Netflix vs. the CRTC

by | Sep 23, 2014 | Biz/Tech

By Karina Nowysz


Netflix is challenging the Canadian Radio-television and Telecommunications Commission’s (CRTC) authority by refusing to hand over subscriber data.

Last week during a very public fight on CRTC’s Talk TV proceedings, the CRTC demanded Netflix hand over data related to Canadian subscribers by Monday evening.

CRTC chair, Jean-Pierre Blais told Corie Wright, Netflix’s global public policy director: “ You operate under an exemption order that requires you to provide information. Failure to provide information puts at risk your exemption order. So the Commission is ordering you to provide the number of subscribers that you have currently in Canada by 5:00 p.m., Ottawa time, Monday.”

Despite the CRTC’s threat to remove Netflix’s exemption, the company did not comply because the CRTC did not absolutely guarantee confidentiality.

Dwayne Winseck, School of Journalism and Communications professor at Carleton University told Humber News, “the CRTC does have the right to request information from those provider services over the internet including Netflix,” under the Digital Media Exemption Order

“But nobody’s ever taken it down this path,” he said. “We are kind of in unchartered waters.”

“To do what this passage suggests would require basically to bring Netflix underneath the Broadcasting Act and that’s not going to happen,” said Winseck.

Mark Goldberg, a communication consultant and founder of Canada’s Telecom Summit told Humber News that the exchange between CRTC and Netflix could have been managed better.

“It was quite likely inappropriate for the CRTC to have threatened the removal of the exemption if Netflix didn’t comply with the order,” he said. “That’s a threat that is extremely unlikely to be carried out.”

“You don’t threaten a nuclear option unless you are actually willing to carry out the nuclear option,” said Goldberg.

Humber News contacted the Department of Canadian Heritage, which oversees the CRTC, regarding allegations that the government interfered in the CRTC’s proceedings.

The Director of Communications, Mike Storeshaw, said on behalf of the Minister of Canadian Heritage, that they are following the process closely and that the CRTC operates independently and at arm’s length from the government.

Despite that, Shelly Glover, the Minister of Canadian Heritage, tweeted this on Friday:

“Government has no place telling the CRTC during the regulatory proceeding that the CRTC should or shouldn’t be doing,” said Winseck. ‘It’s government meddling in an independent regulator.”

Although the CRTC had the right to request confidential data from Netflix, some say the CRTC’s jurisdiction is questionable.

Donna O’Brien-Sokic, Film and Television Production professor at Humber told Humber News that the law is out of date and Netflix is taking advantage.

“The goal now for CRTC is to force Netflix to play by the same rules as traditional Canadian broadcasters,” said O’Brien-Sokic. “The problem is that Netflix is not nor do they look at themselves as traditional Canadian broadcasters.”

“The definition of broadcaster has to be amended and updated,” she said.

Another issue is that Netflix is not a Canadian entity.

“They have no physical presence in Canada for tax purposes,” said Goldberg.

“So you’ll notice your Netflix bill doesn’t have HST charged,” he said. “As a non-Canadian entity, from a legal perspective, there’s a question as to whether Canadian laws can be applied to them.”

The ball is in the CRTC’s court in the coming days, “I really can’t imagine what the CRTC will do at this time,” said Winseck.