ISPs provide mere ‘mode of transmission,’ Supreme Court says

The Supreme Court of Canada issued a decision Thursday that said Internet service providers (ISPs) do not carry on broadcasting activities under the Broadcasting Act and merely provide a “mode of transmission.” Canadian cultural groups had appealed the issue to the Supreme Court after a Federal Court of Appeal decision last year said ISPs play a “content-neutral role” in the transmission of data and do not carry on broadcasting activities. The cultural group coalition argues that ISPs should be required under the broadcast regulations to make contributions to Canadian content funds like cable and satellite broadcast distributors. The Supreme Court decision Thursday sided with the lower court. “An ISP does not engage with these policy objectives when it is merely providing the mode of transmission,” the Supreme Court said. “ISPs provide Internet access to end-users. When providing access to the Internet, which is the only function of ISPs placed in issue by the reference question, they take no part in the selection, origination, or packaging of content. We agree with Noël J.A. that the term 'broadcasting undertaking' does not contemplate an entity with no role to play in contributing to the Broadcasting Act’s policy objectives.” The CRTC referred the question to the Federal Court of Appeal in 2009. Maureen Parker, executive director at the Writers Guild of Canada (WGC), said in an interview that the Supreme Court decision is disappointing because the group considers ISPs to be broadcast undertakings. “These are fully integrated businesses that follow fully integrated viewing patterns, and they should be under the jurisdiction of the CRTC and under the Broadcasting Act,” she said. The Supreme Court said it relied on a 2004 decision, SOCAN v. CAIP, “to conclude that since ISPs merely act as a conduit for information provided by others, they could not themselves be held to communicate the information.” The cultural group coalition, made up of members from the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), the Canadian Media Production Association (CMPA), the Directors Guild of Canada (DGC) and the Writers Guild, said in a release Thursday that the decision shows that “principles of the Broadcasting Act are sound, but their application remains inconsistent.” John Barrack, chief operating officer and chief legal officer at the CMPA, said in an interview that the decision means the production industry should watch ISPs' activities going forward. “If they start to manipulate content in any way, that’s a different beast, and we’ll have to look at it in that context,” he said. Barrack said the Canadian broadcasting industry is changing and will continue to change, and as those changes happen, the CRTC and the government will have to decide whether the Broadcasting Act or the broadcasting regulations need modification. “It’s a new world,” Barrack said. “What we’re saying is that the commission needs to recognize that it has powers in that new world under the Broadcasting Act, and we need it to seriously look at those powers and consider what it should do as broadcasting is changing.” The Supreme Court noted in its decision that the Broadcasting Act makes it clear that “broadcasting undertakings” are assumed to have some control over programming. It acknowledged that the policy objectives listed under section three of the Broadcasting Act focus on content issues “such as the cultural enrichment of Canada, the promotion of Canadian content, establishing a high standard for original programming, and ensuring that programming is diverse.” These are not responsibilities of ISPs because “they provide access through the Internet to ‘broadcasting’ requested by end-users,” the court said. The appeal, heard by the court on Jan. 16, 2011, was dismissed with costs, which means the cultural groups are expected to pay a portion of the respondents' legal costs. The respondents in the case were Bell Aliant and Bell Canada (subsidiaries of BCE Inc.), Cogeco Cable Inc., MTS Allstream Inc., Rogers Communications Inc., Telus Communications Co., Videotron Ltd. (a Quebecor Media Inc. company) and Shaw Communications Inc. Parker told The Wire Report that, although the appeal was dismissed, the coalition will continue its work on the file. “While we are disappointed, we have plans to move forward and ensure that ISPs properly contribute to the Canadian system,” she said. She didn't elaborate on those plans other than to say the group will monitor the consumption of programming online. As viewing patterns shift towards online services, it will be important to ensure ISPs make financial contributions, Parker said. “Under the regulated system, BDUs must contribute to the Canada Media Fund (CMF),” she said. “But under the unregulated system, ISPs contribute nothing to the creation and production of Canadian content.” Rogers spokeswoman Leigh-Ann Popek told The Wire Report in an email that “we’re very pleased that the court made the right decision.” BCE spokeswoman Jacqueline Michelis also said in an email that Bell is “very pleased” with the court’s decision. “It leaves no doubt that ISPs are not broadcasters just because customers access broadcast content over the Internet,” Michelis wrote. “Any other decision would have allowed the CRTC to impose a levy on ISPs’ Internet revenues to pay producers for new media content, something that would harm consumers and stifle innovation,” she said, adding that the decision ensures this won't happen. dgrenier@thewirereport.ca

ISPs provide mere ‘mode of transmission,’ Supreme Court says

News | February 9, 2012

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