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Why the CRTC’s showdown with Netflix was all for show

A surreal bit of political theatre



That was quite the display of political theatre with the CRTC and Netflix the other day.

Appearing at the regulator’s Let’s Talk TV hearings, the streaming company caused a stir when it refused to supply requested subscriber and revenue numbers, causing the CRTC chairman and commissioners to storm out to talk amongst themselves. In regulatory land, that’s akin to a riot breaking out.

When the hearing resumed, so too did the hostility. At issue for Netflix was whether the requested numbers—which it considers to be highly sensitive competitive secrets—would be kept confidential if supplied. This angered the CRTC representatives, who continued to chide the company’s lawyer in increasingly silly ways, like her neglecting to bring visual aids.

“I’m sorry I’m propless,” said Netflix global public policy director Corie Wright in the hearing’s most surreal moment.

MORE: Why Ontario’s “YouTube Tax” is a terrible idea »

Ultimately, both the regulator and the company were in the wrong – and in the right – with nothing likely to come of it. It’s enough to make one wonder whether the obvious, prolonged pissing contest was happening for someone else’s benefit. We’ll get to who in a second.

From one perspective, the exchange—which you can watch here—looked like a petulant American company refusing to submit to Canadian authority. From another, it appeared like the last gasp of an increasingly irrelevant regulator trying to flex its dwindling muscle.

For its part, the CRTC was not entirely wrong. Broadcasting vice-chair Tom Pentefountas and chairman Jean-Pierre Blais repeatedly asked whether Netflix has Canadian-oriented data – not just how many subscribers there are, but how much Canadian content it has and how popular is it.

Netflix, a company driven by data, certainly has that information. Given the company’s primacy in online streaming – it’s the veritable canary in this new media coal mine – this is data that someone outside the company really should have a handle on.

YouTube videos, for example, at least display how many times they’ve been viewed. In comparison, Netflix is a walled garden. No one outside the company has any idea what people are watching. That should make more than just regulators anxious. Otherwise, when Netflix tells us something is popular, we have no choice but to believe the company.

MORE: The CRTC’s TV survey is asking all the wrong questions »

Where the CRTC likely overstepped was in threatening to regulate Netflix if Wright didn’t supply the numbers. Netflix is currently exempted from CanCon rules, which include funding and programming requirements, thanks to a special new media clause. Blais threatened to yank that status away, but it’s highly doubtful it’d be that simple.

Indeed, Netflix is emboldened by the fact that there will be metaphorical blood in the streets should there be any attempt to regulate it. The public will revolt and the federal government has repeatedly said it will not allow any sort of “Netflix tax.”

The CRTC gave the company till 5 p.m. Monday to supply the requested data. Given its position, it wouldn’t be surprising to see the company call the bluff and refuse. If it does follow through, it’s a safe bet that every reporter in the land will be filing access to information requests to get those numbers.

So what was the point of the big scuffle? Simple: it was political theatre, and the intended audience was traditional TV providers—Bell, Rogers, Shaw and the rest. Certainly no one, especially those companies, can now say Netflix got an easy ride from the regulator.

Harsh words have been spoken, muscles have been flexed and appearances of neutrality have been maintained. Now, with the charade over, we can get on with reality, which is that Netflix simply isn’t going to be regulated. And everyone knows that.