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Speech

Notes for an address

by Charles Dalfen

Chairman, Canadian Radio-television
and Telecommunications Commission

to the Sixth Annual Conference of the International Institute
of Communications, Canadian Chapter

“The Future of Canadian Communications Policy and
Regulation: Preserving the Essential”

Ottawa, Ontario

December 5, 2006

(CHECK AGAINST DELIVERY)

Thank you, André [Bureau], for your comments and introduction, and thank you to the Canadian Chapter of the IIC for your invitation to speak here today.

This annual meeting is the one time each year when all sectors of our industry get together, outside a hearing room – or a courtroom – to discuss the key issues of the day. It is becoming an extremely useful annual event for the Commission and for everyone in the world of Canadian communications policy and regulation.

And now for some parting reflections.

There are a number of approaches that are customary on these kinds of occasions. One is the “objective” or “historical” approach, often intended as a defence of the record.

Churchill, when asked why he wrote a history of the Second World War, is said to have replied: “If I don't do it certainly others will, and I may not like what they have to say.”

Another approach is the “most” approach: what was the most important matter you faced; most difficult decision; what surprised you the most; what has changed most since your term as vice-chair 100 years ago?

Another approach is the “legacy” approach: what do you think your legacy will be? Or the flip side of that, taking into consideration what's happened in the industry, what do you think you'll be held responsible for?

I ended up rejecting all of these approaches. They all seemed a bit too autobiographical and I remembered what that media pioneer, Samuel Goldwyn, once said: “I don't think anyone should write their autobiography until after they're dead.”

Then I had the idea that I would give you my ideas on fee-for-carriage . . . however, I didn't want to clear the room so early in the day.

So instead I decided to discuss the future with you, and how we might be able to respond to the changes in our environment that are, as André just said, changing at morph speed. In this period of turbulent change – technological change, changing business models, political change, change in prevailing values and ideologies – how can we figure out what is important, what needs to be changed and what needs to be preserved?

We heard from last night's panel about the online world and, to be sure, the online world is here. But it's coexisting with the traditional world that we have known, the world of our broadcasting system and of our telecommunications system. And, at the same time, we know that the Internet is going to be the platform on which broadcasting and telecommunications are increasingly being transmitted and received, and on which all kinds of content is and will continue to be accessed.

But what we don't have the answers to, of course, is what does all that mean? What is it really? The Internet is recreating itself all the time and not a day goes by when there isn't a new development. What is important? What do we want to preserve through all of this change? What regulatory tools do we want to use, if any? And what is going to be the appropriate regulatory framework for this environment?

Many people will be suggesting change. And indeed over the past year or so many people have been recommending changes of all kinds affecting the regulatory framework. But I thought another approach might be to ask, from the perspective that I have been privileged to have for the past five years, what needs to be preserved as technology and as values are changing, as consumer choice and control are increasing, and as regulation is becoming increasingly challenging and increasingly challenged?

We have become quite “decimalized,” from the Ten Commandments to the metric system, and the number 10 seems to be very popular. I ended up putting 10 points forward and I'd like to share them with you.

They are meant to be in the form of questions, although I might put them assertively from time to time.

Ten elements in our existing regulatory framework that need preserving

1. Objective-based legislation

The Broadcasting and Telecommunications Acts, which set out the CRTC's mandate, as well as the CBC's, are both objective-based statutes, with statements of policy declared by Parliament, grounded in the notion that telecommunications and broadcasting in Canada play an essential role in the maintenance and enhancement of Canadian sovereignty and identity. That's fairly deep and quite routed in the psyche of Canada going right back to the beginning. It's not that surprising. It's unusual, because very few Canadian statutes contain lists of objectives that are then meant to guide decision-makers in giving effect to them.

But our legislation does and always has. It is a mark of the importance that Canadians have attached to telecommunications and broadcasting in binding the country together, in providing our economic backbone. And also in ensuring that we can communicate with each other over a vast, climatically challenging land, where the nights are long throughout the winter and where we have two languages along with diverse ethnic and Aboriginal groups. We can communicate a whole variety of messages that we need to exchange with each other.

We live in what is essentially a thin population band across a long border with the most powerful and prolific culture in the world, certainly in the entertainment and information world. So it's no surprise that the objectives are set forth pretty clearly and that it is Parliament that decides upon them. What may be more surprising in the current political environment is that Parliament was virtually unanimous in both 1968 and 1991 in setting out the objectives of the Broadcasting Act as the marching orders to the institutions that give effect to them.

So the question is: in the global, borderless, online all-the-time world, are these objectives still valid?

