My household recently signed up for an unlimited data plan with our cable provider. With my job, my spouse's Netflix viewing habit and a teenager in the house, our video streaming was out of control and those little warnings that we had reached 75 per cent of our monthly limit were arriving earlier each month.
We're pretty typical: Canadians are crunching through more and more data to watch video or listen to music online. Estimates for 2016, from network equipment provider Sandvine, show that about 70 per cent of evening broadband use in North America is devoted to streaming video and audio, and the Waterloo, Ont., company predicts that it will rise to 80 per cent by 2020. Netflix alone accounts for 35 per cent of the traffic.
Minister of Canadian Heritage Mélanie Joly cited that very number in a recent interview with The Globe and Mail: as she prepares to deliver a long-overdue update of Canadian cultural policy, Joly knows there's a crisis when a foreign service – one that collects no HST from its Canadian subscribers and pays no corporate tax in Canada – is probably the most significant home-entertainment provider in the country. Yes, there's a smattering of Canadian shows on Netflix – the Trailer Park Boys oeuvre, old episodes of Murdoch Mysteries, Heartland and Being Erica – but this back-catalogue stuff is well buried beneath bright, shiny and new U.S. and international offerings that are the service's main draw.
Joly also talked to U.S. entertainment and media executives recently during a visit to California, where she tried to start a conversation about cultural diversity, the notion that a healthy culture includes a plurality of voices and draws on a variety of sources. It might seem as though the infinite Internet was ideally suited to delivering pluralism and diversity, but the reality is that digital oligopolies such as Google, Facebook and Netflix are thriving, making Canadian choices harder to produce and harder to find. Look what happened to Shomi, the money-losing Canadian video-streaming service that closed last fall after two years spent failing to rival Netflix.
In my house, we were just starting to experiment with Shomi when it closed. So now, I wonder if the video that we watched on a Canadian service didn't apply toward our data cap, would I have been able to stick to a cheaper Internet plan? The question arises because Joly received some advice on cultural diversity from an unlikely source this week: Roslyn Layton, an adviser on communications issues to U.S. President Donald Trump, suggested Canada should try "zero-rating" Canadian content; that is, letting providers offer it as a bonus that doesn't count toward data charges.
"People would go out of their minds, but I would say that all Canadian content should be zero-rated," she said in an interview with The Globe and Mail. "Canadian content should have a fast lane."
The trouble with zero-rating is that it would seem to violate the principle of Net neutrality, the idea that service providers should treat all content equally, without slowing down or speeding up any particular stream. That's precisely why Layton likes the look of it: The Trump administration seems determined to weaken Net neutrality. Ajit Pai, Trump's new chair of the Federal Communications Commission and a long-time Net-neutrality skeptic, quickly halted investigations into zero-rating by U.S. telecommunication companies this winter, arguing service providers should be able to compete for customers by offering bonuses as they see fit.
While the United States backs away from Net neutrality, Canada has embraced it and Joly stressed that during her California trip, considering that the principle is an article of faith amongst the U.S. content producers and distributors she was visiting.
The Canadian Radio-television and Telecommunications Commission also favours Net neutrality: In an April decision, it ruled that Quebec service provider Videotron could not zero-rate its own music-streaming service for its best customers.
But what if Videotron could produce logs to show that a certain percentage – let's say 35 per cent, the old Cancon number for terrestrial radio – of the music on its service is Canadian and then was required to zero-rate it for everybody?
The CRTC also rejected calls from cultural industry groups to use zero-rating or differential pricing as a way to promote Canadian programming, arguing the benefits were uncertain and the mechanics too complicated, but analysts are debating how firmly that door has been slammed. Obviously, it would be difficult to ask Internet service providers to start assessing the source of every program that users stream, but instead, zero-rating or discounts could be applied to entire services that can show a set percentage of Canadian content in their catalogues – and pay taxes in Canada.
Would Joly still consider such an exemption to Net neutrality? With her talk in The Globe interview of carrots and sticks, you can almost hear her weighing the horse-trading with foreign services that will be needed to make Canadian programming more visible online. If she has promised Hollywood and Silicon Valley Net neutrality, what might she get in return?