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                       SUBJECT / SUJET:


HELD AT:                               TENUE À:

Place du Portage                       Place du Portage
Conference Centre                      Centre de conférences
Outaouais Room                         Salle Outaouais
Hull, Quebec                           Hull (Québec)

Decembre 1, 1998                       Le 1 décembre 1998

                          Volume 7
tel: 613-521-0703         StenoTran         fax: 613-521-7668



Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.


                 Canadian Radio-television and
                 Telecommunications Commission

              Conseil de la radiodiffusion et des
                télécommunications canadiennes

                  Transcript / Transcription

              Public Hearing / Audience publique

                  New Media / Nouveaux médias


David Colville                         Chairperson / Président
                                       Telecommunications /     
Françoise Bertrand                     Chairperson of the
                                       Commission / Présidente du
Martha Wilson                          Commissioner / Conseillère
Cindy Grauer                           Commissioner / Conseillère
Joan Pennefather                       Commissioner / Conseillère
David McKendry                         Commissioner / Conseiller


Carolyn Pinsky /                       Commission Counsel /
Karen Moore                            Avocates du Conseil
Ted Woodhead                           Hearing Manager / Gérant de
Daphne Fry                             Manager of Convergence
                                       Policy / Responsable de la
                                       politique sur la
Diane Santerre /                       Secretaries / Secrétaires
Carol Bénard

HELD AT:                               TENUE À:

Place du Portage                       Place du Portage
Conference Centre                      Centre de conférences
Outaouais Room                         Salle Outaouais
Hull, Quebec                           Hull (Québec)

December 1, 1998                       Le 1 décembre 1998

                          Volume  7



Presentation by / Présentation par:

Sheridan College                                          1766

Canadian Screen Training Centre                           1811

Canadian Independent Record                               1835
Production Association

Canadian Recording Industry Association                   1900

Alliance of Canadian Cinema, Television                   1932
and Radio Artists

Society of Composers, Authors and Music                   1966
Publishers of Canada / la Société canadienne 
des auteurs, compositeurs et éditeurs de musique



 1                                  Hull, Quebec / Hull (Québec)
 2     --- Upon resuming on Tuesday, December 1, 1998,
 3         at 0858 / L'audience reprend le mardi,
 4         1 decembre 1998, á 0858
 5  7580                 THE CHAIRPERSON:  Good morning.
 6  7581                 I think it's a minute or two before
 7     nine, but it seems everybody is ready, so we might as
 8     well begin.
 9  7582                 Madam Secretary, would you call the
10     next party.
11  7583                 MS BéNARD:  Thank you, Mr. Chairman.
12  7584                 The next presentation will be by
13     Sheridan College and I would invite Mr. Levy to
14     introduce his colleagues.
16  7585                 MR. LEVY:  Thank you very much.
17  7586                 Mr. Chair, members of the Commission,
18     thank you for inviting us to meet with you today.
19  7587                 My name is Sheldon Levy and I am the
20     President of Sheridan College.  I am very pleased to
21     have with me two of my Sheridan colleagues in new
22     media.
23  7588                 To my right is Robin King, Director
24     of the School of Animation, Arts and Design, who set up
25     computer graphics and animation as a program at


 1     Sheridan in 1980, almost ten years before they matured
 2     as viable industries.  He has been in featured in
 3     "Toronto Life", "Maclean's" magazine and the "Financial
 4     Post" as a world leader in the world of digital media,
 5     imaging and communications.
 6  7589                 To Robin's right is my colleague
 7     David Tucker, whose is Associate Director of the School
 8     of Animation, Arts and Design, who is an established
 9     television writer, director and producer.  As a regular
10     content provider for CBC, TVO, The Discovery Channel
11     and other broadcasters, David has won numerous
12     international awards, including most recently a Freddie
13     from the American Medical Association for his work on
14     the CBC series "The Nature of Things".
15  7590                 We appreciate the chance to be here
16     today because one of the things we do best at Sheridan
17     is teach new media.  It is our job to educate students
18     about new media production and to prepare them to
19     function within this new environment as professionals
20     and entrepreneurs.
21  7591                 From our own experience at Sheridan
22     and looking at the wonderful list of our new media
23     colleagues form other organizations and companies with
24     whom you will be meeting or have met, we have one
25     message to deliver and it is this.


 1  7592                 The quality of new media in Canada is
 2     outstanding.  It is internationally competitive and we
 3     are at the leading edge.  It needs no defense, no
 4     protection, no apology.  Rather, new media in Canada
 5     needs to be acknowledged with pride as a source of
 6     cultural and economic strength and resourcefulness.
 7  7593                 It needs to be afforded all the
 8     advantages that the federal government and its agencies
 9     can devise and imagine to provide the best possible
10     environment for growth and prosperity right here at
11     home.
12  7594                 Our shared goal for the 21st century
13     should be to recognize and prove that Canada is the
14     best place to learn new media, to practise new media
15     and to achieve success on a global scale.
16  7595                 To acknowledge our competitive and
17     creative edge demands that we understand and embrace
18     the evolution of new media.  The new media environment
19     promotes and enables a free flow of information.
20  7596                 It supports collaboration and inquiry
21     on the broadest possible scale.  Interactivity is the
22     defining characteristic of new media -- broadening,
23     strengthening and democratizing communications.  It
24     enables and supports the rapid dissemination and
25     creative exchange of information and ideas at every


 1     level from the local classroom to the global
 2     enterprise.
 3  7597                 Information is the currency of the
 4     media-rich age we are entering and new media is the
 5     means by which we will build our competitiveness in
 6     this new world.
 7  7598                 At Sheridan we offer our students the
 8     chance to be involved with international competitors
 9     and partners and with other students and industries in
10     ways that spur their innate creativity, enrich their
11     exchanges with fellow creators around the world and
12     encourage them to learn more skills and more ways to
13     reach out and take advantage of all their
14     opportunities.
15  7599                 Communication, interactivity and
16     knowledge gathering are available at the click of a
17     mouse, irrespective of borders or boundaries.  We would
18     no more think of constraining that access for students
19     than we would think of taking away their pens or their
20     library cards.
21  7600                 If we truly believe that Canada can
22     compete as one of the best, and we have confidence and
23     evidence that this is true, then our approach to new
24     media has to be proactive.  This means supporting and
25     encouraging the natural environment which new media is


 1     flourishing.
 2  7601                 We are here because we are encouraged
 3     to think that the CRTC has a role to play.  We are here
 4     because we want to support your bid to make new media
 5     in Canada an international issue and a national
 6     priority.
 7  7602                 It is not hard to imagine the forms
 8     this support might take.  I am sure our suggestions
 9     will be consistent with the messages you have read and
10     the submissions you have received, but it might be
11     helpful to give you a specific illustration of how we
12     are preparing for the future.
13  7603                 At Sheridan, initiatives in new media
14     are currently focusing on new facilities, new partners
15     and a new role in applied research and development.
16  7604                 We are building an animation and new
17     media campus of the future.  The Sheridan Centre for
18     Animation and Emerging Technologies, on track to open
19     in September 2000,, will offer outstanding
20     opportunities for new media education and will form the
21     hub of a land development plan that will see a business
22     and research park supporting collaboration between the
23     public and private sectors in new media.
24  7605                 We are defining new ways of working
25     with visionary partners on diverse new media


 1     initiatives.  Silicon Graphics Canada, IBM Canada and
 2     Alias/Wavefront are partners with us in the new centre. 
 3     Advanced Media Group and Sony Canada have announced a
 4     partnership with us on a remarkable project to develop
 5     expertise in high definition television and film
 6     production.
 7  7606                 Northern Digital is making Sheridan
 8     the first site in Canada for its motion capture
 9     technology.  We are working with the Hospital for Sick
10     Children on a multimedia centre and with Immersion
11     Studios on studies in virtual reality.
12  7607                 Dalhousie University and the
13     University of Colorado are partnering with us on the
14     development of post graduate programs in new media and
15     telecommunications.
16  7608                 The CRTC can offer support for these
17     kinds of initiatives at the national level.  It is an
18     agency with an established mandate to uphold and
19     promote Canadian culture.  What better way to do this
20     than to ensure that the new media environment is
21     acknowledged and supported as a Canadian success story
22     and offered every competitive advantage?
23  7609                 For Sheridan, and we believe for
24     others as well, the CRTC could make a remarkable
25     contribution to new media in Canada in three ways.


 1  7610                 First, the CRTC should ensure that
 2     access to opportunity is not restricted; that access
 3     and distribution mechanisms, cross-cultural exchanges
 4     and global collaboration are facilitated and offered
 5     the best and most positive kinds of experiences.
 6  7611                 Faculty, students, industry,
 7     governments and business should be able to freely
 8     acquire and exchange information and skills in an open
 9     environment without borders or restrictions.
10  7612                 Second, the CRTC should develop ways
11     to encourage public and private partnerships,
12     especially to guarantee that education and industry are
13     deriving the most benefit from their interaction.  The
14     growth of Canada's competitiveness, economy and
15     cultural strength must be a natural development
16     resulting from these initiatives.
17  7613                 Third, the CRTC must provide
18     assistance and incentives that will promote Canadian
19     new media as world class and globally competitive. 
20     Canadian talent and expertise is outstanding and worthy
21     of promotion and support at the national level.
22  7614                 We must have access to research and
23     development support, adequate funding, tax breaks,
24     matching grants and innovative programs designed to
25     ensure that the best talent finds Canada the best place


 1     to work and to prosper.
 2  7615                 The ever-increasing role that new
 3     media communications will play in Canadian society
 4     will, of course, lead to new employment and jobs with
 5     very specialized skills that ensure persuasive and
 6     clear communications.
 7  7616                 One hundred per cent of Sheridan's
 8     new media graduates find employment.  The economic,
 9     social and cultural role that these new employees will
10     play in furthering e-commerce and entertainment stands
11     to play a major part in the definition of Canadian
12     identity in the global communications universe.  What
13     the CRTC must do is enable these entrepreneurs to lead
14     in the 21st century.
15  7617                 To conclude, we applaud the
16     initiative taken by the CRTC in asking some very
17     pertinent questions about the changing nature of
18     communications in Canada.  These are difficult and
19     complex issues and we do not claim to know all the
20     answers, but we are pleased to offer one final
21     statement in summary.
22  7618                 As a world leader in new media
23     education, Sheridan is proud to say that Canadian new
24     media talent and businesses are second to none
25     worldwide, requiring from the federal government and


 1     the CRTC not protection or defence, but the kind of
 2     support that will keep our talent in this country and
 3     our businesses competitive far into the next
 4     millennium.
 5  7619                 Sheridan wishes you well in your
 6     deliberations.  Thank you for the opportunity to make
 7     this presentation today.  We would be happy to answer
 8     any questions.
 9  7620                 THE CHAIRPERSON:  Thank you, Mr.
10     Levy.  I appreciate your presentation this morning. 
11     Your reputation precedes you I think in that there have
12     been already several references to the work that is
13     being done at Sheridan College.
14  7621                 To discuss that with you I will turn
15     to Commissioner McKendry.
16  7622                 COMMISSIONER McKENDRY:  Thank you,
17     Mr. Chair.
18  7623                 Good morning and thank you again for
19     coming to make your presentation this morning.
20  7624                 In your oral comments you talked
21     about the outstanding quality of new media in Canada
22     and the international recognition that we are receiving
23     for that.
24  7625                 I wonder if you could just elaborate
25     a bit for us on the importance of new media in the


 1     international scene, particularly from a Canadian
 2     perspective.
 3  7626                 MR. KING:  Yes.  I think it's an
 4     increasingly critical issue.  Global competitiveness in
 5     today's market requires -- demands that communications
 6     producers are capable of crossing cultural boundaries
 7     on a worldwide basis.
 8  7627                 The very nature of electric commerce
 9     of the Internet, of the kinds of new forms of
10     communication that are emerging, mean that we must
11     produce the kind of talent that can cross these
12     cultural boundaries.
13  7628                 The problem is that designing for new
14     media is quite different from designing for an
15     individual traditional media.  It requires a far
16     greater range of professional expertise.  It demands a
17     much greater variety of skills and the importance of
18     distance collaboration becomes increasingly important
19     as bandwidth increases globally.
20  7629                 We have seen large numbers of
21     countries coming to Sheridan trying to partner with us
22     because they recognize the need to be able to produce
23     this kind of diverse cross-cultural communications
24     capability.  To do that the new media environment is
25     critical.


 1  7630                 I think the key issue here is the
 2     design for new media is simply not a matter of having
 3     access to new technologies.  It is an intellectual
 4     process.  It is far beyond simply the matter of
 5     accumulation of digital assets in a virtual space.  It
 6     is also the ability to be able to use those assets for
 7     communication on a global basis.
 8  7631                 That's clearly an issue that Canada
 9     has very strong opportunity to lead in because of the
10     cultural diversity of our society and our ability to
11     kind of cross those kinds of cultural boundaries.
12  7632                 COMMISSIONER McKENDRY:  What are the
13     key barriers to crossing those boundaries that you see
14     in today's environment?
15  7633                 MR. KING:  One of them is the
16     difficulty of designing media for cross-cultural
17     communications.  The problems of the traditions of the
18     use of things like colour, for example, topography, the
19     way messages are read, whether they are right to left
20     or right to left, et cetera, may seem like trivial
21     issues, but they are in fact very significant issues.
22  7634                 If we send a message, for example, to
23     another culture in which the colour combinations are in
24     fact associated with that culture in a negative light,
25     very subtly the image is a very different one and can


 1     be disastrous.
 2  7635                 Much needs to be done to educate
 3     people to understand how to design for global
 4     communications.  To do that requires that you have a
 5     body of information and a level of experience that has
 6     been accumulated over time to understand what
 7     practices, what principles and what structures are
 8     needed to ensure that that effectiveness takes place.
 9  7636                 Fundamentally, there isn't an easy
10     access to that body of information yet.
11  7637                 COMMISSIONER McKENDRY:  I take it
12     this is where the importance you placed on
13     international collaboration comes in in order to help
14     you and your colleagues gain insight into these kinds
15     of cultural differences that need to be taken into
16     account.
17  7638                 MR. KING:  That is certainly part of
18     it, yes.  There are additional issues, but that
19     certainly is why we have been spending a lot of time
20     looking at international partnerships.
21  7639                 COMMISSIONER McKENDRY:  You say there
22     are additional issues.  What would some of those be?
23  7640                 MR. KING:  I would say probably the
24     most critical issue from my perspective personally, but
25     I think also for the development of Canadian new media,


 1     is access to research and development funds.  If I may,
 2     I would like to give you an example.
 3  7641                 About a year ago I was involved as a
 4     principal researcher on a proposal to a National
 5     Centres of Excellence Program, a federal body which
 6     included the Social Science and Humanities Research
 7     Council, the Medical Research Council, Industry Canada,
 8     National Science and Engineering and Research Council.
 9  7642                 The nature of this proposal, which
10     consisted of a consortium of 20 organizations from
11     across Canada involved in new  media, joining together
12     to undertake a research program to improve the design
13     and production methodology for new media.  In other
14     words, the notion was that we need to produce better
15     tools.
16  7643                 The tools currently are primarily
17     simply extensions of the tool base that we have used,
18     the mouse, the single computer screen, et cetera.
19  7644                 We recognized that new media requires
20     new toolsets and we are very strong in engineering, we
21     are very strong in software in Canada.  No other
22     competitive new media proposal was made to the National
23     Centres of Excellence and yet our grant was not
24     awarded.
25  7645                 Frankly, the traditional granting


 1     bodies simply do not know how to evaluate and support
 2     the kind of interdisciplinary projects of this kind.
 3     They bridge not only engineering, but the social
 4     sciences and the humanities language, culture.  They
 5     are complex and they are non-traditional, yet the
 6     competitiveness of every industry as we move into an
 7     industrial age will depend on clear and effective
 8     communications delivered in a global environment.
 9  7646                 Because new media workers are working
10     with relatively primitive environments -- we know there
11     have been dramatic improvements in speed, in
12     processing, in communication, in bandwidth, but there
13     aren't, if you will, the improvements being made in
14     technology itself, in production methodology for new
15     media, in creating environments where we have an
16     entirely new way of looking at how to assemble and
17     communicate new media results.
18                                                        0915
19  7647                 So the question for me really is, you
20     know, new media designers need simultaneously an access
21     to a very divergent resource base, online
22     collaboration, web access, the work that they are
23     working on.  It is a diverse working environment.
24  7648                 The research needed to do that has
25     not been done, and yet the traditional research bodies


 1     that grant money to do this kind of research simply
 2     don't know how to evaluate new media projects because
 3     of their interdisciplinary nature, and are more likely
 4     to give money to traditional disciplines.
 5  7649                 So that I see as a significant
 6     challenge, and where we would see the CRTC and the
 7     federal government as helping to put these kinds of
 8     projects together.
 9  7650                 MR. TUCKER:  If I might just add a
10     point, we at Sheridan thought that we might be able to
11     provide something to you in terms of some of the
12     consultative activity that might go on in some of these
13     initiatives.  Robin has mentioned the R&D area, but
14     also funding agencies and so forth that will fund new
15     media activity.
16  7651                 We would see, possibly because of the
17     role that we currently play, which is a bit hands-off
18     from the industry directly, that we might be able to
19     help in that consultative process.
20  7652                 COMMISSIONER McKENDRY:  Are you
21     suggesting, or have you thought that far along with
22     respect to this problem, that you need a new funding
23     body, or is it, in effect, a reform of existing funding
24     bodies that will address the problem you have
25     identified?


