there are any issues with IP. Lamontagne responded that there are none because the rights holders retain the rights.
Senator Cormier said that since he works with algorithms that maybe he could better enlighten Senators how algorithms and discoverability works.
Lamontagne responded that algorithms are closed. They are airtight. It’s very hard to understand Netflix or Disney+ or others. They try to understand them, but they do not have full access. Some platforms use public databased like IMDB and Wikipedia and go from there. They use the same databases.
Senator Donna Dasko asked how different platforms may differ. If there are differences, could he share what the differences are in them that he found.
Lamontagne responded that his work is mostly with how they could affect them. He couldn’t give a presentation on individual ones, but rather, he works to try to influence the different algorithms. The biggest influence he can give is through lobbying and getting out those phone calls. He said that communication is important and that is the biggest issue that they face.
Senator Dasko said that this is interesting because he said that the algorithms are airtight, but at the same time, he could influence them.
Lamontagne responded that he can in some ways. He can’t explain how it works, but he can increase the chances that the work can be proposed by the algorithm.
Senator Dasko commented that she was studying Netflix and found out that they don’t use any demographic data. She asked if others use demographic data like age and so on.
Lamontagne responded that he was unable to obtain that information, unfortunately.
Senator Fabian Manning noted that some people say that companies like Netflix aren’t paying their fair share. Some say that the number is as low as 0.3%. However, in their submissions a while back, Netflix told them that since 2017, the have invested more than $3.5 billion in Canada (sounds like a reference to hearing nine, segment 2). He asked how he sees this improving when C-11 is enacted and becomes law.
Lamontagne responded that he is hoping that there will be more productions. Some see streamers as a big menace, but actually contribute to diverse production in Canada. He said that it is important for content to be produced local, but he added a warning that it is also important to think about domestic content being produced elsewhere. He said that it is also important that this content to be available on the platforms as well.
Senator Manning asked about how we should measure how much investment is sufficient for francophone content. IS it a percentage? Is there a dollar value? How do we measure that and reach a satisfactory level?
Lamontagne responded that in terms of how much investment, he said that he is not an expert in producing. He said that the biggest issue is the amount of titles.
Senator Bernadette Clement wondered about an analysis of gender based data as well as accessibility. She then asked Lamontagne about what he observed with regards to Canadian content and whether people will like the Canadian content that is placed on the platforms or whether Canadians don’t want to be forced to watch Canadian content.
Fenton responded that three is no accessibility lens to run legislation through. It’s been talked about since 1999, but the issue hasn’t gotten off the ground since then. He said that if the Senate wanted to explore this and make a recommend it, they would enthusiastically support it because it is long overdue.
Lamontagne said that he believes the opposite is true. Canadians need to watch Canadian content. He thinks it will improve the experience. He said that the consumption of Canadian content is done by people not necessarily looking for Canadian content. If the content is good, it will be watched everywhere.
Senator Wallin noted that Lamontagne noted that people search out the genres they want and the emotions. That seems to drive the algorithms. Yet, at the same time, Lamontagne mentioned that he spends most of the time lobbying the platforms rather than trying to drive audiences which dictates how the algorithms function.
Lamontagne asked if she could rephrased that question (in all fairness, I had to hear that twice to get her question to sink in, but I did get what she is getting at). He asked he should be working more towards the audiences as opposed to being towards the lobbying.
Senator Wallin agreed that this is the correct interpretation.
Lamontagne responded that, ideally, he would be putting all of his efforts towards the audience and drive them towards where the content is. However, as an aggregator, he made it a mission to first get that content on that platform and then drive the audience. The problem is that they have been pitching their content to the big platforms, but they do not acquire it except the big big films.
After that, the hearing concluded.
Concluding Thoughts
OK, first of all, I don’t know what is so hard to understand how the legislation violates CUSMA. Between a Senator who’s staff was unable to find it to the witness who talked about hiring a large law firm to find it and being unable to find it, apparently for them, it’s a big mystery as to why this issue keeps coming up. Uh, hello? This isn’t rocket science. It’s right there in Section 19.4 which reads as follows:
Article 19.4: Non-Discriminatory Treatment of Digital Products
1. No Party shall accord less favorable treatment to a digital product created, produced, published, contracted for, commissioned, or first made available on commercial terms in the territory of another Party, or to a digital product of which the author, performer, producer, developer, or owner is a person of another Party, than it accords to other like digital products.
Bill C-11 doesn’t just gently violates this, it rips up that section, wipes its rear end on it, flushes it down the toilet, drinks all the booze in the place, and leaves flipping the bird to everyone else in the process. The violations are about as blatant as it gets. When some random internet guy like myself can find this in the span of about 5 minutes for free, it puts into question what the heck that law firm was doing all that time it was paid to find this. If anything, I should be paid for finding this.
At any rate, the CUSMA/USMCA agreement is very clear, you can’t treat a digital service differently that originated outside of Canada. Bill C-11 mandates discoverability, paying to various content creation funds, and manipulates outcomes of algorithms. That doesn’t happen to anywhere near the same degree in the US. With this alone, trade tariffs to respond in kind is almost not a matter of if, but when and Canada would only have itself to blame for putting on the blinders and charging forward ignoring the consequences of their actions.
What’s more is that I’m not even sure this is the only section Bill C-11 violates. It would actually be a surprise if there wasn’t a whole raft of other provisions that C-11 runs afoul of. Heck, a US ambassador actually explicitly expressed concerns about Bill C-11 in the context of the USMCA, so this isn’t even some theoretical possibility being discussed, but seemingly a massive looming threat should this bill go ahead. I seriously doubt that a US ambassador would publicly air these concerns just for a cheap laugh.
Honestly, at this point, if you don’t see the trade implications, you had to put in effort to not see those threats.
Drew Wilson on Twitter: @icecube85 and Facebook.
