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ROUND-TABLE DISCUSSION – CRTC
FEES AND COST RECOVERY

Held on August 17, 1999
From 9:00 a.m. to noon in the Salon Réal Therrien, CRTC

CRTC Attendance:	Andrée Wylie	Vice-Chairperson, Broadcasting
	Jean-Pierre Blais	General Counsel, Broadcasting
	Céline Leblanc	Director General, Finance & Corporate Services
	Jim Stefanik	A/Director, Corporate Services, Review and Renewal
	Guy Latraverse	Director, Financial Operations & Licences Processing
Participants Attendance:	Glenn O'Farrell	Canwest Global Communications Corp.
	Jim Macleod	Télémédia Communications
	Fil Fraser	Vision TV
	David Wiebe	Golden West Broadcasting Ltd.
	Christian Jolivet	Cogeco Cable Inc.
	Pierre Gagnon	Le Groupe Vidéotron Ltée
	Bernard Guérin	TQS Inc.
	Daniel Lamarre	TVA Inc.
	Charron Kerr	Videon Cablesystems, for Moffat Communications
	Pam Dinsmore	Rogers Communications
	Peter Miller	CHUM Limited
	Ian Lurie	Standard Radio Inc.
	Dean MacDonald	Cable Atlantic Inc.
	Robin Fillingham	CTV Inc.
	Grant Buchanan	WIC
	Jane Logan	Specialty & Premium Television Association
	Jim MacDonald	Chairperson of the Board, Canadian Association of Broadcasters
	Michael McCabe	Canadian Association of Broadcasters
	Janet Yale	Canadian Cable and Television Association

 

1.  Opening Statement by CRTC Vice-Chairperson Andrée Wylie
     - Introduction of participants

2.  Review of Agenda

3.  a.  Presentation of the CRTC Financial Report by Céline Leblanc

Céline Leblanc presented the issues related to CRTC budgets and resource utilization for the fiscal years 1997/1998, 1998/1999 and 1999/2000. She also outlined some of the streamlining initiatives being explored and /or implemented by the CRTC such as forbearance, alternative dispute resolution, electronic filings, and enhanced web search engine.

    b.  Presentation by Jim Stefanik on CRTC budget and resource plans for the next three years (i.e. fiscal year 2000/2001 onwards).

Jim Stefanik discussed existing budget levels for fiscal year 2000/2001, new resource requirements and funding strategy.

Both of these presentations provided highlights of an information package that was distributed to the roundtable participants. This package included: i) the Government’s Cost Recovery and Charging Policy; ii) CRTC Financial Report - Budget & Resource Utilization (fiscal years 1997/1998 to 1999/2000); iii) CRTC Streamlining initiatives; iv) CRTC Budget, Resource Requirements & Funding Strategy fiscal year 2000/2001 onwards.

4.  Roundtable discussion

A summary of the significant issues that were raised and discussed as part of this roundtable consultation is noted as follows:

Key Themes

The participants viewed the consultation process as very productive and are welcoming further discussion with the CRTC on a number of issues. The participants expressed the view that CRTC needed to be adequately resourced in order to fulfil its objectives. Many said that there would not be a strong communications industry today if it were not for effective regulation, which has fostered industry growth.

Two key themes emerged from the discussion: in the short-term, the funding increases needed to resource the CRTC for the next three years, and in the longer term, the fee structure and the rationale for the Part II broadcasting licence fee. During the course of the roundtable consultation, other issues were raised, such as improvements to CRTC's service delivery and to the streamlining of the regulatory process.

Overall, industry participants expressed strong support for the CRTC's resource request and proposed funding strategy. Participants also indicated that, as part of this new dialogue, concerns with Part II licence fees must be addressed over the next few years.