 1  7653                 MR. KING:  I think it has to be a new
 2     funding body personally.
 3  7654                 I mean, the diversity that we deal
 4     with is very significant.  These are engineering
 5     problems, these are social problems, these are problems
 6     of psychology and methodology of work.
 7  7655                 We have entered an information age in
 8     which we know very little in fact about the working
 9     methodology required to produce new media.  It is still
10     done on a single screen with an archaic device called a
11     mouse for the most part.  These are just extensions of
12     traditional technology, and yet we know with kind of
13     emerging and embedded technologies that other devices
14     need to be designed to make the free flow of creative
15     information for the producer, as well as the receiver,
16     far more effective in the design and development of new
17     media.
18  7656                 There is very little research being
19     done, and I think it will take a cross-disciplinary
20     body to be able to understand how to fund, how to
21     evaluate, and how to support that kind of initiative.
22  7657                 MR. LEVY:  Could I just add one part. 
23     I'm sorry to interrupt.
24  7658                 In Ontario I chair a committee for
25     the Minister of Science and Technology which is the


 1     first of a kind, which is the establishment of a
 2     digital media fund where the objective is to promote
 3     the industry in partnerships.  And I believe it is a
 4     recognition in Ontario that this type of support, and
 5     the type of encouragement from the government is
 6     necessary.
 7  7659                 I think what Robin is referencing is
 8     that the granting councils at the federal level have a
 9     more traditional view on disciplines, and digital media
10     doesn't have what I will call champions yet, and you
11     need champions on the funding counsels so that when
12     submissions come -- whether they are from one end, UBC
13     or Memorial or Sheridan or anyone, that they are
14     received with the knowledge base that is necessary to
15     help others understand it.
16  7660                 So I think it is a function of time,
17     and right at the moment the champions are more
18     disciplined-based, but not new media-based, and I think
19     where CRTC and the federal government can help is
20     opening up or broadening the view of research in Canada
21     to include new media as a legitimate player in
22     research, but not limited to an engineering sense of
23     new media, but a content sense of new media and an
24     engineering sense.
25  7661                 That is where the cross-disciplinary


 1     part comes, because we will get, no doubt, engineering
 2     support for new media and the development of new
 3     technologies.
 4  7662                 But where do you pull it together as
 5     new media and get content and technology coming
 6     together?  I think in Ontario Minister Wilson, who has
 7     asked me to chair the committee, has that in mind, that
 8     there is no place that is open to that, and I think
 9     CRTC can make a major contribution to open up the
10     playing field a bit wider to recognize new media.
11  7663                 MR. TUCKER:  To get back to your
12     point about funding bodies, I would certainly agree
13     with Robin that there perhaps needs to be a new body
14     created, or perhaps a merging of existing ones.
15  7664                 We have gotten rather hung up on the
16     notion of new media, seeing it as something distinct
17     from media, and really it is the integration of
18     existing and new medias, and I think the mechanisms to
19     support that industry will have to similarly reflect
20     that merging, that integration so that you have these
21     cross-disciplinary skills when it comes to evaluating
22     and assessing projects and initiatives.
23  7665                 COMMISSIONER McKENDRY:  There has
24     been quite a focus, at least at Industry Canada, on the
25     information highway and connecting Canada, and so on,


 1     but I take it from your comments today that that has
 2     probably been, in your view, a focus on the technology
 3     of the highway and you are suggesting that it is very
 4     important to reach out beyond the technology and to
 5     think of the technology along with content, and that
 6     is, I guess -- I just want to make sure I understand
 7     the information highway focus hasn't addressed what you
 8     are suggesting needs to be addressed.
 9  7666                 MR. TUCKER:  We feel this
10     particularly acutely in education because training
11     students on technology gives them a very short lifespan
12     in the job market.  It is the people who can provide
13     content, the intellectual property holders that have
14     the staying power.  So that would certainly be
15     reflective.
16  7667                 MR. KING:  And we are dealing with
17     new forms of communications strategy.  Just the issue,
18     for example, of designing navigation on any interactive
19     system is something that essentially is a new art, if
20     you will.  It involves the analysis of information, the
21     restructuring of information, the organization of
22     information in new ways.
23  7668                 And yet the quality of how that is
24     done, the quality of the result is critical to
25     producing effective communications, and yet we don't


 1     have the opportunity to do the current design work,
 2     either engineering or the time taken to put together
 3     new strategies, because the evolution of the technology
 4     is just so fast.
 5  7669                 COMMISSIONER McKENDRY:  I would like
 6     to take advantage of your visit today just to talk with
 7     you for a while about how you see the future unfolding
 8     from the technology and content perspective.
 9  7670                 I thought it might be helpful to look
10     at Appendix A to the Business Plan that you attached to
11     your oral comments where you set out several emerging
12     technology markets and key trends.
13  7671                 I just wondered, thinking about
14     those -- or others that aren't listed there, because I
15     notice it was written about a year ago, so I suspect
16     there are some changes, but I just wonder if you could
17     set out for us how you see the technology content, new
18     media, digital media world unfolding from where you sit
19     today.
20  7672                 MR. KING:  It is always easier to
21     predict in hindsight, but when we look back I think
22     there are two issues here.
23  7673                 We know a lot about the linear
24     extrapolation.  We can make some judgments about how
25     the speed of things will change.  We know about


 1     processing power and bandwidth, et cetera.  We can
 2     predict from the linear extrapolation a great deal
 3     about issues around speed.
 4  7674                 What we can't predict are the non-
 5     linear.  The emergence of the internet was something
 6     that we sort of predicted four or five years ago and
 7     became involved in fact in the precursors of that,
 8     Teledon some 18 or 19 years ago.  We were involved with
 9     interactive design almost 20 years ago.
10  7675                 Fundamentally, the underlying
11     principles are the things that will always carry us
12     into the future.  It is not the specifics of the
13     technology, the amount of bandwidth or the particular
14     nature of new technologies, it is the ability
15     underlying all of that to be able to communicate well
16     irrespective of the medium.
17  7676                 I think the reason that Sheridan has
18     been successful in media, in animation and in some of
19     the other technologies, is because we have not lost
20     sight of the fact that content for the most part is the
21     most important, and we will continue to believe that, I
22     believe.  We will adjust to changes in technology. 
23     But, fundamentally, if we can't communicate ideas to
24     people effectively then we will not be in business.
25  7677                 So I think the greatest challenges in


 1     the future will be in the analysis of complex
 2     information, and the ability to be able to take complex
 3     information and bring it into visual and multi-media
 4     form in ways which reflect what needs to be understood. 
 5     For example, new ways to develop business information
 6     so that people can make real-time interactive decisions
 7     about markets, for example.  It is the ability to be
 8     able to do that translation of information into
 9     effective knowledge that is more critical than the
10     individual technology.
11  7678                 So we will adjust to the specifics of
12     the technology, but underlying that is a strong 30-year
13     commitment at Sheridan to the development of effective
14     content.  It is just that that is becoming a lot more
15     complicated because of the range of new technology and
16     the range of new media extends the ways in which that
17     can be distributed.
18  7679                 Some of the challenges I guess would
19     be things like online collaboration for example.  What
20     are the dynamics of online collaboration?  How do we
21     work with other parties and other countries in real-
22     time.  Those kinds of things will be new challenges
23     that we know very little about right now.
24  7680                 And they are certainly a challenge
25     for television production and new media production, how


 1     we collaborate in virtual teams in a worldwide
 2     environment and stay competitive.  It is the
 3     methodology and it is the process more than it is the
 4     technology and the bandwidth.
 5  7681                 MR. TUCKER:  One small add on to that
 6     too, Robin, I guess is the democratization of the whole
 7     process too that will be a fundamental shift.
 8  7682                 Certainly increasingly individuals
 9     will be able to, in a sense, become their own
10     broadcasters and content creators, and that will
11     certainly have an impact on the future of all media.
12  7683                 MR. KING:  A good example would be,
13     for example, in 1985 there were 12 large animation
14     companies in North America.  Eleven of them disappeared
15     within three years.  The whole industry is moving
16     towards boutique operations.  Democratization of the
17     technology means that it is the individual and small
18     group environment that can be the most effective
19     producer.  They bring and sell their own creativity,
20     their own design talent, their own content expertise to
21     the process.
22  7684                 Their value in the chain becomes
23     really significant, so that we are seeing a
24     disappearance of the medium sized production industries
25     compared to the very large and the very small.


 1  7685                 But the very fact that you can by the
 2     technology now at very low prices means that the kinds
 3     of things that David is talking about, the non-linear
 4     video editing, for example, can be done by somebody in
 5     their basement.  It is the talent and the creativity
 6     underlying the production which is the value in the
 7     chain which will make the difference globally in the
 8     long run.  It will not be the bandwidth.  It will not
 9     be the hardware.  It will be the talent of the
10     producer.
11  7686                 MR. LEVY:  Could I give you sort of a
12     glimpse of a potential future, to give you some idea of
13     a practical answer to your question.
14  7687                 We are engaged in a project with the
15     Hospital for Sick Children at the moment, and we are
16     thinking of the following project:  When a child, let's
17     say breaks their arm -- I will use this as an
18     example -- and has to go for physiotherapy, one of the
19     difficulties is what happens between physiotherapy
20     sessions.  How does this child exercise to ensure that
21     the type of exercise is in fact improving the
22     condition?
23  7688                 Well, right now we have technology
24     that could help the child with the physiotherapist move
25     their arm and capture the data points of that movement


 1     to make sure it is right, so that a movement, say of
 2     this order, which is the right movement, is captured in
 3     data.  So just imagine that you now have the Hospital
 4     for Sick Children webTV page, and the child goes home
 5     and does exercises, but the data points that were being
 6     captured with the physiotherapist are now known by the
 7     technology, and as the child is doing their
 8     physiotherapy it is making sure in a matching way from
 9     the movement of the child to those data points that
10     they are right, that they are doing the right exercise.
11  7689                 Furthermore, the child wants to have
12     fun and be encouraged to do it, so we animate the child
13     as a cartoon figure while they are doing those
14     exercises.
15  7690                 But let's just take it a bit further. 
16     Those exercises are progressive, so that as the child
17     masters one the exercises become more difficult but
18     more helpful, says the doctor and the physiotherapist.
19  7691                 But let's go a step further, that as
20     the child is doing it, if the child is getting into
21     difficulty an e-mail is sent automatically to the
22     physiotherapist.
23  7692                 Now let's take it one bit further,
24     that the child happens to be in Brazil or some other
25     place and interacting with the Hospital for Sick


 1     Children.  All that technology is presently available. 
 2     It is pulling it together.
 3  7693                 I think this is part of the digital
 4     media world where interactivity, and new forms of
 5     interactivity, which is far more than a mouse, are
 6     going to be the differentiating factor.  And you can
 7     now just say, well, imagine you have a blood disorder,
 8     and rather than looking at colours of experiments and
 9     tubes, you send the data digitally over the internet
10     and it is viewed and evaluated and information comes
11     back to you to help you as to improve your conditions,
12     your diet.
13  7694                 These are all parts of a new media
14     world that we are entering and designing and planning
15     and innovating for that, I think are all parts of what
16     Canadians can do extremely well, but these are all
17     e-commerce based as well.
18                                                        0935
19  7695                 This is where the new economies are
20     going to emerge, from ideas like this and entrepreneurs
21     seeing the value of these ideas.  I think this is the
22     type of view of the future that I see that I would put
23     into the new media age.
24  7696                 MR. KING:  The mix of these two
25     technologies -- it's not just entertainment, you know. 


 1     It's the fact that there really is no border between
 2     hard data and the way in which that data can be
 3     interfaced with new media.
 4  7697                 I think that's a prime example of the
 5     fact that as the child moves, they are getting
 6     encouragement and entertainment from a character that
 7     is helping them to learn.  It is an integration of
 8     using an attractive entertainment technology with
 9     really concrete data.
10  7698                 There are all of these new
11     interdisciplinary opportunities of which that is an
12     example which open up new areas of commerce.  We need
13     to be able to do that research, promote that research
14     and find those interdisciplinary opportunities.
15  7699                 COMMISSIONER McKENDRY:  The
16     Commission has had a longstanding concern about
17     Canadian content in conventional broadcasting media in
18     achieving certain cultural objectives with respect to
19     broadcasting in Canada.
20  7700                 In light of what you said about
21     pulling things together, the intellectual exercise
22     involved in this, the importance of content, not just
23     focusing on technology, do you have any thoughts about
24     the new emerging digital world and its relationship to
25     our Canadian content and our cultural concerns, how


 1     they will fit together?
 2  7701                 MR. TUCKER:  I think since we are
 3     entering a brave new world, we have to think in new
 4     ways.  Our feeling is that Canadian content can be best
 5     encouraged, enhanced, et cetera, through incentive
 6     approaches.
 7  7702                 We feel that if you have an
 8     environment that encourages production, that encourages
 9     and sustains the creative talent here, that you will
10     grow a very strong industry.
11  7703                 The traditional role of the broadcast
12     regulations have been enormously helpful in developing
13     and nurturing that industry, but the environment has
14     changed now so substantially that trying to regulate it
15     in a traditional way may be very difficult.
16  7704                 There may be opportunity for
17     regulation, for example, in extreme instances of
18     monopoly practice if that emerges, but at this stage it
19     is very hard to predict exactly where we are headed, in
20     essence fostering Canadian through regulation may be
21     premature.  There may be opportunity for it down the
22     road, but right now we see it as a very difficult thing
23     to try to regulate in the traditional way.
24  7705                 As I said, really the emphasis and
25     the message we are trying to leave today I guess really


 1     is that content is at the core of success and we have
 2     to find ways to encourage talent to stay here in this
 3     country.  With democratization of resources, it also
 4     means that people can work out of their basement.  They
 5     don't necessarily require in all cases multimillion
 6     dollar budgets to produce quite world class -- I
 7     hesitate to use that term -- world class product.
 8  7706                 We would encourage any incentives
 9     that would support that kind of activity at the content
10     intellectual property level.
11  7707                 COMMISSIONER McKENDRY:  I am thinking
12     about new media and the new technologies, do you
13     anticipate that there will be a shift throughout the
14     type of content that we now find in traditional
15     broadcasting media to new delivery systems such as the
16     Internet?
17  7708                 MR. TUCKER:  In a word, yes.  We
18     would see things such as the webTV scenario, for
19     example.  Certainly a lot of new delivery systems
20     advancing technology will provide, you know, immersive
21     and other forms of entertainment that haven't really
22     developed fully to this point.
23  7709                 There will be all kinds of -- beyond
24     high definition there will be 3D, I'm sure, and a lot
25     of other extensions.  It's both a revolutionary and an


