As the Standing Committee on Canadian Heritage continues its study on Bill C-10, it has also received some notable submissions from organizations and experts that raise further questions about the wisdom of the bill. One submission not yet posted (but provided to me with the consent to post) comes from Philip Palmer, former Senior General Counsel with the Department of Justice focused on communications law. Palmer spent decades in government focused on telecommunications and competition law issues. His expert opinion is that Bill C-10 is unconstitutional since on-demand streaming services such as Netflix are not inter-provincial undertakings and therefore are not subject to the federal government’s jurisdiction over broadcasters.

Palmer’s submission emphasizes that the technical differences between broadcasters and online streaming services matter when it comes to constitutional jurisdiction. His argument echoes a point I made before the committee last month, when I noted that notwithstanding claims conventional broadcasters and Internet services are all part of the same “system”, they are not:

What this seeks to do – and I think we’ve seen this even in a couple of comments that my fellow panellists have made- is to claim that this is all one system, that the Internet is the same system as broadcast or television and radio, and that we can have the same rules apply. The problem is that it isn’t. The long-standing policies we’ve had in broadcasting, for the long-standing broadcaster, have been premised on scarcity of spectrum, the privilege of having those licences and the requirement to give back.

Palmer takes this issue and assesses the constitutional implications. The entire submission is worth reading, but two points are critical. First, online streaming is not broadcasting:

Two aspects of online, on demand streaming distinguish it from broadcasting, as it is legally understood. First, subscribers are free to select what programs they want to watch or listen to, and when they will enjoy it. The subscribers act as their own programming curators: they control the content they receive and its scheduling. This is a much greater freedom than to switch among a limited number of licensed broadcasting channels that provide fixed menus.

Second, the content streamer does not choose or control the communications path between itself and its subscribers. The selected content is transmitted by telecommunications carriers over their facilities by means of digital packets that are disaggregated during transmission and then reassembled at the recipient’s end. Telecommunications carriers transmit the chosen content across provincial and international boundaries to the program consumer. There is no ‘dedicated channel’ – physical or otherwise – between the streamer and the end-user. Indeed, if a million people are watching the same program from the same streamer at the same time, there will be a million discrete streams, each one controlled by the user who may pause, rewind or terminate the transmission at will.

Why is this relevant?  Palmer argues that it means federal jurisdiction doesn’t touch streaming services:

Online streaming services, whether domestic or foreign, do not rely on over-the-air radio signals: they do not transmit by radio (no frequency scarcity concerns apply) and they do not control how their programming reaches consumers. As we have noted above, streaming services are delivered to the public through telecommunications carriers. This distinction is critical to any analysis of the constitutionality of Bill C-10.

As we have seen, Parliament’s authority over broadcasting derives from paragraph 92(10)(a) of the Constitution Act and is factually based on the use of radio waves to carry broadcast programming to listeners and viewers. The courts determined that cable television is an extension of over-the-air broadcasting. All of which was based on the notion that radio waves crossed provincial and international boundaries.

Streaming services do not use assigned radio frequencies to reach their audience. Hence, they are not, themselves, interprovincial undertakings. For the delivery of content, online streaming services depend on telecommunications carriers to transport programming across provincial and international boundaries. The mere fact of relying on telecommunications to conduct one’s business is not enough to bring an enterprise within federal legislative authority. Netflix and Spotify are not broadcasters: they are, respectively, a digital video store and digital jukebox. Federal legislation has never reached to the regulation of video stores or jukeboxes – or cinemas for that matter. How can the mere fact of digital transmission change the fundamental nature of the underlying undertaking?

The implications of this argument are very significant since it suggests that even if Bill C-10 makes it through the Parliamentary process, a constitutional challenge is a distinct possibility. This is particularly true given the encroachment on provincial jurisdiction. For example, Quebec has a long history of taking issue with federal involvement in broadcasting, putting a potential challenge in play. Indeed, it is odd to see this legislation viewed as a political winner in Quebec, when it effectively asserts federal jurisdiction over an area that has long been contested in the province.

Noting the lengthy CRTC hearing periods, I told the committee that the bill won’t provide new revenues for film and television production until the second half of the decade at the earliest. If a constitutional challenge is added to the mix, the timeline grows even longer. The bill has faced a rough ride at committee and the Palmer submission should give the committee further pause about the wisdom of moving forward without a significant overhaul.

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