Resource Request and Funding Strategy of the CRTC

Treasury Board Submission

Industry participants were briefed that the CRTC will be requesting approximately $3 million in new resources starting next fiscal year and continuing for a period of three years. It was indicated that of this total, approximately $1.5 million would be directed at the broadcasting activity. CRTC staff indicated that they are preparing for the fall a Treasury Board submission that will request that these resources be funded from government general revenues as opposed to increasing the fees.

Industry participants asked the CRTC to outline its strategy if it does not obtain the additional funds of $3 million from general government revenues. The CRTC indicated that there could be a potential increase of 7.5% in Part I licence fees, if the Government does not accept the proposed funding strategy. One participant expressed concerns about the substantial fees paid to the CRTC and about any increase in fees, if the Treasury Board did not accept the CRTC's funding proposal.

Several participants asked where the new resources would be spent. Staff indicated the funding would be used to address workload pressures and service delivery issues. This will include issues related to priority files, competitive issues, consolidations, convergence (e.g. access) and improvements to service delivery.

Some participants also suggested that the $3 million would only maintain the status quo for the CRTC and would not enable it to effectively improve its resource situation, as competition develops and new complex issues arise all the time. One participant suggested an amount of $5 million would be needed to make major improvements in overall service delivery.

Fee rationale and structure

Part II Licence fees

Industry participants underlined that the key issue for them was the rationale and structure of the Part II Broadcasting Licence fees. Andrée Wylie explained that though the CRTC collects the Part II fees on behalf of the government, it has no power to make changes to the Part II fee, without the approval of the Treasury Board. However, the CRTC will take note of the participants comments and raise them with the Treasury Board Secretariat. Participants then asked if they should contact the Treasury Board and the Department of Finance directly. Céline Leblanc explained the government’s consultation policy in relation to cost recovery and the role of this committee, and asked that any letters and concerns be addressed to the CRTC so that the relevant issues would be forwarded to the appropriate point of contact in the Government.

Industry participants expressed the following concerns with the structure and the rationale of the Part II Broadcasting Licence Fees.

Equity

First, industry participants said they would like to see further equity in the system. There were questions as to why, in a converging environment, there was no parity with the telecommunications fees. Jim Stefanik explained that the Part I broadcasting licence fee mirrored the CRTC telecommunications fee. He also explained the rationale for the Part II broadcasting licence fee. He indicated that this fee is assessed to address three major issues: i) $12 million in costs related to Industry Canada spectrum management; ii) the privilege for use of the broadcasting spectrum; and iii) the privilege of holding a broadcasting licence for commercial benefit.

One participant asked some questions about the cost of regulating the spectrum. He indicated that, according to the Industry Canada Website on spectrum auctions, the cost associated with the regulation of 60 gigahertz of spectrum is $60 million. There was some interest as to why the cost of regulating 300 megahertz, which is the amount of spectrum used by the broadcasting industries, would be so high (i.e. $12 million for the broadcasting industries). CRTC staff indicated that they would follow-up with Industry Canada on that issue and that they would also pass on these comments to Treasury Board. The industry participants stressed that the cumulative and economic impact of the fees was onerous for the industry.

Fees increases and economic impact

Second, industry participants expressed serious concerns with record growth in the Part II licence fees. Because Part II is based as a percentage of the industry's revenues, the increase can be largely attributed to strong growth of the broadcasting industry. As the industry revenue increases, so does the amount of CRTC fees. Some industry participants also mentioned the cost of regulating small companies may be as high as regulating larger ones, yet the fees do not reflect this.

Who should pay

Thirdly, there were some questions as to why the industry should bear all of the costs of the CRTC, including the services aimed primarily at the general public, the regulatory costs associated with CBC, and CRTC resources dealing with the foreign services. Industry participants felt that the CRTC should look into a more equitable and fair distribution of costs since part of their fees are used to regulate the CBC.

CRTC staff indicated that with respect to service to the public, a preliminary conservative costing has determined costs at approximately $3.5 million (based on CRTC organizational units that primarily provide service to members of the general public), which is approximately the amount of new resources being requested. The CRTC will further explore this issue in co-operation with other federal agencies and fee-paying clients. Specifically, the CRTC will discuss with Treasury Board the issue of public vs. private benefits for a regulatory agency such as the CRTC.

