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No to Internet Tax !

Apparently Canadian Heritage Minister Mélanie Joly is considering an Internet Tax to fund Canadian content, according to University of Ottawa professor Micheal Geist. And unfortunately for Canadians this tax may make internet access more expensive.

There are currently two taxes being considered ; One on content providers like Netflix and iTunes and another general sales tax on internet access. And although the previous tax may sound better than the latter, one has to wonder if all music, television programs and films purchased or rented online would be subjected to this tax, including those that are made available through the internet television providers.

SiriusXM subscribers are already subject to taxes and a “Music Royalty and Regulatory Fee of 14.2%”. But would the service also be subjected to this additional tax ? Will Apple Music subscribers need to pay for this additional tax ?

We currently pay nothing to listen to radio and to watch television offline. We also already pay taxes on compact disc, DVD and blu-ray purchases, which would not be subject to this new tax. It therefore makes no sense to charge people more taxes for the same content, especially when it involves the streaming of purchases matched or uploaded to a Cloud service.

Why does the government not fund Canadian Content by taxing Canadian broadcasters that run adverts online, when they stream foreign content ?

I’m sure Rogers and Bell would likely oppose this because they’d likely rather see the foreign services taxed instead. But the foreign services have no legal obligation to collect these taxes and the Trans-Pacific Partnership Agreement would disallow this requirement, if passed.

We also currently pay taxes on our internet provider subscription fees so any additional tax would simply make it unaffordable for many Canadians.

Canadians spent on average $203 per month on communication services in 2014, according to a CRTC Report released in 2015, an increase of approximately 6% from 2013 ($11.92). And according to CBC News, there was a 10% increase on wireless and internet services specifically from 2013.

To dissuade use of foreign services like Netflix and iTunes, Canadians are also already subject to data caps and the proposed tax would simply make the unlimited internet plans less affordable.

Many Canadians also still pay a “Digital Services Fee” on their cable, satellite and television subscriptions, a fee that cannot be justified now that an analog service has been fazed out.

Could the government not demand this fee be replaced with a Canadian Content Improvement Fund fee instead ? Or will this obsolete fee be buried like that of Bell’s $2.80 Touch-Tone fee, which netted Bell $80 Million in 2013 according to CBC News ?

At the moment Bell is claiming the Digital Service Fee is collected to improve their services. But isn’t that what their investors are paying for ? Why their customers are being asked to pay more per month for television ?

Prior to September 2014, cable and satellite television subscribers in Canada paid a monthly 1.5% fee to the Local Programming Improvement Fund, which netted $106 million in 2011 for television stations in markets smaller than a million. And although this fee was discontinued, these subscribers barely noticed because they were asked to pay more for their television subscriptions shortly after.

The average monthly rate for television services paid by Canadians climbed from $65.25 in 2014 to $66.08 in 2015, according to CBC News ; A difference of 83 cents per month when the average monthly rate for Canadians for the Local Programming Improvement Fund was 50 cents. And with the mandated “skinny package” changes some have seen their monthly rates rise significantly since the spring of 2016.

I believe it makes more sense to apply a Canadian Content fee of a dollar or two to the sale of television antennas, digital converter boxes, digital television receivers/set top boxes, satellite/internet radio receivers and streaming media players in Canada, although some members of the public would likely not enjoy the prospect of paying it in addition to a Provincial environmental handling fee and having both fees taxed.

Perhaps a monthly fee of 1.5% on unlimited internet packages or bundled packages over $150/month would be the path of least resistance because it would likely be negligible to the subscribers of these specific bundles or packages.

Limewire – What Next ?

As you may have heard, Limewire lost their case this week in the United States.

The Recording Industry Association of America had filed a lawsuit against them in the state of New York on August 4th, 2006, claiming they facilitated copyright violations with their file sharing software, by not taking the appropriate measures to prevent such activity. And on Wednesday the 12th of May, Judge Kimba Wood of the U.S. District Court for the Southern District of New York ruled against Limewire.

Of course the recording industry praised this ruling, both in the United States and in Canada. But could this all have been prevented ?

On February 12th, 2010 Limewire CEO George Searle posted an entry on the company’s blog stating that Limewire had been “working diligently with labels, publishers and artists to introduce a full range of commercial services that harness, rather than alienate, music fans”.

The company had signed an agreement with independent music distributor CD Baby on July 1st, 2009 to sell recordings from their 240,000 plus artists to Americans via their online store.

But of course Mitch Bainwo, RIAA’s Chairman and CEO, claimed that Limewire had “thumbed its nose at the law and creators” in RIAA’s May 12th, 2010 press release on the ruling, because they failed to both negotiate licenses with the labels and impose filters on their peer to peer transfers.

By finding LimeWire’s CEO personally liable, in addition to his company, the court has sent a clear signal to those who think they can devise and profit from a piracy scheme that will escape accountability

Yes, the distribution of copyrighted material using LimeWire’s software was illegal. But whether it was a “piracy scheme” is debatable because Limewire would not have even bothered to warn its users of the implications of such violations nor would they have implemented any content filtering if they were in it to profit on the back of copyright owners.

RIAA obviously believes that the multiple statements and warnings found in LimeWire‘s end-user license agreement and copyright documentation are tantamount to lip service, along with the basic content filtering. But I believe the consumer, those that buy music or purposely use services where the copyright holder is compensated, do heed to these warnings and do use these filters.

Personally I have avoided peer to peer software because of the spam files and possibility of infection by malicious software. But now that LimeWire has partnered with AVG Technologies I may consider using the program. But only if I know the artists and copyright holders are compensated.

I believe LimeWire could distribute funds derived from advertisements and Livewire Pro software sales to copyright owners. And this could result in further partnerships with wireless device manufacturers, who could stream content and targeted advertising on their devices.

But of course we’ll need to wait until June 1st to know what the monetary penalties and damages will be, the original figure being $150,000 per occurrence of an illegally traded file according to Betanews. And then there’s the possibility of an appeal or settlement.

Here are some interesting links until then :

Arista Records LLC et al v. Lime Wire LLC et al

Press Releases

Interesting Reading