The day after Netflix Inc. defied an order from Canada’s broadcast regulator to hand over its subscriber data, the U.S. video-streaming service insisting it was not bound by Canadian regulations, legal observers said the commission has little recourse to force the matter besides taking the company to court.
If the Canadian Radio-television and Telecommunications Commission does resort to that however, it could put the very power of the government to regulate internet content to the test — and the government may not like the outcome.
The CRTC and Netflix are currently stuck in a stalemate over several orders for commercially sensitive information the commission made at a hearing Friday. After a tense exchange, the CRTC ordered Netflix to provide the information by the end of the day Monday or risk being forced to play by the same rules as other Canadian broadcasters.
On Monday, Netflix filed a portion of the information the CRTC asked for, but said it will not provide data the company considers confidential. Netflix said it believes the CRTC didn’t have the power to issue the order in the first place.
If the CRTC and Netflix can’t come to an agreement, the CRTC would have to convince the attorney general to charge Netflix with violating the Broadcasting Act, said Lawson Hunter, a regulatory lawyer with Stikeman Elliott LLP and a former BCE executive. That would put an interesting question before the courts: Is online video covered by Canadian broadcasting law?
“If Netflix is a broadcaster, then so is YouTube. So is anybody who posts anything on the Internet,” Mr. Hunter said. “We’re in an interesting time.”
The origin of the standoff can be traced to 1999, when the CRTC decided that while the Broadcasting Act gives it jurisdiction over the Internet, it chooses not to apply the same regulations that traditional broadcasters have to follow. The exemption order for online media still carries certain responsibilities, however, such as providing information to the commission if asked.
“At the time, people were not absolutely certain that was right… but nobody said anything,” Mr. Hunter said. “It seemed like sort of a nice way to avoid a tricky problem.”
That convenient solution went up in smoke Friday morning, when CRTC chairman Jean-Pierre Blais threatened to enforce the Broadcasting Act in relation to Netflix if it didn’t comply with orders to provide information, said University of Ottawa professor Michael Geist.
“I’m not sure if it was the heat of the moment or if that was the clear intent,” Mr. Geist said. “I think it was a mistake.”
I think the CRTC needs to cool it a little
It’s also unclear whether YouTube owner Google Inc. complied in full with the CRTC’s requests for information. Neither Google nor the CRTC were available for comment Tuesday.
Mr. Geist and Mr. Hunter said both sides would have a strong case if the issue of whether the CRTC has jurisdiction over Netflix went to court. If Netflix won, however, that would mean the CRTC doesn’t have the power to regulate other online video providers either, leaving it powerless over a medium that’s growing its audience while traditional cable companies’ viewership shrinks.
“They have to be very careful that this order doesn’t disappear, because then they have no control,” Mr. Hunter said.
If the CRTC decides to follow through on its threat, it would be without the backing of the federal Conservative government, which has repeatedly said it will not stand for any attempts to regulate the Internet. Mr. Geist said he also thinks trying to force Netflix to comply with Canadian broadcasting laws would be unpopular with the general public.
As for the opposition, NDP heritage critic Pierre Nantel said he was offended by the disrespect both Netflix and the government have shown the CRTC, although he declined to say whether he would support the commission pursuing the issue in court. Liberal industry critic Judy Sgro said her party also opposes regulating Netflix or forcing it to pay into a fund to support Canadian content and thinks the CRTC should take a less confrontational approach.