Implementing Canada's Online Streaming Act — Legislative and regulatory changes

The Online Streaming Act[1] is the most significant and impactful piece of legislation in Canada’s broadcasting space in the past 30+ years. With many parts of its implementation still shrouded in relative uncertainty, questions remain as to the extent to which it will affect Canada’s future broadcasting landscape. However, as the Canadian Radio-television and Telecommunications Commission (the “CRTC”) begins to establish the minute details and infrastructure needed to fulfill the objectives of the Online Streaming Act, a map of the future regulation of Canada’s broadcasting industry in the digital age is beginning to take shape.

Background to the Online Streaming Act

Since the Online Streaming Act became law in April 2023, the CRTC has been taking steps to modernize Canada’s broadcasting regulatory framework in order to bring online streaming services under its purview. The Online Streaming Act amended the Broadcasting Act[2] in a variety of ways, including by establishing “online undertakings” as a new type of broadcast undertaking — thus making such entities expressly subject to the regulatory authority of the CRTC for the first time. Under the Online Streaming Act, online undertakings are required to make certain annual contributions to the Canadian broadcasting system and, specifically, to support the creation and production of Canadian and Indigenous content.

In addition to issuing a policy and order outlining the framework for annual contributions and their allocation by online undertakings, the CRTC has scheduled a variety of consultations that will inform the new regulatory broadcasting framework. Most recently, a proceeding on revising the definition of Canadian content was announced on November 15, 2024.[3] The CRTC has already conducted preliminary engagement sessions with key industry stakeholders on the definition of Canadian content, which aided in designing the approach for this public consultation.

The policy and order finalizing the contribution framework for online undertakings

In August 2024, the CRTC issued a policy decision and order[4] that represented a major step forward in creating a framework for one of the elements of the Online Streaming Act that has had some of the largest initial implications: the annual financial contribution in support of Canadian and Indigenous content. In its policy decision, the CRTC determined that online undertakings that earn “annual contributions revenues” of $25 million or more from Canadian broadcasting activities across all services during the previous broadcasting year will be required to contribute 5% of those revenues to support Canadian and Indigenous content.  

The policy decision and order also provide for the allocation of those contributions to various funds and initiatives commencing in the 2024-2025 broadcast year. With respect to audiovisual online undertakings, contributions are to be allocated as follows:

(a) not less than 2% to the Canada Media Fund (“CMF”), although the operator may deduct certified Canadian content expenditures (productions or acquisitions) of up to 1.5% of the contribution for this initiative;

(b) not less than 1.5% to the Independent Local News Fund;

(c) not less than 0.5% to the Indigenous Screen Office Fund;

(d) not less than 0.5% to any or a combination of the following funds:

(i) Black Screen Office Fund,

(ii) Canadian Independent Screen Fund for BPOC creators, and

(iii) Broadcasting Accessibility Fund; and

(e) not less than 0.5% to any or a combination of identified Certified Independent Production Funds (“CIPF”) that demonstrates a dedicated funding envelope for producers from official language minority communities (“OLMCs”) and producers from diverse communities.

Exclusion of online undertakings affiliated with traditional licensed broadcasting undertakings

The order includes an applicability section that expressly excludes from the new contribution framework online undertakings whose operator: holds a licence to operate a traditional broadcasting undertaking; is an affiliate of that licensee; or is a person operating, or affiliated with a person operating, an exempt broadcasting undertaking pursuant to an exemption order that requires the undertaking to be licensable.

Defining “annual contributions revenues” for the purpose of the $25 million threshold

Defining the term “annual contributions revenues” was an important issue addressed by the CRTC because it is used to determine which online undertakings exceed the $25 million threshold for contributions and to establish the types of revenues captured under the new framework.

The CRTC defined the term “annual contributions revenues” to mean: “total revenues attributable to an online undertaking derived from its Canadian broadcast activities during the previous broadcast year (i.e., the broadcast year ending on the 31st of August of the year that precedes the broadcast year within which the revenue calculation is being made) less any excluded revenue.”

The CRTC noted in its policy decision that the definition makes it clear that, with respect to online streaming services that are resold by a third-party online reseller (either directly to consumers or as part of a bundle), only the portion paid to the online undertaking would be considered annual contributions revenues. The remaining portion that is retained by a reseller should be counted by the reseller only. This applies only when calculating the $25 million applicability threshold to address the double-counting of revenues between two online undertakings.

Consultation on a temporary fund supporting local news production by commercial radio stations outside designated markets

Another result of the CRTC’s policy decision and order is to ensure that new funding from audio online undertakings is directed to areas in immediate need in the Canadian broadcasting system, which includes local news production by radio stations. However, given that there is currently no funding mechanism that specifically supports news and information programming by commercial radio stations, the CRTC indicated that it would establish a temporary Radio News Fund to support commercial radio stations outside of the designated markets of Montréal, Toronto, Vancouver, Calgary, Edmonton, and Ottawa-Gatineau. The Canadian Association of Broadcasters (“CAB”) was invited to file an operation plan to administer this temporary fund to provide relief in smaller markets.

