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Netflix will not have to pay fees to subsidize Canadian TV production, nor will the company have to comply with so-called “Canadian content” quotas, the head of the country’s broadcast regulator told media outlets this week.

Canada is in the midst of a debate over TV in the digital era, including how to apply a set of cultural rules intended to foster homegrown TV and films as a counterbalance to U.S. mass culture.

While the CRTC, which is akin to America’s FCC, initially tried to use the process to pull companies like [company]Netflix[/company] and [company]Google[/company] into its regulatory net, it appears to have given up for now. “Regulating Netflix is the least of our worries,” CRTC Chairman Pierre Blais told Montreal news site La Presse.

Blais also pointed out that the country’s cable giants plan to offer online platforms with 30 percent Canadian content — a figure that is close to what traditional broadcast platforms must offer — without new regulations.

In the case of Netflix and Google, however, the CRTC may simply be bowing to political realities. Earlier proposals to force U.S. companies to subsidize Canadian content were slammed as a “Netflix tax,” while Netflix and Google have been emphatic they will not be regulated like traditional TV.

Netflix executives have said Canadian content is very popular on the platform, which began streaming in Canada in 2010, but the company also rebuffed recent demands by the CRTC to share its viewing data. While the agency likely has the legal authority to force Netflix to stop streaming, doing so would anger many Canadians.

The CRTC appears to be sidestepping a fight it can’t win. While many will be pleased with this outcome, it will also anger Canada’s cultural elite as well as the country’s media giants, which have complained it’s unfair they must pay fees that U.S. internet companies do not.

More broadly, the dispute over Netflix and “Canadian content” reveals how traditional systems of cultural subsidies, which relied on government control over distribution platforms, are impractical in the digital age.