TORONTO, Sept 29 (Reuters) - Canada's broadcast regulator said on Monday it will ignore evidence from Internet-based video providers Netflix Inc and Google Inc when making new rules for television after the companies refused to hand over some data.
In a terse exchange at a regulatory hearing earlier this month, the Canadian Radio-television and Telecommunications Commission (CRTC) demanded Netflix provide details about its Canadian operations or risk losing its exemption from rules that govern domestic broadcast distributors.
Google was also asked to back up claims it made about Canadian content thriving online, including data on the amount of content uploaded from Canada on its YouTube service.
Both companies declined, and both were told in letters dated Sept. 29 that the regulator would therefore remove their entire voluntary submissions from the public record by Oct. 2.
The conclusions of the Let's Talk TV hearings will determine future regulation and reflect only the views of participants, which included traditional broadcasters, satellite and cable companies and some advocates of regulating online video.
"It's like Stalin getting rid of Trotsky," Canaccord Genuity analyst Dvai Ghose said of the CRTC's decision, comparing the regulator's move with the former Soviet Union's removal of references to Marxist politician Leon Trotsky from the historical record.
But Ghose said explicit signals from Canada's Conservative government that Netflix and Google would not face more regulation, and the government's track record of overturning CRTC decisions, left the regulator little room for more exacting punishment.
"It's very difficult to regulate when your political bosses are saying 'if you do we'll just overturn everything you do," he said.
The CRTC's "new media exemption order" covers streaming video services including Netflix, Google's YouTube, and Apple Inc's iTunes. It means that unlike traditional distributors, they do not have to ensure a quota of Canadian content is offered nor contribute to a fund that domestic producers draw from.
"The chairman went one step too far and said this puts your exemption order in jeopardy, but he has no lever," one lawyer, who declined to be identified to protect commercial interests, said after the CRTC ultimatum to Netflix was issued. "He has shone a spotlight on his lack of power."
Netflix did not immediately respond to requests for comment.
A Google spokeswoman said: "We stand by the submissions we made in this process and believe we made a positive contribution to the discussion." (With additional reporting by Euan Rocha; Editing by Jeffrey Hodgson; and Peter Galloway)