On November 4, 2024, the CRTC issued a call for comments,[5] regarding the plan submitted by the CAB for the operation of the temporary Commercial Radio News Fund. As requested by the CRTC, the CAB’s operational plan needs to demonstrate its capacity to administer the temporary fund, identify the date it expects the fund to be operational, and provide details related to fund governance, eligibility criteria, accountability measures, reporting requirements, and allocation methods. Additionally, the CRTC requested that the plan provide details on the CAB’s proposed outreach initiatives for the promotion of the fund to all eligible commercial radio stations, including stations serving ethnocultural and Indigenous communities.

As noted by the CRTC, this fund should be operational starting in the 2024-2025 broadcast year.

Consultation to define “Canadian program” and support the creation and distribution of Canadian programming in the audio-visual sector

The consultation to establish a revised definition of Canadian audiovisual content for television and online programming will include a public hearing that is scheduled to begin on March 31, 2025. The CRTC published a “What we Heard” report[6] in September 2024 noting certain key themes including the complexity of defining Canadian culture, the inclusion of diverse equity-seeking groups, the role of foreign investment in content production, and the extent that intellectual property and copyright will factor into a definition.

In the Notice announcing the consultation and public hearing, the Commission stated that it “seeks comments on the various elements of the definition of Canadian content (referred to as “Canadian program” in the Broadcasting Act) as well as on the types of expenditures that traditional broadcasting undertakings and online undertakings should make towards this content.”

The current definition of a Canadian program is based on a “key creative point system”(where points are allotted to Canadians occupying certain key creative positions) that is designed to ensure Canadians exercise creative control over productions. Under this point system, productions must generally earn a minimum of six points out of ten to qualify as Canadian programs. The CRTC is considering adding new key creative positions – up to a total of 15 – to the point system and requiring a production to earn 9 out of 15 points to be Canadian. Canadian producers are also required to demonstrate that they control the production through indicators such as development, creative and financial control, financing, and producer remuneration.

In addition to modernizing the definition of Canadian program, the CRTC is asking interested parties to comment on the following:

• amending the requirements for Canadian programming expenditures (CPE) and programs of national interest (PNI) to ensure support for audio-visual Canadian programming and “at-risk programming”, such as news content, and applying these new requirements to CPE and PNI obligations imposed on Canadian and foreign audio-visual undertakings operating on traditional and online platforms;
• addressing the use of artificial intelligence (AI) by audio-visual creators and broadcasters; and
• ensuring that Canadians can access the data and information they need to make informed choices about Canadian programs.

What’s next?

Several other consultations and public hearings are expected to be announced as part of the CRTC’s plan to modernize Canada’s broadcasting framework.

In Winter 2024-2025, the CRTC plans to examine the market dynamics between small, medium, and large players operating traditional and online platforms. A public hearing will be included as part of that consultation in Spring 2025.

Other future consultations include looking at all aspects of radio and audio streaming services in Canada to examine how to support the industry in Canada and studying the diversity of local and national news programming in preparation for future regulatory changes.

As more of these consultations occur and CRTC decisions are issued, both the lasting impact of the Online Streaming Act and the future structure of Canadian broadcasting regulation will become clearer.

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Scott Prescott practises communications and administrative law. He has extensive knowledge of the legal, regulatory and policy frameworks governing the broadcasting and telecommunications industries in Canada.

Providing complex legal and strategic advice, clients include leading Canadian and international communications companies. He advises a number of cable, IPTV and satellite distributors, television and radio broadcasters, online content providers, foreign programming services, Internet service providers and wireline and wireless telecommunications carriers.

Scott acts for clients in a broad range of proceedings before the Canadian Radio-television and Telecommunications Commission (CRTC).

Scott’s communications practice includes advising on various matters relating to licensing and regulatory compliance, dispute resolution, regulatory and statutory interpretation, transfers of ownership and control, Canadian ownership and foreign investment, regulatory and policy frameworks, building access and telecommunications interconnection, licensing and tariffs.

Assisting clients operating in the communications industry on privacy and access to information matters commercial transactions and agreements and a range of competition, constitutional and administrative law issues is also a significant part of Scott’s communications practice.

Scott is the Co-Managing Partner of the firm’s Ottawa office.

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Kiera Boyd practices in the area of communications, with a particular emphasis on copyright.

Kiera graduated from the Faculty of Law at the University of Western Ontario. Prior to law school, she completed an Honours Bachelor of Arts in English Literature with a minor in Political Science at Queen’s University. During her summers throughout school, Kiera worked as an Administrative Assistant at a large national firm, where she was part of the Intellectual Property Team.

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Riley Mintz is an articling student in the firm's Ottawa office.

Riley recently completed her Juris Doctor at the University of Ottawa in the Faculty of English Common Law, with an option in Law and Technology. Throughout her time at uOttawa, Riley worked on campus at CRAiEDL Lab, focusing on robotics and artificial intelligence ethics and policy. She also participated in the prison law practicum for two years, which brought critical legal education and resources to people and their loved ones experiencing incarceration. Riley previously completed her first class honours Bachelor of Arts degree in Anthropology at McGill University. During her undergraduate studies, Riley was an active member of the Anthropology Student Association and volunteered at the Redpath Museum.