Ontario wants digital media providers such as Netflix brought under the regulatory regime that governs traditional TV and says they should contribute to public funds that support homegrown content.

The online providers that benefit from delivering programming to Canadians would begin paying into the system once they reach some minimum threshold likely in market penetration, according to the province’s recommendation.

In a submission to the Canadian Radio-television and Telecommunications Commission on the first day of a two-week regulatory hearing, Kevin Finnerty, assistant deputy minister of tourism, culture and sport, said Ontario wants the CRTC to revisit its new media exemption.

He said the foreign-owned Internet content providers should be regulated so they share the financial burden with conventional domestic broadcasters but the obligation would be reciprocal, with new media then eligible for support from various public funds.

Regulation of streaming video platforms including Google’s YouTube and Apple’s iTunes could also generate new tax revenue for the province which receives HST income from purchase of some online services, CRTC chair Jean-Pierre Blais suggested.

Schulich School of Business MBA candidate Zachary Kornblum who appeared before the hearing as an individual said new media escaped the heavy regulation that applies to conventional broadcasters due to a “semantic difference.”

He said both new and old media now use similar streaming techniques for content such as NFL Sunday Ticket, the same fibre optics networks and often appear on the same TV screens.

He said new media is not yet a market share threat to conventional TV but is advancing rapidly and it is advisable to “regulate potential.”

OTT media or so called “over-the-top” media like Netflix should be integrated into the broadcasting system with all of the attendant entitlements and responsibilities, he told the hearing, adding that consumers will pay for Canadian content contributions if the digital channels do not.

But Jason Kee, public policy and government relations counsel at Google Canada, said regulating new media would stifle innovation and hurt consumers.

“Mandatory contributions would likely increase costs to consumers in the form of increased subscription fees and creators in form of diminished license fees or revenue share for them.”

He told the hearing into how Canadians view and pay for TV that those online services already contribute to the system through licensing of content.

In his opening remarks, meanwhile, the CRTC chair said rules protecting channels or broadcasters could be thrown out after the CRTC review in favour of new regulations that empower Canadians to tailor TV programming to their demands.

“Rather than protect specific channels or broadcasters or a particular way of doing business, we must ensure that the television system meets the needs and interests of Canadians, both today and in the years ahead,” Blais said.

The group Friends of Canadian Broadcasting said the regulatory changes proposed by the CRTC to give viewers more choice would harm local TV stations and would not help consumers.

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“Pick-and-pay along with the other significant changes on the table . . . will likely harm local broadcasting, especially local news, which is the kind of programming Canadians think is most important,” the group said in a statement.

“In fact, local, independent broadcasters-stations in small- and medium-sized markets are blunt that the changes could force them off the air.”

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