Canadian ISPs, artist groups butt heads over new media funding proposal

A Canadian Radio, Television and Telecommunications Commission (CRTC) proposal that more Canadian programming for the Web be funded by taxing ISP profits has sparked a heated debate – with ISPs and members of the artiste community expressing sharply differing views on the issue.

CRTC is the public authority that regulates Canadian broadcasting.

Few argue against more money for Canadian content. But the CRTC proposal that the approximately $100 million fund be created through a three per cent tax on ISP profits, hasn’t found favour with Canadian ISPs.

Many of them – especially smaller ones – say it’s already a struggle to stay afloat – and such an additional levy could put them out of business.

On the other hand, representatives of the artiste community – such as The Canadian Conference of the Arts – argue that ISPs should be contributing to Canadian programming the same way as other broadcasting companies do.

The issue has come to the fore right now because of the CRTC public consultation on new media being held this week in Gatineau, Que.

A key aim of the hearings is to ensure all broadcasting mediums –
including the Internet – contribute to the creation and presentation of Canadian programming, as required by the Broadcasting Act.

Many Canadian artistes worry they will be crowded out of a new media environment inundated with foreign content.

Canadian programming, they note, comprises only a minuscule part of the millions of videos, television shows and music tracks accessible online.

But ISPs here don’t believe looking to them to fund such programming is the answer.    

There can only be two ways for ISPs to generate revenue for artistes: either from their profits or by charging customers – and both aren’t really viable options, they say.

A three per cent tax on subscriber revenue would be huge burden for smaller ISPs, suggested Tom Copeland, chair of the Canadian Association of Internet Providers (CAIP), and president of Cobourg-based ISP,   

Many ISPs are self-employed and employ family members, he said, noting that his own company is owned by him and his wife, who share a “modest” salary.

Copeland said passing on the cost to customers would also be difficult for some ISPs, especially those serving remote areas, who already charge the maximum allowed by law. 

If adopted the proposal could also affect customer choice and selection, he said, as it could result in fewer ISPs.

With fewer players in the market it’s likely that controversial practices – such as traffic throttling (a practice admitted to by both Bell Canada and Rogers Communication) would get more pervasive.

“We’re not suggesting that we don’t want artistes compensated or that we don’t want more Canadian content,” said Copeland. “But telling ISPs to pay is an outdated business model because we have no point of control and no ability to influence users.”   

Copeland doubts a decision will be made on this difficult issue any time soon, especially since this argument is nothing new.

The debate dates back to 1994 when Canadian musicians wanted ISPs to pay for customers downloading their music free of charge.

It was brought up again in 1999, but the CRTC concluded regulation would be unnecessary, given the  small number of high-speed customers.

“Not much has changed since then,” Copeland said. “Artistes are still looking for the same thing – a royalty for having their music and video available free on the Internet.”

But he argues that ISPs are simply conduits. “They have no control over the content customer’s access, and ISPs who do – such as Rogers Video Channel or the Telus Music store, pay royalties.”

But this isn’t a view that many in the artiste community share.

The Canadian Conference of the Arts argued Tuesday, that ISPs should contribute to Canadian funding in the same way other broadcasting companies do.

A similar view was expressed by the Alliance of Canadian Cinema, Television, and Radio Artists (ACTRA). ISPs, they argued, benefit from customer’s downloading video because they use more bandwidth.

Copeland disagrees.

“I sell access to the Internet. That’s it. I don’t receive any direct benefit from my customers buying iTunes and have no way of influencing what my customers do.”

Other proponents of the tax have compared the ISP to a radio station or cable company – that have a definite influence over what their customers view.  

But Copeland does not believe they should be the ones held accountable.

He noted that TV companies can limit broadcasts, chooing which show to schedule and control, and what is placed in front of the customer. “In the case of the Internet, there are hundreds of sites people can go to and we can’t influence their choice.”

And there seem to be at least a few Canadian production companies who agree with this view.

Jay Moulton, president of Young Cuts Inc. does not believe funding for more Canadian content should come directly from the ISP. Young Cuts is a Montreal-based company distributing video for the Internet.

Moulton says the government must create enact policy regarding Canadian content online if they want to protect Canadian culture.

“Why not identify it as a tax so consumers are aware of why they are paying more? This may hold politicians accountable to their own promises of protecting Canadian content.”   

Moulton noted that many talented young Canadians are unable to pursue video production because they can’t access funding.

Right now, narrow interest groups often get most of the funds raised from other broadcasting mediums.

“I envision a more democratic funding process where smaller amounts are given to individuals rather than big amounts going to large groups.”

Ross Turnbull, general manager of Charles Street Video, a non-profit, artiste-run centre located in Toronto is also on the side of the ISPs.

“I’m all for funds to create more indigenous content. But a 3 per cent requirement to ISPs will inevitably get passed down to the consumers,” says Turnbull.

“Why not use government funding – more direct, legitimate way to improve Canadian content – the purpose of all of this?”

Seventy per cent of broadband users watch video over the Web, according to a Harris Decima poll.

A key argument advanced by the “fund” proponents — especially at ACTRA — is the money would help artistes who don’t get paid when their work is viewed or downloaded over the Web.

But others note that many artistes upload their and want people to view it for free.

Instead of trying to regulate such a large forum, Turnbull says the government should focus on improving funding to current groups, such as Telefilm or the Ontario Arts Council.

“Government should support mechanisms already created by public policy, which support actual Canadian artistes, rather than tax private businesses, such as ISPs.”

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Jim Love, Chief Content Officer, IT World Canada

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