Direction to the Canadian Radio-television and Telecommunications Commission Respecting the Implementation of the Canada–United States–Mexico Agreement: SOR/2020-77

Canada Gazette, Part II, Volume 154, Number 9

Registration

SOR/2020-77 April 7, 2020

BROADCASTING ACT

P.C. 2020-231 April 3, 2020

Whereas the Government of Canada has entered into the Agreement between Canada, the United States of America and the United Mexican States, done at Buenos Aires on November 30, 2018, as amended by the Protocol of Amendment to the Agreement between Canada, the United States of America and the United Mexican States, done at Mexico City on December 10, 2019;

Whereas paragraphs 1 and 4 of Annex 15-D of that Agreement concern matters within the jurisdiction of the Canadian Radio-television and Telecommunications Commission under the Broadcasting Act footnote a;

And whereas the Minister of Canadian Heritage has, in accordance with subsection 27(2) footnote b of that Act, consulted with the Canadian Radio-television and Telecommunications Commission;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Canadian Heritage, pursuant to paragraph 27(1)(a)footnote b of the Broadcasting Act footnote a, makes the annexed Direction to the Canadian Radio-television and Telecommunications Commission Respecting the Implementation of the Canada–United States–Mexico Agreement.

Direction to the Canadian Radio-television and Telecommunications Commission Respecting the Implementation of the Canada–United States–Mexico Agreement

Definition of Agreement

1 In this Direction, Agreement has the same meaning as in section 2 of the Canada–United States–Mexico Agreement Implementation Act.

Direction

2 The Canadian Radio-television and Telecommunications Commission is directed to implement, by appropriate means, paragraphs 1 and 4 of Annex 15-D of the Agreement.

Coming into force

3 This Direction comes into force on the day on which section 152 of the Canada–United States–Mexico Agreement Implementation Act, chapter 1 of the Statutes of Canada, 2020, comes into force, but if it is registered after that day, it comes into force on the day on which it is registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Direction.)

Issues

On September 30, 2018, Canada, the United States (U.S.) and Mexico announced the completion of negotiations toward a revised North American Free Trade Agreement (NAFTA). Following more than a year of negotiations, the three countries reached important outcomes in key areas, including market access, rules of origin for automotive manufacturing, agriculture, labour, environment, intellectual property rights, culture, and dispute settlement. This outcome is expected to strengthen the trilateral commercial relationship and provide much-needed stability and predictability for Canadian businesses and workers. The Canada-United States-Mexico Agreement (CUSMA) was done in Buenos Aires on November 30, 2018, as amended by the Protocol of Amendment to the Agreement between Canada, the United States of America and the United Mexican States, done in Mexico City on December 10, 2019.

In Annex 15-D of CUSMA, Canada agreed to

Regulatory measures are required to implement these CUSMA obligations.

Background

The Canadian Radio-Television and Telecommunications Commission

The CRTC is an independent administrative tribunal whose mandate is to regulate and supervise all aspects of the Canadian broadcasting system with a view to implementing the policy objectives established in the Broadcasting Act (the Act). footnote 1

To that end, the CRTC grants licences exclusively to Canadian broadcasters and imposes Canadian content exhibition requirements and financial contributions for Canadian productions as conditions of licences.

The Act provides the Governor in Council the power to issue binding directions to the CRTC to implement obligations contained in CUSMA.

As the administrative tribunal that regulates and supervises broadcasting and telecommunications in the public interest, the CRTC is the appropriate organization to give effect to the broadcasting-related commitments in Annex 15-D of CUSMA.

Simultaneous substitution

The Simultaneous Programming Service Deletion and Substitution Regulations provide that a broadcaster may request a cable or satellite distributor to temporarily replace the signal of a TV channel with the broadcaster’s channel if both channels are showing the same program at the same time. footnote 2 Often, the signal of an American television station is replaced by a Canadian signal showing Canadian advertising.

