The Canadian government has worried for some time about the possibility of having its creative industries squeezed into oblivion by competitive pressure from Hollywood and elsewhere. To support homegrown content, the government offers money to content creators and uses regulation to mandate that certain amounts of Canadian content end up on TV. But what happens when broadcasting moves onto the Internet?

That was the question confronting the Canadian Radio-television and Telecommunications Commission (CRTC), which was facing pressure to set up a levy system on ISPs to help fund Canadian Internet audio and video content. The CRTC today decided not to adopt the levy proposal, though, and also voted not to regulate broadcast content on the Internet (read the complete report).

Internet broadcasting has had a special regulatory exemption since 1999, but some cultural groups and content creators argued that it was time to apply the same standards that govern TV to Internet broadcasting. ISPs were totally opposed to the plan, which would in some ways regulate them like traditional broadcasters.

Since late 2008, the CRTC has been examining the issue, especially the contentious claim that ISPs should start paying their "fair share" to create Canadian content. "With respect to the source of the funding for the creation of such a fund, certain parties, including creative unions, guilds and producers, argued that ISPs and wireless service providers (WSPs), to the extent that they deliver broadcasting content, are an important part of the broadcasting system in Canada," says the new CRTC report. "These parties were of the view that ISPs and WSPs, in their distribution capacity, should be required to contribute to Canadian program creation and exhibition."

But, in the end, the ISPs won out. "While broadcasting in new media is growing in importance, we do not believe that regulatory intervention is necessary at this time," said CRTC Chair Konrad von Finckenstein. "We found that the Internet and mobile services are acting in a complementary fashion to the traditional broadcasting system. Any intervention on our part would only get in the way of innovation."

The move was cheered by Google, for one, which said that the "new media" regulatory exemption was the best approach to "keeping the Internet awesome." Canadian law professor Michael Geist concurred, saying, "Overall, the decision to avoid new regulations and levy schemes is a good one."

"New media" was spared regulation this time, but only through an "exemption"—the CRTC still considers Internet video to be "broadcasting" and could therefore remove the exemption at some future date and treat TV and the Internet exactly the same way.

One CRTC Commissioner, Tim Denton, wrote a concurring opinion in which he called the entire Broadcast Act an outdated law that needs to be scrapped. "Commissioners of the CRTC should not be deciding at five-year intervals or less whether massive amounts of personal and corporate communications should be subjected to a comprehensive scheme of prior approval by the state," he wrote. "This is the issue which should be put permanently beyond the reach of the CRTC. It is for this reason especially that steps must be taken to limit the Act to 'broadcasting,' as it is popularly understood, and to leave the Internet to evolve."