Retransmission battle lines publicly drawn as regulations proposed for Bill C-48

As expected, industry stakeholders are expressing mixed views on proposed regulations by the federal government to close an apparent loophole in Canadian copyright law that seemed to allow companies such as JumpTV.com Canada Inc. and iCraveTV Inc. to operate. The draft regulations, contained in a consultation document circulated to industry stakeholders for feedback on March 19, propose the establishment of a new category of Internet retransmitter with significant operating restrictions (CNM Update, Mar. 21/02). Some parties say the consultation document represents a reasonable compromise among the various interests, but others say it has serious flaws. The consultation document, prepared by the departments of Canadian Heritage and Industry Canada, and obtained by Canadian NEW MEDIA, spells out several options for defining Bill C-48, all of which are couched in Internet-specific language. On March 22, a group of industry stakeholders met with Heritage and Industry officials to discuss the proposals behind closed doors. As expected, the meeting highlighted predictable opposition by all parties to various suggested regulations. Some participants tell CNM that the meeting will likely be followed by more public consultation. It’s also been suggested that the departments will embark on a technical fact-finding mission to establish the possibility of setting various territoriality thresholds. While the exact definition of a "new media retransmitter" remains to be hammered out, several options for restricting their operation are on the table. Most contentiously, territorial restrictions proposed for new media retransmitters would see those entities operate only as subscription services, with stringent conditions on monitoring and quickly shutting down unauthorized reception. The departments have also proposed a ban on banner ads. The consultation document, with the draft title Retransmission Conditions Regulations, sets out in six sections proposed regulations that must be in place before Bill C-48 can proceed to a hearing by the Standing Committee on Canadian Heritage. C-48 is a response by Canadian Heritage and Industry Canada to demands by broadcasters and content producers that operations such as JumpTV and iCraveTV be prohibited from retransmitting North American off-air signals to viewers via the Internet. While the bill’s introduction has widely been seen as accomplishing those goals – largely the result of a high-profile spin campaign by the Canadian Association of Broadcasters and the Canadian Film and Television Production Association – the bill, in fact, only put power to make specific regulations in the hands of the Governor in Council. Now, the industry has before it a compromise position that’s unlikely to leave either broadcasters and producers, or JumpTV and its allies, fully satisfied. The consultation document, which does not reflect final policy determinations, first spells out two options for a "new media retransmitter" being weighed by the departments. First, the term could be defined as a person who carries on a broadcasting undertaking under the exemption order for new media issued by the CRTC in 1999 and who wouldn’t otherwise qualify as a lawful broadcasting undertaking without a licence. Or, in a second option, the departments are considering a more broadly-termed definition, which states simply that a new media retransmitter would be one that carries on a broadcasting undertaking by delivering or providing access to their signal over the Internet or a "comparable international network." In the second and likely most damaging section for operations such as JumpTV, the departments set out several proposed measures dealing with a territorial restriction. Among them, the departments are asking for feedback on suggestions that new media retransmitters could only broadcast to people "individually authorized to receive the retransmission only in Canada, and who under terms of that authorization submit to the new media retransmitter a separate request prior to the initiation of each discrete period of reception of the retransmission." Neither JumpTV nor iCraveTV have yet proposed working on such a pay-per-view, subscriber basis. In several more proposals, the departments propose new monitoring obligations to ensure that signals are only being received in Canada, though the language is sufficiently flexible to account for reasonable certainty – a concession that’s short of the broadcasters’ demands that there be 100% territorial protection guarantees. For example, the departments propose that new media retransmitters be forced to take action against hacks only if "those measures are available to the public and are being used for that purpose…" Still, it’s likely JumpTV and its allies will attack the proposed regulations as unfair since they would apply only to Internet companies. Although the consultation document later makes mention of new requirements for territorial restriction on direct-to-home (DTH) satellite TV signals, neither cable companies nor DTH operators are required to operate in such fashion. The following two sections reinforce the measures that would be required to ensure a territorial restriction. In section five, and likely to stir up new controversy in the satellite TV industry, the departments have apparently taken JumpTV’s argument that DTH leakage into the United States is becoming a problem and proposed a new territorial restriction with technological enforcement on DTH players. Last fall, JumpTV lawyer Sunny Handa quoted from CNM affiliate publication Canadian Communications Reports to highlight that leakage was not limited to Internet players, and argued that it was unfair to require foolproof protection by JumpTV and other Internet retransmitters. In its consultation document, however, the departments note that DTH transmissions from Canada are already technologically protected to the satisfaction of rights-holders. However, the departments have apparently considered the technology neutrality of the bill and are also soliciting input on whether a single measure of territorial restriction should be imposed on all retransmitters, regardless of which platform they choose. Finally the departments are seeking input into a proposed ban on banner ads with the exception of ads by the retransmitter explaining or touting their goods and services. The departments note that the consultation document is a draft paper for working purposes only and that final wording of the regulations as prepared by the Department of Justice may vary from the wording contained in the document once policy decisions have been made. Several interested parties were quick to respond to the draft regulations when contacted by CNM following their release. For its part, the Canadian Cable Television Association (CCTA) is generally pleased with the departments’ proposals. Counsel Jay Kerr-Wilson tells CNM that the document represents a reasonable compromise among the various interests. "From our point of view, our concern was that the legislation should be technologically neutral and not create a barrier to the use of innovative technology by cable