Simultaneous substitution allows Canadian broadcasters to maximize audiences and advertising revenues for the non-Canadian programs for which they have acquired the Canadian market rights. Without simultaneous substitution, the audience for a TV program would be split across the Canadian station and the U.S. station, which would reduce the size of the audience for each station, and thus the amount of money that the Canadian station could receive from advertisers.

The CRTC launched the Let’s Talk TV: A Conversation with Canadians (Let’s Talk TV) [https://crtc.gc.ca/eng/talktv-parlonstele.htm] public consultations in October 2013 and undertook a comprehensive broadcasting policy review. The Let’s Talk TV consultations resulted in the review of the quality and timing of simultaneous substitution especially during the broadcast of the Super Bowl in Canada. The CRTC concluded that advertising content is an integral part of the Super Bowl broadcast. As a result, the CRTC issued Broadcasting Regulatory Policy CRTC 2016-334 and Broadcasting Order CRTC 2016-335 prohibiting the practice of simultaneous substitution during the broadcast of the Super Bowl in Canada effective January 1, 2017 (https://crtc.gc.ca/eng/archive/2016/2016-334.htm).

The National Football League (NFL), which is the copyright holder for the Super Bowl, has an agreement with BCE Inc. and its subsidiary Bell Media (Bell), granting Bell the exclusive rights to broadcast the Super Bowl in Canada until February 2020. Bell and the NFL appealed the CRTC’s decision to prohibit simultaneous substitution during the Super Bowl broadcast to the Federal Court of Appeal, which upheld the CRTC’s decision.

Bell and the NFL then appealed the Federal Court of Appeal’s decision to the Supreme Court of Canada. On December 19, 2019, the Supreme Court of Canada allowed the appeal and quashed the CRTC’s Order. The Court ruled that the section of the Broadcasting Act that the CRTC used to make the Order did not provide the Commission with the power to do so; therefore, the CRTC’s decision was not “correct” in light of the law. However, the Supreme Court did not decide whether the CRTC could make a similar Order under a different part of the Act.

The U.S. Trade Representative identified simultaneous substitution during the broadcast of the Super Bowl in Canada as a trade barrier in its 2016, 2017 and 2018 National Trade Estimate Reports on Foreign Trade Barriers. footnote 3

American home shopping services

Home shopping services (also called teleshopping services) are television programming services that are intended to sell or promote goods and services.

In 2003, the CRTC issued the Exemption Order Respecting Teleshopping Programming Service Undertakings (Exemption Order) exempting Canadian home shopping services from licensing requirements, concluding they do not contribute in a material manner to the implementation of the Act’s broadcasting policy objectives (https://crtc.gc.ca/eng/archive/2003/pb2003-11.htm).

The Exemption Order describes the criteria that the service must meet in order to operate in Canada. These include compliance with industry codes and standards; providing the programming without charge to all cable, IPTV, and satellite companies; not broadcasting political or religious messages; etc. Rogers Communications Inc. (Rogers) has owned and operated a home shopping service in Canada called Today’s Shopping Choice (previously The Shopping Channel) for over 30 years.

Currently, no American home shopping services are permitted to be distributed by cable, IPTV, or satellite providers in Canada. This is because the CRTC generally does not permit the distribution of foreign services it deems to be totally or partially competitive with an existing Canadian discretionary programming service.

QVC, an American home shopping service, has expressed an interest in accessing the Canadian market. With a Canadian sponsor, it applied for authorization to be distributed in Canada in 2015, but the CRTC denied its application (https://crtc.gc.ca/eng/archive/2016/2016-122.htm). The decision was appealed to the Federal Court of Appeal, which returned the matter back to the CRTC for consideration. In 2018, the CRTC launched a process to reconsider the matter (https://crtc.gc.ca/eng/archive/2018/2018-80.htm), but the process had not yet concluded by the time CUSMA was signed on November 30, 2018.

The Advisory Committee on Trade Policy Negotiation concluded that persistence on restricting distribution of U.S. home shopping services in Canada is not consistent with a modernized agreement. footnote 4

Objective

Description

The Direction to the Canadian Radio-Television and Telecommunications Commission Respecting the Implementation of the Canada-United States-Mexico Agreement (the Direction) directs the CRTC to implement, by appropriate means, Canada’s commitments in Annex 15-D of CUSMA.

