National Newswatch Op-Ed: Is Canada's Digital Activism Worth the Risk?


National Newswatch Op-Ed: Is Canada’s Digital Activism Worth the Risk?

By DiMA President and CEO Graham Davies

Like many governments globally, Canada frequently finds itself racing to keep up with the fast pace of technological advancement. We live in an era where regulatory frameworks crafted nearly decades ago are now as outdated as the cassette tapes and CDs once used to listen to music. Given this mismatch between modern digital realities and archaic legislation, it is no wonder governments feel an urgent need to update their laws. However, the pressure to adapt quickly should not outweigh the importance of doing so thoughtfully and meticulously.

Ongoing implementation of the Online Streaming Act serves as a prime example of legislation where the risks far outweigh the rewards.

The U.S. Government is watching C-11 implementation closely. The United States Trade Representative (USTR) recently highlighted the Online Streaming Act in its National Trade Estimate Report on Foreign Trade Barriers. USTR Ambassador Katherine Tai was questioned about the Canadian Online Streaming Act during a recent Congressional hearing. Specifically, Republican lawmakers were asking her point blank whether this act will impose financial obligations on U.S. companies. (Spoiler alert: It might).

This coincides with the Government of Canada’s announcement of its intention to levy a Digital Services Tax on foreign tech companies in the most recent federal budget. This move has not gone unnoticed by the United States. During a recent session of the US Congress Ways and Means Committee, US Secretary of the Treasury, Janet Yellen, emphatically stated, “We are trying as hard as we can to get rid of digital service taxes that we regard as discriminatory against U.S. firms.” Additionally, last fall, the US Ambassador to Canada expressed the Biden Administration’s concerns regarding the proposed DST. Despite these explicit warnings suggesting potential repercussions from the US government, Canada is proceeding with its plans. This decision to act unilaterally appears particularly risky in a U.S. election year, where protecting U.S. workers is expected to be a pivotal issue on the campaign trail.

The Trudeau government had previously directed the CRTC to clearly define what constitutes Canadian Content before making decisions on new financial obligations. This logical and prudent approach is intended to ensure that any new fund is accurately targeted and effective, and that it supports the growth of Canadian culture in the digital age without imposing undue burdens on international services. Yet, this logical sequencing has been overlooked by the CRTC.

As the voice of music streaming services, we have been vocal about our concerns for months. The industry predicts not only higher prices for the average Canadian but also a degraded user experience if the CRTC continues on its current policy path. When you bundle in the risk of a trade dissent with the U.S., the unintended consequences of this approach continue to mount. The implications of this are not just domestic; they extend internationally, potentially affecting trade relations with the United States.

It is clearer by the day that a rethink is needed. The CRTC needs to follow the directive previously set by the federal government and define CanCon before any new funds are established. Furthermore, the federal government must fully examine the unintended consequences C-11 implementation is now revealing. Finally, this government must recognize that in an affordability crisis, any new costs to businesses are synonymous with new costs to consumers. And consumers watching the price of gas, groceries and housing are in no mood for another hit to their household budgets.

The good news is there’s a better path forward. A more balanced and thoughtful approach to implementing the Online Streaming Act that aligns more closely with the government’s guidelines and engages constructively with international stakeholders will ensure Canada’s cultural policies enhance rather than hinder the digital media landscape. If the CRTC fails to recognize its approach is flawed and poses too many risks, the Trudeau cabinet must intervene.

The decisions made today will define the future of digital media regulation in Canada. There is time to change course, before the current path leads Canada to diminished cultural and economic strength.

You can find the op-ed on National Newswatch here.