Broadcasting Public Notice CRTC 1999-84
Telecom Public Notice CRTC 99-14
Ottawa, 17 May 1999
TABLE OF CONTENTS
Attributes of new media
The Commission's approach to new media
A Canadian presence in new media
How conventional broadcasting and telecommunications
are affected by new media
Offensive and illegal content
Appendix 1 Chronology of convergence-related initiatives (N/A)
Appendix 2 Glossary
Earlier this year, the Commission concluded its public consultations
under both the Broadcasting Act and the Telecommunications Act, regarding
the range of communications and information services referred to as "new
Parties to the proceeding assumed new media to be services delivered
over the Internet and the Commission does not consider it necessary to
define the term further.
In 1996, Industry Canada estimated that as many as 650 businesses,
employing as many as 17,000 people, were active in multimedia, including
new media. Other studies suggest that there may be more than 1,000 such
firms. Whatever its actual size, it is clear that the multimedia industry
is vibrant and growing, with the numbers of firms and services expected
to grow significantly as more Canadians acquire personal computers (PCs)
and seek access to the Internet.
This section of the document summarizes the Commission's determinations
following the proceeding noted above.
The Commission's approach to
To date, there has been uncertainty about whether new media services
constitute broadcasting in light of the breadth of the definitions of "program"
and "broadcasting" as set out in the Broadcasting Act. The Commission
agrees with those parties who stated that such uncertainty could be problematic
for the developers and producers of new and emerging services. It therefore
provides the following views about the scope of the definition of "broadcasting"
in the Act and sets out its approach to new media.
The Commission considers that the majority of services now available
on the Internet consist predominantly of alphanumeric text, and, therefore,
do not fall within the scope of the Broadcasting Act and are thus outside
the Commission's jurisdiction.
Among the services that also do not fall within the scope of the
definition of broadcasting are those where the potential for user customization
is significant, i.e., services where end-users have an individual, or one-on-one,
experience and where they create their own uniquely tailored content. The
Commission considers that these types of services do not involve the transmission
of programs for reception by the public and are, therefore, not broadcasting.
The proceeding also made it clear that some new media services fall
under the Broadcasting Act's definitions of "program" and "broadcasting."
These include digital audio services and audio/visual signals.
For those undertakings that offer new media services that do fall
under the definition of broadcasting, the Commission has concluded that
regulation is not necessary to achieve the objectives of the Broadcasting
Act. It will issue, by 30 June 1999, a proposed exemption order without
terms or conditions in respect of all undertakings that are providing broadcasting
services over the Internet, in whole or in part, in Canada.
Accordingly, the Commission will not regulate new media activities
on the Internet under the Broadcasting Act.
A Canadian presence in new media
In the Commission's view, there is no apparent shortage of Canadian
content on the Internet today. Rather, market forces are providing a Canadian
Internet presence that is also supported by a strong demand for Canadian
The Commission notes that a number of initiatives and funds have
been developed in both the public and private sectors to help finance and
support Canadian new media product.
For these reasons, the Commission concurs with the majority of participants
that there is no reason for it to impose regulatory measures to stimulate
the production and development of Canadian new media content.
How conventional broadcasting
is affected by new media
The Commission considers that new media have not had any detrimental
impact on conventional radio and television audiences. The Commission is
of the view that the effect of new media on television audience size will
be limited at least until such time as high-quality video programming can
be distributed on the Internet.
The Commission also agrees with most participants in the proceeding
that there is no evidence that the Internet has had any negative financial
impact on the advertising revenues of traditional broadcasters. In fact,
radio advertising revenues have increased since 1993, and television advertising
revenues have grown steadily over the past twenty years.
Illegal and offensive content
The Commission acknowledges the expressions of concern that have
been made about the distribution of offensive and potentially illegal content
on the Internet.
The Commission notes that Internet Service Providers (ISPs) and their
industry associations, in conjunction with government agencies and other
organizations, have made efforts to develop codes of conduct to help combat
the distribution of offensive material. It considers that more could be
done for example, by establishing complaint lines and industry ombudsmen
and developing international cooperation with law enforcement agencies.
The Commission also notes that effective content filtering computer software
is being developed. Such software will assist those who wish to control
access to material that they feel is inappropriate.
The Commission acknowledges the views of the majority of parties
to the proceeding that generally-applicable Canadian laws, coupled with
self-regulatory initiatives, rather than the Broadcasting Act are more
appropriate means for dealing with offensive material in new media. The
vast majority of such content, particularly hate propaganda, is beyond
the regulatory jurisdiction of the Broadcasting Act because it consists
predominantly of alphanumeric text. As such, it falls outside of the definition
of a "program" set out in the Act. In keeping with the overall
policy stated earlier, significantly customized content does not fall within
the definition of broadcasting and that content which is broadcasting will
be exempt from regulation.
The Commission considers that access by competitive providers of
Internet services to the facilities they require to offer services is an
important concern. In a 1998 decision (Telecom Decision CRTC 98-9), the
Commission decided it would approve the rates and terms under which incumbent
cable and telephone companies provide higher speed access to their telecommunications
facilities to ISPs. The Commission will set out its general regulatory
approach to rates and terms for such cable carrier higher speed access
services in the near future.
1. On 31 July 1998, in Broadcasting Public Notice CRTC 1998-82 and
Telecom Public Notice CRTC 98-20 (the Public Notice), the Commission announced
that it was initiating a proceeding under both the Broadcasting Act and
the Telecommunications Act calling for comments on the rapidly expanding
and increasingly available range of communications services collectively
referred to as "new media."
2. The Commission held a three-phase process for the submission of
written comments by interested parties. This proceeding was unprecedented
in terms of the broad spectrum of individuals, industries, and interest
groups from whom the Commission received comments. The call for comments
produced well in excess of 1000 contributions from individuals, multimedia
companies involved in the production and distribution of new media products
and services, as well as the traditionally regulated industries and their
industry associations that are familiar and active participants in Commission
3. Many of the submissions came from individuals, groups and industries
that had not previously appeared at or participated in Commission proceedings.
Their submissions were most useful in informing the Commission during its
deliberations on the prevailing technical and market realities in which
new media players operate.
4. In addition, the McLuhan Program E-Lab unit, on behalf of the
CRTC, hosted an on-line forum that stimulated comment from a wide range
of individuals from across the nation and around the world on issues that
were germane to the matters under consideration in this proceeding.
5. At the two oral phases of the public hearing held, respectively,
during eleven days last November and December and two days last February,
the Commission heard close to one hundred parties on the subject of new
media. 6. In the Public Notice, the Commission stated that the purpose
of the proceeding was to develop a comprehensive record to assist it in
answering the following questions:
a) In what ways, and to what extent, do new media affect, or are
they likely to affect, the broadcasting and telecommunications undertakings
now regulated by the Commission?
b) In what ways, and to what extent, are some or any of the new media
either broadcasting or telecommunications services?
c) To the extent that any of the new media are broadcasting or telecommunications,
to what extent should the Commission regulate and supervise them pursuant
to the Broadcasting Act and the Telecommunications Act?
d) Do the new media raise any other broad policy issues of national
7. This document responds to these questions. The following section
describes the general attributes of the new media sector that emerged throughout
the written and oral phases of the proceeding. These attributes are intended
not only to describe the emerging new media sector, but are also key elements
that contribute to the Commission's determinations that follow later in
the public notice.
