Intellectual Property Update
July 2002
CRTC to consult public on
Internet broadcast regulation
As reported in our December 2001 IP Update, the Canadian Parliament was expected to act to
clarify the copyright issues arising from the retransmission of television and radio broadcasts in
Canada over the Internet. Two significant events in this process have recently occurred: first, the
anticipated legislative amendments were passed by the House of Commons (although final Senate
approval is not expected before the fall); and second, a Cabinet directive was issued to Canada’s
federal broadcast regulator, the CRTC, requesting that the CRTC hold a public hearing on several
issues relating to Internet TV and radio. Each of these developments are discussed in detail below.
First, however, it may be useful to provide some background on the issue.
Background
Although the technology has long existed to allow cable companies and satellite television
providers to pick up over-the-air signals and retransmit them to their own subscribers, such
retransmissions would ordinarily be a breach of the copyright in the original programming, without
the consent of rights holders in the programs embedded in the signal.
Since 1989, however, Canada has had a compulsory license regime that lessens the
administrative burden on cable companies and satellite television providers engaging in the
retransmission of distant signals. The retransmission regime embodied in section 31 of the Copyright
Act permits the retransmission of copyrighted works embedded in distant over-the-air television and
radio signals without the consent of rights holders, provided certain conditions are met, including the
payment by retransmitters of royalties set by the Copyright Board.
The compulsory license regime was set up with cable companies (and later satellite television
providers) in mind. However, a few years ago, a company named iCraveTV proposed an Internet
service in which television programming would be streamed via the Internet, inside a frame with
banner advertising sold by the Internet company. iCraveTV kicked off a storm of controversy by
attempting to utilize the distant signal retransmission regime to deal with the issue of copyright
licenses.
The iCraveTV concept collapsed as a result of U.S. legal proceedings. However, the issue was
later raised by a company named JumpTV. JumpTV proposed to distribute distant programming
STIKEMAN ELLIOTT
2
signals over the Internet on its web site, surrounded by banner advertising. In August 2000, JumpTV
objected to the proposed distant signal retransmission tariff filed by copyright collectives with the
Copyright Board because the proposed tariff failed to cover Internet retransmissions.
JumpTV’s objection raised a threshold legal question; namely, whether the Copyright Act distant
signal royalty regime applies only to traditional retransmitters (i.e. cable companies and DTH satellite
distributors), or whether it also applies to Internet retransmitters. The Copyright Board had planned
to hold a hearing into JumpTV’s application starting in December 2001. However, JumpTV
withdrew its application before the hearing started.
In the meantime, the federal government announced its plan to amend the Copyright Act to
make it clear that Internet retransmissions are not covered under the distant signal regime, and
introduced Bill C-48 (An Act to Amend the Copyright Act). The Bill C-48 amendments received third
and final reading (approval) from the House of Commons on June 18, 2002. Bill C-48 must also
receive approval by the Senate to become law. Senate approval is not expected until this coming fall.
Legislative Solution
The amendments to the Copyright Act added a new definition to capture Internet
retransmitters. A “new media retransmitter” is essentially defined as an entity that engages in
retransmission over the Internet without a licence from the CRTC. This type of broadcasting was
exempted from regulatory control by the CRTC in December 1999, when the CRTC issued an
exemption order for broadcasters providing broadcast services delivered and accessed over the
Internet. Moreover, the definition of “retransmitter” was amended to more specifically define a
retransmitter as a person who performs a function comparable to a cable retransmission system, and
to specifically exclude new media retransmitters.
However, taken together, the proposed legislative amendments were not as categorical a
prohibition on Internet retransmission as may have been expected from the government’s previous
statements on the issue. The interplay between the definitions of “new media retransmitter” and
“retransmitter” leaves open the possibility of an Internet retransmitter applying for and receiving a
broadcasting licence, in order to become eligible for inclusion in the compulsory retransmission
licensing regime under the Copyright Act.
The government gave itself more time to consider how it would regulate such entities by
providing the federal cabinet with the power to enact regulations, which could impose extra
conditions that a retransmitter must satisfy to qualify for the compulsory licence regime. Right now,
cable companies and DTH distributors may retransmit distant over-the-air television and radio
signals without the consent of copyright holders of works embedded in the signals provided they
meet the following four conditions:
STIKEMAN ELLIOTT
3

The retransmissions are of local or distant television or radio signals;

The retransmission is lawful under the Broadcasting Act;

The signal is retransmitted simultaneously and without alteration, except as otherwise required
or permitted by law; and

In the case of distant signals, the retransmitter pays royalties in accordance with a tariff
approved by the Copyright Board.
Bill C-48 will add a fifth requirement, namely, compliance with conditions prescribed in
regulations made by the federal Governor in Council (i.e. Cabinet). Bill C-48 gives Cabinet the
power to enact regulations prescribing the conditions to be met by retransmitters in general, or a
class of retransmitters, which could include Internet retransmitters. This means that Cabinet will
have the power to set preconditions that must be met in order for Internet retransmitters to
redistribute distant television and radio signals over the Internet.
The Federal Government has yet to decide what, if any, conditions to impose. This is one
reason why Cabinet issued a directive to the CRTC to study and report on the issue. Cabinet
Directive P.C. 2002-1043, dated June 12, 2002, requested the CRTC to conduct a public proceeding
and report back to Cabinet no later than January 17, 2003, on the following three issues, in light of
the objectives of the broadcasting policy prescribed in the Broadcasting Act:

The broadcasting regulatory framework for persons who retransmit over the air television and
radio signals via the Internet;

The appropriateness of amending the New Media Exemption Order regarding persons who
retransmit by the Internet, the signals of over-the-air television or radio programming
undertakings, and

any other measures the Commission considers appropriate.
Analysis
The government’s thinking on the criteria, if any, that must be met for new media
retransmitters to qualify for treatment under the Copyright Act compulsory retransmission licence is
unclear.
The government appears to be torn between conflicting public policies on this issue. On one
hand, the government claims, with some justification, that Canada is a world leader in new media
technologies and has created a “hands off” regulatory environment that promotes technological
STIKEMAN ELLIOTT
4
change. The CRTC’s New Media Exemption Order is an example of such a regulatory environment.
On the other hand, however, broadcasters, artists, new media content creators and other rights
holders, including those representing US television and film rights holders, have lobbied aggressively
to ensure that they retain the rights to their content when it is transmitted or retransmitted over the
Internet. Asking the CRTC to study and report on the issue buys the government some time, and
may enable the CRTC to propose a viable Internet retransmission regulatory framework.
The preamble to the Cabinet’s directive to the CRTC notes that the New Media Exemption
Order imposes no terms or conditions on persons operating under it. This suggests the CRTC could
propose terms and conditions that an Internet retransmitter must meet in retransmitting distant over
the air television and radio signals over the Internet in order to obtain a broadcasting licence under
the Broadcasting Act. Another requirement proposed by rights holders in retransmission tariff
proceedings before the Copyright Board is that Internet retransmitters be required to implement
technology that ensures their retransmissions cannot be accessed by Internet users outside of
Canada. Representatives from the Canadian and US broadcasting industries and other content
creators are likely to propose such a condition before the CRTC.
The CRTC is expected to issue a public notice establishing the procedure for its consultation
on Internet retransmission in the coming weeks. Members of the Internet industry and content
creators will be watching the CRTC’s public process and the government’s response with great
interest to determine the regulatory framework that will be adopted for retransmissions of distant
television and radio signals over the Internet in Canada.