 1     evolutionary process that happens in conjunction.  It
 2     will take time for all of those elements to unfold.
 3  7710                 At that time I think we will be
 4     better positioned to know what we can or can't regulate
 5     successfully and where we need to foster greater
 6     support of Canadian content or not.
 7  7711                 MR. KING:  One example would be
 8     something like the intelligent refrigerator, you know,
 9     with a built-in television screen connected to your
10     local supplier or range of suppliers of foods, et
11     cetera.
12  7712                 Not only would it deliver advertising
13     to you, it would also allow you to order the kinds of
14     things that you want.  The question is how far does
15     that distance ordering to?
16  7713                 When you buy a refrigerator
17     manufactured in the U.S., does it come with an
18     interface to resources -- sorry -- American resources. 
19     Say you buy it in the U.S., it comes with a data system
20     that says you are going to buy American product.
21  7714                 Certainly those possibilities because
22     of the interconnection through the Internet become real
23     commercial opportunities.  We would certainly want to
24     make sure that Canadian advertisers always have the
25     opportunity to advertise to Canadians through whatever


 1     means were necessary.
 2  7715                 Imbedded technologies in appliances
 3     will become a major source of connection to the
 4     Internet for a variety of opportunities.  That's
 5     another issue that we face, although it's not a
 6     directly Canadian content issue.  We want to make sure
 7     that the encouragement is there to ensure that
 8     Canadians always have a presence on your refrigerator.
 9  7716                 COMMISSIONER McKENDRY:  The thing
10     about our presence on television if webTV emerges, is
11     there a risk that television sets or the terminals that
12     we think of today as television sets will come with
13     imbedded technology from, say, the United States?
14  7717                 MR. KING:  It's certainly a
15     possibility.  There are others as well. For example, if
16     you go to Tokyo, many cars have satellite positioning
17     systems so that when you drive down the highway, you
18     know exactly where you are.  There is a dynamic map of
19     your location with information about not only where you
20     are but where the traffic jams are.
21  7718                 That same technology, however, can
22     easily be connected to television and television
23     commercials.  It's kind of an ubiquitous entry of
24     advertising into all kinds of parts of our environment. 
25     It's a really important issue.  That can come from


 1     anywhere that can deliver by satellite.
 2  7719                 COMMISSIONER McKENDRY:  Up until now
 3     in the hearing we have heard from several parties that
 4     we need to be thinking a bit about ensuring that
 5     Canadians have access to the major portals and so on
 6     that exist on the Internet.
 7  7720                 You are presenting us with another
 8     potential situation that we need to contemplate, I
 9     guess the downloading -- we should be worried about the
10     technology in one's homes where data may be imbedded
11     that requires the user to, say, go to the United States
12     for information and entertainment.
13  7721                 How would Canadians deal with this
14     potential situation?  How would one ensure that the
15     technology was neutral culturally or perhaps even had a
16     Canadian data in it?
17  7722                 MR. LEVY:  Could I not answer that
18     question directly but reflect upon the following that
19     just occurred to me.
20  7723                 There might be a bias in that new
21     media or those things that come on television screens
22     and computer screens.  I think what you are hearing is
23     that we see those as just an example of where new media
24     is going to be playing.
25  7724                 If we can use the refrigerator as an


 1     example only, our view of new media is far broader than
 2     the tradition.  Maybe your question that you asked
 3     earlier about where is this going, I think what we are
 4     saying is it's going everywhere, and try to remove
 5     one's self from a traditional view of media, new media
 6     at the present, and then you will have an idea of our
 7     perspective on it.
 8  7725                 It also now ties into why we believe
 9     the research part is necessary because in order for
10     Canadians to be able to move into the appliance new
11     media, it requires the research and development and it
12     will be content driven because the technology is there. 
13     It will be how you use the technology.
14  7726                 I didn't want to ignore your
15     question.  I will pass on the technical part to my
16     colleague.
17  7727                 MR. KING:  I'm not sure I can answer
18     the technical questions, but I think all of us hold a
19     sentimental belief that our competitiveness will always
20     come back to our ability to produce attractive content. 
21     People will buy what they want to see, what they want
22     to experience.
23  7728                 We have to make sure that we have the
24     best design community, the best production community,
25     to answer whatever type of challenge comes forward. 


 1     That really is just a fundamental way of reinforcing
 2     everything we have really said today which is we better
 3     have the content side and the research and development
 4     side to thoroughly inculturate it in what we do to
 5     satay competitive, irrespective of the means of
 6     distribution.
 7  7729                 MR. TUCKER:  I think we also have the
 8     opportunity of tremendous market potential we may not
 9     even be aware of yet.
10  7730                 When you think back say to 1950,
11     studios were terrified that television would -- they
12     viewed it as competition.  As we have seen now with
13     hindsight through home video and television, suddenly
14     there were all kinds of ancillary markets.
15  7731                 I think the same evolutionary process
16     will happen for traditional broadcasting and so on
17     through webTV and other outlets that are perhaps not
18     even considered yet.
19  7732                 COMMISSIONER McKENDRY:  Mr. Levy's
20     comments reminded me of your definition of new media in
21     your written comments.  I will quote:
22                            "New media describes any digital
23                            media production that is
24                            interactive and digitally
25                            distributed."


 1  7733                 The first reaction when I read that
 2     is you have committed kind of a bureaucratic sin here
 3     because you have used one word where six or seven would
 4     probably do.
 5  7734                 Any digital media production in that
 6     definition is a very broad matter, following on the
 7     point you made about the refrigerator.  I think that's
 8     important to emphasize to us.
 9  7735                 Just in terms of the definition in
10     new media and the problems of defining it and so on.,
11     we had a submission from Mr. Pilon of Cyberflex
12     Interactive Media.  I just wanted to get your reaction
13     to his comment about the problems inherent in defining
14     new media.
15  7736                 I am going to quote from paragraph
16     3.6 of his submission.  He says:
17                            "In summary, it is not
18                            beneficial or appropriate to
19                            forge together distinct
20                            communications technologies and
21                            their industries through the
22                            creation of a blanket
23                            definition.  Instead, each
24                            technology and technique should
25                            be studied and assessed


 1                            independently."
 2  7737                 We have had in the course of the
 3     hearing a fair bit of discussion about the definition
 4     of new media, what it is and what it isn't.
 5  7738                 I guess my question to you is do we
 6     really need to definite it?  Is Mr. Pilon right that we
 7     should focus on the technologies and assess each one
 8     independently?  What's your reaction to that
 9     perspective?
10  7739                 MR. KING:  I think you have to think
11     of new media as organic, you know.  It's an evolving
12     system with a flexible boundary set.  It will embrace
13     new technologies as they come along and other
14     technologies will fall by the wayside.
15  7740                 What holds any kind of system
16     together?  Well, it's the form of communication that
17     ties them all together.
18  7741                 In the same analogy, the human body
19     loses cells every day, gains cells every day, gains
20     nutrition, et cetera.  I think in a sense new media is
21     an evolving and rather organic framework.  I don't
22     think it helps to talk about the individual parts when
23     dealing with the whole is the most important thing. 
24     It's the integrity of that whole environment and
25     understanding how it changes, how its dynamics change


 1     over time.
 2  7742                 It's that inter-relationship between
 3     the technologies and the content.  I don't think you --
 4     it's like the scientific paradigm.  You can take all
 5     the individual parts and you can deconstruct them to
 6     the point where you know a lot about each individual
 7     one, but it doesn't help you to understand the whole.
 8  7743                 Somehow we need that broad
 9     perspective that understands the integrity of the whole
10     and its dynamic change over time.
11  7744                 COMMISSIONER McKENDRY:  So at a
12     minimum focusing on a particular technology, we would
13     be ignoring the important content element --
14  7745                 MR. KING:  Absolutely.
15  7746                 COMMISSIONER McKENDRY:  -- which is
16     key to this organic view of digital media that you
17     have.
18  7747                 MR. KING:  Yes.
19  7748                 COMMISSIONER McKENDRY:  Let me just
20     clarify a couple of things in your written submission
21     to finish off.  You say in paragraph 18, and I will
22     quote:
23                            "The environment has taken the
24                            next evolutionary step where
25                            neither limits nor control can


 1                            be defined, much less enforced."
 2  7749                 I take it that you are referring
 3     there to the traditional regulatory approach.  I
 4     assume, and I will put this forward to you for your
 5     comments, that criminal law as we know it would
 6     continue to apply, for example, laws on obscenity and
 7     so on.
 8  7750                 I am assuming that you believe they
 9     could continue to be enforced.  If I'm wrong, please
10     comment on that.
11  7751                 MR. TUCKER:  Yes.  We would support
12     that with the proviso that again through the technology
13     it's possible to do a certain degree now of
14     self-regulation.  I mean V-Chip is one example.  That
15     will increasingly -- I think in the future we will see
16     more and more of that kind of activity where parents or
17     whomever can select or deselect programming or whatever
18     information is coming into their home.
19  7752                 Part of it again will be democratized
20     but there would be a broader role.  I had also
21     mentioned earlier about some monopoly practices too
22     that might be considered for regulation as companies
23     develop and merge and so forth.  There may be some need
24     there.
25  7753                 I heard an interesting example


 1     recently of America Online had accepted a large sum
 2     from a particular private company to have exclusive
 3     territory on their service.  That might be something
 4     for future consideration as well.
 5  7754                 COMMISSIONER McKENDRY:  What would be
 6     the problem with America Online striking that
 7     arrangement with a particular supplier?  I assume an
 8     America Online subscriber could choose another
 9     subscriber outside the AOL gated community if they
10     wanted to.
11  7755                 MR. TUCKER:  This is what I'm saying. 
12     A lot of the -- any attempts at regulation at this
13     stage may be premature because we have to see how the
14     industry unfolds first.  If there were a point where
15     these companies reach a certain critical mass, that may
16     be more problematic.
17  7756                 COMMISSIONER McKENDRY:  I guess that
18     leaves me your comment about the AOL arrangement with a
19     particular supplier.  In the terrestrial world those
20     kinds of arrangements would be typical in grocery
21     stores or anywhere in the retail arena.
22  7757                 Should we attempt, we being the
23     government I suppose or society collectively, should we
24     attempt to enforce different kinds of relationships
25     between suppliers and retailers in cyberspace than we


 1     do in the terrestrial world?
 2  7758                 MR. TUCKER:  I don't really feel the
 3     principle of a change fundamentally there.  We are
 4     talking about technological evolution, but in terms of
 5     ongoing business principles, we see many of the same
 6     practices applying to new media as we have seen in
 7     traditional media and in all areas of business
 8     activity.  There may be opportunity.  I'm not saying
 9     there necessarily is, but it's something to examine
10     down the road.
11  7759                 COMMISSIONER McKENDRY:  You mentioned
12     the risk of monopoly practices or monopoly
13     organizations emerging.  Where would you see we are
14     most vulnerable in cyberspace to that happening?  What
15     should we be on watch of in particular?
16  7760                 MR. TUCKER:  Well, the example I gave
17     is the one that sort of jumped out at me.  It hadn't
18     actually occurred to me up until reading that.  It
19     seemed that there might be some areas where, you know,
20     a particular provider gobbles up a very large range of
21     products and services and perhaps limits competition,
22     limits access.
23  7761                 MR. LEVY:  I could raise a question. 
24     I'm not even sure I have an answer to it.  It is one
25     that I think is worth considering.


 1  7762                 Imagine a very large provider or
 2     portal and that individual or that company has a
 3     variety of arrangements with a variety of other
 4     companies.  It provides its users search engines, but
 5     when it searches, it doesn't search everything.  It
 6     searches particularly for those arrangements that it
 7     has with other companies.
 8  7763                 Clearly, a sophisticated user can
 9     leave that portal and go to another one and find a
10     broaderone, but a less sophisticated user is going to
11     be limited to the choices of that search engine that is
12     funded by those companies.
13  7764                 That's a question that is at least
14     worth considering.
15  7765                 COMMISSIONER McKENDRY:  I suppose the
16     person using the search engine wouldn't necessarily
17     know that those arrangements have been struck.
18  7766                 MR. LEVY:  Yes.  That's correct.
19  7767                 COMMISSIONER McKENDRY:  Thank you
20     very much for answering my questions.
21  7768                 I don't know whether there is
22     anything else you would like to add based on the
23     discussion we have had.
24  7769                 Thank you very much.  We very much
25     appreciate you taking the time to come and meet with us


 1     today.
 2  7770                 MR. LEVY:  Thank you and thank you
 3     for inviting us.
 4  7771                 THE CHAIRPERSON:  Thank you,
 5     Commissioner McKendry.
 6  7772                 I just have one question.  You said
 7     you didn't want to get into an engineering discussion,
 8     but I presume in order to be able to do sort of the
 9     interesting and innovative things that you foresee in
10     the future, the requirement for higher speed access to
11     the Internet would be essential if not critical.
12  7773                 MR. KING:  Yes, it would.
13  7774                 THE CHAIRPERSON:  As you may have
14     heard, we had some discussions last week about the ISPs
15     getting high.  Do you have any comment on that whole
16     question about how we might create an environment that
17     might speed up the development of higher speed access
18     from a regulatory point of view?
19  7775                 I appreciate that is not the
20     particular focus of your presentation here today or
21     your work in general.  I was wondering whether you
22     might have a view on that.
23  7776                 MR. LEVY:  If I could try to be clear
24     on the question for a moment.  This is higher speed
25     access to public schools, secondary schools, to the


 1     home.  If I have one word of advice as I am on
 2     different sets of committees that are asking exactly
 3     this question, it is somehow coordinated.
 4  7777                 It needs coordination at the
 5     provincial level.  It certainly needs coordination at
 6     the federal level.  I know the complexity of this task,
 7     but the number of different groups that are asking
 8     exactly this question, the number of groups that are
 9     spending money or trying to advocate for money to pull
10     wire or to pull fibre for their particular needs is
11     quite overwhelming.
12  7778                 There isn't evidence of the Canadian
13     strategic plan, if I can call it that.  That said, I
14     would hate to be the one who had to get involved in
15     developing it.  It needs coordination.  I see so much
16     duplication possible and not strategic thinking of
17     where and what geographic areas that potential
18     investment would make best sense for the overall best
19     economic advantage to those communities.
20  7779                 I can't think of anything other than
21     a national coordination strategy.
22  7780                 THE CHAIRPERSON:  I think counsel has
23     a question or two.
24  7781                 MS PINSKY:  Thank you, Mr. Chairman.
25  7782                 I would just like to follow up on the


 1     discussion you just had with Commissioner McKendry with
 2     respect to the issue of the potential ability of
 3     portals to limit access to sites as a potential
 4     example.
 5  7783                 A number of parties in this
 6     proceeding have suggested that the Commission actually
 7     requires portals or ISPs who create content or other
 8     types of content aggregators to give access to all
 9     Canadian sites, to all Canadian content and to ensure
10     that Canadian sites are predominantly displayed on, for
11     example, the ISPs home page.
12  7784                 I wonder if you could comment on that
13     proposal and specifically comment on your view of its
14     feasibility, the need for that type of measure and the
15     desirability about implementing that.
16  7785                 MR. TUCKER:  It sounds like an
17     encouraging idea.  Whether it can be successfully
18     launched I guess is dependent on a number of factors,
19     including technology.  It would certainly have merit. 
20     We would certainly support investigating it, shall we
21     say.
22  7786                 MR. LEVY:  As a general statement as
23     opposed to that, I think when you consider the
24     potential of local calls anywhere in the world or the
25     1-800 number, requirements that you will put on


 1     Canadian providers that encourage them to get out of
 2     the requirements and, therefore, move a hundred miles
 3     south are going to ultimately be to the disadvantage of
 4     Canadians.
 5  7787                 I think one has to be very careful of
 6     putting bars up for Canadians to jump over that are not
 7     competitive.  It isn't in any disagreement to what you
 8     have said, but I would think that the other side of the
 9     equation would have to be that they would want to do it
10     for economic reasons as opposed they have to do it for
11     regulatory reasons.  Otherwise it's just one more
12     reason for them to get a 1-800 number south of the
13     border.
14  7788                 MS PINSKY:  Thank you very much.
15  7789                 That's my only question.
16  7790                 THE CHAIRPERSON:  Thank you, counsel.
17  7791                 Thank you very much, gentlemen.  I
18     think for all of those that were worried that we might
19     spend our time trying to regulate the Internet, we can
20     probably spend our time over the next while trying to
21     figure out how an interactive refrigerator fits within
22     the definition of broadcasting.
23  7792                 Thanks again.
24  7793                 MR. LEVY:  Thank you.
25  7794                 THE CHAIRPERSON:  Madam Secretary.