8. The Commission wishes to underscore that this proceeding made
clear the rapid change that has occurred in this industry within a very
short time frame. This pace will undoubtedly continue. It also considers
that the development of new media services will not necessarily be "linear"
in their evolution toward audio and video applications. Rather, they may
develop in ways not yet contemplated. As a result, by necessity, this report
provides a snapshot of this important and evolving industry at this stage
of its development.
9. Section 3 of this report presents the Commission's determination
that it will not regulate new media activities under the Broadcasting Act.
Therefore, it will issue, by 30 June 1999, a proposed exemption order without
terms or conditions in respect of all undertakings that are providing broadcasting
services over the Internet, in whole or in part, in Canada.
10. The remaining sections provide discussion of some key policy
issues of national interest, including the impact of new media on conventional
broadcasting and telecommunications, support for Canadian new media content,
and the availability of illegal and offensive content on the Internet.
11. This process has provided the Commission with a substantial record
of information and viewpoints on the four general questions posed by the
Commission, as well as on other important issues. The Commission wishes
to thank all parties for their views and participation.
of new media
12. The development of digital technologies has led to the emergence
of new media which can combine elements such as text, graphics, data, fixed
images, audio, full motion video and animation and deliver them to exhibition
devices such as personal computers (PCs) or television sets. The distinguishing
features of new media are its use of digitization, interactivity and interconnected
13. In 1996, Industry Canada estimated that 650 Canadian multimedia
firms had created over 17,000 jobs. Other studies, such as those conducted
by the Canadian Human Resources Council, estimate that there may be more
than 1,000 such firms. Most multimedia firms are privately held and small,
with 80% having fewer than 25 employees. The industry is concentrated in
the metropolitan areas of Quebec, Ontario and British Columbia, but other
regions are also developing significant amounts of Canadian new media content.
14. The term "new media" can refer to a diverse range of
communications products and services, which include but are not limited
to video games, CD-ROMs, electronic-mail (e-mail), on-line paging services,
faxing, electronic commerce, IP telephony, and services delivered over
the World Wide Web and the Internet. In the Public Notice initiating this
proceeding, the Commission stated that as a working definition:
New media can be described as encompassing, singly or in combination,
and whether interactive or not, services and products that make use of
video, audio, graphics and alphanumeric text; and involving, along with
other, more traditional means of distribution, digital delivery over networks
interconnected on a local or global scale.
15. Parties to the proceeding assumed new media to be services delivered
by means of the Internet. Given its regulatory approach, as set out earlier,
the Commission does not consider it necessary to further define new media.
Throughout this document, the Commission uses the term new media services
to be those that are delivered by means of the Internet.
16. Parties to the proceeding brought a great deal of new information
to the Commission relating to the new media industry in Canada. A number
of factors relevant to the new media industry in Canada on which there
was a high degree of agreement on the record of the proceeding are summarized
below. Some of these attributes, particularly those that are integral to
the Commission's policy direction for new media, are discussed in greater
detail in other sections of this public notice.
17. The new media industry in Canada is highly competitive. Both
the industry and the market for new media products and services are vibrant
and growing, with the number of firms and services expected to expand considerably
as the penetration of information technologies increases. There is significant
participation by individuals and organizations, as well as by existing
broadcasting undertakings, in the creation and distribution of Canadian
new media products and services.
18. One of the key factors in the growth of the market for new media
products and services is the increasing penetration of information technologies.
Canada has a relatively high level of penetration of computers in the home
and in the workplace when compared with other OECD countries. In 1997,
Statistics Canada estimated that 36% of Canadian households were equipped
with PCs, an 11% increase over 1996. In September 1998, Ekos Research estimated
that close to 60% of households owned at least one PC.
19. Canada also has one of the lowest costs for consumer access to
the Internet when compared with those in other OECD countries. A huge rate
of growth in Internet use can also be noted. The October 1997 Statistics
Canada Household Internet Survey revealed that 42% of connected households
spent over 20 hours per month on-line, with 61% connecting at least seven
times a week. The survey also found that the most common uses were sending
e-mail (77%) and accessing information (71%). In turn, a study undertaken
by Communications Management Inc. (CMI) filed in this proceeding estimated
that, by 2001, approximately five million Canadian households, or 40% of
households, will have access to the Internet, double the number of households
which had Internet access in 1998. According to CMI, most of the growth
will take place in households that already have PCs, as modems and Internet
access features are added.
20. A wide range of both public and private initiatives are working
together to facilitate the growth of new media in Canada. For instance,
the Community Access Program (providing public access to the Internet in
urban and rural communities), the Computers for Schools Program and the
SchoolNet Program have hastened the availability of access to Canadians
in rural areas and public facilities across Canada. Canadian educational
institutions are actively involved in the development of educational and
training programs that take advantage of Canadian technological and creative
21. The availability of funds through the federal and provincial
governments, as well as certain private sector initiatives, provide valuable
core funding to the Canadian new media sector for both industry and content
development. Accordingly, most participants considered that a requirement
to contribute to the production of Canadian content through a levy is unnecessary
and could even be detrimental to the Canadian new media sector.
22. New media content creators operate within a highly diversified
industry. Players range from traditional media extending their brands to
the Internet, to non-media companies seeking to use the Internet to promote
their services, to universities, libraries and individuals. As a result,
the production of new media content can range from very simple text and
graphics, all the way to elaborate graphics and streaming audio and video.
Much of the content on the Internet, Canadian or otherwise, is currently
made up predominantly of alphanumeric text. Although there appears to be
a trend towards an increase in the use of audio and video elements either,
singly or in combination, the ability to deliver long-form programming
of an acceptable technical quality is emerging slowly, most particularly
with respect to video.
23. Much of the Canadian new media content available complements
either the existing programming of those Canadian broadcasting undertakings
involved in new media or provides a means for expressing a diversity of
viewpoints to niche audiences or others who perceive that they are not
adequately represented by traditional media in all of its forms. Portal
operators make available a considerable amount of Canadian new media content
that is of local and regional interest.
24. Participants provided statistics indicating that Canadian web
sites represent about 5% of all Internet web sites. The availability of
a number of Canadian search engines provides relatively easy access to
Canadian new media content. French-language content represents about 5%
of total Internet content.
25. In addition, the Commission considers that, due to the nature
of the networks that comprise the Internet, spectrum scarcity is not an
issue and the development of high bandwidth infrastructure is proceeding
at a relatively rapid pace, although its deployment appears to be proceeding
more slowly. The Commission is of the view that these developments are
proceeding on the basis of business considerations and financial investments
made by firms in the marketplace, as well as through the efforts of Government
in funding the development of these technologies.
Commission's approach to new media
26. Many parties to this proceeding agreed that there is a need for
greater regulatory clarity and certainty regarding services that are being
offered by way of the Internet. In this respect, parties submitted that
there is a need for the Commission to move beyond the statements included
in its 19 May 1995 report to Government entitled Competition and Culture
on Canada's Information Highway: Managing the Realities of Transition (the
27. In the Convergence Report, the Commission noted, among other
things, that the current Broadcasting Act will likely capture many of the
new and emerging services. Since that report was released, neither the
Commission nor other government bodies have clarified what approach or
treatment should be applied to such services.
28. Parties differed on whether the Broadcasting Act applies at all
to new media undertakings and the services they provide. Some parties argued
that most new media services are beyond the scope of "broadcasting"
as defined in the Broadcasting Act and that the Commission should settle
any uncertainty to that effect. Others argued that none of the services
delivered over the Internet are consistent with any notion of broadcasting
that would have been contemplated by the Broadcasting Act.
