Netflix tells CRTC consumers should vote with their dollars

Regulating the internet to help boost Canadian content will only hurt consumers, a Netflix executive told the country's broadcast regulator on Friday before being ordered to hand over confidential company information.

In an occasionally tense appearance before the Canadian Radio-television and Telecommunications Commission, Corie Wright urged the broadcast regulator to let market forces dictate what consumers can watch.

Netflix was the first of 13 organizations testifying on the last day of public hearings before the CRTC on the future of television regulation in Canada.

• CRTC gets an earful at hearings on future of TV
• CRTC hearings: How the outcome could affect your cable and internet bill

The impact of Netflix and other online video providers on the country's traditional TV broadcasting sector is central to the hearings.

Wright, Netflix Inc.'s global public policy director, told the five-member CRTC panel that regulating internet-based video services would fly in the face of competition, innovation and consumer choice.

"Netflix believes that regulatory intervention online is unnecessary and could have consequences that are inconsistent with the interests of consumers," Wright said.

She said viewers should have the ability "to vote with their dollars and eyeballs to shape the media marketplace."

Tax on internet-based services?

Several cultural groups, along with at least two provincial governments and a content production group, have argued in favour of regulating Netflix and other online video services, essentially forcing them to pay into funds designed to help finance Canadian television production.

But the Harper government has said it would oppose any tax on internet-based services, specifically citing Netflix and YouTube.

The federal cabinet could order the CRTC to reverse itself should it decide to regulate online content distributors, but critics say that would be a heavy-handed measure, urging the Harper Conservatives to keep their noses out of the regulatory process.

"The real issue is, does this commission apply the [Broadcasting] Act and require Netflix as a player in the Canadian audio-visual system to make a contribution to the system or not," said Ian Morrison of the group Friends of Canadian Broadcasting.

"Does Stephen Harper tell the CRTC what to do?"

But the Opposition New Democrats don't support the notion of taxing internet-based services either, saying it would be virtually impossible for the CRTC to track the content that people stream into their homes.

Rather than regulate online content providers, the government needs to adequately fund the production of quality Canadian digital cultural content, the NDP said a statement Friday.

Netflix doesn't need subsidies, Wright says

Wright's solo appearance at the hearing stood in stark contrast to earlier presentations by Canada's major TV networks and content delivery services. Throngs of Bell and Rogers executives faced the commission over the last two weeks.

CRTC rules give traditional broadcasters money to pay for Canadian content and Netflix doesn't have access to these funds, but Netflix and other online content providers don't need subsidies to create content, she said.

"It is not in the interest of consumers to have new media subsidize old media or to have new entrants subsidize incumbents."

Netflix already offers Canadian content from its huge video library, said Wright, although she would not say how much of the company's lineup is Canadian programming, or how much it pays to produce and distribute content.

Ordered to provide data

At one point, CRTC chairman Jean-Pierre Blais became agitated when Wright refused a direct request to provide confidential subscriber information.

Wright said Netflix was concerned that private corporate information submitted to the commission might later find its way into the public sphere, which could make the service vulnerable to exploitation by its competitors.

After a short break, Blais returned and ordered Netflix to provide the data — along with information related to the Canadian content it creates or provides to subscribers — by the end of the day on Monday.

"Netflix's kind of late-1990s view of the internet as some unregulatable space was dragged into the 21st century and was put on notice," said Carleton University journalism professor Dwayne Winseck, who characterized Wright's appearance as "theatre."

"The CRTC has a Broadcasting Act to live up to and Netflix ... has to have a respectful conversation in that light."

This third and final phase of hearings was launched with the intent of providing consumers will greater choice and helping Canada's television broadcasting sector adapt to quickly changing technologies that have TV networks, local stations and traditional third party content suppliers struggling to maintain revenues.

The hearings have also heard from a wide range of stakeholders about proposals to allow Canadians to pay for only the TV channels they want, rather than being forced to subscribe to bundled channels — a so-called pick-and-pay model that has been touted by the federal Conservatives as good for consumers.

Also Friday, American TV network executives appeared before the CRTC, arguing for regulations that would see stations south of the border compensated for providing "free" programming on Canadian airwaves — something Blais suggested would run counter to the regulator's mandate.