A proposal to impose a levy on Internet service providers to fund the creation of Canadian new media content is an "unlawful" idea that would harm consumers and create barriers to net access in this country, says Rogers Communications Inc.

The Toronto-based telecommunications and cable giant made those arguments today at the Canadian Radio-television Telecommunications Commission, which is holding public hearings on the thorny issue of new media regulation.

As part of that probe, the federal broadcast regulator is mulling the idea of imposing a new charge on Internet service providers, or ISPs, to fund the creation of Canadian content for new media platforms like the Internet. It is a contentious idea that critics say will create added costs for consumers during the current economic downturn.

For their part, ISPs like Rogers and Shaw Communications Inc. have already filed various legal opinions with the CRTC that cast doubt on the lawfulness of such a levy. That prompted CRTC chair Konrad von Finckenstein to acknowledge today that brewing legal battle will likely be resolved in court.

During his presentation, Ken Engelhart, chief of regulatory affairs for Rogers, tried to further his company's legal argument by contending that ISPs function as telecommunications service providers and not broadcasters. That means ISPs should remain exempt from the Broadcasting Act, including its Canadian content requirements, he said.

"ISPs are pipes, not broadcasters," Engelhart told the commission. "ISPs are the underlying telecommunications facility that customers use to access the Internet and that content providers, including broadcasters, use to transmit their content. ISPs do not buy, package or sell programming or any other Internet content."

Furthermore, the CRTC has a long history of treating ISPs as telecom service providers by regulating them through provisions of the Telecommunications Act since 1996.

"The CRTC cannot impose a levy on ISP revenues under the Telecommunications Act, further to the cultural policy objectives of Section 3 of the Broadcasting Act," Engelhart said.

"As a result, it would be unlawful to impose a levy on ISPs to support Canadian content. While an ISP levy is not something that can or should be implemented, neither is it the only way to ensure that the objectives of the Broadcasting Act are achieved in this new age of broadcasting."

It has been a decade since the CRTC deemed the Internet a regulatory-free zone through its 1999 new media exemption order. ISPs, such as Rogers and Shaw Communications Inc., say there is no need to revise that hands-off approach.

In addition to being potentially illegal, an ISP levy would result in higher costs for consumers and "harm the growth and development of Internet access in Canada," executives said.

"Countries all over the globe are trying to ensure that their broadband networks are fast, powerful and ubiquitous," Engelhart said. "The Internet is the nervous system of the economy and broadband access is critical for a country's future.....

"Imposing an ISP levy would frustrate these objectives and inhibit the growth of broadband in this country by raising the cost to consumers and by diverting a sizable amount of available resources away from infrastructure investments."

CRTC chair Von Finckenstein, however, made it clear that he would not debate the legality of such an ISP levy during the current new media hearings.

"You make a big, big argument about legal. Let's reserve that for a court fight," Von Finckenstein said. "We disagree with you. I know if we impose a levy, you will take that to the court. The court will decide, so we are not going to waste any time on the legal issues here."

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Canadian content advocates have told the commission that a new fund to support new media content will help promote domestically-produced content online and have the effect of reserving "shelf space" for Canadian culture on the world wide web. They point to statistics that show some 60 per cent of Canadians have high-speed Internet connections and are increasingly using the Internet to watch video and other media.

Executives from Shaw Communications were scheduled to present at the CRTC later in the day.

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