29. Interpretations on this point were varied. For instance, the
vast majority of individual Canadians who participated in the on-line forum
that was initiated at the outset of this proceeding, as well as the numbers
of individuals who e-mailed the Commission during the course of the proceeding,
submitted, in essence, that there should be no regulatory oversight of
these services by the Commission pursuant to the Broadcasting Act.
30. Certain parties, however, argued that most new media services
would qualify as "broadcasting" and the undertakings that provide
them as "broadcasting undertakings" under the definitions set
out in the Broadcasting Act.
31. Putting those differing interpretations aside, parties were generally
consistent in the view that there is a compelling need for the Commission
to provide more clarity and certainty as to the approach that it intends
to develop with regard to new media. They argued that the uncertainty surrounding
this issue creates difficulties for developers and distributors of such
services in accessing capital markets and in bringing new and innovative
services to the Canadian market.
32. The Commission agrees that there has been uncertainty as to whether
new media services constitute broadcasting in light of the breadth of the
definitions of "program" and "broadcasting" under the
Broadcasting Act. The Commission also agrees that such uncertainty could
be problematic for the developers and providers of new and emerging services.
In the following section, the Commission provides its views as to the scope
of the definition of "broadcasting" in the Act and sets out its
approach to new media.
Is new media "broadcasting"?
33. "Broadcasting" is defined in section 2 of the Broadcasting
Act as follows:
[a]ny transmission of programs, whether or not encrypted, by radio
waves or other means of telecommunication for reception by the public by
means of broadcasting receiving apparatus, but does not include any such
transmission of programs that is made solely for performance or display
in a public place.
34. The term "program" is in turn defined in section 2
of the Act as: [s]ounds or visual images, or a combination of sounds and
visual images, that are intended to inform, enlighten or entertain, but
does not include visual images, whether or not combined with sounds, that
consist predominantly of alphanumeric text.
Explicit statutory exclusions from the definition
35. The Commission notes that, as stated above, much of the content
available by way of the Internet, Canadian or otherwise, currently consists
predominantly of alphanumeric text and is therefore excluded from the definition
of "program". This type of content, therefore, falls outside
the scope of the Broadcasting Act. Accordingly, the remainder of this section
contemplates Internet content that consists only of audio, video, a combination
of audio and video, or other visual images including still images that
do not consist predominantly of alphanumeric text.
36. It was submitted, among other things, that information displayed
on the Internet can be considered to be solely for display in a public
place and therefore excluded from the definition of "broadcasting".
Certainly, the Canadian public expressed its view that the Internet has
a unique ability to foster citizen engagement and public discourse. While
the Commission agrees, it considers that the Internet is not in and of
itself a "public place" in the sense intended by the Act. Programs
are not transmitted to cyberspace, but through it, and are received in
a physical place, e.g. in an office or home.
37. The Commission considers, however, that the exception to the
definition of "broadcasting" for programs transmitted for display
in a public place would apply, as suggested by one participant, to a particular
service delivered via the Internet that is accessible by end-users only
in a terminal or kiosk located in a public place, such as a public library.
Technological neutrality of "broadcasting"
38. The Commission notes that the definition of "broadcasting"
includes the transmission of programs, whether or not encrypted, by other
means of telecommunication. This definition is, and was intended to be,
technologically neutral. Accordingly, the mere fact that a program is delivered
by means of the Internet, rather than by means of the airwaves or by a
cable company, does not exclude it from the definition of "broadcasting".
39. Some parties argued that there is no "transmission"
of content over the Internet, and therefore, there is no "broadcasting".
The fact that an end-user activates the delivery of a program is not, in
the Commission's view, determinative. As discussed below, on-demand delivery
is included in the definition of "broadcasting". Further, the
Commission considers that the particular technology used for the delivery
of signals over the Internet cannot be determinative. Based on a plain
meaning of the word, and recognizing the intent that the definition be
technologically neutral, the Commission considers that the delivery of
data signals from an origination point (e.g. a host server) to a reception
point (e.g. an end-user's apparatus) by means of the Internet involves
the "transmission" of the content.
40. Some parties submitted that the definition of "broadcasting
receiving apparatus" was not intended to capture devices such as personal
computers or Web TV boxes when used to access the Internet. The Commission
notes that the definition of "broadcasting receiving apparatus"
includes a "device, or combination of devices, intended for or capable
of being used for the reception of broadcasting". The Commission considers
that an interpretation of this definition that includes only conventional
televisions and radios is not supported by the plain meaning of the definition
and would undermine the technological neutrality of the definition of "broadcasting".
In the Commission's view, devices such as personal computers, or televisions
equipped with Web TV boxes, fall within the definition of "broadcasting
receiving apparatus" to the extent that they are or are capable of
being used to receive broadcasting.
Transmission of programs for reception by the
41. It is therefore necessary to consider whether the transmission
of sounds or visual images (or a combination of sounds and visual images)
that do not consist predominantly of alphanumeric text by means of the
Internet can be said to involve the transmission of programs for reception
by the public.
42. A number of parties submitted that content that is "customizable"
does not constitute "broadcasting". The Commission notes that
parties have used the term "customizable" to mean different things.
For example, some parties cited the non-simultaneous characteristic of
Internet services as a basis for which such services cannot be considered
to be "broadcasting".
43. The Commission considers it important to distinguish between
the ability to obtain Internet content "on-demand" - the non-simultaneous
characteristic of Internet services - and the ability of the end-user to
"customize", or interact with, the content itself to suit his
or her own needs and interests.
44. In the Commission's view, there is no explicit or implicit statutory
requirement that broadcasting involve scheduled or simultaneous transmissions
of programs. The Commission notes that the legislator could have, but did
not, expressly exclude on-demand programs from the Act. As noted by one
party, the mere ability of an end-user to select content on-demand does
not by itself remove such content from the definition of broadcasting.
The Commission considers that programs that are transmitted to members
of the public on-demand are transmitted "for reception by the public".
45. The Commission considers, however, that some Internet services
involve a high degree of "customizable" content. This allows
end-users to have an individual one-on-one experience through the creation
of their own uniquely tailored content. In the Commission's view, this
content, created by the end-user, would not be transmitted for reception
by the public. The Commission therefore considers that content that is
"customizable" to a significant degree does not properly fall
within the definition of "broadcasting" set out in the Broadcasting
46. By contrast, the ability to select, for example, camera angles
or background lighting would not by itself remove programs transmitted
by means of the Internet from the definition of "broadcasting".
The Commission notes that digital television can be expected to allow this
more limited degree of customization. In these circumstances, where the
experience of end-users with the program in question would be similar,
if not the same, there is nonetheless a transmission of the program for
reception by the public, and, therefore, such content would be "broadcasting".
These types of programs would include, for example, those that consist
of digital audio and video services.
Proposal to exempt all new media broadcasting
47. Section 9(4) of the Broadcasting Act requires the Commission
to exempt broadcasting undertakings from the licensing requirements in
the Act if the Commission is satisfied that compliance by these undertakings
with these requirements will not contribute in a material manner to the
implementation of the broadcasting policy for Canada.
