CREATION OUT OF DESTRUCTION REINVENTING CANADIAN ONLINE REGULATION IN THE DIGITAL ERA Presentation made to Leg@l.IT 6.0 Montréal, April 2, 2012 Dr. Sunny Handa
The Legal/Regulatory Landscape
THREE PILLARS OF CANADIAN COMMUNICATIONS LAW/REGULATION Telecommunications Act Broadcasting Act Radiocommunication Act 3
TELECOMMUNICATIONS ACT Strong players due to former monopoly status Foreign ownership and control restrictions (soon to be lifted in large part) Effectively economic regulation Price cap regulation for tariffed services 4
BROADCASTING ACT Effectively cultural regulation Applies to the transmission of "programs" to the public Broadcasters include: Programming undertakings Distribution undertakings Networks New Media undertakings? Currently exempt 5
BROADCASTING ACT (CONT D) Licensing and registration regime Foreign ownership and control requirements Contribution to production fund Canadian content requirements 6
RADIOCOMMUNICATION ACT Authorizations and licences for use of spectrum including receiving and transmitting of wireless transmissions Equipment certification 7
OTHER AREAS OF LAW AFFECTING THE COMMUNICATIONS INDUSTRY Copyright law: Property rights for content Competition law: In the absence of sector specific economic regulation, competition law ensures the proper functioning of the market Criminal law: Covers extreme online behaviours 8
DESTRUCTION/DISRUPTION TECHNOLOGIES AND BUSINESSES Films Netflix Available in Canada with a growing library New Media Decision CRTC: Over-the-top services escape regulation Argues that ISP Bandwidth caps are still a constraint 9
DESTRUCTION/DISRUPTION TECHNOLOGIES AND BUSINESSES (CONT D) Books Amazon.com: Kindle Available and very successful in Canada Certain copyright protections in place for exclusive distributors Highly complex rules Antiquated rules Currently U.S. publishers have raised prices for Kindle books in some cases higher than for physical books 10
DESTRUCTION/DISRUPTION TECHNOLOGIES AND BUSINESSES (CONT D) Radio Pandora.com Not yet in Canada Copyright tariff rates remain very high Benefits from New Media Decision (i.e. exemption) 11
DESTRUCTION/DISRUPTION TECHNOLOGIES AND BUSINESSES (CONT D) Music distribution itunes Not regulated Very successful in Canada Amazon.com s service and others are following suit 12
DESTRUCTION/DISRUPTION TECHNOLOGIES AND BUSINESSES (CONT D) Television Hulu Not available in Canada due to copyright licensing issues CRTC: Over-the-top services escape regulation Amazon a potential acquirer (Business Week)? Others? 13
DESTRUCTION/DISRUPTION TECHNOLOGIES AND BUSINESSES (CONT D) VoIP Telephony CRTC: 2005-28 PSTN connected VoIP services are regulated as resellers Pure Internet calling escapes regulation Cable companies and telcos Regulated as with other equivalent services 911 and other services are still a problem with nomadic VoIP 14
PRESSURES ON THE EXISTING LEGAL REGIME Telecommunications (facilities based) Continued concentration Need for regulatory oversight? By whom? Vertical integration fears Net neutrality Usage based billing Foreign ownership and control restrictions limit foreign company competition 15
PRESSURES ON THE EXISTING LEGAL REGIME (CONT D) Broadcasting Covers all forms of distribution (e.g. cable and channels) Vertical integration concerns Buying content owners ( undue preference concerns) Asymmetry in regulation Canadian content Foreign ownership and control 16
PRESSURES ON THE EXISTING LEGAL REGIME (CONT D) Copyright Current regime does not accommodate the needs and reality of the digital world we are in New digital bill (C-11) will be passed (this time) Technical protection measures Cloud drives Expanded fair dealing Search engine exceptions Won t solve pricing issues 17
CREATION: LOOKING TO THE FUTURE Will borders be meaningless? Will IP laws continue to be separated along country lines? Server havens? How will Canada be affected? Canadian content rules (cultural effects) Will there be a Canadian industry (economic effects)? 18
CREATION: LOOKING TO THE FUTURE (CONT D) What will the Industry look like? Likely much more international Revenue models? Current examples Freemium Ad supported Subscription Something new? Are these sustainable? Are these just early days with unsustainable models? 19
CREATION: LOOKING TO THE FUTURE (CONT D) The pressure for change is high But change to what? What form will legal governance take? Will sector specific regulation be needed or will competition law suffice? Copyright reform blockage will finally have given way. Will this be enough? «The Future is near» 20
QUESTIONS? CREATION OUT OF DESTRUCTION REINVENTING CANADIAN ONLINE REGULATION IN THE DIGITAL ERA sunny.handa@blakes.com 21