Every once in a while a debate erupts with implications that extend far beyond the topic at hand. The current CRTC hearings are a perfect example.

The CRTC is entertaining the idea put forth by Canadian cultural groups that it should introduce content regulations on the internet and new media. It's also considering establishing a fund to help promote Canadian content. This, the groups argue, will ensure Canadian voices will continue to have voice on both the domestic and the international virtual stage.

While this debate certainly concerns the country as a whole, it's particularly important for Toronto, as the city continues to be one of the leading media centers both in Canada and North America. According to government statistics, the city ranks 3rd in TV and film production and 2nd as an exporter of TV programming in North America. A recent report from the Toronto Film and Television Office says production companies spent more than $791 million filming on location in Toronto in 2007.

Sounds great. But, those numbers don't tell the whole story.

In recent years, the city's film and production industry has been in steady decline, partly because of the strong Canadian dollar and the 2007 writers strike. What those two factors highlight is the local industry's dependence on foreign companies - with close to $300 million of 2007's production revenue coming from U.S. companies. One way to possibly loosen the dependence of Toronto's film and production industry on American companies is to support local content. As many readers know, the CRTC already does this through a number of programs and grants - most notably in the $242-million Canadian Television Fund.

Yet, for the last ten years, the CRTC has refused to enter the new media ring, allowing the market to evolve without the 'invisible hand' of government interference. But that might be about to change.

The Globe and Mail reported Stephen Waddell, executive director of the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) telling the CRTC that "in our view, if the CRTC doesn't give some opportunity to Canadian content to have a place on that platform, we're going to be immersed in non-Canadian content."

On top of seeking new regulations for online content, ACTRA and other cultural groups want the CRTC to implement regulations forcing Internet service providers to hand over about 3 percent of their subscriber revenue - or about $100 million - to a fund that would help create Canadian programs for the web. They believe the Internet has evolved to point where it should be treated the same as other media platforms like radio, TV and the recording industry.

The ISPs scoff at the idea. They say any such regulation would simply be passed on to the consumer, resulting in more expensive internet bills. Plus, they're not even sure the CRTC has the ability to implement such a tax. We can expect a war of words between the two sides.

The CRTC's decision could potentially have an enormous financial and cultural impact on Toronto (not to mention Vancouver, as Canada's other major English speaking film and production hotbed). The city is already home to a number of digital production companies (I used to work for one), meaning a sizable chunk of money from the proposed fund would likely find its way to Toronto.

But this issue has implications far beyond simply finding a way to support Canadian content in the new media industry. The most important question is: Should the government start regulating Internet content? Isn't the major attraction of media on the web its wild-west nature, where those companies offering the most innovative products rise above the rest? The typical problems associated with traditional media (like high entry costs) are vastly mitigated when it comes to putting content online; this allows for greater competition and more choice for consumers. Are we ready to exchange the free-for-all nature of the web in order to support home-grown talent?

Also, in the face of the global economic downturn, politicians and analysts have been warning against the rising tide of protectionism - with a number MPs in Ottawa attacking the 'Buy American' clauses in the recent U.S. stimulus plan. Isn't this another form of protectionism? If it is, then we must be prepared for other countries to enact similar policies for their new media industries. And if they do, it may contribute further to the drowning out of Canadian content on the web.

What looks like a simple plan to help foster Canadian content on the web may result in the opening of a political and cultural Pandora's box. One major hurdle for the CRTC is how to actually enforce the regulation. One solution proposed is to ensure any media site hosted in Canada contains a certain percentage of domestic content. I doubt the feasibility of this idea, as it would create a regulatory nightmare, forcing the government to continually monitor web activity.

In response to calls from the cultural groups to regulate content, a recent CBC article quoted CRTC chair Konrad von Finckenstein saying, "we are not in that universe anymore, yet you are asking me to regulate based on that old model." I think that's an apt description of the situation. Policy makers are looking for new and innovative ways to adapt to the Internet--similar to the way traditional print and broadcast companies are being forced to alter their business models. Implementing regulations that worked for a previous era may be insufficient or backwards in today's climate.

Photo by Pete, member of the blogTO Flickr Pool.