48. The record of this proceeding indicates that the Internet has
given rise to new avenues and forms of expression and communication for
Canadians, amongst themselves and others in both French and English. The
proceeding also highlighted the often local and regional nature of many
of the services. They provide valuable sources of information and other
services to many Canadians that are otherwise unavailable. Moreover, the
demand for Canadian information and other services has led to the development
of search engines and aggregation sites that facilitate access to Canadian
49. Furthermore, the Commission considers that to impose licensing
on new media would not contribute in any way to its development or to the
benefits that it has brought to Canadian users, consumers and businesses.
50. In light of the foregoing, the Commission is satisfied that compliance
with Part II of the Act, and any applicable regulations made thereunder,
by persons carrying on new media broadcasting undertakings will not contribute
in a material manner to the implementation of the policy objectives set
out in section 3(1) of the Act.
51. Accordingly, the Commission will issue a proposed exemption order
without terms or conditions in respect of all undertakings that are providing
broadcasting services over the Internet, in whole or in part, in Canada.
52. In addition, in light of the Commission's view with respect to
"customizable" content delivered by the Internet expressed above,
it considers it appropriate to review in the near future its current exemption
order with respect to video game programming undertakings.
Competitors' access to carriers' facilities that are closest to the
53. Internet service providers consider that the most immediate need
is for Commission involvement in resolving access issues remaining with
respect to facilities that are closest to the customer ("last mile
facilities"), including higher speed access. It was submitted by others
that the Commission must ensure that such Internet service providers understand
that tariffing such access is a transitional step, and that Internet service
providers should invest in their own facilities. With respect to this position,
it was stated that, under current legislation, this approach would effectively
require Internet service providers to be Canadian-owned to supply high
speed Internet services. Further, this would also amount to the government
assuming what should appropriately be business investment decisions by
forcing investment to be made in "transmission facilities" and
away from "exempt transmission apparatus" such as routers, servers,
54. The Commission agrees that it is important that potential providers
of competitive retail level Internet services have access to the facilities
of carriers that are dominant with respect to such facilities. For example,
the Commission has addressed such issues in Telecom Decision CRTC 98-9,
Regulation under the Telecommunications Act of Certain Telecommunications
Services Offered by "Broadcast Carriers", 9 July 1998. In that
Decision, the Commission decided it would approve ("tariff")
the rates and terms on which incumbent cable and telephone companies provide
higher speed access to their telecommunications facilities with respect
to competitive providers of retail level Internet services. The Commission
anticipates that it will issue, by 30 July 1999, its decision on the general
regulatory approach to such higher speed access services when they are
offered by cable carriers.
55. However, in light of the nature of the arguments made, the Commission
wishes to clarify that it does not agree with parties suggesting that the
Commission's objective is that all ISPs, providers of local exchange services
or other service providers must own or operate transmission facilities
and so become "facilities-based" carriers. The Commission has
stated its objective of promoting facilities-based entry in respect of
switched services in particular (such as local exchange and long distance
services). However, this objective does not exclude resale. While the Commission
considers that facilities-based competition is important to the realization
of sustainable competition, it also recognizes that not all service providers
will invest in the transmission facilities that qualify them as "telecommunications
common carriers" under the Telecommunications Act.
User Access to the Internet
56. Various parties raised issues relating to the affordability and
universality of new media services. Certain parties discussed the importance
of an "electronic public commons" and addressed the various facets
of Internet access with reference to an "access rainbow" of various
levels (carriage and devices, software, content and services, service providers,
literacy facilitation and governance). Parties indicated that literacy
and computer skills and the cost of terminal equipment are more important
to the achievement of universality in new media than is the case with traditional
telecommunications services. Because many Canadians do not have literacy
skills sufficient for Internet use, these Canadians will never have access
to the benefits of this medium. A partial solution is to explore ways to
use new media to advance literacy skills and, hence, Internet accessibility.
Another participant considered the government should clarify and elaborate
on its commitment to develop a national access strategy in respect of electronic
57. Some of the points raised by parties go beyond the Commission's
mandate under the Telecommunications Act. The Commission is currently examining
certain telecommunications issues related to access and its affordability
in the proceeding initiated by Telecom Public Notice CRTC 97-42, Service
to High-Cost Serving Areas. The Commission intends to address issues relating
to whether access to the Internet should be considered as "basic"
service for subsidy purposes in its decision in that proceeding. Rationalizing
interconnection and unbundling arrangements for various service providers
58. It was argued that the Commission should indicate that it will
begin a proceeding to rationalize all interconnection and unbundling arrangements,
and should include the issue of interconnection and unbundling rules for
Internet service providers in that proceeding. This was based on the view
that such a proceeding is required in order to realize the benefits of
facilities-based competition in all areas. Other parties, while agreeing
that all interconnection and unbundling decisions should be consistent
with the Commission's fundamental competition principles, considered that
it may be useful to conduct a review if more issues come before the Commission
and it is not clear how fundamental competition principles would apply.
59. The Commission notes that it has addressed a number of interconnection
and related issues on a case by case basis and, as a result, varying regulatory
arrangements are in place in respect of different service providers. Further,
the Commission recognizes that, with continuing developments in technologies,
market structure and service provider arrangements, a comprehensive review
of all interconnection and unbundling arrangements is appropriate. The
Commission anticipates that such a review will begin in the near future.
Canadian presence in new media
60. Under its mandate to implement the policy objectives set out
in the Broadcasting Act, the Commission has imposed Canadian exhibition
and expenditure requirements on traditional broadcasters, as well as requirements
for distribution undertakings to contribute financially to the production
of Canadian programming. This was done in recognition of the fundamental
importance of broadcasting to Canadian sovereignty and cultural identity
and the realization that market forces alone would not provide a significant
amount of Canadian broadcasting content. Canada's small domestic market
makes it difficult to finance the creation of competitive Canadian programs.
Whereas U.S. producers can recover the majority of their production costs
through domestic licence fees, the licence fees earned in Canada by most
Canadian program producers represent only a fraction of their total production
61. The economies of scale that exist in the United States make American
programming less expensive for Canadian broadcasters to acquire than Canadian
programming. At the same time, American programming has tended to attract
larger Canadian audiences than Canadian programming because of its higher
production values and well-established star system. This has particularly
been the case for English-language television. American broadcasters cannot
provide their programming directly to Canadian viewers except in situations
where off-air signals are directly receivable. This has resulted in a system
whereby profitable non-Canadian programming is purchased by Canadian broadcasters
to subsidize the cost of Canadian programming.
62. Similarly, in English-language radio, before the advent of Canadian
content regulations, it was difficult for Canadian sound recordings to
get airplay in Canada because they were competing against more heavily-financed
and promoted "hits" from the United States and other countries.
63. The Commission confirms that its policies and regulations for
conventional broadcasting services remain appropriate.
Availability of Canadian Content
64. In the Public Notice, the Commission set out a number of questions
related to Canadian content on the Internet. Specifically, the Commission
was interested in participants' views on the availability and visibility
of Canadian new media content and whether any incentives or regulatory
measures were needed to prompt existing or new industry participants to
develop, produce, promote and distribute Canadian new media content and
65. Differing views on the need for public intervention to foster
the development and production of Canadian new media content were discussed
at the hearing. Some parties saw no need for any intervention at all, arguing
that government should not interfere in any way because there is no shortage
of Canadian new media content, no access problems for producers or consumers,
and the new media industry is developing rapidly.
66. Other participants, however, favoured some form of support for
the production and distribution of new media content, although the majority
of these participants clearly preferred an incentive-based approach to
one involving regulation. To increase the level of support for Canadian
new media content, a number of initiatives were recommended. Among these
were direct funding programs targeted specifically at Canadian new media
content, various tax incentives to support the new media industry, content-specific
industry development initiatives, and activities to stimulate consumer
demand for new media content.