My guess is that they are and that they will continue to be. But at this time, we are all trying to place bets on the right squares and we really don't know. Those on the business side of this sector have to do that every day, and no one has the answers. But it seems to me that objectives, grounded in sovereignty and in binding the country together, are going to continue to be seen as essential to guide us as we go forward.

2. The concept of universal service

Section 7(b) of the Telecommunications Act speaks of rendering reliable and affordable telecommunications services, of high-quality and accessible to Canadians in both urban and rural areas in all regions of Canada.

We want to have it every which way. Are we going to stop? I somehow doubt it.

Access to the Internet is becoming increasingly universal. We are going to need capitalized, innovative, financially healthy industries to invest in, and to provide the services and facilities that Canadians are going to continue to want access to. I think it is going to require a regulatory body, in whatever shape or form it has, to provide incentives and sometimes direct investment, as well as pricing, that can achieve those goals. And I think, in a converged world, the term “services” is going to have an expanded meaning beyond telecommunications services to encompass every communications service that is available, including broadcasting.

In Canada we are proud of the fact that, as measured by the OECD and others, we have universal telephone service, wireline telecom prices that are among the lowest in the world, the highest capital investment in telecommunications among the G7 countries and the highest broadband penetration. I suspect that the basic service objective, which is currently limited to telephone service and dial-up Internet access, will have to reach the point where it includes broadband access.

Other countries with whom we are competing are going to be doing it. I don't think we are going to have much choice but to do it. We are going to have to find ways to fund this creatively through a variety of techniques. So I am answering the question. Is it important? I think it is going to be vital to the future of Canadian telecommunications and broadcasting.

3. A Canadian broadcasting system

You are as familiar as I am with the Broadcasting Act: programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity; that displays Canadian talent in entertainment programming; and that offers information and analysis concerning Canada and other countries from a Canadian point of view.

I believe this is primordial. I don't think we are going to give up on this. I think it will continue to be a matter of national self-respect. If it was important in the three-channel universe, it is all the more important in the 500-channel universe and even more important still in the digital world.

In the Commission's New Media and Mobile Television orders, we used exemption as the technique for giving effect to the Act. The message of those orders was not that we were relaxing our vigilance on Canadian content, but that for the time being, exemption orders were the best regulatory technique for bringing this about.

The message was that:

  • Canadians should prepare themselves to compete in a more consumer-driven environment;
  • early evidence suggests that they are doing so;
  • Canadian content is being featured on these new platforms; and
  • we are confident that Canadians, including Canadian broadcasters, can be prominent in the creation and exhibition of new media content, in occupying that space.

Is there really any choice?

But it has never been easy. Canadian content has always been an uphill battle for the CRTC and every CRTC commissioner, past or present, has the scars to prove it. And I'm not sure that we've gotten to the toughest part yet. Because in the digital world, where borders and restrictions are more difficult to impose both technically and in terms of the values that the Internet throws up – values of freedom and universal accessibility – it is far from clear whether the old techniques (percentages of schedule directed to Canadian content, distribution and linkage rules, etc.) are going to be doable and workable.

And I suspect that the technical details are easier to resolve than some of the other questions, the tougher questions such as: is restriction of any kind desirable? I suspect that when we get there, the debates are going to be firm and vigorous. At the same time, I continue to believe that this goal is going to be one that we are, as a country, going to insist upon. I hope I'm not wrong about that.

4. A system that reflects and respects Canadians

Again, you are familiar with section 3(1)(d)(iii) of the Act, which speaks of serving the needs and interests, and reflecting the circumstances and aspirations, of Canadian men, women and children. Notably, this refers to equal rights, linguistic duality, the multicultural and multiracial nature of Canadian society, and the special place of Aboriginal peoples within that society.

It is a huge mouthful. And it seems to me that it captures something essential about Canada. I call it the “reflect and respect” rule. We try to reflect our country to each other in both official languages. We seek to reflect minority, linguistic and ethnic groups, and aboriginal communities. To that end we have issued many ethnic radio and television licences, and tried to ensure that the diversity of Canada is reflected in the general broadcasting system. The CAB has played an important role in this effort, notably through its Task Force for Cultural Diversity on Television, which reviews the latest research, as well as best practices.

The CAB this week also undertook three “diversity day” initiatives in connection with the International Day of Disabled Persons. Inclusion and fairness: that is what reflection is all about.

It is also about mutual respect. A nation of immigrants and of cultural diversity needs to foster mutual respect. And so regulations prohibiting abusive broadcasting that holds individuals or groups in hatred or contempt – based on religion, race, colour, disability and so on – go back 75 years to the origins of broadcasting in this country.

