October 6, 2011, 4:56 PM

Netflix and others dodge Canadian regulation of digital entertainment for now

Digital entertainment providers don’t have an unfair advantage, says the Canadian Radio and Telecommunications Commission.

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Netflix Inc., Apple Inc. and any other company that’s setting up shop to sell digital entertainment services to Canadian consumers won’t be regulated—at least for now.

Since May the Canadian Radio and Telecommunications Commission, which like the Federal Communications Commission in the U.S. regulates the broadcasting industry, has been studying Netflix, No. 13 in the Internet Retailer Top 500 Guide, Apple (No. 3) and other providers of streaming or downloadable entertainment content to see if those companies have an unfair advantage over highly regulated traditional Canadian broadcasters such as Rogers Communications Inc.

But so far the wide-open nature of the digital entertainment industry is a level playing field that doesn’t give an advantage to companies such as Netflix over more heavily regulated traditional broadcasting and cable television organizations. “There is no clear evidence that Canadians are reducing or cancelling their television subscriptions and online and mobile programming appears to be complementary to the content offered by the traditional broadcasting system,” the Canadian Radio and Telecommunications Commission says. “The traditional broadcasting system continues to support Canadian programming even as services emerge to deliver content to Canadians in new ways.”

Netflix is among the companies targeting Canada for digital entertainment growth opportunities. In September 2010 Netflix launched a service that enables consumers in Canada to stream movies and TV shows via broadband Internet connections. The service marked Netflix’s first foothold outside the United States, the video content provider says.

Netflix subscribers in Canada pay $7.99 per month to access thousands of films and shows. The content streams to subscribers’ TVs and computers. Consumers can watch streamed content via Nintendo's Wii home console and Sony's PlayStation 3. Netflix currently has about 900,000 paid subscribers in Canada that for the first six months of the year generated revenue of $31.2 million, the company says.

For now the Canadian Radio and Telecommunications Commission won’t regulate digital entertainment providers because Canadian broadcasters and cable TV companies such as Rogers, which owns and operates TheShoppingChannel.com (No. 152), also are moving into offering more forms of digital entertainment. “Canadian creators are taking advantage of the digital environment to produce innovative content and to reach Canadian and global audiences,” the commission says. “Canadian broadcasters and distributors are also launching their own online and mobile programming services.”

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