Canada: Top 10 Canadian Communications Law Developments For 2011

The past year has seen many important developments in the area of Canadian communications law, and we have blogged about many of them here.

In several cases, the key developments have stemmed from ongoing trends in the industry, especially those relating to technology and industry consolidation.  If there is one unifying theme for the key legal and policy changes in 2011, it would be that many of them stem from the continuing disruptive effect of broadband internet services and digital technology on both the existing business models for broadcasting and telecommunications and the regimes under which those industries have been regulated.  Several courts began considering, or issued judgement in cases that explore the intersections between the laws respecting, broadcasting, telecommunications and copyright.

Here are our picks for the most significant communications law developments of 2011:

1. ISP Reference to be heard by Supreme Court

In March, the Supreme Court of Canada granted leave to hear an appeal from a 2010 judgement of the Federal Court of Appeal, which found that Internet Service Providers (ISPs) do not carry on "broadcasting undertakings", within the meaning of the Broadcasting Act, when they provide access through the Internet to broadcasting material requested by users.  The case, which addresses the intersection of the legal regimes for broadcasting and telecommunications, was initiated by a Reference Order issued by the CRTC to resolve fundamental questions about the Commission's authority over ISPs with respect to broadcasting content delivered over the internet.

The appeal is scheduled to be heard on January 16, 2012.  Fingers are crossed on both sides of the debate.

2. Value for Signal Reference to be heard by Supreme Court

In September, the Supreme Court granted leave to hear an appeal from yet another jurisdictional reference put forward by the CRTC – this time respecting the Commission's authority under the Broadcasting Act to establish a "Value for Signal" (VFS) regime under which broadcasting distribution undertakings (BDUs) might be required to pay local broadcasters a fee to distribute their programming services within the serving areas where the broadcast signals are receivable off-air.  Among other things, the case raises significant issues about the intersection between broadcasting and copyright laws and policy.

No date has yet been set for the hearing of the appeal, but as we noted in our earlier post, much will have changed since the CRTC originally endorsed the concept of VFS.

3. The Continuing Saga of Foreign Ownership

One of the most controversial and divisive issues in Canadian communications policy continues to be the question of the appropriate approach to ownership restrictions on broadcasting and telecommunications undertakings operating in Canada.  In this regard, 2011 was notable as much for what didn't happen as for what did. 

The past year saw not one, but two, judgements broadly relating to the compliance of new wireless entrant Globalive Wireless Management Corp. (Globalive) with existing foreign ownership restrictions in the Telecommunications Act and related regulations.  By way of background, in 2009, the CRTC, exercising its authority under the Telecommunications Act, and the Minister of Industry, exercising his authority under the Radiocommunication Act, came to different conclusions with respect to whether Globalive complied with the ownership restrictions: the Minister said "yes," but the Commission said "no."  Subsequently, the federal cabinet overturned the CRTC decision.

Following an application for judicial review, in March 2011 the Trial Division of the Federal Court quashed the cabinet decision that overturned the CRTC's decision, finding that the cabinet had misdirected itself at law.  Subsequently, in June of this year, the Federal Court of Appeal overturned the lower court's decision, restoring the cabinet order and effectively confirming the ability of Globalive to both hold spectrum licences and operate as a telecommunications common carrier.  An application for leave to appeal that Court of Appeal decision to the Supreme Court of Canada was filed in September, but the matter is still pending.

Meanwhile, the past year was also notable for the continuing silence of the Government with respect to its intentions for the potential reform of existing ownership restrictions.  Back in June 2010, the Government had proposed and sought public comments on 3 options for foreign ownership reform, one of which was the elimination of foreign ownership rules for telecommunications carriers.  The previous Minister of Industry had indicated that any changes to the rules would be considered in the context of the upcoming 700 MHz spectrum auction, scheduled for 2012.  There was even much speculation that the current Minister would be making an announcement about foreign ownership reform at an Ottawa conference at the end of November, but instead, the Minister indicated that the Government had yet to reach a decision on reform.

4. New Vertical Integration Rules

In September, the CRTC released a new regulatory framework to deal with vertical integration among broadcasters and broadcasting distribution undertakings.  The new framework, which followed CRTC approvals of two recent transactions that transferred effective control of major private broadcasting networks to ownership groups that controlled major distribution undertakings, imposed several significant new restrictions on vertically integrated companies.

Among the most contentious of these new restrictions, the Commission imposed a new rule prohibiting new media broadcasting undertakings from offering programming designed primarily for television on an exclusive or otherwise preferential basis, where availability is dependent on a consumer's subscription to a particular mobile or retail Internet service.  The Commission indicated that it would revise the New Media Exemption Order to include the new restriction.

In December, the Commission initiated public processes to amend both the New Media Exemption Order and the Broadcasting Distribution Regulations to reflect the new rules stemming from the Vertical integration decision.

That same month, the Commission issued its decision on an earlier complaint by TELUS Communications Company against Bell Mobility, finding that Bell Mobility gave itself an undue preference and subjected TELUS to an undue disadvantage when it secured exclusive programming rights for certain NHL and NFL games for its mobile platform, despite Bell Mobility's argument that its arrangement with the leagues did not allow it to sub-licence the programming in question.  The decision was actually made under the existing 2009 New Media Exemption Order, which many felt did not prohibit the provision of exclusive content on competitive, non-legacy platforms.  The Commission's decision would have been the same under the new rule, which is more clearly restrictive of exclusive content on mobile platforms.