companies and I think it actually achieved that," he says. "So, for instance, I note that they try to define a class of a new media retransmitter and set the standard for territorial retransmission…It will be up to the retransmitter to decide whether or not they can actually meet the standards but I think that the standards are fair. Depending on the technology, I think it at least provides protection to the rights-holders that they should find reasonable." All parties with whom CNM has spoken tend to agree that, if the current proposed regulations stand, the back-end software infrastructure to monitor and enforce territorial monitoring may be prohibitively expensive. Kerr-Wilson says that isn’t an unreasonable demand. "Cable architecture and DTH architecture isn’t cheap. This is a capital-intensive business no matter which technology you use. I don’t think it’s an unfair disadvantage to these people. They’ve got a technological advantage because of the nature of the Internet…I won’t say that we want them to spend as much money as we do. But what I’m saying is that you have to spend money to ensure you have a secure product. Because if you don’t have a secure product, the (system) is going to be threatened." The Canadian Association of Internet Providers (CAIP) won’t go as far as to say the consultation document is a good one, chiefly because of opposition to the ban on banner advertising. President Jay Thomson says the restriction effectively dictates which business models may evolve or not, which would in turn influence whether or not ISPs eventually join the retransmission game. Thomson says it’s still early days for the discussion, however, and predicts more fractious negotiations ahead. "It’s a working document but I think there’s still a lot of politics and policy discussion that has to take place. I foresee a lot of battling still to come." Interestingly, the Canadian Association of Broadcasters (CAB), and Canadian Film and Television Production Association (CFTPA) have had very different reactions to the proposed rules. For its part, the CAB has broken its public silence on C-48 to confirm what many have suspected – that the association is displeased that the bill isn’t restrictive enough on Internet retransmitters. "We were pleased that the government took swift action to introduce Bill C-48," says CAB president/CEO Glenn O’Farrell. "However, the regulations outlined last week do not address the Minister of Canadian Heritage’s clear intention to close the loopholes. "The departments of Industry and Canadian Heritage are trying to find a balance where there is no balance and these regulations do not achieve that. We, the CAB, are not alone in this opinion. The majority of the stakeholders who attended the consultation agree with the CAB that these regulations pander to the Internet renegades, who poise themselves as new technology entrepreneurs. We need to remember that innovation cannot be based on theft." The CAB’s main partner in the Media Content Coalition, which was formed to fight Internet retransmission (at least initially), is more forgiving. In a candid interview with CNM, Stephen Stohn, chair of the CFTPA’s copyright and international policy committee, uses new conciliatory language to describe the document that bodes well for a mutually satisfactory conclusion. "I think that if JumpTV gets into a real subscription model, where they’ve got live people they know are in Canada, that’s really what we want to end up with," he says. "Because in the end, we want our product on the Internet. That’s the business of the future, of getting our product into the hands of consumers and it’s going to be through the Internet in one way or another. So, we want to promote these kinds of technologies and even promote the JumpTVs – not the JumpTV take-it-off-the-air-for-free technology but putting it there with our consent and marketing it to consumers." Congratulating the government for the consultation paper’s direction, Stohn says all parties including JumpTV have come closer on the issue of territorial protection, satisfying producers’ major concern with Internet retransmission. "In the very beginning, we were promoting a complete ban on the Internet and we’ve certainly moved from that. We’ve said, no, we’ve got to embrace the Internet, but do it in a way that offers the necessary protections." He adds that the CFTPA is comfortable with the draft regulations’ wording on territorial restriction, though he concedes it may be expensive to implement. Still, Stohn says, "what I can say in terms of stringing miles and miles of coaxial cable and fibre and everything that cable needs, it will be a minute fraction of the cost." On the other side of the table, however, JumpTV lawyer Sunny Handa is quick to point out several points with which he takes exception in the proposed regulations. Chief among them is his interpretation of a bias in the rules that discriminates against new media retransmitters on a technological basis. For example, he says, rules governing monitoring of the signals doesn’t apply to cablecos or DTH operators. "They are being grandfathered into this new regime with no additional technological measures being imposed on them. They have got a technologically neutral regime for traditional cable but the government may be shooting the cable industry in the foot and the cable industry may not even know it yet. What’s happening is they’re preventing new media retransmission from using banner advertising. But what about cable companies that start to use banner advertising next to their signals or have a combo box? They shouldn’t be allowed to do that either and they may not by the way they’ve structured the regulations." He adds: "Heritage is potentially going to kill any attempt to use a retransmitted signal, on cable or otherwise. (Cableco) Vidéotron has experimented with this stuff, where you have a web page on part of the screen and your TV on another part of the screen. At that point, what happens? Web pages do typically contain advertising. Are you allowed to do that? Will that then kill cable companies who want to offer that service? Has anyone even thought about this problem?" Handa also has questions about some of the proposed language, including a demand to clarify the "discrete" viewing period the government would require new media retransmitters to monitor. Overall, he says, he’s disappointed with the number of new requirements placed on Internet retransmitters and questions whether copyright law is the most appropriate vehicle. Though new media companies were exempted from CRTC regulation in 1999, he says the feds are using copyright law to enforce conditions. "The government is using copyright as sort of a stick to make JumpTV comply in a way with regulations that even the CRTC is not making us comply with…They are convoluting copyright and broadcasting policy all together. Copyright is about copyright. It’s not about broadcasting policy…The Copyright Act is not a catch-all for all sorts of policies…That’s what these regulations, I think, are doing."

Retransmission battle lines publicly drawn as regulations proposed for Bill C-48

Broadcast | March 27, 2002

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