 1  7795                 MS BéNARD:  Thank you, Mr. Chairman.
 2  7796                 The next presentation will be by the
 3     Canadian Screen Training Centre.
 5  7797                 MR. CRAWLEY:  Thank you.
 6  7798                 My name is Alexander Crawley.  I am
 7     the Executive Director of the Canadian Screen Training
 8     Centre.  We are a not-for-profit training organization
 9     that offers professional development and training
10     opportunities for self-employed people basically on a
11     short term basis, always using professionals to teach
12     our classes.
13  7799                 I would say we are not in the same
14     league as the previous intervenor in terms of the
15     volume of training we have been able to do,
16     specifically in the new media area.  However, it is
17     something that interests us very greatly.
18  7800                 We have begun to train in the new
19     media.  We are an organization that has existed for 18
20     years training for film and television.  Obviously, a
21     lot of the people who are involved in the film and
22     television industry are also looking at using the new
23     media, not only for the production of their traditional
24     forms but also as a means itself to communicating.
25  7801                 We don't have too much to add to what


 1     we said in our written submission to you, but we wanted
 2     to make sure we were here in order to reiterate the
 3     point that the Commission has a responsibility.
 4  7802                 The fundamental issue here in terms
 5     of the new media is the cultural objectives of the
 6     Broadcasting Act and where the new media is used to
 7     deliver copyrighted material, basically material that
 8     has been created by the individual expression of
 9     creative artists.
10  7803                 You must do whatever you can to
11     ensure that those materials are made available to
12     Canadians first of all and, secondly, are not stolen
13     from their creators.  That seems to be the main issue.
14  7804                 The salient point which I think the
15     Chair brought up just towards the end of the Sheridan
16     intervention is a sense of creating some kind of
17     incentive for Internet service providers to make their
18     contribution as they must.
19                                                        1005
20  7805                 I think you do have to hold on to
21     that idea.  I'm not sure -- it is a very difficult one
22     obviously.  No one wants to see everyone running across
23     the border.
24  7806                 However, I think sometimes we
25     underestimate the desire of Canadian entrepreneurs to


 1     be in their own country and offer services to their own
 2     citizens.  I think sometimes the global aspect of this
 3     thing is over-emphasized.
 4  7807                 As my colleague from ACTRA pointed
 5     out to me as we were chatting -- and I think this is
 6     true and you will know better from your sources -- that
 7     the internet and internet mass communications remain at
 8     this point really more of a North American phenomenon
 9     than truly a global phenomenon.
10  7808                 I agree with what Mr. King said about
11     the tremendous opportunity for Canada as a very well-
12     developed, modern, multi-cultural nation to make great
13     strides in the future in terms of that cross-cultural
14     communications that Mr. King was talking about.
15  7809                 However, I think the big challenge
16     right now is still, as it has been traditionally with
17     our broadcast media, to make sure that we are not
18     totally swamped by our neighbours and friends to the
19     south.
20  7810                 So I don't want to take a lot of
21     time, because you have quite an impressive array here
22     today and I want to hear what they have to say, but I
23     really just wanted to reiterate the point on behalf of
24     the Canadian Screen Training Centre that the Commission
25     does strongly consider a form of regulation for the


 1     internet for the new media and to create incentives for
 2     that critical mass of research, develop and training
 3     that is going to be necessary if we are going to
 4     continue to stay ahead of the game in terms of new
 5     media development.
 6  7811                 That is really all I have to say.
 7  7812                 THE CHAIRPERSON:  Thank you,
 8     Mr. Crawley.
 9  7813                 I will turn questioning over to
10     Commissioner Grauer.
11  7814                 COMMISSIONER GRAUER:  Thank you.
12  7815                 I will try not to keep you too long,
13     Mr. Crawley.
14  7816                 I am sure if you have been following
15     the hearings you would realize that we have not had a
16     lot of intervenors who are supporting intervention by
17     the Commission with respect to regulating the internet.
18  7817                 So I guess what I would like to do
19     first is to see if you can -- clearly you are of the
20     view that this falls under the jurisdiction of the
21     Broadcasting Act.
22  7818                 MR. CRAWLEY:  I think inevitably the
23     challenge here is the materials that are developed, the
24     works that are created that are currently made
25     available to us through traditional broadcast media are


 1     going to be made available to us as the pipeline opens,
 2     as the system develops, by what we would now call the
 3     internet I suppose, by those sorts of methods, through
 4     computers as opposed to television.  That is going to
 5     happen.  It is happening to a certain extent and it is
 6     going to happen increasingly when the system develops.
 7  7819                 So inasmuch as internet service
 8     providers are making those works available, they are
 9     broadcasting, if they are making them available on a
10     commercial basis.
11  7820                 Obviously it is not your jurisdiction
12     particularly as long as -- if e-commerce is working,
13     and as long as the rights are being paid, and so on.
14  7821                 There is the fact that with our
15     recent and very welcome reform of the copyright laws
16     there was an admission on the part of the ministries
17     involved that they weren't really dealing with the
18     digital world yet.  So that is something I think the
19     Commission can usefully do is to remind again the
20     government that they must get on with their so-called
21     Phase III copyright.  It only takes 10 or 12 years
22     apparently to reform copyright.  But they had sort of
23     promised that they would get on with that.
24  7822                 I think we all need that for a level
25     of comfort in order to go ahead and create the works


 1     that will be delivered and know that we won't lose our
 2     rights, those of us who are involved in the business of
 3     producing content.
 4  7823                 But, I mean, it is a terribly
 5     difficult issue, the idea of whether you can regulate
 6     the thing or not.  I just think it is very important
 7     that you hear the voice that says -- that counters the
 8     sort of technological determinism of people saying "It
 9     can't be done.  Forget it.  You know, you cannot create
10     an industry based on regulatory framework because these
11     technologies defy regulation."  I don't believe that is
12     true.
13  7824                 I think the combination of copyright,
14     the appropriate copyright and intellectual property
15     regime, and certainly e-commerce is going to be
16     regulated in the way that any kind of retail
17     transaction can and must be regulated, but there may be
18     an area there where -- well, it looks like there will
19     be an area where nobody really has jurisdiction except
20     potentially the Commission.
21  7825                 In the sense of creating an incentive
22     for the internet service providers to make investments
23     in research development and content to present the
24     content, to make sure that there is access to Canadian
25     content on their home pages, et cetera.


 1  7826                 I am not sure what models you are
 2     playing with, but the Canadian Screen Training Centre
 3     would just like to urge you not to forebear completely. 
 4     I know that at the moment they are not licensed and
 5     they are not under a licensing regime.  Perhaps they
 6     could come under an exemption regime or something.
 7  7827                 But I think that it is critical that
 8     these people who are, you know, entrepreneurs and want
 9     to make a good living, provide a service, also make an
10     investment in the content side of things one way or
11     another.  I don't know how you are going to do that,
12     but I think they must make that investment somehow,
13     whether it is through an incentive of some kind or a
14     licensing regime.  We wouldn't be adverse to seeing
15     some kind of licensing regime.
16  7828                 I don't think it will drive everyone
17     south of the border.  I think people want to live in
18     this country, make a living in this country and work
19     creatively in this country.  I think it is overstated
20     that -- I know the national newspapers that we have
21     both seem to pick up on that as the salient point, but
22     I'm not sure that -- I think it is overstated.
23  7829                 COMMISSIONER GRAUER:  I don't know if
24     you were here last week, but I think one of the things
25     that we heard repeatedly is how much demand -- the


 1     unique nature of the internet in particular in which
 2     the consumers have an enormous amount of choice and
 3     control over the information they receive.  What they
 4     are seeing, is it the demand on the part of Canadian
 5     consumers is for Canadian information, and that in fact
 6     that is driving the ISPs to provide their Canadian
 7     consumers with Canadian choices?
 8  7830                 We heard this really quite
 9     repeatedly, which was a very interesting aspect of all
10     of all of this, the way this is evolving, while it is
11     global medium it is very much people are looking for a
12     sense of community on the internet and that is very
13     much driving them to Canadian choices.
14  7831                 I don't know if you had heard that. 
15     And I guess at the end of the day what we all share is
16     a goal that in fact Canadians will have Canadian
17     choices and that Canadian sites and choices will be
18     reasonably easily available to Canadians.  Is that fair
19     to say?  And then it is a question of how we get there?
20  7832                 MR. CRAWLEY:  I think that is very
21     encouraging.  I hadn't heard that actually.  I wasn't
22     able to be here last week.  I hope that is borne out by
23     the future -- in the future.
24  7833                 I forget who it was, but someone said
25     "All culture is local", you know, really.  I think that


 1     is true.  I think that the myth of the global market is
 2     something that we have to be wary of in this particular
 3     area.
 4  7834                 People -- sure, I want to be able to
 5     go to an Australian site to learn about something where
 6     that expertise exists, or Korean or whatever, but, as
 7     Mr. King's remarks were suggesting, you still need to
 8     be able to get that information in a way that you
 9     recognize.
10  7835                 There is no doubt in my mind that
11     there is a Canadian set of values and a framework and a
12     way of looking at things that is quite different, but I
13     am very encouraged by what you said.
14  7836                 But I still believe, though, that the
15     Commission should keep the stick.
16  7837                 COMMISSIONER GRAUER:  How do you
17     think we might do that?
18  7838                 MR. CRAWLEY:  I don't know.  I really
19     don't.
20  7839                 COMMISSIONER GRAUER:  I guess, as
21     someone said the other day, we will leave the hard work
22     to you.
23  7840                 MR. CRAWLEY:  Well, yes.
24  7841                 I mean, you know, the major -- the
25     BDUs are making their contributions and so on, and they


 1     certainly wouldn't be making them if the Commission
 2     hadn't existed.  I think ISPs have to -- you have to
 3     look at a way to get those contributions.  It may be,
 4     you know, some kind of voluntary thing, I don't know.
 5  7842                 It is very complicated, because we
 6     don't know who is going to thrive in the world of
 7     internet service.  Is it going to be the big players
 8     who also have interests in the other industries, the
 9     traditional media; or is it going to be the
10     independents who really specialize only in this?  And,
11     you know -- it is very complicated.  I don't envy you
12     that.
13  7843                 I still think that you have to hold
14     open the possibility that you may have to license these
15     people, depending on how the development goes.  But we
16     need a critical mass, a critical investment in content
17     in the interdisciplinary work that Robin was talking
18     about.
19  7844                 Perhaps there is some way in which
20     research and development can be rewarded in this
21     particular field the way, you know, production of
22     content in traditional media has been rewarded.
23  7845                 I really don't know, but I'm sure you
24     will figure it out.
25  7846                 COMMISSIONER GRAUER:  Well, perhaps I


 1     could share with you the Interactive Multimedia Arts
 2     and Technology Association of Ontario -- IMAT, I think
 3     I have the names right -- have recommended to us that
 4     what they require is what they call four pillars of
 5     support.  This is to encourage and stimulate the
 6     development of the Canadian new media business, which
 7     is very much on the content side as well as just these
 8     emerging high tech business.
 9  7847                 Number one is:  Support for research
10     and development for content development.
11  7848                 Second is:  Education and training
12     support.
13  7849                 Third is:  Support for marketing and
14     promotion, which is seen as critical in this area.
15  7850                 The fourth is this major issue, which
16     is:  Access to capital for investment in interactive
17     new media products and companies.
18  7851                 Now, their approach is very much the
19     incentive approach.  None of these are areas in which
20     we as the Commission can take an active role, but I
21     think they feel that we can make recommendations to
22     government in these areas and perhaps resonate with
23     someone there.
24  7852                 Now Torstar, who was also here very
25     much along the same lines, had some very specific


 1     recommendations:  a refundable tax credit for employee
 2     training; allowing research and development in Canadian
 3     content to qualify for scientific research and
 4     experimental development credit; and a tax credit for
 5     capital expenditures.
 6  7853                 What I am really trying to get at
 7     here is, I understand what you are saying, and if I --
 8     I think I understand what you are saying, which is we
 9     need to do what we can to ensure there is a strong
10     Canadian presence and a vibrant Canadian industry here
11     to continue to produce the creators and the
12     infrastructure which will allow the creators to create
13     and have exposure.
14  7854                 So I guess what I'm saying is, there
15     is the incentive route and there is the regulatory
16     route, and I think what we have had as a consensus so
17     far that perhaps the incentive route is what is
18     required at this particular time.  I just --
19  7855                 MR. CRAWLEY:  I think that is
20     probably -- that is probably right.  I just don't want
21     to -- I just don't want to -- you know, I don't want --
22  7856                 COMMISSIONER GRAUER:  You don't want
23     us to abandon the field.
24  7857                 MR. CRAWLEY:  -- anything that says
25     that we will never regulate this industry kind of


 1     thing, you know, it is impossible.  I mean, just I
 2     would like to really see that myth disappear in a way.
 3  7858                 The tax incentives and all those
 4     things, the Torstar recommendations, as you relate them
 5     to me, sound reasonable.  The only thing I have found
 6     bells going off in my head was remembering how often
 7     before these things have been abused, in a sense, maybe
 8     not intentionally, but that the outcomes have been
 9     disappointing.
10  7859                 Maybe this is where -- although I
11     don't like to see a new funding body or a new -- you
12     know, the creation of a new bureaucracy just for the
13     sake of this task, but it may be necessary.  But I
14     really think you need some real expertise.  And we do
15     have some real expertise in this country.  You have
16     had, you know, many of the people here I think, and
17     some of them are coming up and some of them have been
18     here already, that somewhere or other someone -- maybe
19     its the federal government in some way -- create some
20     kind of a body, I guess, that can assess these things.
21  7860                 The difficulty always is that if
22     people have expertise in these areas they usually have
23     a vested interest, so the conflict stuff comes up.  But
24     that can be dealt with I think.
25  7861                 Because I don't think people should


 1     be getting tax breaks to teach their employees how to
 2     keystroke or use a mouse.  I think we are at a stage
 3     where it should be more sophisticated than that.
 4  7862                 In terms specifically of content
 5     development and research, promotion certainly is
 6     something that I think is going to be hugely necessary. 
 7     I was fascinated, yesterday there was a line of
 8     questioning with one of your intervenors of how do you
 9     promote new media materials, and I guess my choice
10     would be you use old media to promote the new media,
11     and I think that is what eventually will work.
12  7863                 But it is probably accurate, I mean
13     that assessment that incentive is the way to go unless
14     it doesn't work.  The trouble is, you know, how long do
15     we wait, and are we buried by content from elsewhere,
16     you know, before we sort of pull out the bigger stick.
17  7864                 But the new media development, I
18     think that there has been some discussion too, and at
19     the risk of sending shock waves through the traditional
20     media providers, there may be a way to reward new media
21     development, research by people who currently have
22     certain responsibilities they have to meet.  In the old
23     media they have those incentives -- or regulatory
24     things that may be able to give them a break or
25     something for an investment, a meaningful investment in


