No tax on in­ter­net ser­vice providers, Joly in­sists

TELE­COM

National Post (Latest Edition) - - FINANCIAL POST - Emily Jack­son Fi­nan­cial Post

• Cana­dian Her­itage Min­is­ter Mélanie Joly re­it­er­ated there will be no tax on in­ter­net ser­vice providers, but it’s not clear how she plans to get new dig­i­tal play­ers to sup­port Cana­dian con­tent as broad­cast­ing shifts to the in­ter­net from tele­vi­sion.

“I’ve said it in June, the prime min­is­ter also said it in June, there will be no ISP tax,” Joly told re­porters af­ter dis­cussing her Cre­ative Canada strat­egy at the Em­pire Club of Canada in Toronto on Thurs­day.

Joly out­lined the need to mod­ern­ize the broad­cast and tele­com acts for the in­ter­net era on the same day Canada’s broad­cast reg­u­la­tor, at her re­quest, em­barked on a mis­sion to fig­ure out how Cana­di­ans will con­sume au­dio video con­tent in the fu­ture and how new plat­forms can sup­port con­tent cre­ation.

The Cana­dian Ra­dio-tele­vi­sion and Telecom­mu­ni­ca­tions Com­mis­sion launched a con­sul­ta­tion on how th­ese new ac­cess mod­els will “en­sure a vi­brant do­mes­tic mar­ket that is ca­pa­ble of sup­port­ing the con­tin­ued cre­ation, pro­duc­tion and dis­tri­bu­tion of Cana­dian con­tent.”

“We will be work­ing with the CRTC to un­der­stand what are the new play­ers in the sec- tor and also how can there be new ways of sup­port­ing Cana­dian con­tent,” Joly said.

“In the con­text of stream­ing ser­vices, our leg­is­la­tion right now doesn’t deal with the re­al­ity of the in­ter­net.”

Canada’s ex­ist­ing sys­tem was set up for a broad­cast world where con­tent was con­sumed on ra­dios and tele­vi­sion screens. In this world, broad­cast­ers are re­quired to con­trib­ute a per­cent­age of rev­enue to fund Cana­dian pro­gram­ming. But the funds avail­able for lo­cal cre­ators have de­clined as tele­vi­sion rev­enues stag­nate.

Many have eyed the new plat­forms where con­sumers ac­cess con­tent — namely, stream­ing ser­vices such as Net­flix Inc. and in­ter­net ser­vice providers — as pos­si­ble sources to make up for the lost broad­cast rev­enue. Many oth­ers have de­cried any levy on th­ese ser­vices as a ter­ri­ble idea that tries to squeeze new tech­nol­ogy into an an­ti­quated sys­tem.

While Joly is clear that she does not in­tend to tax ISPs in the mod­ern­ized sys­tem, she did not re­veal any ideas on new ways th­ese new play­ers will sup­port CanCon in the re­jigged en­vi­ron­ment.

She did, how­ever, say the $ 500- mil­lion i nvest­ment from Net­flix an­nounced in late Septem­ber had noth­ing do with its stream­ing ser- vices, merely with its plans to open a lo­cal pro­duc­tion house.

“There was no dis­cus­sion of whether we should or not leg­is­late dig­i­tal plat­form ac­tiv­i­ties. This was not part of the con­ver­sa­tion,” she said. Rather, she framed the in­vest­ment as a vote of con­fi­dence in lo­cal crews, in­fra­struc­ture and sto­ry­telling, which she said com­pelled Net­flix to do more busi­ness north of the border.

When it comes to stream­ing, Joly noted that dig­i­tal plat­forms don’t fall un­der ex­ist­ing leg­is­la­tion — they were pur­pose­fully ex­empt by the CRTC in 1999. In­stead of ig­nor­ing the new play­ers, how­ever, she started con­ver­sa­tions in Sil­i­con Val­ley.

“They’re present… they won’t go away,” she said, adding that 22 mil­lion Cana­di­ans use Face­book and one in two house­holds (more than 6 mil­lion) have a Net­flix ac­count.

“Of course we want to con­tinue to have th­ese con­ver­sa­tions, but at the same time my job is to grow the sec­tor and pro­tect Cana­dian cul­ture,” she said.

The CRTC has un­til June 2018 to re­port back to the govern­ment on fu­ture dis­tri­bu­tion mod­els and how they will con­trib­ute to the con­tin­ued cre­ation, pro­duc­tion and dis­tri­bu­tion of Cana­dian con­tent. Pub­lic con­sul­ta­tions are open un­til Nov. 24.

Mélanie Joly

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