Canadian Regulators Back Off Plan to Impose a ‘Netflix Tax’

Streaming service won't have to subsidize TV productions

Canada’s equivalent of the FCC has backed off trying to regulate Netflix by dropping a proposal that has become known as the "Netflix tax." The move could have significant implications for other U.S. entertainment content providers doing business in Canada.

The Canadian Radio-television and Telecommunications Commission (CRTC) has ruled that Netflix will not have to pay fees to subsidize Canadian TV productions nor will the company be subject to minimal Canadian content requirements.

Canada’s largest cable companies reportedly already provide 30 percent Canadian content, and Netflix features Canadian programs, which has apparently satisfied the CRTC. Netflix has been doing business in Canada since 2010.

CRTC Chairman Pierre Blais reportedly told La Presse news site that "Regulating Netflix is the least of our worries." Last week the regulatory agency gave the go-ahead for Canadian television subscribers to be able to change companies without giving thirty days notice.

The CRTC has been conducting hearings to determine the extent of regulating U.S. content providers.  One of their more controversial ideas revolves around unbundling cable TV subscriptions, which could cut into profits of U.S. providers such as Disney and Comcast.

But this current ruling could indicate a retreat from such protectionist efforts. Fostering local TV and movie production has been at the heart of government efforts to limit U.S. content cabled or streamed into foreign countries.

Netflix and other U.S. content providers have been fighting government efforts to limit their global markets as emerging technologies overtake old laws that are not relevant in a digital world of on-demand entertainment.  

In China, government regulators are attempting to control the amount of U.S. television and movie content streamed to online subscribers. While in France, Netflix avoided content regulation problems because its European headquarters are in Amsterdam, but the company faced widespread press criticism because of the perceived erosion of French culture with U.S. entertainment programming.