 1     this particular area.
 2  7865                 I mean, some of your licensees are
 3     already doing this, big telcos and so on have put some
 4     money in this area.  I think it could be better focused
 5     in some cases.  Certainly the danger of competition, we
 6     were talking about the danger of monopoly.  Favouritism
 7     has to be looked for every -- there is lots of work for
 8     you to do.
 9  7866                 COMMISSIONER GRAUER:  I was going to
10     say, we have had some recommendations and, in fact, we
11     allow broadcaster investments in new media area to
12     perhaps qualify for the Canadian content expenditures,
13     and also suggestions that new media projects could
14     access the funds.  I wonder if you could give me any
15     comments on that?
16  7867                 MR. CRAWLEY:  Well, everybody wants
17     into those funds I know.  We believe that some of those
18     funds should be available for educational and training
19     staff.
20  7868                 I'm not sure that we don't need to
21     create a new critical mass of resources for this.  You
22     were talking about the access to capital and I know
23     from new media developers this is always the problem. 
24     People say, "Well, how can I" -- you know, there is no
25     collateral.  Maybe the Federal Business Development


 1     Bank has to look at this in a different way, maybe some
 2     of the major banks have to look at it in a different
 3     way.
 4  7869                 In principal, from the Canadian
 5     Screen Training Centre perspective, we have no
 6     objection to opening up the Canadian television fund to
 7     include new media.  There is a fund that has been
 8     created at Telefilm, I know they were here talking
 9     about it yesterday.  They may be a logical dispenser of
10     these resources.
11  7870                 The big challenge, I think, is to
12     create the will to put the resources in place, and I
13     think that working out how to dispense them is doable. 
14     How do you -- short of forcing investment, how do you
15     create that incentive?  I don't know.
16  7871                 COMMISSIONER GRAUER:  One of the
17     other things that came up last week on a number of
18     occasions was the need for us to create and foster a
19     climate of innovation, how important that was going to
20     be with respect to the creation of content that is
21     going to resonate not just with Canadians but I think
22     that we feel that perhaps there is an appetite for
23     outside Canada.
24  7872                 I would be interested to know whether
25     you think that that exists now, and what you think are


 1     things that we might either recommend or do to
 2     encourage that?
 3  7873                 MR. CRAWLEY:  You mean whether the
 4     appetite for innovation exists, or the climate?
 5  7874                 COMMISSIONER GRAUER:  No, a climate. 
 6     A climate of innovation.
 7  7875                 MR. CRAWLEY:  It is certainly there
 8     in the creative community, I think.
 9  7876                 Again I think the previous intervenor
10     was referring to it, the difficulty is in the biases of
11     the bodies that are set up to fund innovative work or
12     research, and so on, the granting bodies and so on. 
13     Because this is still so new and it really is
14     interdisciplinary.
15  7877                 I would say that research and
16     training have to be concurrent in a sense.  I mean,
17     that is where the innovation comes from, when you take
18     people who have mastered a certain set of skills having
19     to do with maybe a traditional medium and introduce
20     them to the new tools without losing -- you know, how
21     do they contribute to the creative process without
22     losing their own language in order to -- I mean, we see
23     them in the television, film and television world, no
24     one -- hardly anyone cuts films any more, it is all
25     non-linear, and that is -- you know, I have talked to


 1     people in that field, editors who say, "Well, you know,
 2     I really don't think I can do as good a job at this.  I
 3     think I was better when I was working with raw film",
 4     for whatever reasons.
 5  7878                 That sort of conflict will be there,
 6     and those sorts of hurdles are there.  The key is
 7     getting people from the different disciplines involved,
 8     the engineers and the creative people.
 9  7879                 I haven't seen much that is really
10     compelling yet from this world, and that is partly
11     because of the delivery system I think.
12  7880                 An example of one academic that I
13     know who I think has done some of the most exciting
14     database work in terms of new media, multimedia,
15     computerized, and this fellow couldn't get -- he
16     couldn't get tenure either as an art historian or a
17     technologist, because neither of those disciplines at
18     the university he was at would fully embrace him.  They
19     said, "No, no, you are not really an engineer, you are
20     an art historian."  The art history people said, "No,
21     no, that is not good academic work, you are just
22     working with these new machines."  I mean, it is that
23     sort of barrier that I think we need to -- it's a new
24     way of thinking.
25  7881                 Maybe what the Sheridan people were


 1     talking about this morning is the way to go, is to try
 2     to create some locus for that interdisciplinary work
 3     that has to happen.  You have to take the most
 4     talented, young innovators who have no idea who daVinci
 5     was, and you have to take the people who understand the
 6     traditional media and say "Oh, I see how this can" --
 7     and you have to take a risk there.  You have to put
 8     those people together and not know what the outcome is
 9     going to be every time.  That takes up, obviously, some
10     resources, some serious resources.
11  7882                 COMMISSIONER GRAUER:  I mean there is
12     no question that one word that has sort of been a
13     constant through this is "partnerships", and one of the
14     things that struck me is whenever you hear talk of new
15     media on the internet partnerships are always there
16     somehow in the discussion, and it is interesting to
17     know whether we are talking about the same kinds of
18     partnerships that have existed in the old media world
19     or whether these are new manifestations of partnering. 
20     I certainly haven't figured it out.  I don't know if
21     you have any thoughts.
22  7883                 MR. CRAWLEY:  Not really, no.  I mean
23     there are some new players I think, especially in this
24     world of course.  It is technologists who are new to
25     some of the -- well, it is the traditional system that


 1     the Commission and its forbearers have really played
 2     the vital role in building.
 3  7884                 I guess the main point, I come back
 4     to my original point, which is that that is still the
 5     fundamental with this, is the cultural objectives and
 6     whether -- you know, we get down to splitting hairs,
 7     whether it called broadcasting or not.  I'm sure that
 8     some of the other intervenors today will address that
 9     as well, because they have very specific ties to the
10     existing regime, and economic ones as well.
11  7885                 There will be new partners, and
12     people will make and lose fortunes.  We know that.  I
13     mean, that is not really a problem.  The problem is
14     whether we will have the critical mass of resources
15     available to this development.
16  7886                 You know, I mean we have heard so
17     much hype about this for decades now about where we are
18     going with all this, and sensible people usually admit
19     they don't know.
20  7887                 But I'm sure that in a decade or so
21     no one will conceive of a work of artistic expression
22     or entertainment in one medium any more.  Well, some
23     will, I mean purists.  But I think if people are
24     involved in the economics of getting their message out
25     or telling their story, they are always going to look


 1     at more than one way of delivering it, and that is what
 2     this thing is all about really.
 3  7888                 People will not even conceive of
 4     something as simply a movie any more, it will be
 5     different kinds of programming, it will have its
 6     interactive side, it will have its lineal side, and so
 7     on and so forth.  So how do we get there?  Investment I
 8     guess.
 9  7889                 COMMISSIONER GRAUER:  I just have one
10     last question.
11  7890                 What are you hearing from your
12     students and your former students that are out there
13     working in this environment?  I mean how are they
14     faring?  What are their experiences?
15  7891                 MR. CRAWLEY:  Particularly in the new
16     media area it is early days for us in this, we have
17     only been doing it for about three years, but we have
18     had people who are respected in this field come and
19     instruct for us, and so on, and we will have more in
20     the future.
21  7892                 People are really excited about this,
22     but I think there is a frustration because the delivery
23     system is really not developed yet in that sense.  It
24     will be a while before -- so a lot of the work that is
25     being done from the people that have been working with


 1     us is basically in-house advertising, you know, CD-ROMs
 2     to promote a particular thing.
 3  7893                 It is not -- people are excited about
 4     it, but they don't know exactly what their careers are
 5     going to be, unless they are already developed, unless
 6     they are developers already.
 7  7894                 We are not particularly -- we are
 8     probably interesting people, our function of the
 9     Canadian Screen Training Centre because we specialize
10     in short-term professional development, it is giving
11     people some basic information so that they know where
12     to go next in that sense.  It is not as profound as the
13     work that is going on at Sheridan or at the Canadian
14     Film Centre, it is not long-term, 18-months or
15     something, you know, where you really come with a set
16     of skills.
17  7895                 But there is certainly a huge
18     interest in this.  But I think people really are still
19     confused by the moving target.  We are waiting for you
20     to clarify everything for us.
21  7896                 COMMISSIONER GRAUER:  I think if
22     there is anything we have heard consistently through
23     this it is that nobody knows quite where it is going.
24  7897                 Anyway, I thank you very much.  I
25     don't know if you have anything to add that I didn't


 1     cover.
 2  7898                 MR. CRAWLEY:  No.  Actually, I am
 3     coming back later on in the week with the Canadian
 4     Conference of the Arts.  If I think of anything I will
 5     put it in then.
 6  7899                 Thank you.
 7  7900                 THE CHAIRPERSON:  Thank you,
 8     Commissioner Grauer.
 9  7901                 Mr. Crawley, just a comment on one
10     point you made, and I may have heard this different
11     than you meant it.
12  7902                 You said at one point "I don't know
13     what models you are playing with".  Again, to try to
14     relieve some of the concerns and fears of people who
15     may think that we have some particular model in mind,
16     we don't have any models we are playing with.  We are
17     very much trying to learn about this.
18  7903                 I think this picks up on the last
19     exchange you just had with Commissioner Grauer of us
20     trying to understand this and where it fits with our
21     legislative mandate, and trying to understand it better
22     in the sense of what positive things one could do to
23     help encourage the growth of this industry.  But we
24     don't have a particular agenda or models in mind that
25     we are playing around with.  We are very much trying to


 1     learn from this exercise as to what this is all about.
 2  7904                 MR. CRAWLEY:  If I could respond, I
 3     would say that you shouldn't ignore the models that you
 4     developed in telephony and broadcasting.  So in that
 5     sense -- I guess that is what I was referring to.
 6  7905                 THE CHAIRPERSON:  Okay.
 7  7906                 MR. CRAWLEY:  I mean, so I shouldn't
 8     have said I don't know, because I mean I certainly
 9     don't them intimately, but I know of their existence. 
10     I think the principles that you have applied in both
11     telephony and broadcasting are going to be very useful
12     for you in dealing with this issue.
13  7907                 THE CHAIRPERSON:  Thanks again.
14  7908                 We will see you later in the
15     proceeding.
16  7909                 All right.  I think this is probably
17     a good point to take our morning break, and will
18     reconvene at 10 to 11:00.
19     --- Short recess at / Courte suspension à 1035
20     --- Upon resuming at / Reprise à 1054
21  7910                 THE CHAIRPERSON:  We will return to
22     our proceeding now.
23  7911                 Madam Secretary, the next party.
24  7912                 MS BéNARD:  Thank you, Mr. Chairman.
25  7913                 The next presentation will be by the


 1     Canadian Independent Record Production Association.
 3  7914                 THE CHAIRPERSON:  Good morning.
 4  7915                 MR. CHATER:  Good morning, Mr.
 5     Chairman.
 6  7916                 My name is Brian Chater, President of
 7     CIRPA, the Canadian Independent Record Production
 8     Association.  With me, as an expert on the subject of
 9     new media, I have brought David Basskin who you will
10     know in another life as President of CMRRA.  You could
11     I guess to a rhetorical side say we are the dynamic duo
12     or terrible twins.  Take your pick.
13  7917                 CIRPA views this hearing as extremely
14     important for the future of both Canadian culture and
15     infrastructure although as we said in our filing, at
16     this time there are probably more questions than
17     answers.
18  7918                 The Commission will have noted our
19     comments in the original filing and this presentation
20     is more of a brief overview of the issues as we see
21     them, combined with some comments on how others have
22     seen them in the filings and appearances.
23  7919                 First, if I might quote form an
24     article on prognostication in Forbes ASAP, the first
25     three rules of prognostication are that:


 1                            "We tend to overestimate change
 2                            in the short term, we tend to
 3                            underestimate change in the long
 4                            term and the more specific a
 5                            prediction, the less likely it
 6                            is to be correct."
 7  7920                 Having set out the parameters as it
 8     were, we will address the issues of access, the
 9     definition of new media, the issue of copyright and
10     rights in general, funding of new media content and
11     what constitutes broadcasting on the net.  All of this
12     in about eight minutes.
13  7921                 CIRPA is of the view that all of
14     these issues are important in the context of this
15     review and should be addressed both individually and as
16     a whole so as to ensure that a useful policy framework
17     will emerge from this process and any ensuing
18     processes.
19  7922                 First, the content issue.  CIRPA
20     agrees with many intervenors that the development is of
21     vital importance.  Given the difficulties in financing
22     faced by the industry, the Commission should give
23     serious consideration to the institution of funds to
24     aid production either from private or public sources or
25     to lobbying government for the institution of tax


 1     credit regimes.
 2  7923                 CIRPA disagrees with several
 3     submissions that have stated that there is plenty of
 4     Canadian content and, by implication, that there will
 5     continue to be in the future.  CIRPA has difficulty
 6     with this point of view unless proper content funding
 7     mechanisms are in place.
 8  7924                 CIRPA's perspective on this issue is
 9     shared by several intervenors, notably CFTPA, DGC, IMAT
10     and DMCG, for example.  IMAT also raises the issue in
11     the context of local ISPs who wish to differentiate
12     themselves by providing different, i.e. local, content
13     from the major providers, either Canadian or foreign
14     owned.  Indeed, IMAT specifically points to the fact
15     that Rogers @home includes mostly American material.
16  7925                 The content issue flows into the
17     access issue as independent content providers face
18     heavy competition from established players in the old
19     media who start with tremendous advantages in the
20     production of new media, namely access to funding and a
21     wide range of content that they already own that can be
22     repackaged into new media applications.
23  7926                 In this regard, CIRPA supports the
24     position of those intervenors such as the CFTPA and its
25     view that groups such as broadcasters already have been


 1     granted a tremendous competitive advantage through
 2     their licences and that they should not be able to
 3     access any new sources of funding for content
 4     providers.
 5  7927                 As the DMCG comments, those with the
 6     most access to money will get the most customers. 
 7     CIRPA agrees and views it as vital in this new
 8     environment that this fact be clearly understood by the
 9     Commission.
10  7928                 To concluded this issue, CIRPA would
11     just reiterate its views of those groups already cited
12     and the view of CITO that the issue of predatory
13     competition is one of considerable concern.
14  7929                 CIRPA also feels that the position of
15     IMAT that it doesn't want regulations and feels that
16     its members will be fully able to compete against
17     broadcasters and other well-funded content producers
18     will prove a trifle unrealistic in the real works, a
19     view that is shared incidentally by the CFTPA.
20  7930                 The issue of rights is, of course, a
21     critical one and one that is close to CIRPA's heart. 
22     We are pleased to see the Commission addressing the
23     issue of rights in a hearing discussing content and
24     distribution.
25  7931                 Not only will payment for use of


 1     property be vital in tomorrow's world, but also CIRPA
 2     feels that the Commission, as far as it is able, should
 3     ensure that rights payments are easily collected by
 4     owners.
 5  7932                 This is of particular concern in view
 6     of what has often occurred in the past between users
 7     and creators.  Indeed, in this regard the Commission
 8     may wish to examine other jurisdictions where licences
 9     specifically address the matter of rights payments.
10  7933                 As far as what constitutes
11     broadcasting on the net, CIRPA is of the view that if
12     an entity is licensed by the Commission, its activities
13     on the net are a direct result of its licence and
14     should be characterized as a broadcast.  However, this
15     should be through a separate licence and not as an
16     add-on to the current one.
17  7934                 Similarly, broadcast-like activities
18     that are on the net but not owned by a broadcaster
19     should also be considered as broadcasting and licensed
20     as such. In other words, if it walks like a duck and
21     quacks like a duck, then it must be a duck.
22  7935                 Finally, what is the definition of
23     new media?  This is an extremely interesting question
24     to which there are many potential answers.
25  7936                 As we stated in our written