The CHOI case was not a trauma for those of us who were associated with it, but it served to draw an important line in the sand about what is acceptable and what is not acceptable.

And I think the best expression of this is in the unanimous Federal Court of Appeal judgement, written by Mr. Justice Létourneau, where he says:

“I do not think I am mistaken in saying that freedom of expression, freedom of opinion and freedom of speech do not mean freedom of defamation, freedom of oppression and freedom of opprobrium.”

He added:

“To accept the appellant's proposition would mean using the Charter to make the State or its agencies an instrument of oppression or violation of the individual rights to human dignity, privacy and integrity on behalf of the commercial profitability of a business.”

That was the line in the sand. That was the message. And it is a message that, I think, Canadians will be looking for in the digital world. People will want to preserve online the rights that they have offline.

Again, how do we do this is not yet entirely clear. We have had a number of initiatives such as Project Cleanfeed Canada, a partnership between Canadian ISP carriers and Cybertip.ca to fight online child sex abuse.

Hate sites are proliferating on the Internet. We get letters from people saying that we are going to have to deal with this somehow. I'm not sure what role, if any, the CRTC, the Broadcasting Act or the Telecommunications Act will play in all of this. There are human rights commissions and there are courts as well, and our society is going to have to figure this out. But it will have to address the problem. It has already got some of the tools and some of the experience in this area.

I gave a talk a few months ago about freedom of speech versus responsibility in broadcasting. Broadcasting isn't really the problem other than the odd case. The question I got was: what about the Internet? What are you doing about that? Many people think that this is a matter for the Commission. Whether it is or is not will be a question that the Commission is going to be engaged with, as is our society. It won't be easy, not any more than any of these other issues are easy. But the pressures will continue, reflecting the ongoing importance of mutual respect among the different groups that make up our country.

5. Adapting to new technologies

This element is obvious and essential. It is what the Commission has been doing, and what its predecessors did, ever since the beginning of broadcasting in Canada: adapting technologies and leveraging them in the Canadian interest. Beginning with radio, and then with television, cable and satellite, we took technologies that we thought would be disruptive to our cultural fabric and leveraged them, in my view, successfully to provide the system that we have today. And we are going to have to continue to do that.

We had another controversial example on my watch with satellite radio, where ultimately we made a choice – not between the ideal world and the decision that we made – but between having no Canadian content and no French-language content on satellite radio service to the car, and the Canadian and francophone channel arrangements that we established, which furthered the objectives of the Broadcasting Act. Although, again, it did so in a way that was less than ideal because of the circumstances surrounding the ownership of satellites and the prospects for Canadian satellites in the future.

In the case of new media, our approach to adapting to new technologies has been to allow them to find their own level through the use of the exemption power.

6. An independent regulator

This is the linchpin of our regulatory framework.

A quasi-judicial, converged and independent regulator to give effect to the objectives set out by Parliament in the Act. The advantages, as many of you know, are transparency and the right to be heard. A corollary is, let the regulator do its work. There are times when the decisions that regulators make are controversial.

That's what it's about. The more difficult the decisions the more controversial they are going to be.

Over the history of the CRTC, while the government of the day hasn't always agreed with what the Commission has done, it has been supportive of its general directions and, more importantly, supportive of the institution. Is that being questioned right now? I'm putting that as a question to you. I think it would be an extremely unfortunate thing if the answer to that question were “No.” I suspect that it is not “No.” I suspect that it is “Yes” and that we will find our way towards the appropriate level through which governments can set general policy and the Commission can do the regulatory work required to give effect to the objectives of the legislation, whether that legislation remains in effect as it currently is or becomes more converged, as inevitably I think it will be.

7. To foster an increased reliance on market forces

To be sure, the Commission has always put a premium on market forces. Broadcasting, radio and television have always been competitive. Cable has been competitive against DTH over the past 10 years and now telephone companies are in television as well. Specialty services compete for audiences and advertisers and, in English-language pay-TV, a new competitor has recently been licensed. Competition has been introduced into every sector of telecommunications, including the local exchange market.

But market forces, as important as they are, cannot alone take care of the most vulnerable in society, whether it is geography, economic status, origin, belief or disability that makes them vulnerable. Market forces would not result in the Canadian content levels that we have now. They would not result in French-language services being carried across the country. They would not result in the current levels of French vocal music.