5. "Over-the-Top" Still Off the Table

In another "convergence" related decision, the CRTC indicated in October that it has no immediate plans to impose broadcasting regulatory obligations on "over-the-top" (OTT) providers of internet-delivered content, but will continue to monitor the issue.  The decision followed a public proceeding in which interested parties were invited to submit comments on the implications of OTT services for regulated broadcasters.  The CRTC had been under pressure from a number of stakeholders to examine the potential impact of the growing use of services like "Netflix" and the potential impact on the Canadian broadcasting environment.

6. Anti-Spam Regulations

Canada's Anti-Spam Legislation (CASL), as the new anti-spam law is unofficially known, was passed in late 2010, but has yet to be proclaimed in force.  In part, that proclamation has been awaiting the finalization of 2 sets of draft regulations, both of which were introduced in the summer of 2011 – and hit snags in the fall of this year.

In June, the CRTC issued the proposed Electronic Commerce Protection Regulations (CRTC) for comment.  In July, Industry Canada issued its own Electronic Commerce Protection Regulations, and in August, the government launched a new "Fight Spam" website.

In comments respecting the proposed Regulations, many interested stakeholders expressed strong concerns and urged the Government and CRTC to make significant modifications and additions.  In October, the Canadian Marketing Association confirmed in a newsletter to its members that the Government had indicated that a number of provisions in the proposed Regulations would be revisited, and further consultations initiated with stakeholder groups.

7. The Supreme Court's Copyright Pentalogy

Copyright cases are not often considered by the Supreme Court; indeed, the Court has apparently heard only 5 cases in the past decade that focused on substantive copyright law.  It is therefore unprecedented for 5 to be heard in a single year, never mind at the same time (all were heard in early December).  By itself, this concentration of the highest court's attention on copyright issues earns a spot on the top ten; however the appeals also raise a number of issues of significant interest to the communications industry, including:

  • the scope of the "fair dealing" exception
  • whether the streaming or downloading of copyrighted content requires an additional royalty (over and above the royalty applicable for selling the content or access to the content)
  • whether royalties are payable for short online previews of musical works

The Supreme Court's consideration of these appeals is particularly timely as it coincides with Parliament's consideration of a number of important amendments to the Copyright Act (see number 8, below), including amendments to some of the provisions at issue in the appeals. 

8. Another Copyright Bill

For the 4th time since 2005, the Government introduced in September a bill to implement revisions to the Copyright Act, including a number of revisions of interest to the communications industry, including:

  • Anti-circumvention provisions, which prohibit tampering with Digital Rights Management protections (or digital locks) built into digital music
  • Personal use exceptions that will allow for time and format shifting and back-up copies of copyrighted works – subject to any digital locks
  • Education exceptions that would allow downloads of copyrighted material for study and research
  • Expanded fair dealing provisions, to include use for the purposes of education, parody or satire (in addition to existing exceptions)
  • A "notice and notice" regime for ISPs with respect to alleged infringements by internet users
  • A "mash-up" exemption, allowing for the use of pre-existing works to create new, non-commercial works
  • Revisions to the statutory damages provisions that reduce the scope of damages for non-commercial infringements

While the Heritage Minister had indicated a desire for passage by Christmas, a motion to read Bill C-11 a second time and refer it to a committee was still being debated by the House of Commons when it adjourned for the Christmas break. 

9. Internet Traffic Management Guidelines

Also in September, the CRTC issued new procedural guidelines for dealing with customer complaints about the inappropriate use by ISPs of Internet Traffic Management Practices (ITMPs), which could include technological measures to slow down access to certain types of content in the name of managing network congestion – often referred to as "throttling."  The guidelines, which seem intended to provide procedural certainty to both complainants and ISPs with respect to the Commission's handling of complaints about alleged violations of its 2009 policy on the use of ITMPs, are particularly noteworthy for spelling out a range of escalating enforcement tools that will be used against ISPs that violate the ITMP policy, apparently signalling a clear "get tough" stance on the part of the CRTC.

Ironically, just as the Commission is getting tough on misuse of ITMPs, the days of using technological measures to throttle traffic may be coming to an end.  Just prior to year's end, one of the largest ISPs in the country announced that it will stop throttling internet traffic by March of 2012.  Should others follow suit, the CRTC's policy respecting throttling may well be moot.

10.  Telemarketing Enforcement

In recent years, the CRTC has been getting increasingly tough with telemarketers that are found to be in violation of the Unsolicited Telecommunications Rules, which include rules for the National Do Not Call List – and 2011 is no exception.  In addition to several substantial fines and alternative settlements with telemarketers, the past year is particularly notable for the Commission's efforts respecting reciprocal international investigation and enforcement of telemarketing rules.

First, in October, the CRTC announced that it had reached an agreement with two Mexican companies related to unauthorized telemarketing and "robocalls" made to Canadians, aided by Mexico's consumer protection agency, PROFECO.  Later that month, the Commission announced the creation of an International Do Not Call Network to facilitate international cooperation on telemarketing enforcement, which the CRTC will co-chair.

These international efforts are noteworthy given the amount of unauthorized and fraudulent telemarketing that originates outside Canada.  They may also prove significant if the same arrangements are extended to the Commission's role as enforcer of the newAnti-Spam Legislation, once it comes into force.

Other Developments of Interest

Our sister blog, Canadian Technology & IP Law has also posted a Top 10 list, which may also be of interest to readers of Canadian Communications Law.

A Final Note

2011 was also significant to us, as it was in March of this year that we launched Canadian Communications Law.  We hope that readers have found our posts useful, and look forward to building on this year's success in 2012.  As always, we would be pleased to receive any comments or suggestions that you may have.

Thank you to all of our readers for their support.  Happy holidays and best wishes for the New Year.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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