 1     submission, CIRPA is of the view that while the
 2     Internet can be called new media, it can also be called
 3     old media, or a combination of both.  Similarly,
 4     digital radio and TV are not, in CIRPA's view, new
 5     media in the real sense.  They are just add-on versions
 6     of current media that are essentially based on a
 7     pre-existing content and structure.
 8  7937                 Hopefully in the short time available
 9     to us we have been able to give you a brief overview of
10     CIRPA's concerns regarding the whole new media issue,
11     but obviously it is a subject we could elucidate upon
12     for hours rather than the short time taken in this
13     presentation.
14  7938                 We thank you for your time.  We look
15     forward to your questions and hope that we can clarify
16     our positions.
17  7939                 Thank you, Mr. Chairman.
18  7940                 THE CHAIRPERSON:  Thank you, Mr.
19     Chater.
20  7941                 I will turn from one Chair to
21     another.  Madam Bertrand.
22  7942                 THE CHAIRPERSON OF THE COMMISSION: 
23     Good morning, gentlemen.   
24  7943                 MR. CHATER:  Good morning.
25  7944                 THE CHAIRPERSON OF THE COMMISSION: 


 1     Thank you very much for this presentation and your
 2     participation in this proceeding.  I saw, Mr. Chater,
 3     that you were very present during the proceedings
 4     because we have seen you quite a few days.
 5  7945                 MR. CHATER:  Yes.
 6  7946                 THE CHAIRPERSON OF THE COMMISSION:  I
 7     was surprised that you took only eight minutes.  I
 8     thought you would take a song to talk to us about your
 9     positions.        
10  7947                 MR. CHATER:  I was just trying to be
11     polite.
12  7948                 THE CHAIRPERSON OF THE COMMISSION: 
13     Let me go first in terms of understanding where you
14     come from.  Do you have any experience at all with the
15     new universe that we are talking about?  Have your
16     members been involved at all in this new world?  Do you
17     have any kind of history to give us in terms of what
18     has been your experience as producers?
19  7949                 THE CHAIRPERSON:  Maybe I could
20     answer this briefly and then turn it over to Mr.
21     Basskin.
22  7950                 Basically, yes, our members are
23     involved in "the new media".  Often your package is
24     part of that new media.  Quite often you as a producer
25     will be looking to expand your universe with people


 1     like IMAT, for example, which produced the immediate
 2     technology, and work with them separately as an
 3     individual company or as a group to produce new media.
 4  7951                 The problem we have generally found
 5     with new media is the revenue sources are very, very
 6     slim at the moment.  There are very few serious revenue
 7     sources you can access.  Therefore you are spending, as
 8     I guess people have already said, a great deal of money
 9     in this area on various things with very little return.
10  7952                 With our members being the poor
11     rather than richer in nature, that is a continuing
12     problem.
13  7953                 There is a considerable interest in
14     this.  People have been involved and are getting into
15     it.  It is still very much a what will work, what won't
16     work.  Every avenue is like, we have to try this but we
17     are not sure it will work.
18  7954                 Perhaps Mr. Basskin would like to add
19     something.
20  7955                 MR. BASSKIN:  Thank you.
21  7956                 Good morning.
22  7957                 THE CHAIRPERSON OF THE COMMISSION: 
23     Good morning.
24  7958                 MR. BASSKIN:  My organization, which
25     works closely on a lot of issues with CIRPA, is the


 1     Canadian Musical Reproduction Rights Agency, which is
 2     owned by the Canadian Music Publishers Association.  We
 3     share a lot of views in common with CIRPA.
 4  7959                 Songwriters and music publishers,
 5     publishers being the owners of the copyrighted music,
 6     have a pretty constant need to want to exploit the
 7     value of the music that they control, to make money
 8     from it and to ensure that, of course, it isn't taken
 9     without compensation.
10  7960                 Observing the growth of new media and
11     the Internet over the past few years has been at times
12     an alarming exercise.  We field a tremendous number of
13     questions from people who, it's our impression, want to
14     do the right thing, want to license music, want to make
15     sure they pay for it, but the lack of industry
16     standards makes it pretty much of an ad hoc process.
17  7961                 The question of new media is actually
18     quite important here.  I don't see any opportunity for
19     the Commission to be involved in the production of
20     multimedia productions on CD-ROM.  That would seem to
21     be outside of the Commission's jurisdiction.
22  7962                 From the perspective of producers we
23     talked to, they don't seem to make a distinction in
24     their own minds between productions that might end up
25     on CD-ROM, productions that might end up on a Web site


 1     or the two that might be woven together.
 2  7963                 Things at this point seem to be
 3     roughly in the manner of instead of air conditioning a
 4     house, you buy one air conditioner per room.  A lot of
 5     custom made solutions are being found for problems as
 6     they develop.
 7  7964                 Many people have told you in this
 8     hearing that this is the world's fastest moving of
 9     moving targets.  I don't think it's possible for me
10     anyway to give you an across-the-board answer.  We have
11     seen a lot of projects come to us.  A lot of people
12     have sought permission to use songs.  It's very much a
13     matter of the publishers trying to assess on a case by
14     case basis what it's worth and whether the rights are
15     going to be protected.
16  7965                 The largest single fear that all of
17     us have in getting involved in the use of music on the
18     Internet is the danger that music can simply be
19     stripped out of the sites, taken and used in
20     environments it was never intended for in the first
21     place, or just Web sites or Internet presences that
22     take music without concern in the first place.
23  7966                 There's a lot fear in the music
24     world, particularly among those who own music
25     copyrights, that it's an environment which is


 1     controllable or not, currently not controlled, and one
 2     in which infringement of copyright by unauthorized
 3     takings of music from various sources, including CDs,
 4     make it a pirate's haven at this point.
 5  7967                 Rights and protection of copyright
 6     are pretty well at the core of all or our concerns on
 7     the Internet as it now stands.
 8  7968                 THE CHAIRPERSON OF THE COMMISSION: 
 9     The different issues that you are raising, either in
10     your written brief or this morning, some seem to be
11     much more like the concerns that we will have with the
12     emergence of a new world until we find a way of taming
13     it, not meaning the regulator but us as consumers and
14     providers of content, where the issue right is long
15     lasting and will always be at the core, given that
16     content is so important.
17  7969                 Do you see it that way as well?
18  7970                 MR. BASSKIN:  As someone once said,
19     what's the future like?  I don't know, the future's not
20     here yet.
21  7971                 The trouble is the future -- it's
22     very hard to discuss or understand new technologies,
23     except in terms of what we know today.  You can't talk
24     about a new technology when you haven't got the
25     vocabulary of that new technology, which is one of the


 1     things that makes the definition of new media so
 2     conceptually difficult to achieve.  It's not a new
 3     observation.
 4  7972                 A writer named Tony Schwartz wrote a
 5     book 20 years called "Media, the Second God", in which
 6     he was trying to outline the differences between
 7     televisions, not radio with pictures.  These are
 8     analogies you have heard many times, I'm sure.
 9  7973                 The Internet and the Web environment,
10     the networked environment, whatever it's going to be
11     called in the future, is changing so fast that it's
12     defying our abilities to come up with business models
13     and conceptual models and, I'm sure, regulatory models.
14  7974                 If you were to have held this hearing
15     two years ago, probably the word on everybody's lips
16     would have been push technologies, pointcast and the
17     like, things that would push content to the user.
18  7975                 There was a very interesting piece in
19     the New Yorker about three or four weeks ago about how
20     Murdoch was about to push $450 million U.S. into it and
21     then the deal fell apart.  Today pointcast is worth a
22     fraction of that because the moment passed.
23  7976                 You heard this morning and all
24     through the other discussions about portals, portal
25     being the current word of the moment.


 1  7977                 There's a column that appears in
 2     "Wired Magazine" where they have the ten wired and the
 3     ten tired concepts of the moment with the trends that
 4     are rising and falling.  It seems silly to try and
 5     construct a regulatory model based on what looks like a
 6     popularity contest.
 7  7978                 In a way, you have little more to go
 8     on than that.  I have a feeling that using portals as
 9     methods to control access or content are as illusory as
10     anything else we have seen.
11  7979                 It baffles me to try to say how the
12     questions you posed in your Notice of Motion -- now I'm
13     thinking legally.  Your Notice of Call for Comments. 
14     Are we suing somebody here?  Let's sue somebody.  It
15     always makes me feel better.
16  7980                 As I read the submissions and
17     listened to some of the hearings, this almost seems
18     like the world's most astonishing ongoing seminar in
19     media conceptual issues.  If we could all agree on what
20     the Internet is, we would be half way to figuring out
21     what the CRTC should or shouldn't do.  The trouble is
22     the Internet won't do us the favour of sitting still.
23  7981                 A piece in yesterday's "Wall Street
24     Journal" talked about the world of banner ads.  It's
25     interesting how all these places I am pointing to are


 1     print media, but nevertheless I'm sure it was on their
 2     Web site.  (Laughter)  Now, now.  We can learn from
 3     them I'm sure.
 4  7982                 The phenomenon of banner ads and
 5     click-through advertising was seen as just a few months
 6     ago a joke or an imposition on people's times.  Why go
 7     to a Web site if you are going to get eight or ten
 8     little banners in a row?
 9  7983                 Now they are discovering that
10     advertisers are actually willing to pay significant
11     dollars for these.  The piece was on the front of
12     yesterday's "Wall Street Journal".  It was a profile of
13     a fellow who goes out there and sells ads for an
14     organization called Double-Click Network.
15  7984                 All of a sudden he is discovering
16     that advertisers to his astonishment are starting to
17     pay very serious dollars to be on a selection of sites,
18     even to the point of let's say you are on a page for
19     Yahoo and you are looking up music.  Gee, there's a
20     banner ad about music.  If you were looking up fishing
21     rods, there would be an ad for fishing rods.  This, of
22     course, is not accidental.
23  7985                 That kind of fine tuning has been
24     there for a while.  What's coming now is the capability
25     of network advertisers to be able to spot the user's


 1     locale right down to his area code or even postal code
 2     and to start customizing the media for that.
 3  7986                 This perhaps would be a dream for the
 4     world of print ads or broadcast advertisers or people
 5     who buy ad space on cable, but the business model
 6     itself just keeps on evolving.
 7  7987                 The terms mass customization,
 8     democratization of access to the medium, were
 9     theoretical terms a few years ago.  They are working
10     business realities today.
11  7988                 My great fear in the Commission's
12     undertaking here, which is at times scary and at times
13     fascinating, is that by the time your decision is made,
14     will you have to hold another new hearing?  Will this
15     hearing have to go on more or less indefinitely as the
16     target keeps on moving?
17  7989                 That's not a pleasant prospect,
18     particularly for a body that is legislatively mandated
19     to make decisions.
20  7990                 I am probably 18 miles away from your
21     question now, aren't I?
22  7991                 MR. CHATER:  It was a very brief
23     summation.
24  7992                 THE CHAIRPERSON OF THE COMMISSION:  I
25     find that fascinating.  Maybe it's because of the use


 1     of the second language for me applied to a world that I
 2     am not familiar with, but somehow the way you were
 3     intervening contradicts a bit or at least nuances the
 4     kind of position that I thought I was reading from
 5     CIRPA.  No?       
 6  7993                 MR. CHATER:  We are wide open on
 7     this.  The realities, as I say, I think I was being
 8     devious enough to say the other options.  In general,
 9     we would say, as I said, particularly in view of
10     broadcast-like activities on the net, they to me or to
11     CIRPA are clearly a regulatory exercise or should be.
12  7994                 The problem in my view is that in
13     fact it is not clearly one thing or the other.  It can
14     be a one day distribution network and one day a
15     quasi-broadcast network.  It can be three or four
16     different things.  At any given point it is in fact the
17     cyberworld version of a retail store, a broadcaster,
18     you know, and three or four different other things too.
19  7995                 You can't nail down what it is. 
20     Probably you will be less able to do so in the future. 
21     However, that being said, it has considerable
22     ramifications for changing the way that people act and
23     do business and react to content.
24  7996                 We are in essence always content
25     providers.  We provide content for the various means of


 1     distribution, whether it be a CD, a tape, a digital
 2     download system, it doesn't matter to us.  Our concern
 3     is we have grave concerns with the rights issue.
 4  7997                 As you may know, the MP3 machine, the
 5     new machines, they can download off the net, strip
 6     stuff right up, put it on there and you can play on a
 7     chip an hour of hour music, whether it be the owner,
 8     the artist or the publisher and the writer, it doesn't
 9     matter.  It's doable today and more and more so and
10     becoming a reaL problem.
11  7998                 That being said, it is almost an
12     international problem.  You can't just address it in
13     Canada.  We feel that the regulatory process should not
14     be abandoned in the field of what's being done.
15  7999                 THE CHAIRPERSON OF THE COMMISSION:
16     That is where I see the nuance.  The interesting
17     comment of your colleague, when you appreciate that
18     environment and recognizing with you like many
19     intervenors in this hearing of the transforming of this
20     new reality every day almost, how can you say that
21     regulation would still be a tool?
22  8000                 I would like to reconcile that in my
23     mind.  What are the practical or concrete ideas you
24     have about it?
25  8001                 MR. BASSKIN:  If I could echo a point


 1     made by Brian in CIRPA's submission, those who
 2     presently have broadcasting licences own something of
 3     perhaps not incalculable value, but of very, very great
 4     value in the marketplace.
 5  8002                 Traditional broadcast regulation is
 6     based on scarcity of spectrum and the net seems to pose
 7     what to some people is an insoluble problem because the
 8     medium doesn't appear to be scarce.
 9  8003                 There is a very serious connection
10     between old media and new media and it's this.  It
11     seems to me it would be a very long time between
12     anybody who presently holds a broadcasting licence will
13     abandon it in favour of a presence on the Web, and not
14     just because of inertia, not just because the station
15     is there and the people are working.
16  8004                 A very wise smart-alec remark goes
17     that God could create the world in seven days because
18     he didn't have an installed base to worry about.  I
19     think there's a great truth in there.
20  8005                 Radio stations, television stations,
21     those with the existing broadcasting licences can now
22     serve the entire Canadian population and will be able
23     to serve the Canadian population.  Even if our toasters
24     are hooked up to the Internet, radio is not going to go
25     away.


 1  8006                 No new medium has ever completely
 2     displaced a previous medium.  The old media have
 3     sometimes changed.  The radio of the pre-television era
 4     was utterly different than today.  But they are not
 5     going to go away.
 6  8007                 Radio and television are still going
 7     to be -- even if their worlds of audience reach are
 8     diminished, there are still going to be extremely
 9     valuable and useful ways for advertisers to reach large
10     audiences.
11  8008                 Even in America where cable has
12     driven down the traditional major network viewing share 
13     to a fraction -- well, to a much smaller portion of
14     what it once was, it is still the only national buy
15     available.
16  8009                 These people who own broadcasting
17     stations are going to continue to have an asset of
18     great value.  To the extent, in my view, that they are
19     using these government CRTC licensed frequencies as the
20     springboard for the development of other broadcasting
21     activities, I certainly believe that the other
22     activities taking place on the Web should carry similar
23     or same obligations that they bear on the broadcast
24     world.
25  8010                 In other words, they are going to


 1     have a tremendous advantage of cash flow, of expertise,
 2     of marketing knowledge, of reaching the public.  As a
 3     consequence of running those broadcasting stations,
 4     they are getting a headstart in the race to become
 5     successful in the new media.
 6  8011                 I am not saying tie lead weights to
 7     their feet.  I'm not saying deliberately hobble them,
 8     but let's recognize the advantage they have got by
 9     virtue of a licence and recognize that it carries
10     continuing obligations when they are present in new
11     media, particularly when it comes to questions like
12     accessing funds which presently are not available to
13     broadcasters.
14  8012                 Broadcasters have a tremendous
15     headstart already.  Let's leave the way clear for other
16     people to get on board without ensuring that the same
17     three or four ownership groups or combination of
18     ownership groups in public broadcasting that dominate
19     the scene today are going to continue to be the sole
20     proprietors.
21  8013                 Media function best, creativity
22     functions best in a plurality of voices, when there is
23     a larger number of voices saying more things that are
24     opportunities for our culture, better opportunities for
25     export.