Regulatory development

Consultation

The CRTC is aware of Canada’s commitments in CUSMA to rescind its Order prohibiting simultaneous substitution during the broadcast of the Super Bowl and to provide U.S. home shopping services, including modified versions of those services, access to the Canadian market. The CRTC has been consulted on the Direction and is prepared to implement the commitments when CUSMA comes into force.

Stakeholder views on both of the broadcasting-related commitments are available on the public record through the Let’s Talk TV proceedings and the QVC application hearings.

During the Let’s Talk TV proceedings, the CRTC received approximately 90 complaints from Canadians concerning simultaneous substitution during the broadcast of the Super Bowl which indicated that they preferred to watch U.S. advertisements. While the implementation of the commitment to restore simultaneous substitution during the Super Bowl will limit the ability of Canadians to view American advertising as part of the television broadcast, Canadians will be able to watch U.S. advertisements on corporate websites, as well as on other platforms including YouTube.

Rogers, the owner and operator of the only Canadian teleshopping service currently available, initially expressed concern when QVC applied to gain access to the Canadian market. Of note, some Canadians made interventions in support of QVC’s application in October 2015. footnote 5

Modern treaty obligations and Indigenous engagement and consultation

As required by the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, the Direction’s possible treaty implications were assessed. No such implications were identified.

Instrument choice

A statutory approach to implementing the broadcasting-related commitments was considered, but it was not deemed appropriate as the CRTC is the independent administrative tribunal responsible for regulating and supervising the Canadian broadcasting system.

The Direction to the CRTC is the most appropriate instrument choice to implement the broadcasting-related commitments in Annex 15-D of CUSMA. It respects the existing architecture of the Act.

Regulatory analysis

Benefits and costs

The Direction meets Canada’s obligation under CUSMA while preserving the independence of the CRTC by allowing it to follow its own established rule-making process to give effect to the commitments.

The Direction to the CRTC will ensure that it does not in the future prohibit simultaneous substitution during the broadcast of the Super Bowl.

The cost to the CRTC to change the regulatory framework is covered by the CRTC’s existing level of funding. The CRTC is the appropriate body to assess other cost impacts as a result of the commitments in CUSMA.

Small business lens

In accordance with the Policy on Limiting Regulatory Burden on Business, the Direction was assessed for small business impacts and it is not anticipated that the Order will have any associated impacts for small businesses.

One-for-one rule

In accordance with the Red Tape Reduction Act, the Red Tape Reduction Regulations and the Policy on Limiting Regulatory Burden, the Direction was assessed to determine if the one-for-one rule applies. It was determined that the one-for-one rule does not apply because the Direction does not impose or change any administrative costs to businesses. It applies to an arms-length administrative tribunal that does not have a competitive or for-profit motive.

Regulatory cooperation and alignment

The Direction is unrelated to a work plan or commitment under a formal regulatory cooperation forum to which Canada is subject.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan or Program Proposals, a preliminary scan concluded that the Direction is not likely to generate environmental effects, either positive or negative. A strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified in relation to implementation of the Direction.

Implementation and compliance and enforcement

Implementation

The CRTC is aware of Canada’s commitments to rescind its Order prohibiting simultaneous substitution during the broadcast of the Super Bowl and to provide U.S. home shopping services, including modified versions of those services, access to the Canadian market in CUSMA. The CRTC has been consulted on the Direction and is prepared to implement the commitments when CUSMA comes into force. The CRTC may determine the appropriate means for implementing these commitments.

Compliance and enforcement

The CRTC’s compliance with the Direction will be assessed through Canadian Heritage’s ongoing monitoring of the CRTC’s operations.

Contact

Drew Olsen
Senior Director
Marketplace and Legislative Policy
Broadcasting, Copyright, and Creative Marketplace Branch

25 Eddy Street
Gatineau, Quebec
K1A 0M5
Telephone: 819‑934‑2825
Email: drew.olsen@canada.ca