Finally industry participants suggested there could be various ways to calculate the fees and would like to have some further discussion on Part II licence fee issues and a general review of the entire fee structure over the next few years.

CRTC Service Delivery

Service Improvements

Andrée Wylie indicated that the CRTC has and will continue to welcome and act upon industry solutions or suggestions as to how to lighten the workload while fulfilling legislative requirements. Several participants acknowledged the streamlining and improved service delivery initiatives undertaken by the CRTC to date, as well as the CRTC's intention to continue to explore more streamlining initiatives. For example, major improvements of the CRTC Website, which the participants found useful, were acknowledged.

French Service

Several questions were raised as to why service in French was deteriorating, as some key French officers had left the Commission and were not replaced. Andrée Wylie replied that the Commission is working on this issue and has invited the industry to send names and to encourage competent Francophones to come to Ottawa to work for the CRTC. Andrée Wylie noted this was an on-going operational issue not specifically related to the new resource request.

Processing Time

Industry participants asked the CRTC to share the information on the improvements that already occurred to improve the processing time for different types of processes. Participants expressed concerns on the length of time the CRTC takes to render a decision. Industry participants indicated that the actual time frames need to be improved. For example, in a competitive environment, 160 days is too long to resolve issues through alternative dispute resolutions. Jean-Pierre Blais asked the industry to identify areas where the CRTC can make improvements. He acknowledged that the CRTC has to deal with more complex situations and this has affected processing times. Andrée Wylie stressed the importance of the quality of applications, with respect to completeness, for timeliness to improve. It was suggested that the industry could help the CRTC by putting its best effort in submitting complete applications on time.

Service Standards

Several participants asked if the CRTC could develop some benchmarks and service standards and if it could look at other organizations in other jurisdictions. Andrée Wylie confirmed that similar proposals were put forward at the Telecom Round table (e.g. disclosure of processing times, expectation dates, etc.). Andrée Wylie said that the CRTC is committed to effective service delivery, mentioning that in the past, the CRTC has developed mechanisms such as Non-Appearing Public Hearings to further streamline service delivery. The CRTC will examine this issue in co-operation with industry members and look at establishing service standards.

Jean-Pierre Blais outlined three factors that will influence service delivery: legislation, procedures and internal practices. While it is more difficult to change legislation, it is easier of course to modify internal practices. Jean-Pierre Blais mentioned that the CRTC is reviewing its Rules of Procedures and they will be available for comment soon.

Advertising

There were also some questions as to why the advertising approach of the CRTC, (i.e., advertising in newspapers) has not kept pace with technology. It was seen as expensive and not as effective as broadcasting. It was indicated that advertising in newspapers is a statutory requirement outlined in the Broadcasting Act.

Monitoring

Some industry participants stressed there was too much emphasis on monitoring and that we should be relying more on complaints. Jean-Pierre Blais stated that complaints and monitoring are complementary processes. One participant expressed interest in having more monitoring in terms of researching key industry and environmental type issues.

Activity Based Costing

One participant wanted further clarification on the CRTC's development and implementation of Activity Based Costing. There was a concern that such a system is often expensive to develop and maintain. Céline Leblanc clarified the issue, by indicating that instead of a true "ABC" approach, the CRTC uses a simpler planning and budgeting approach to control costs.

Next Steps

Finally industry participants asked what could they do so support the CRTC funding strategy. Jean-Pierre Blais indicated that the industry can help by supporting the requirement for additional resources which may be helpful in better serving the public and members of the industry.

Participants were informed that the minutes of the meeting would be prepared which would highlight the main issues as part of the consultation. The minutes will be placed on the public record and will be available on the CRTC’s Website.

The meeting was adjourned at 12:00 p.m.

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