 1  8014                 This is just a view being expressed,
 2     but I don't think that we should be providing that much
 3     of an additional advantage for those with broadcasting
 4     licences today unless perhaps they are willing to
 5     abandon them and throw themselves head first into the
 6     web with every startup on the market.
 7  8015                 THE CHAIRPERSON OF THE COMMISSION: 
 8     Is that referring to the idea of taking some money from
 9     the fund, for example in television, and allowing it to
10     be used in new media, some request that has been made
11     in that respect, or are you thinking of other measures?
12  8016                 MR. CHATER:  Any particular measure
13     that might be considered being instituted, whether it
14     be taking from one fund, institute a new fund, putting
15     in the refundable tax credits, anything that might help
16     the development of the new media, wherever the funding
17     came from, we would consider that this should at least
18     be looked at very seriously.  Players already involved
19     should not have access to that fund.
20  8017                 THE CHAIRPERSON OF THE COMMISSION: 
21     Any money, for example MusicAction, that could be
22     directed to that kind of an initiative for you is not
23     something that should be encouraged.  If activity
24     should be taking place there, it should be with other
25     money derived from the existing or the conventional


 1     broadcasting.
 2  8018                 MR. CHATER:  In general it supports
 3     the independent sector in a variety of ways.  By
 4     definition at the moment, it doesn't include "major
 5     players" of any shape or size.  Therefore, obviously we
 6     would look at this the same way.
 7  8019                 We will be, I am sure, be considering
 8     new electronic activities, digital.  As the world
 9     evolves, we have to evolve with it.  What there will be
10     until we get there, to quote Mark Twain, prediction is
11     always difficult, especially if they are about the
12     future.
13  8020                 We are trying to get to this point,
14     but obviously any sort of fund that would have a
15     component that would involve "new media".
16  8021                 THE CHAIRPERSON OF THE COMMISSION: 
17     When you look at the new universe, whether it's add on
18     or the same, especially in radio, it seems if there is
19     one phenomenon that is already there, it is radio on
20     the net.  I don't know how many, but there is really a
21     long list.        
22  8022                 MR. CHATER:  Yes.
23  8023                 THE CHAIRPERSON OF THE COMMISSION: 
24     Do you see regulation being imposed on radio on the net
25     given that if you don't own a radio on the net within


 1     Canada, how can you compete with those that are owned
 2     by others.
 3  8024                 Given that it's not licensed in other
 4     countries, why would we consider a regulation in that
 5     new environment?  I can't understand why you say there
 6     should be a derivation from the existing broadcasting
 7     to that new world.
 8  8025                 How do you see the new players in
 9     Canada getting measures imposed on them that would be
10     different from those they are competing with that have
11     totally different approaches?
12  8026                 MR. CHATER:  To be blunt, I'm
13     surprised to hear language from the Chair of the CRTC
14     saying Canadian content is being imposed people, but
15     never mind.  We will let that one go.
16  8027                 However, it is like the realities.  I
17     am thinking one could turn this argument upside down
18     and say the Canadian radio stations who differentiate
19     themselves by playing more Canadian content will
20     therefore be a different presence on the web to every
21     other station.  Why would they play one more version of
22     Rod Stewart or Spice Girls?  You can hear that all over
23     the world.
24  8028                 Again, my personal view, and this is
25     going back to the old media, in fact in old media there


 1     are radio stations around the world -- all you have to
 2     do is buy a shortwave radio.  You can hear stations
 3     from everywhere.  Nobody does.  This again is not
 4     inertia.  It is ease of access.
 5  8029                 Frankly, the radio on the Internet is
 6     to most radio stations in Canada and anywhere else just
 7     an add-on, just a thing they put there.  Somebody said
 8     a few days ago without being defensive and covering
 9     every angle to make sure they weren't caught offside.
10  8030                 My personal view is I don't think
11     radio on the Internet will ever be a major player. 
12     It's very difficult to put a computer in your car or in
13     the kitchen.  It's very hard.  I am being a bit
14     facetious, but I think shortwave radio gives you the
15     analogy.  Shortwave radio, a very small proportion of
16     the population listen to that.
17  8031                 Most people listen to local radio,
18     local things.  I really couldn't care less, frankly, if
19     it's raining in Melbourne.  I want to know if it's
20     raining in Toronto or Montreal or wherever.
21  8032                 MR. BASSKIN:  Internet radio
22     stations, yes.  Virtually every radio station now has
23     or probably shortly will have a replay going on on the
24     net.
25  8033                 I think I heard Perrin Beatty give a


 1     speech the other day in which he said there's currently
 2     7,000 hours of programming on the CBC site that can be
 3     accessed at its Web site which I think is obviously
 4     wonderful from a public service component and I think a
 5     real fulfilment of the CBC's mandate in terms of
 6     reaching people.
 7  8034                 Internet radio I think is tied more
 8     closely to the bandwidth question than anything else. 
 9     Right now if you have a really good connection, you can
10     hear sound quality that is at best half way between an
11     AM and a FM radio, depending on what kind of speakers
12     you have hooked up to your computer.
13  8035                 I don't think that's going to stay
14     still.  I think as Internet bandwidth increases and
15     becomes cheaper, and I am sure there will be
16     improvements in the compression technology that will
17     make it more feasible, I think there is likely to be a
18     better chance for Internet radio stations that exist
19     just on the Internet alone to flourish.
20  8036                 I would be the first to recognize
21     there are severe problems in saying how you go about
22     regulating them when anybody with a laptop computer and
23     a CD player could be on the Web.  There's no practical
24     way you could find or catch all those people.
25  8037                 It seems to me there may be other


 1     ways of recognizing and rewarding those who make their
 2     Internet radio presence more prominently Canadian. 
 3     Some of these may be beyond the jurisdiction of the
 4     CRTC.  Some of these might be tax incentives.  Some of
 5     these might be funding incentives.  Some of these might
 6     be incentives at some level of policy that are tied to
 7     rewards in other areas
 8  8038                 In other words, it doesn't have to be
 9     a matter of a top down approach of saying thou shalt
10     have 35 per cent Canadian content because thou art a
11     radio station. If the practicalities of the medium make
12     it impossible to reach a particular Web site or there
13     are other good policy reasons for deciding that's not
14     going to be the way the Internet will work, it may be
15     possible to consider another method, tied to other
16     forms of production.
17  8039                 Canada's policy recognizes that the
18     production and the promotion and the dissemination of
19     materials in our cultural sector, created by Canadians,
20     telling Canadian stories is ipso facto a good thing.
21  8040                 There are a variety of ways of
22     getting at that good thing.  Just because it may be
23     impossible in practical terms to regulate a Web site
24     radio station that only exists on a Web site doesn't
25     mean we can't find another way of encouraging people to


 1     create sites like that that are Canadian.
 2  8041                 One thing I think is absolutely true. 
 3     If you impose too heavy a burden, you will drive people
 4     into havens where they don't have those obligations. 
 5     One of the great dangers in the world of copyright is
 6     the creation of what some people have called copyright
 7     havens, sites that are blessed with an abundant great
 8     big fat Internet pipe and no copyright laws or no
 9     copyright enforcement.
10  8042                 The potential for such sites to
11     develop is very, very real.  This is an issue of great
12     concern to the entire copyright and rights world today. 
13     If we can help you devise a system with you and with
14     the other ministries and branches of government that
15     can reward instead of punish, to encourage instead of
16     bar, we might find a creative way to respond to this
17     unprecedented challenge to regulation.
18  8043                 THE CHAIRPERSON OF THE COMMISSION:  I
19     suppose you heard about an intervention last week where
20     a company from Toronto was involved in online games, a
21     very flourishing company.  Their rights had been stolen
22     from Russia.  They were getting copies.  They don't
23     have much appeal in terms of what they can do to
24     recuperate what is theirs.
25  8044                 What about music?  I suppose a lot is


 1     going on at the international level in terms of finding
 2     ways.  If you want to take full advantage of what that
 3     world is promising, it has to be global.
 4  8045                 What kind of initiatives are you
 5     aware of that you are confident might mesh with the
 6     ideas you are putting forward that have been put
 7     forward by many others in tax incentives and
 8     reinforcement programs.
 9                                                        1125
10  8046                 MR. BASSKIN:  Two of the most
11     important issues on the plate right now are the
12     treaties that were negotiated at the World Intellectual
13     Property Organization, or WIPO or OMPI, as the French
14     acronym is.
15  8047                 The WIPO Copyright Treaty, and the
16     WIPO Performances and Phonograms Treaty has been signed
17     by Canada, among the many nations who have signed it. 
18     We have not yet passed legislation on the subject. 
19     Clearly this is parliament's jurisdiction, but one of
20     the key initiatives in the treaties -- two of the key
21     initiatives that would be of value to us, because so
22     much of what goes on in music is the result of the
23     handling of recorded music, is the need for Canada to
24     have laws to make it illegal to own or produce or
25     distribute devices intended to get around copy


 1     protection.  This is sometimes called the anti-
 2     circumvention provision.
 3  8048                 This is something that would be of
 4     great assistance in our law to give us some teeth to
 5     deal with people who use or develop or distribute
 6     technologies, whether on the web or otherwise, that
 7     would get around forms of copy protection.
 8  8049                 The second issue is the need to have
 9     a law that addresses work identification or
10     thumbprinting or watermarking of works.
11  8050                 It is a tremendous challenge.  We
12     have the better part of two decades worth of compact
13     disks out there full of every song in the world with no
14     form of copy protection and no form of work
15     identification.  Clearly that medium was never designed
16     with the internet in mind and represents an immense
17     challenge today.
18  8051                 With little effort -- I'm sure you
19     have seen demonstrations where you can download songs
20     from the web that have been literally ripped off of
21     CDs.  Not for nothing is the software used to take
22     songs off CDs called "CD Rippers".  That is the term
23     they are called.  With a CD Ripper and a little program
24     to convert the resulting file into a freestanding
25     program and a CD burner, and a blank CDR, you can be


 1     out there turning your home computer into a little CD
 2     factory.
 3  8052                 These issues are not the CRTC's.
 4  8053                 THE CHAIRPERSON OF THE COMMISSION: 
 5     No.
 6  8054                 MR. BASSKIN:  They are perhaps the
 7     police's, the RCMP, they are perhaps -- certainly for
 8     parliament, Ministry of Heritage, Ministry of Industry,
 9     but they are very, very closely allied -- they are
10     inextricably allied with what is going on on the
11     internet.
12  8055                 I don't know, short of having a
13     corporation called "Internet Canada Limited" like the
14     "China Internet Services Corporation", or what is going
15     to happen, from what I understand in places like Saudi
16     Arabia that will truly monitor everything that is
17     accessed, I don't think that is practically possible, I
18     don't think it is conversant with our national
19     traditions.  It is just not on the table.
20  8056                 Short of that, the difficulty in
21     establishing a bright line between a broadcast-type
22     activity and a non-broadcast activity, and an
23     e-commerce activity and, if you will, an e-theft
24     activity, makes this an exceptionally difficult problem
25     to address.


 1  8057                 Last month in Ottawa, just across the
 2     river, there was the OECD ministerial meeting on
 3     electronic commerce.  I had the opportunity to take
 4     part in the minister's ad hoc planning group for that,
 5     and although the sessions went on and on there was no
 6     discussion of intellectual property.
 7  8058                 As a matter of fact, what was
 8     frightening when we got to the hearing was there were
 9     supposed to be four topics that were dealt with in the
10     session:  privacy; consumer protection; the
11     authenticity of transactions, in other words are you
12     really dealing with that gaming site in Canada or is
13     this a Russian who has masked himself with the same
14     material but the money is going to him, or whatever;
15     and the fourth one being taxation.
16  8059                 Somehow, I guess if you want to make
17     a federal senior official or politician wake up in a
18     cold sweat in the middle of the night the easiest way
19     to do it is to suggest that his entire tax base is
20     going to vanish down the internet.  This is something
21     that gets their attention.
22  8060                 In fact, the keynote speaker at the
23     conference was Lou Gershner(ph), the CEO of IBM, whose
24     message essentially was:  Industry has built the
25     internet, industry will continue to develop the


 1     internet, we will look out for the issues you care
 2     about.  There is a place for government, don't worry
 3     about that.  Let us do it the way we want to do it and
 4     we will make sure you get your taxes.
 5  8061                 And speaker after speaker continued
 6     to present that point of view.  That is a very powerful
 7     argument, that these are the issues that don't lend
 8     themselves really to the heavy-handed regulation but
 9     don't worry, we will still make sure you get your sales
10     taxes.
11  8062                 I was disappointed in the entire
12     event, because the issues of protection of the public
13     interest, and protection of copyright holders interests
14     seemed to slip by the wayside.
15  8063                 The need to incorporate protection of
16     creators, or creativity -- you have heard many times in
17     this hearing that it is the talent, it is the
18     creativity that really drives this -- has to be at the
19     centre of the Commission's agenda, as it has to be at
20     the centre of government's.
21  8064                 Yes, it is important to protect
22     access to funds.  Yes, it is important to protect
23     consumer protection, authenticity of transactions. 
24     Yes, taxation has to be protected as a revenue stream
25     for government or government will just find another way


 1     to take it out of us I guess.
 2  8065                 But the real issue, in my view, that
 3     has to rank as high on the agenda as any other issue is
 4     the protection of creativity, the protection of
 5     creators, the protections of works, whether they are
 6     musical works, dramatic works, artistic works, literary
 7     works, recordings, cinematic graphic works, the whole
 8     catalogue.
 9  8066                 And I recognize this has not
10     traditionally be the CRTC's area of focus, yet it is
11     so, as I said, inextricably tied to the development of
12     the net and the development of new media that you can
13     no longer draw a line between these two issues.
14  8067                 Just as it has always been our
15     view -- one that hasn't necessarily been accepted so
16     readily by the CRTC -- that the Commission should
17     consider the behaviour of its broadcast licensees with
18     regard to the use of copyrighted works just as it
19     considers other issues in granting licences for
20     broadcast, in other words, don't renew licences to
21     people who don't respect copyright, to put it bluntly. 
22     That has never really been the Commission's perception
23     of its role.  It hasn't been that high on the agenda.
24  8068                 But in our view copyright has to be
25     this high on the agenda, because nobody turns on a web


 1     browser just to see a blank screen.  Nobody turns on
 2     their computer just to see a "C" prompt.  They are
 3     turning on their computer for content.
 4  8069                 There is a book out right now -- the
 5     author's name escapes me, I can supply it to the
 6     Commission, a fellow from MIT -- talking about the
 7     development of information appliances, and I commend
 8     this book to you very, very highly.  I'm embarrassed I
 9     can't remember the author's name right now.
10  8070                 But in the book -- this is a fellow
11     who was involved at Apple, he was at MIT for years, he
12     has been involved in very high level computer stuff,
13     and his view is that computers are far too complicated. 
14     The all-purpose laptop or desktop box that does
15     everything is far too complicated.  The industry must
16     drive itself towards the creation of information
17     appliances, just as the television is an information
18     appliance.
19  8071                 The telephone.  No one knows how a
20     telephone system works, except perhaps a handful of
21     people in the telephone company, but everyone knows how
22     to use a telephone which is really what counts.
23  8072                 As soon as we go from the more
24     complex personal computer era to the information
25     appliance era tied to a great big fat pipeline, whether


