No need to amend New Media Exemption Order, CRTC concludes in Internet retransmission report to CabinetThere is no need to amend the New Media Exemption Order to take into account a new crop of Internet-based television retransmitters, the CRTC ruled today in a much-anticipated report on the issue (Broadcasting Public Notice 2003-2). Responding to Cabinet’s request for an inquiry into Internet retransmission (CNM, July 25/02), the commission has ruled that while Internet retransmission of over-the-air TV signals has the potential to foster innovative new business models, and is unlikely to compete directly with traditional broadcasting for the forseeable future, the practice still has the potential to do significant damage in relatively short order. In its ruling released this morning, the commission states that it, "considers that Canadian Internet users would have to demonstrate a substantial interest in accessing programming on their computers before Internet retransmission could become a substitute for licensed over-the-air broadcasting or distribution undertakings." Further, "the Commission’s assessment of the record of this proceeding is that Internet retransmission, at this stage of its development, is not a substitute for the activities of existing licensed distributors and over-the-air-radio and television broadcasters. Further, in the Commission’s view, Internet retransmission could only become a substitute for conventional broadcasting and distribution services if and when it can provide a service comparable in price, choice and quality. In the Commission’s view, significant capital investment in infrastructure and the development of successful business models will be required before this can occur." But while the commission leans toward the view that Internet retransmission will remain on the margins of broadcasting as a competitor for years to come, it recognizes the concerns of several parties in enumerating the damage the practice might have. The commission lists several potentially damaging effects of giving Internet retransmitters the same rights to a compulsory licence as cable companies and satellite TV providers, including: a reluctance by foreign rights-holders to license programs to Canadian over-the-air broadcasters; undermining the potential for Canadian broadcasters to obtain additional revenues by licensing programs to foreign markets; the potential for banner advertising on Internet retransmissions to lower the value of advertising time sold by broadcasters; and a reluctance on the part of Canadian producers to sell to over-the-air broadcasters rather than safer specialty and pay services. "If Internet retransmitters were to be granted access to the compulsory licensing provisions of the Copyright Act, the Commission considers it possible that at least some of the negative consequences described above would manifest themselves relatively quickly. Further, the Commission considers that these disadvantages would likely outweigh any positive benefits that Internet retransmission might bring to the Canadian broadcasting system," the CRTC report notes. "In light of the above, the Commission does not consider it necessary or appropriate to require the licensing of Internet retransmitters. Rather, Internet retransmission undertakings should remain exempt from these and from other requirements under Part II of the Broadcasting Act. In addition, since the recent amendments to the Copyright Act address the main concern identified in this proceeding, the Commission sees no need to amend the New Media Exemption Order at this time." Internet retransmitters hoping for some new class of licensing will likely be disappointed in the ruling, though they will continue to have the option of applying for a broadcast distribution licence subject to the requirements and conditions that entails. But, since the passing of Bill C-11, the loophole that apparently gave Internet companies such as JumpTV.com Canada Inc. the right to operate outside of traditional broadcast rules while taking full advantage of the right to retransmit over-the-air signals without the permission of broadcasters or program rights-holders has apparently been closed (CNM, Dec. 20/02). Bill C-11, given Royal Assent late last year, is still not in effect, however. It had been suggested that the departments of Industry and Canadian Heritage were looking to the CRTC for guidance before proclaiming the bill as law. At least one party, Aliant Telecom Inc. is seeking a delay in the coming-into-force date for the bill to give it time to protect its TV-on-my-PC service, the over-the-air signal components of which will run afoul of the Copyright Act when Bill C-11 takes effect. Canadian NEW MEDIA will have further details on the CRTC ruling including industry reaction in its upcoming issue.