67. A few parties argued that a regulatory approach is the only way
to ensure that Canadian new media content is produced, promoted and guaranteed
a place of prominence on the Internet. The main suggestions for regulatory
measures included: (1) requiring ISPs to contribute a portion of their
annual revenues to content development funding; (2) requiring ISPs and/or
content aggregators to ensure shelf space and a place of prominence for
Canadian new media content; and (3) requiring Canadian ISPs to provide
links to Canadian web sites.
68. In the Commission's view, the circumstances that led to the need
for regulation of Canadian content in traditional broadcasting do not currently
exist in the Internet environment. Market forces are providing a Canadian
presence on the Internet that is also supported by a strong demand for
Canadian new media content. Participants provided statistics indicating
that Canadian web sites represent about 5% of all Internet web sites.
69. Admittedly, the sheer amount of content available on the Internet
makes it difficult to measure Canadian-based content. However, parties
demonstrated that a strong Canadian presence exists on the Internet through
reference to some of the following: (1) the impressive number of Canadian
web sites that exist; (2) key partnerships that have developed between
some ISPs and Canadian content creators for the specific purpose of generating
a supply of Canadian content; (3) the expansion of many traditional Canadian
media businesses to the Internet; and (4) the search tools available that
make it easier to locate Canadian content on the Internet.
70. Further, during the hearing, many broadcasters illustrated how
they use their web sites to cross-promote their traditional Canadian broadcasting
services. There also appears to be a significant demand for local and regional
Canadian content on the Internet. Many Canadian television and radio stations
distribute some of their local news programming through their web sites.
71. In light of the above, the Commission concurs with the majority
of participants that there is a significant amount of Canadian new media
content and services available on the Internet today and ample business
and market incentives for its continued production and distribution. In
fact, many parties submitted that regulation would serve to hinder, not
help, the production and distribution of Canadian new media content. Therefore,
there is no policy rationale for the Commission to impose regulatory measures
to stimulate the production and distribution of Canadian content.
Visibility of Canadian Content
72. The issue of how Canadian new media content producers will acquire
visibility for their content was discussed at the hearing. Concern was
expressed that a few large content aggregators who might gain dominant
positions could act as gatekeepers to the most heavily trafficked web sites
on the Internet.
73. Parties disagreed on the urgency of this threat. Some producers
claimed to have already been asked to pay for access to search engines
or portals. However, many of the content aggregators that appeared before
the Commission denied that anyone is charging for access. Instead, they
indicated that Canadian content is always in demand because of the Internet's
virtually limitless capacity to carry it. Others have argued that producers
are demanding and receiving significant compensation in return for the
right to mirror or cache their sites on a particular portal or server.
Many also noted that there are a number of Canadian content aggregators
and portal sites that are being established that could lead Canadian consumers
easily to Canadian content.
74. In the Commission's view, there was no convincing evidence submitted
throughout the hearing process to suggest that visibility of Canadian content
on the Internet is a problem and, therefore, no policy rationale to pursue
regulatory measures to support access to Canadian content on the Internet.
75. The Commission is aware that the likely explanation as to why
Canadian content is flourishing on the Internet today is because the Internet
is still primarily a text-based information medium with a strong appeal
to local and regional interests. The type of content that is predominant
on the Internet has low production values; it is relatively inexpensive
to produce; and it is in demand by Canadians who want access to local,
regional and national information in such areas as weather, sports, current
affairs and social services. If the Internet remains primarily a text-based,
information medium, then it is likely that market forces alone will continue
to provide an adequate supply of Canadian content.
76. Many expressed concern about the preservation of funding resources
for high quality Canadian programming in the future new media environment.
A broad spectrum of participants recommended different funding initiatives
to support Canadian new media content. These included direct government
funding of new media content, in the form of grants, loans, and equity
investments. A number of refundable tax credits were also recommended to
cover such new media expenses as investment in new media production, labour,
research and development, and capital costs. Several parties also recommended
that Section 19 of the Income Tax Act, which provides advertisers in Canadian
publications with deductions equal to the costs of their advertisements,
should be applied to new media.
77. The Commission notes that a number of funds have already been
developed in both the public and private sectors to help finance Canadian
new media content. Funds such as The Multimedia Fund administered by Telefilm
Canada, the Stentor and Bell New Media funds and recent funds announced
by Industry Canada have been targeted toward Canadian new media content
in the entertainment and educational genres.
78. The Commission also acknowledges the work that is being done
to develop initiatives to support Canadian new media content and to nurture
the Canadian new media industry by such government departments as Canadian
Heritage, Industry Canada and the Department of Foreign Affairs and International
Trade. Among a number of noteworthy initiatives has been the government's
"Connecting All Canadians" agenda, which was announced in the
1998 Budget. This agenda has six pillars or areas of emphasis for national
leadership in new media which are intended to ensure that, among other
things, all Canadians will have access to new media, Canada will be a leader
in electronic commerce, and Canadian content will occupy a place of prominence
on the Internet.
79. Funding initiatives may be particularly necessary for the French-language
new media market, which is significantly smaller than the English-language
market. Francophone new media developers are faced with higher production
costs than English-language producers because they often have to create
a product in both languages and develop more costly marketing and distribution
strategies to expand their market. Export options are also more limited
in the francophone market. Not surprisingly, the level of French-language
content on the Internet is quite low when compared with English-language
80. Nevertheless, it is worth noting that the federal and Quebec
governments have been working to address this issue and have established
funds that are targeted specifically at French-language new media production.
In addition, despite the challenges it has faced, the new media industry
in Quebec is one of the most vibrant and well-developed in Canada.
The Commission also notes the availability of a number of French-language
search engines that provide access to information in French.
The Future of Canadian Content
on the Internet
81. There was a wide divergence of views among parties on how the
future of the Internet might unfold and the impact that this will have
on traditional media and on Canadian content.
82. Many predicted that the future new media environment could differ
greatly from that of traditional broadcasting. For one thing, the notion
that the Internet might some day be a substitute for traditional television
and radio broadcasting is predicated on the assumption that it will be
capable of delivering broadband content. As mentioned previously, this
will depend upon, among other things, significant advances in bandwidth
and processing speeds as well as the resolution of major intellectual property
issues. Several parties also pointed out that no new medium has ever completely
displaced a previous medium and it could be that television and radio will
continue to co-exist with the Internet, although perhaps in altered forms.
83. Even if the Internet does become the dominant medium for reaching
mass audiences, it cannot be taken for granted that the economic model
that governs traditional broadcasting, whereby Canadian broadcasters can
acquire discrete Canadian rights for American programming, will exist on
the Internet. This will depend on, among other things, whether or not geographic
rights markets for content on the Internet will emerge.
84. Some feel that it is more likely that production companies such
as Disney, Fox or MGM will have their own servers located in the United
States that will distribute video products cheaply and effectively direct
to other countries around the world. If there is no need for intermediaries,
then Canadian programmers or distributors may not be able to access the
rights to non-Canadian intellectual property. This could have an impact
on the production of Canadian programming if revenues from the exhibition
of American programming are no longer available to Canadians. In any case,
the business model for the Internet would be significantly different from
that of traditional television. The business model could be driven by Canadian
content, eliminating the need for the regulation of Canadian content although
not necessarily the need for public funding of this content.
