Law Times

Page 8 April 22, 2013 Law Times • Focus On IT/Telecommunications Law CRTC curtailed over value for signal SCC decision sends warning to administrative bodies, lawyer says BY MICHAEL McKIERNAN T For Law Times he Supreme Court of Canada has significantly curtailed the regulatory powers of the Canadian Radio-television and Telecommunications Commission in a decision that killed its proposed value-for-signal regime, according to a lawyer involved in the case. The CRTC program, first advanced in 2010, aimed to boost broadcasters' flagging revenues by forcing cable and satellite providers to pay to transmit their signals. But when providers complained about the CRTC's jurisdiction to impose the plan, the regulator referred the matter to the Federal Court of Appeal. The broadcasters won that round, but on Dec. 13, the nation's top court reversed the decision after ruling by a 5-4 margin that the CRTC had exceeded its jurisdiction. Jay Kerr-Wilson, a partner with Fasken Martineau DuMoulin LLP, represented Rogers Communications Inc. and Telus Communications Co., two of the cable providers fighting the regime at the Supreme Court. "It is a fairly significant change in how the scope of the CRTC's regulatory powers have been interpreted," says Kerr-Wilson. "Clearly, the approach has shifted dramatically and their powers are narrower than they were previously." The broadcasters argued the Broadcasting Act's broadly worded s. 10 that deals with the CRTC's regulation-making powers granted the regulator wide discretion as long as the measure lined up with the act's policy objectives as laid out in s. 3. Kerr-Wilson says previous court decisions backed up that interpretation, including a 1979 Supreme Court decision in CKOY Ltd. v. R., a case that dealt with a CRTC plan to prohibit networks from broadcasting recorded phone interviews without the subject's consent. In that decision, the court said the validity of a CRTC regulation "must be tested by determining whether the regulation 'This decision is useful for really constraining administrative bodies to the powers that are there in the statute,' says Michael Osborne. deals with a class of subject referred to in s. 3 of the statute and that in doing so the court looks at the regulation objectively." But writing for the majority in the latest case, Supreme Court Justice Marshall Rothstein refined that position. "In my opinion,  CKOY  cannot stand for the proposition that establishing any link, however tenuous, between a proposed regulation and a policy objective in s. 3 of the act is a sufficient test for conferring jurisdiction on the CRTC," wrote Rothstein. Such an approach, he noted, "would be akin to unfettered discretion" for the regulator. "What this does is to narrow the interpretation. To fall within its authority, any regulation has to be attached to the Broadcasting Act as a whole, not simply one class of policy objective," says Kerr-Wilson. The majority went on to decide that, read in context, the Broadcasting Act didn't empower the CRTC to implement the value-for-signal regime. "The creation of such rights is too great a stretch from the core purposes intended by Parliament and from the powers granted to the CRTC under the Broadcasting Act," wrote Rothstein. Even if it had found the CRTC had jurisdiction, the majority found it couldn't enforce the program in any case because it conflicted with the various sections of the Copyright Act. First, according to the decision, the regulations would grant broadcasters a retransmission right against cable providers withheld from them in s. 21 of the act. Second, the majority found that deletion rights for broadcasters in the CRTC's proposed regime would effectively overturn an exemption for copyright infringement laid out in s. 31 of the act. And finally, the regime would create a new type of copyright without an act of Parliament and thereby violated s. 89, according to the majority. The broadcasters had claimed there was no conflict because it would be possible to comply with both the CRTC regulations and the Copyright Act. But Rothstein said in his decision that a conflict could still arise, even when complying with the letter of the law, "because applying one provision would frustrate the  purpose  intended by Parliament in another." "In this case, applying the CRTC's proposed value-for-signal regime would frustrate Parliament's intended purpose under the Copyright Act," says Kerr-Wilson. The four dissenting judges stuck closer to the court's previous decision in CKOY, saying they would have granted the CRTC jurisdiction to roll out its program "since it is demonstrably linked to several of the policies in s. 3 of the Broadcasting Act." Having determined that the CRTC had jurisdiction under the Broadcasting Act, the dissenting judges wrote that only an "unavoidable conflict" with the Copyright Act could invalidate the value-forsignal plan. It found no such conflict. In a statement, Rogers vice chairman Phil Lind said the Supreme Court ruling was "the right decision for Canadians and a step forward for consumers." "There have been dramatic changes to the industry in Canada since the CRTC first looked at the issue more than two years ago. We believe that value for signal has no place in today's broadcasting landscape where the major players are enjoying significant profits," Lind added. For Bell Media Inc., however, the decision was a blow. The company owns more than 20 CTV stations, including a number of them in smaller markets across the country such as Yorkton, Sask., and Timmins, Ont. In a statement, it said value for signal could have offered long-term stability for financially challenged local stations. "With its reliance on an uncertain advertising market, the financial model for local television is broken," the company said. Michael Osborne, a partner with Affleck Greene McMurtry LLP in Toronto, says he has some sympathy for Bell's view of the TV market. But he welcomed the Supreme Court's decision for reinforcing the idea that the right people to tackle the crisis are legislators rather than appointees at the CRTC. He says the decision will serve as a warning to all administrative bodies operating at arm's-length from the government about straying too far from the mandate granted to them by Parliament. "This decision is useful for really constraining administrative bodies to the powers that are there in the statute. If Parliament wanted them to do something like that, they can change the law to expressly allow it." LT AVAILABLE ONLINE AND IN PRINT WIpN GACard le ift REACH ONE OF THE LARGEST LEGAL AND BUSINESS MARKETS IN CANADA! ting 500 Aepyour current lisnced a Upgrad or Silver enh 13 ld 20 to a Go by June 30, in. listing hance to w for a c r details $ lo See be w fo PLUS! Monthly draws from January to June, 2013 for a $100 Apple Gift Card just for asking how you can develop your business with an Annual Gold or Silver Enhanced Listing. Untitled-3 1 With more than 179,000 page views and 31,000 unique visitors monthly canadianlawlist.com captures your market. FOR MORE INFORMATION CONTACT Colleen Austin T: 416.649.9327 | E: colleen.austin@thomsonreuters.com Visit www.canadianlawlist.com for full contest details. www.lawtimesnews.com 13-01-08 1:26 PM

• Cover