Market forces are good for efficiency. They are less good for equity. We have to acknowledge that there are values that cannot be achieved through market forces alone and need to be set using other methods, including consumer choice. Because if you believe in consumer choice, as we do, you recognize that allowing market forces free reign can restrict consumer choice. Market forces alone would be unlikely to provide competitive service providers access to the support structures, rights-of-way, multiple dwelling units, and inside wire that are necessary to ensure end-user consumer choice. It is in order to enhance consumer choice and consumer benefit that you have to, in some cases, attenuate market forces by using other policy and regulatory techniques.

Again, this should all be seen as being put in the interrogative form even though it sounds pretty assertive.

8. Regulation, where required, should be efficient and effective

I am very proud of our staff, under Len Katz's leadership, for their work on the streamlining procedures that have been set in motion at the CRTC. And I thank my colleagues on the Commission for cooperating fully with those efforts, namely streamlining, tariff approval and expedited dispute resolution. Huge log-jams of both tariffs and disputes have been virtually eliminated to the point where we are caught up and moving ahead in a highly efficient manner.

And it's not just regulatory decisions, but also the willingness to use alternate forms of dispute resolution, some of them provided for in our regulations and others that our very creative mediatory staff under Randy Hutson and Paul Godin, on both sides of the shop, are using in order to ensure that difficult disputes can be resolved without having to go to formal dispute settlement. This is fully in keeping with the spirit of efficient and effective regulation.

Nor is regulation the only approach that should be used to achieve the goals in the Acts. The importance of industry self-regulation and more informal methods of standard-setting can't be underestimated. The industry should resolve as many of the issues as it can. I have said this to many people throughout my term: if you solve the issues, you're probably going to get it right. If you leave it to us to solve the issues, you're probably not going to like the outcomes. It's much better if you can do it by yourselves.

The CBSC, under Ron Cohen's very able leadership, has played a hugely important role in matters of standards and taste in broadcasting. This has not only taken an enormous burden off our shoulders, but it means that the state, which, of course, the CRTC represents, doesn't enter into those matters which verge on taste and preference.

We have, in our local forbearance decision, called for industry self-regulation on a host of consumer-related matters in the telecommunications sector. The CISC committees in telecom, even though at times frustrating for some participants, have also played an important role in resolving a host of technical and operational issues.

Again, the more the better.

Exemptions are a regulatory technique that should be employed wherever possible, particularly in regards to new technologies and services. We are using it and should continue to use it.

And finally, I have become a late convert to the concept of ex post facto regulation, which I believe is something that we should do more of, provided, of course, that we have the ability to impose meaningful penalties as a deterrent to violations of the rules. Whether that will happen remains to be seen.

9. Investment, innovation and productivity

It should be a stated objective of telecommunications policy that regulations should encourage investment, innovation and productivity. A number of the subsections of section 7 of the Telecommunications Act already do this, but it could probably be further enhanced.

The fact is that our industries in this sector are productive and innovative. I have not seen any studies that suggest that we have not achieved these goals, in both regulated and unregulated sectors. I am proud of that and, I think, as a country we ought to be proud of that. If there was clear evidence that regulations were interfering with investment, innovation or productivity in the telecom sector, we'd know about it. There is no such evidence. We have managed, as a sector, to maintain high levels of investment, as I said earlier, and of innovation. And we are going to have to continue to do that to ensure that broadband facilities can be extended to the far reaches of this country.

10. The time-honoured rule prohibiting undue preference and unjust discrimination

This is another way of saying fairness.

It has been a vital tool in telecommunications regulation for removing barriers to entry ever since the Challenge case of 1977, which some of the old-timers will remember. In broadcasting, the Commission had to develop the rule by regulation, initially to ensure fair and reasonable access by programming services to BDUs and, subsequently, to ensure fairness by the former to the latter. We may well need to apply the principle to resolve a number of the issues in the Net neutrality debate that is gathering steam.

To be sure, the principle needs to be adapted to a competitive environment, where discriminatory offerings and practices may be important for competitive success and where regulatory tools are not yet developed. But the rule and its basic underlying principle, it seems to me, needs to be something that the regulator has as a core armament, and regulators who can responsibly exercise this power in a discreet and effective way should be appointed.

Like the objectives of our Acts, I have not given any of these 10 points priority and, like the objectives in the Acts, a few sub-objectives have crept in. However, these are the essential points as I see them. Whether you put them in interrogative form, which I think they have to be put in now because in an age of change I think everything has to be up for questioning, or you assert them, you are going to have to address them. And I suspect what comes out at the other end in the form of new legislation will very likely embody most of these concepts because they are valid concepts for the nature of the country, the nature of its psyche and the nature of its long term goals.

Thank you very much.

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Date Modified: 2006-12-05

 

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