85. By contrast, other parties predicted that the emergence of geographic
boundaries for intellectual property rights on the Internet is imminent.
Several parties also pointed out that some fundamental differences in the
new media environment are likely to provide Canadianswith advantages that
did not exist in conventional broadcasting. For instance, some argued that
the economies of scale in distribution that have existed for U.S. content
creators in traditional broadcasting will not exist to the same extent
in the new media environment. The advantage of the Internet is that anyone
can place their product or program on a server and immediately gain access
to a global audience. Similarly, technologies such as computer animation
are already resulting in lower costs for some types of production and further
technological innovations may continue this trend.
86. There will also be many more outlets for alternative voices and
niche services that may be able to develop an audience or market base.
An example was given at the oral hearing of a Canadian artist who developed
a following in Japan where he sold some of his paintings via the Internet.
87. Many Canadians will increasingly have access to a diversity of
content and services that might not have been available to them through
conventional broadcasting. This may benefit Canadians who belong to communities
of interest that have not been well-represented by mainstream media. This
also raises the question of whether the Internet will ever have the ability
to create mass audiences in a manner similar to that of conventional television,
which is driven by mass-oriented entertainment programming, or whether
the sheer number of "channels" offered by the Internet will always
result in fragmentation. While some spoke of mass market Internet services,
others were of the view that the successful content creators on the Internet
will be the ones who target narrower communities of interest such as sports
fans, art and music lovers, youth culture, and so on.
88. Finally, many consider Canada is ideally positioned to achieve
success in the new media market because of its expertise and strengths
in several of the creative and knowledge-based industries that fuel this
growing industry including telecommunications, software development, digital
animation and multicultural/multilingual content creation.
89. In light of all of the above, the Commission does not consider
that it needs to impose any regulatory measures to support the development,
production, promotion and distribution of Canadian new media content and
services. On balance, while there may be both advantages and disadvantages
in the future new media environment, the Commission is confident, based
on the record of this proceeding, that the industry is moving in a direction
that will result in a strong Canadian new media industry and a strong Canadian
presence on the Internet. Most noteworthy was the expression of excitement
and energy that was communicated by those who discussed their work in new
media. The Commission does not intend to impede this creative energy through
unnecessary regulatory measures but rather to encourage the continued leadership
and innovation of the Canadian new media sector.
conventional broadcasting and telecommunications are affected by new media
90. One of the issues raised by the Commission in its Public Notice
was whether, and if so, to what extent new media are now, or may be expected
to become substitutes for existing broadcasting services and their distribution
systems. It was argued by some parties that a high degree of substitutability
could threaten regulated broadcasters' revenue sources and significantly
impede their ability to fulfil their obligations under the Broadcasting
91. The vast majority of participants agreed that, in the short term,
traditional media and new media services should be considered to be complementary
rather than substitute services. Participants noted key differences from
both a consumer's and a supplier's point of view when comparing traditional
and new media.
92. From the consumer's perspective, new media services provide interactive
and mostly unscheduled access, while traditional media offer mostly one-way
point-to-multipoint programming. Many participants also noted that the
quality of new media video is not of the quality available from traditional
media. That situation is expected to remain until extensive technological
developments allow for improved quality.
93. From a supplier's perspective, new media offer a market where
basic content can be produced and distributed at relatively little cost.
New media offer, among other things, consumer-specific messaging, an unlimited
number of distribution channels and a borderless distribution system through
the Internet. This is in contrast to the traditional media industry which
is characterized by limited channel capacity, a high degree of mass appeal
programming, and high distribution costs and barriers to entry. The Internet,
which today has a penetration rate of approximately 20%, compared to the
much higher penetration rates of television and radio, cannot yet deliver
mass Canadian audiences.
94. There was considerably less consensus among participants regarding
the longer term substitutability of new and traditional media services
and distribution systems. Some argued that there is no evidence that the
Internet will be capable of supporting the delivery of anything near broadcast
quality video within the next decade.
95. Still other participants were of the view that new media services
will become substitutes for traditional media services within a shorter
time frame. Some suggested this could possibly occur within seven years.
96. While views vary considerably, the Commission agrees with most
participants that key technological developments must take place before
new media services and distribution systems compete more directly with
traditional media. Should broadcast quality video and audio services become
available, other factors need to be considered before new media services
and distribution systems can be considered to be substitutes. Such factors
include the cost of exhibition devices, the general appeal of the service
offerings, customers' willingness to pay, as well as PC and Internet access
97. The Commission notes, however, that new media may evolve in ways
that are entirely different from the current forms of conventional broadcasting.
For example, they may simply co-exist with and complement conventional
media, as in the cases of books, radio and television.
Impact of new media on conventional
98. In order to establish whether new media activities are having,
or can be expected to have, a negative impact on the financial well-being
of regulated broadcasting services, parties discussed the major business
models presently used. It was generally agreed that definitive on-line
business models have yet to emerge in the nascent new media industry. Participants
to this proceeding generally agreed, however, that there are three major
types of business models: advertising-driven, subscription-based and transaction-driven.
It was also generally agreed that most revenues are currently derived from
advertising and transactions, while subscription-based models have so far
rarely proven to be successful.
99. A number of participants recognised that traditional media firms
undertaking new media ventures benefit from significant competitive advantages
that are generally not available to new entrants. One of the key opportunities
afforded traditional media firms is the ability to re-purpose their intellectual
property for the Internet, thus allowing for the amortization of costs
over a larger audience. Traditional media firms active in both industries
can also expand their established brands, packaging, publishing, marketing
and content integration skills to the Internet, deriving a sizeable advantage
over firms that have yet to develop the same level of brand recognition
and managerial expertise. Finally, the new media industry provides new
avenues for traditional media growth. For instance, new media players that
advertise on traditional media create an increased demand for new media
services which, in turn, creates an increased demand for traditional avenues
of distribution, such as telephone lines and cable access.
100. Nevertheless, some participants expressed concern about the
potentially negative impact that the new media industry may have on the
revenue sources and the audiences of regulated broadcasters. There was
a general consensus that any such impact would result mainly from three
factors: 1) a loss in radio and television audiences to new media; (2)
a loss in traditional media advertising revenues to new media advertising;
and (3) to a lesser extent, a loss in traditional media advertising revenues
due to the growth in electronic commerce.
Impact of new media on traditional
101. Some participants considered that, in the short term, new media
services will mostly compete for the time that Canadians have traditionally
allocated to leisure activities. Other parties, however, submitted that
significant declines in traditional media audiences are already taking
place. It was argued that the average number of hours that listeners tuned
to radio dropped between 1993 and 1997 and that younger Canadians are listening
to less radio.
102. With respect to radio audiences, the Commission notes that the
reference to a slight decrease in radio audiences between 1993 and 1997
does not present cause for concern since yearly fluctuations in audiences
generally take place. It may be more relevant to note that, according to
BBM data, the overall amount of radio listening by Canadians has increased
slightly over the past two decades, even in the face of increased competition
from other media such as television and computers. There is, therefore,
currently no obvious evidence of an impact on listening to conventional
radio as a result of the emergence of new media.
103. It was also submitted that there has been a decline in the amount
of conventional television watched by Canadians in general. BBM data indicate
a gradual overall decline in per capita hours of viewing for Canadians
of approximately 1.7 hours per week, from a total of 24 hours per week,
since 1986. Some participants were of the view that in the mid to longer
term, as current technological constraints are addressed and as more Canadians
gain access to the Internet, an increasingly large number of Canadians
will substitute the Internet for traditional media.
