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The CRTC, in 1999, adopted an exemption order that, as modified in 2009, defined “new media broadcasting undertakings” as ones that provided “broadcasting services” accessed over the Internet. The CRTC considers Internet audio-visual content to be programming and thus broadcasting. The exemption order requires that new media broadcasting undertakings submit information respecting their activities as required by the CRTC.

There is no reason to believe that an Internet-based content provider is subject to federal regulation

While Netflix has not yet exposed its legal reasoning, there are several arguments Netflix can present to contest CRTC jurisdiction.

The most obvious argument is simply that Netflix is not subject to the CRTC’s jurisdiction. Netflix has no presence in Canada, has no assets in Canada, and its operations are therefore not subject to Canadian legislation. Beyond this, Netflix has at its disposal a number of arguments that go to the heart of the CRTC’s claim to jurisdiction over the Internet.

First, the Broadcasting Act makes no distinction between linear broadcasting (broadcasting over the air, by satellite, cable or wire line networks) and on-demand services. Broadcasting is a transmission for reception by the public. The CRTC has maintained that a transmission made to an individual on demand is a transmission to the public. It remains open for a court to find that the CRTC has misinterpreted the definition of broadcasting and given itself a jurisdiction it does not possess.

The second argument rests on the constitutional division of powers. Broadcasting is not assigned to either Parliament or provincial legislatures under the Constitution Act, 1867.