October 5, 2011 / 7:24 PM / in 6 years

Netflix escapes Canadian broadcast regulator's ire

<p>A screen grab shows the access to Netflix online, as displayed on a television screen, in Encinitas, California July 25, 2011. REUTERS/Mike Blake</p>

TORONTO (Reuters) - Canada’s broadcasting regulator won’t impose restrictions on online streaming companies including Netflix after finding “no clear evidence” they’ve harmed existing Canadian television providers.

Cable companies such as Rogers Communications and Shaw Communications, as well as telecom companies that offer television content packages such as BCE’s Bell and Telus complain that Netflix gets a free pass while they are burdened with regulations and fees.

The Canadian Radio-television and Telecommunications Commission, or CRTC, said its fact-finding study of online and mobile broadcasting showed the medium seems complementary to the existing broadcasting system, which includes requirements for a minimum amount of Canadian content and payments from broadcasters to support local content.

Netflix launched a streaming-only service in Canada last September that offers a limited but growing catalog of films and television shows for a flat monthly subscription far cheaper than a typical television subscription.

“There is no clear evidence that Canadians are reducing or canceling their television subscriptions,” the CRTC said in a statement posted on its website on Wednesday.

Network constraints may challenge the growth of online and mobile content and Canadian creators were also taking advantage of the digital environment to reach audiences, it said.

Netflix cut the default data use for its streaming Canadian service in March in a bid to fit under the restrictive Internet data caps typical in Canada.

The CRTC said it would continue to monitor so-called “over-the-top” services and the subject would be a main focus of its annual industry consultations in November.

While Netflix is the most obvious target, Google’s YouTube offers streaming movie rentals and Canadians can also watch content purchased via Apple’s iTunes store.

Desjardins analyst Maher Yaghi said the CRTC’s stance could be a slight negative for cable companies but agreed that content delivered outside Canada’s traditional broadcasting system was “not yet a full substitute for regular cable”.

Shares in Rogers and BCE were both slightly lower on Wednesday while Shaw was up 3 percent and Telus had risen 1.8 percent on the Toronto Stock Exchange by mid-afternoon.

Netflix’s arrival is also a potential challenge for Canadian media companies Astral Media and Corus Entertainment -- traditional middlemen between creators of content such as Hollywood studios and the cable and satellite distributors -- as it reaches its own deals with the likes of Viacom’s Paramount Pictures.

Reporting by Alastair Sharp; Editing by Jeffrey Hodgson

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