104. Time spent in front of the television is a function of a combination
of factors including demographics, lifestyle, cost and price structures,
the introduction of substitute services and distribution systems, the general
appeal of programming, as well as the penetration rates of PCs and Internet
access. The reasons for the overall gradual decrease in television viewing
over the past decade are complex and cannot be attributed to any one factor.
Specifically, the Commission considers that participants have not demonstrated
that new media services have thus far had a significant and detrimental
impact on traditional media audiences.
Impact of new media advertising
on traditional media advertising
105. A number of participants active in the new media industry stated
that advertising revenues are critical to their financial success. At this
time, it is estimated that the value of the Canadian on-line advertising
industry stands at approximately 1% of that in the U.S. However, many noted
that the industry is still regarded as being in an exploratory phase, experimenting
with both U.S. and Canadian sites. Participants generally considered that,
while the Canadian on-line advertising market could be expected to continue
growing, such growth has to date been slow relative to that in the U.S.
One of the reasons given was that advertisers can reach Canadian and other
Internet users on U.S. sites, an indication of the global nature of the
106. Several participants also noted that a serious impediment to
the growth of on-line advertising results from the absence of sophisticated
and consistent measuring tools. Such tools are used to inform the advertisers
of the proportion of their target audience that is reached for a given
dollar amount invested in advertising. While a broad industry effort has
been initiated to develop voluntary standards for audience measurements,
advertisers are taking a cautious approach to on-line advertising until
such tools are widely available.
107. Most participants were of the view that new media advertising
has not, thus far, had a negative impact on the traditional media advertising
industry in any significant way. Some consider that the "advertising
pie" is getting larger, with the new media industry reaping incremental
advertising dollars due to the increased sales that Internet advertising
generates. The participants considered that the greater value of reaching
more targeted audiences and getting more activity from those audiences
as a result of the advertising is being recognized.
108. It was also submitted that when advertisers recognize the consumer
migration to new media, this will drive further development of new media
and attract more customers away from traditional broadcasters to the Internet.
The suggestion was made that, when this occurs, the value of advertising
on the Internet with this large consumer base will be recognized and may
unleash a wave of advertisers onto the Internet, with a dramatic negative
impact on traditional media advertising budgets. However, there was no
evidence submitted that points to such a sudden and large shifting in advertising
resources to new media.
109. The Commission agrees with most participants that there is currently
no evidence that the Internet has had a negative impact on the advertising
revenues of regulated broadcasters as a result of the growth in on-line
advertising. Analysis of the financial returns of radio broadcasters reveals
increasing annual growth in radio advertising revenue since 1993.
110. Similar data from annual financial returns for the television
industry indicates a steady growth in advertising revenues over the past
two decades with minor slowdowns during the recessions of the early 1980s
and 90s. Accordingly, there does not appear to be any obvious impact of
the growth of Internet advertising on advertising dollars committed to
the television industry.
111. In addition, there may well be increased efficiencies and cost
savings as a result of technological developments, that will lead to more
money being available for advertising in all forms.
Impact of electronic commerce
on traditional media advertising
112. Participants at the hearing generally agreed that electronic
commerce has involved mostly business-to-business rather than business-to-consumer
transactions. A December 1998 Internet Survey conducted by A.C. Nielson
revealed that only 17% of Internet users made on-line purchases in 1998.
Issues such as online security, fraud and privacy were cited as concerns
that continue to discourage many consumers from venturing on-line to shop.
This is, however, an area that will continue to grow and evolve.
113. Some participants expressed concern about the potential negative
impact of the growth of electronic commerce on the advertising base of
traditional media. It was suggested that electronic commerce could significantly
affect the manner in which advertising is bought and sold on traditional
media. For instance, it was argued that an increase in the number of cars
sold on-line could lead to a reduction in the number of retail outlets
for cars, thus likely reducing the number of advertisers who buy commercials
on television and radio stations.
114. While the Commission considers the scenario presented above
to be plausible in the mid to longer term, it notes that no evidence has
been submitted to substantiate that traditional media's advertising revenues
have in any way been negatively impacted by the advent of electronic commerce
thus far. In fact, it is equally plausible that the total advertising dollars
will increase because of stimulation by electronic commerce.
Impact of new media on telecommunications
115. Some parties submitted that the new media are affecting telecommunications
undertakings through the substitution of "telecom analogous"
services, such as e-mail and Internet telephony for traditional telecommunications
services, as well as fax and circuit-switched telephony.
Telecommunications undertakings are also being affected by the new
media through the convergence of data and voice networks and the dramatic
demand for data carriage brought on by the explosive growth in Internet
use. These changes require telecommunications undertakings regulated by
the Commission to adopt the new technologies to remain competitive. In
a similar vein, it was noted that the deployment of new telecommunications
transport technologies, while enabling the offering of new media content
services, is also changing the way current services, such as voice long
distance, are being offered. Various providers of retail level Internet
Services submitted that competitive access is crucial to the success of
the Canadian new media industry and that the Commission should ensure a
competitive infrastructure for new media services.
116. The Commission notes that carriers and other service providers
are responding as they consider appropriate to new transmission and other
technologies. Because new technologies generally are not adopted across
the industry on an instantaneous basis, the impact of these technologies
also manifests itself over a period of time, and the Commission takes this
into account in setting its regulatory agenda. For example, the Commission
has been aware that, for various reasons, including changing technology
(notably the move to packet technologies, which is also one of the attributes
of the Internet transmission protocol), it would likely become necessary
to review the current regime of contribution subsidy payments. Recently,
the Commission began a proceeding to review this subsidy regime, which
supports affordable basic telecommunications services (Telecom Public Notice
CRTC 99-6, Review of Contribution Collection Mechanism and Related Issues,
1 March 1999).
and illegal content
117. Most parties to the proceeding acknowledged the presence of
both offensive and potentially illegal content on the Internet. Where parties
differed to some extent was in how best to deal with this type of content.
Most agreed that Commission regulation of participating undertakings and
the services they provide is either inappropriate or unnecessary. While
the majority argued that issues of social concern, such as hate propaganda
and obscenity, are most appropriately dealt with under existing Canadian
laws, they also supported industry self-regulation as an effective means
of addressing offensive content, either through codes of conduct or other
self-regulatory mechanisms. They also pointed to a number of tools currently
on the market, such as content filters and blocking devices, which exist
to protect children from content that might be harmful to them.
118. However, a number of parties expressed concern about the ease
with which both offensive and potentially illegal content can be accessed
and disseminated. Some called upon the Commission to regulate this type
of content. Of those expressing concerns, a number agreed that while the
Criminal Code contains tools for dealing with illegal content, using those
tools can be a lengthy and arduous process. A number of parties suggested
that additional powers should be given to the Canadian Human Rights Commission
to combat certain hate propaganda and other activities prohibited by the
Canadian Human Rights Act. Some argued that stronger codes of conduct,
including procedures for notice and take down of offending web sites, should
be developed by industry groups.
119. Most parties, while concerned about offensive and potentially
illegal content on the Internet, were reluctant to endorse regulation that
would restrict access to information or rights of rebuttal on the medium.
120. It was also suggested that the Commission and Government work
with a variety of partners, in both the public and private sectors and
on both domestic and international levels, to deal with the issue of "illegal
and undesirable activity" on the Internet. The Commission notes that
government agencies and ISP industry representatives are currently discussing
121. The Commission acknowledges the expressions of concern about
the dissemination of offensive and potentially illegal content over the
Internet. It also acknowledges the views of the majority of parties who
argued that Canadian laws of general application, coupled with self-regulatory
initiatives, would be more appropriate for dealing with this type of content
over the Internet than either the Broadcasting Act or Telecommunications
Act. The vast majority of such content, particularly hate propaganda, is
beyond the regulatory jurisdiction of the Broadcasting Act because it consists
predominantly of alphanumeric text. As such, it falls outside of the definition
of a "program" set out in the Act. In keeping with the overall
policy stated earlier, significantly customized content does not fall within
the definition of broadcasting and that content which is broadcasting will
be exempt from regulation.
122. The Commission also notes that Internet service providers and
their industry associations, in conjunction with both government agencies
and other organizations, have made efforts to develop codes of conduct
that would assist in combating the dissemination of offensive and potentially
illegal material. The Commission encourages these groups to continue their
work in developing standards and procedures for dealing with such content.
The Commission considers that more can likely be done in the area of illegal
content by, for example, establishing complaint lines and industry ombudsmen
as well as developing international arrangements. Such arrangements could
include co-operation between law enforcement agencies for providing notice
and take down of web sites disseminating such content.
123. The Commission also believes that users can assist in controlling
access to web sites that may be inappropriate for children. The existence
of content filtering software that is relatively inexpensive and, in some
cases, free of charge, is a useful tool for controlling access by children
to unsuitable material. The Commission notes that, like most other aspects
of new media, effective content filtering software is developing rapidly.
124. Lastly, the Commission notes that, as with most other media,
awareness and knowledge of the benefits that can be obtained from the rich
diversity of content available on the Internet, as well as of the existence
of offensive content, can be a powerful tool in the hands of users. Organizations
such as the Media Awareness Network, a Canadian not-for-profit organization,
are dedicated to media education and media issues affecting children and
youth. Useful information can be obtained from such groups. The Media Awareness
Network, for example, can be accessed on the Internet at http://www.media-awareness.ca
APPENDIX 1 (not available in DTR)
Glossary of New Media Terms
Viewing World Wide Web sites and often following links to other sites.
CAPs (Community Access Points)
The Internet can be accessed in a variety of public places in communities
across Canada. "Terminals", computers with internet access, are
normally found in libraries, schools and other public buildings and are
available for use by the general public subject to certain usage guidelines
produced and enforced by the group which owns and operates the terminals.
Government assistance has supported and facilitated the establishment of
many of these CAPs.
A Compact Disc is capable of storing large amounts of electronic
data. If a CD ROM reader is attached to a computer then the user can access
that data. ROM stands for Read Only Memory, meaning that the data on a
CD ROM can only be viewed and used but not changed. CD ROM writers, however,
allow data to be changed and are becoming much more common.
E-mail or Electronic Mail is the most common use of the Internet.
Messages can be sent from one user to another over the network almost instantaneously.
Documents or other content may be attached to e-mail messages and also
sent to other users. E-mail passes through the network via Simple Mail
Transfer Protocol (SMTP).
Computer files may be moved (downloaded or uploaded) through the
File Transfer Protocol (FTP).
Freenets (various other names)
These groups provide services for little or no charge and are a way
for members of a specific community to discuss, and provide information
or assistance on topics of importance to the group itself. Freenets operate
much like ISPs although, since they charge little or nothing for the services
they provide, they are often more limited in what they can offer users.
The Internet is a distribution system that is capable of handling
a wide variety of data (text, pictures and sound) in any number of formats.
In order to move through the Internet, however, data and requests for data
made by users must adhere to sets of rules called "protocols."
The Internet is a distributed, inter-operable, packet-switched network
which predominantly uses the TCP/IP protocol.
+ A distributed network has no one central repository of information
or control, but is comprised of an interconnected web of "host"
computers, each of which can be accessed from virtually any point on the
network. An Internet user can obtain information from a host computer in
another province or another country just as easily as obtaining information
from across the street and often with little knowledge of the location
of its source.
+ An interoperable network uses "open protocols" so that
many different types of networks and facilities can be transparently linked
together, and allows multiple services to be provided to different users
over the same network. The Internet can run over virtually any type of
facility that can transmit data, including copper and fibre optic circuits
of telephone companies, coaxial cable of cable companies, and various types
of wireless connections.
+ packet-based technologies transmit information over a network by
splitting up the data into small chunks, or "packets." Each packet
may take a completely different route through the network depending on
congestion and distance. As packets reach their destination they are reassembled
into their original form.
Internet Access Provider. See Internet Service Provider
Internet Service Provider. A company or other organization which
provides access to the Internet to its customers via one or a combination
of dial-up lines (similar to telephone service), coaxial cable ISDN, xDSL
or other dedicated lines. The most typical example is a home user who pays
a fee to connect to the ISP's server. The connection is made by a "modem"
which makes the electronic data from the home user's computer transmittable
over a telephone line. The data then passes through the telephone company's
facilities in the same way as a normal telephone call. The "call"
is received by the ISP which "routes" the user's requests for
information to the server that is "hosting" the desired data.
Note: The computer of an ISP customer is ordinarily never actually "on-line",
it simply sends requests and receives information via the ISP's servers
An Intranet operates almost identically to the Internet but is normally
shielded off from access by the general public and the rest of the Internet
by electronic barriers called "firewalls." Other Intranets may
be entirely self-contained and not accessible at all over the Internet
by normal means.
An Intranet can be considered essentially to be a small privately
owned and operated Internet.
Newsgroups (also called Usenet)
Focused discussion groups (newsgroups or Usenet) are conducted by
Network News Transport Protocol (NNTP). Each of these groups has a specific
topic for discussion and a set of principles that guide discussion that
are usually set out in FAQs (Frequently Asked Questions).
A web-site that accumulates a wide variety of proprietary content
and links that it offers to users, sometimes on a subscription basis. A
portal also organizes and provides links to a great deal of non-proprietary
information elsewhere on the Internet. Portals often provide Internet search
features (see search engine) and maintain links to other media organizations
to supply users with additional news and entertainment content.
A set of rules or an entire "language" which sets out what
form content must be in to be sent and received accurately and the way
in which that content is transmitted.
Many Internet sites offer the user the ability to search their databases
for links to web pages, news group articles, FTP sites or other Internet
The Transmission Control Protocol/Internet Protocol defines a common
structure for Internet data and for the routing of that data through the
network. It is this protocol that makes it possible for data (Internet
content) to be transmitted via any type of infrastructure (i.e. telephone
cable, optical fibre etc.)
World Wide Web (www)
World Wide Web pages are one type of content that may be requested
and distributed on the Internet. Web pages are made up of "hypertext"
which links together a combination of pictures, sounds, text and other
sites. Web pages, or collections of pages by one author(s), which are called
web sites, are based upon the rules of Hyper Text Transfer Protocol (http).
Web pages are viewed in a type of software called a "browser"
(browsers may also be used to view other types of Internet content as well).
Certain small programs may also be part of a web page. These programs,
or "apps" (applications), are normally used to enhance the other
features of a web page or site, such as causing pictures to move or a sound
to be played.
A more sophisticated type of application is used to search databases
such as those owned and operated by the various "search engines."
www applications are not created in hypertext but are usually written in
compatible computer languages.