 1     it is ADSL or cable modem or satellite or some other
 2     new media yet to be created, all the problems that you
 3     have described in your Notice of Hearing, all of the
 4     issues that have been touched upon as potential future
 5     developments in the interventions you have heard will
 6     all come bursting forward like a garden of very ugly
 7     flowers, and we have to be ready to do some mowing. 
 8     How is that for an analogy.  Very evocative.
 9  8073                 COMMISSIONER GRAUER:  Very colourful.
10  8074                 THE CHAIRPERSON OF THE COMMISSION: 
11     Yes, to say the least.
12  8075                 Let's come back to the question of
13     access.  You talk like IMAT about the problem of the
14     portals and the aggregators and you give as an example
15     the example of at home.  How do you see the Commission
16     being able to help in that issue?  What would be your
17     ideas on how that can be prevented and how the
18     gatekeeping effect is not there.  What would be the
19     ways, the tools, the ideas you have in order to prevent
20     this from happening?
21  8076                 MR. CHATER:  This is certain to be
22     more of a push technology than a pull.  There are many
23     less gatekeepers on the internet.  It is almost non-
24     gatekeeper.  There is a wide range of places you can
25     get on and get off as compared to traditional


 1     broadcasting.
 2  8077                 My sense would be, as I said earlier,
 3     that most of the activities on the net are probably not
 4     broadcasting, or are different active e-commerce, or
 5     whatever the different things.  We are concerned with
 6     the sort of quasi-broadcasting area.
 7  8078                 Again, as we said in our
 8     presentation, as IMAT has said and others have said,
 9     this is, I think, more a function of funding to ensure
10     that the product is available.
11  8079                 Some of the comments, I think America
12     Online said that there is plenty of content and there
13     is plenty of stuff available.  Yes, there is; and no,
14     there isn't.  There is plenty available, but there is
15     not a great deal compared to what is available every
16     day, is being added every day from around the world.
17  8080                 I think the trick is to somehow get
18     the providers, or get the access providers to -- I
19     think as Mr. Crawley said before, this is really more
20     of a local issue than a global issue because people
21     like local content.  It is to get them to do it.
22  8081                 I think as David has said, maybe the
23     correct way in the future is not necessarily "Thou
24     shalt not", but it will be to your interest to do this,
25     this and this.  That, I think, is the trick -- and


 1     there are plenty of access points -- is to get them to
 2     commit to, if you like, giving them shelf space, giving
 3     them --
 4  8082                 I just did a particular piece of work
 5     for somebody in Nova Scotia, and one of the points that
 6     came up time and time again -- this is the Nova Scotia
 7     music industry -- was to do with the fact that
 8     production wasn't that difficult -- I say that
 9     jokingly -- the hard part was making sure people bought
10     it.  That is the marketing part.  And this is exactly
11     the same analogy.
12  8083                 THE CHAIRPERSON OF THE COMMISSION: 
13     The same thing.
14  8084                 You wanted to --
15  8085                 MR. BASSKIN:  I don't want to
16     interrupt you.
17  8086                 THE CHAIRPERSON OF THE COMMISSION: 
18     No, that's all right.  I just thought that you wanted
19     to add something on that.
20  8087                 MR. BASSKIN:  I do.  The question of
21     access, Brian mentioned the question of incentive
22     rather than the "Thou shalt not", the prohibitory
23     regulation.
24  8088                 I'm concerned when people talk about
25     portals.  As I said earlier, it is today's buzzword.


 1  8089                 Everybody has a home page when they
 2     turn on their browser.  The argument that portals are
 3     of extreme importance in a way depends on the
 4     assumption that people don't know how to change their
 5     home page.  In fact, neither is it difficult nor is it
 6     something that -- many of the portals if you go to them
 7     today have a button on the page that says "Make this
 8     your home page", click it and the site itself will
 9     rewrite your preferences file to change what your home
10     page is.  It is not that difficult.
11  8090                 I think the development of home pages
12     is less important, the development of portals is less
13     important than the question of how can those who want
14     to be on the net get access.  And perhaps one issue --
15     I don't know if you have had a chance to talk about
16     this in detail -- is the question of how much it costs
17     to get internet access or how much it costs people to
18     get hosting for their site, access to their site.  It
19     is an extremely competitive market certainly.
20  8091                 But again, as an incentive or a
21     method of support for Canadian -- for sites with
22     intensive Canadian content or Canadian-themed sites,
23     again another form of incentive that might be
24     considered might be either a different tax treatment or
25     a different level of funding or funding vehicle to


 1     provide those who want to put sites onto the net with
 2     incentive, or to make it worth the while of internet
 3     service providers like U-net and PSI Net and those
 4     companies, to host Canadian sites.  What I am
 5     suggesting here is that incentives might also be a tool
 6     to encourage the carriage of sites.
 7  8092                 Certainly the internet lowers the
 8     barrier for reaching the public.  The obscure record
 9     label with five releases, or the songwriter with a very
10     small catalogue can be just as present as anybody else,
11     providing he is there, providing he has bandwidth. 
12     This is one of those issues that is going to develop
13     very, very quickly.
14  8093                 I would suggest that the whole portal
15     question is going to look entirely different inside of
16     12 months, and I don't think it is nearly as important
17     as those who have been talking about have made it out
18     to be.  What counts is to have your presence on the web
19     and to develop ways that I suspect can only be
20     developed through marketing and creativity to alert
21     people to the existence of your web.
22  8094                 This is where cross-promotion of our
23     media counts.  This is certainly where one of the
24     advantages that broadcasters have can be brought back
25     into the picture.  When you have a broadcaster


 1     constantly saying "Go to our web site.  Check out our
 2     web site" -- CBC, they must refer to their web site
 3     20 times an hour, which is great.  But what you are
 4     doing is you are seeing other people have derived
 5     advantage from a scarce resource, namely a broadcasting
 6     licence.  In that context we should find other ways to
 7     extend incentives and support to those who need an
 8     additional boost to get themselves up above the level
 9     of visibility that people with broadcasting stations
10     have today.
11  8095                 It doesn't look like it is difficult
12     to get onto the internet from the user's perspective. 
13     Everybody and his brother out there is selling access,
14     and that is going to be a very competitive market.  I'm
15     concerned, though, about the ability of those who want
16     to provide content to get an affordable shop to do
17     business within the mall, and that is where I think the
18     Commission may have role.
19  8096                 THE CHAIRPERSON OF THE COMMISSION: 
20     In terms of incentive.  But you are mentioning too in
21     passing that one of the important things is to acquire
22     visibility and the marketing capacity of those sites
23     will be very important as well I hear you say.
24  8097                 MR. BASSKIN:  Yes.
25  8098                 THE CHAIRPERSON OF THE COMMISSION: 


 1     What would be your ideas on how we could help in that
 2     sense in terms of, you know, contributing -- there was
 3     the idea that the CBC has put forward to create like a
 4     super Canadian site and there is also the Association
 5     of Specialty -- what is the name of the -- SPTV who has
 6     proposed the same thing, to have the site of the sites.
 7  8099                 MR. BASSKIN:  And indeed, nothing
 8     stops anyone from creating such a site today.  But just
 9     as radio stations support music by announcing the name
10     of the artist after they have played the artist --
11  8100                 MR. CHATER:  Well, sometimes.
12  8101                 MR. BASSKIN:  Sometimes, that's
13     right.  "When you play it, say it", is the slogan they
14     used for a while.
15  8102                 Well, it helps.  It helps.  And just
16     as -- interestingly enough, the broadcasters themselves
17     in their endless tub-thumping for digital radio has
18     said one of the advantages of digital radio is there
19     can be a readout on the radio to tell you the name of
20     the song you are listening to.  Similarly, broadcasters
21     could be encouraged to promote the web sites of the
22     artists who they have put up.  I mean, admittedly it is
23     a lot of ", et cetera, but certainly the
24     development of digital radio could be an opportunity to
25     provide links to the artist directly from the radio


 1     station leveraging off their very high profile in terms
 2     of reaching the public.
 3  8103                 THE CHAIRPERSON OF THE COMMISSION: 
 4     So that is the kind of incentive --
 5  8104                 MR. BASSKIN:  Yes, cross-promotion,
 6     voluntary or encouraged cross-promotion of Canadian
 7     artists by broadcasters could be a good tool there was
 8     well.
 9  8105                 THE CHAIRPERSON OF THE COMMISSION: 
10     The last question is about, you said -- and on this you
11     agree with the CAB -- that there will not be total
12     migration from the old broadcasting world to the new
13     media world, but there will be some add-ons and some
14     complementarity.  But you say that it would be
15     important -- and certainly you disagree with the idea
16     that because there will be some add-ons and some more
17     activity that we should deregulate at this point the
18     universe of the old broadcasting, or the conventional
19     broadcasting.
20  8106                 But I would like to know, there was
21     an interesting intervention on Friday from Telus -- I
22     don't know if you --
23  8107                 MR. BASSKIN:  Yes.
24  8108                 THE CHAIRPERSON OF THE COMMISSION: 
25     -- where they suggested to the Commission that we would


 1     be at the forefront and next year starting a proceeding
 2     and looking at the possibility of starting to see if it
 3     wouldn't be already time to change the regulation in
 4     broadcasting because something is happening there with
 5     the new media and the internet that would require, you
 6     know, a less stringent approach and a different
 7     approach.
 8  8109                 The broadcasters also have said that
 9     there is already some shift in the advertising that can
10     be seen from the conventional broadcasting universe to
11     the new media.  What is your view on this?
12  8110                 But mainly you are saying to monitor. 
13     What would be, for you, the indicators where you would
14     see that it is not strictly an add-on of an activity
15     that is strictly like a plus in terms of marketing with
16     the conventional world broadcasters are in?  Where
17     would you see that it is a sign that we should be
18     particularly curious about or concerned about?
19  8111                 MR. CHATER:  Well, to go back to the
20     start, CIRPA found the CAB's discussion paper or
21     recommendations interesting.  I think at one point they
22     were saying less regulation, at another point more
23     regulation.  In other words, not in my backyard, but we
24     love it anyway if you give us all those benefits.  I
25     mean, it's -- well, why would they not say it.  I guess


 1     I would if I were a broadcaster.
 2  8112                 But the reality is that I think you
 3     can't have your cake and eat it too.  You cannot say
 4     deregulate one and then retain the other, and then
 5     alternatively say, well, because you are not going to
 6     deregulate this, therefore, by definition you must
 7     deregulate everything else.
 8  8113                 To go back to media that have been
 9     around for a long time, book sales were, in fact I
10     think, up this year by 4 or 5 per cent.  Well, you
11     know, there are only so many hours a day, there are
12     only so many things you can do, yet book sales are up. 
13     Therefore people are not watching television, they are
14     not watching the net, they are not -- whatever they are
15     not doing, and maybe they are and they are not
16     sleeping, who knows.
17  8114                 But the reality is -- again to jump
18     around a bit to some of your questions -- I think the
19     broadcasters said, well, we are losing advertising. 
20     Well, they have been saying that since about 1922 they
21     have been losing advertising.  The reality is I think
22     that you can say it was anecdotal.  I think they did
23     say it was anecdotal, they hadn't actually got any
24     evidence.  They just thought it was.  Well, that's
25     good.  I can say I think Christmas will come later, and


 1     in fact I know it will.
 2  8115                 But the reality I think in all these
 3     areas, I think you had a comment from Torstar on
 4     Thursday saying that in fact they had suffered
 5     substantially in auto car sales because of things like
 6     Auto Trader which somebody found a better way to do it. 
 7     Well, these things happen.  That is called free
 8     enterprise.
 9  8116                 THE CHAIRPERSON OF THE COMMISSION: 
10     No, but still, you know, I get your point there.
11  8117                 But what for you would be elements
12     where you, even as a partner in that radio venture,
13     would start, you know, in terms of their decrease. 
14     Would it be the decrease in listening?  Would it be the
15     advertising revenue raising radio on the net?  What
16     would be elements that would kind of trigger some
17     concern on your part, being a partner of the radio
18     industry, to say something is happening here that we
19     had not entirely foreseen?
20  8118                 MR. CHATER:  It is very hard to say,
21     again going back to predicting the future.  I don't see
22     it in the short term.
23  8119                 Also, I think that argument is a bit
24     dependent upon there is only "X" amount of advertising,
25     there will never be any more.  If you had said that


 1     when people were in the old days of print in 1900, they
 2     said, well, you could never invent radio or television
 3     or anything else, there won't be any more advertising
 4     ever.
 5  8120                 I mean, there are plenty of
 6     advertisers who can be accessed through the net, or as
 7     you see now on cable.  As different forms of
 8     advertising come up this is not to say current
 9     advertisers, or indeed new advertisers, will not come
10     forward and say, "Gee, that is great idea, I can" -- as
11     David said, "I can get right at those people that sell
12     my fishing lines", or whatever it is.  I cannot do that
13     on most channels."  Even on the specialty channel, I
14     mean the Golf Channel or the Auto Channel you can do
15     that specifically more, but you can still tighten it
16     even more which the net will do for you.  I think it
17     will increase advertising more than decrease it.
18  8121                 I mean, this analogy of there is only
19     so much pie, there will never be any more ever, I mean
20     if that were the case we wouldn't be sitting here, we
21     would still be driving around with horses and buggies. 
22     I mean, that is the reality of this.
23  8122                 I think this is a bit of a canard
24     this argument.  I mean it has yet to be proven and keep
25     being proven.  All of a sudden cable is making all


 1     sorts of money, as is television, as is specialty
 2     television, as is radio, as are magazines, as are
 3     newspapers, most of which didn't exist 50 years ago. 
 4     So where did all this money come from, out of the sky? 
 5     No, it didn't.  It came from advertisers.
 6  8123                 THE CHAIRPERSON OF THE COMMISSION: 
 7     Thank you.
 8  8124                 MR. BASSKIN:  If I could just add
 9     briefly to that.
10  8125                 I have to think about the fact that
11     17 years ago to the day I was sitting here beside
12     Murray Chercover(ph) and John Coleman(ph) at a hearing
13     on CRTC's regulation of Canadian content.  The paint
14     was different, but sometimes I think that little has
15     changed because the fundamental questions don't change
16     that much.
17  8126                 Broadcasters have been crying poor
18     mouth for a very long time.  I know, I used to write
19     those speeches.  And sometimes it's true.  The patterns
20     of earnings ebb and flow.  Broadcasters are in
21     competition with every other medium for advertising.
22  8127                 If you ask:  What would I look for as
23     an indication of substantial change, I would look to
24     see if the way the broadcasters are selling themselves
25     to the advertising market begins to incorporate


 1     meaningful reference to web sites; that if broadcasters
 2     are starting add-on web sites they argue it should not
 3     be regulated in the same manner as things that are a
 4     direct duplication of what they have on the air, I
 5     would say:  Do you have a separate rate card?  How much
 6     of your bottom line is this really contributing?  How
 7     much has it actually changed what you do with that
 8     broadcast frequency?
 9  8128                 The CRTC's regulation of radio
10     includes a great many things:  entry to the market,
11     departure from the market, ownership changes, Canadian
12     content regulation, a host of issues that have been
13     developed after a long and very careful policy
14     exercise, very recently the revision of Canadian
15     content for radio.
16  8129                 The system as it is now has been
17     evolved after a tremendous amount of effort.  I think
18     it is, quite frankly, farfetched at this point to
19     suggest that the growth of the internet today and its
20     profitability, which is pretty much nil, and its
21     success in the advertising market, which is nascent at
22     best right now, has had enough of an impact to warrant
23     even reopening the question of Canadian content.
24  8130                 We are aware that there are those who
25     are going to try to make the argument, if they are not


 1     making it already, that the definition of Canadian
 2     content should change, or that the Commission's newly
 3     published regulations on Canadian content should be
 4     reconsidered or reopened.  Our view is that those
 5     aren't broke, they don't need fixing, the Commission
 6     made to the right decisions, and we will be writing to
 7     you to that effect.
 8  8131                 But above all I think it is grossly
 9     premature at this point to suggest that the development
10     of the internet to date mandates any change in the
11     content regulation of broadcast radio.  Radio stations
12     still trade a high multiple over earnings.  They are
13     still a highly desirable asset in the marketplace, and
14     I don't know of any broadcaster who would voluntarily
15     walk away from one today simply because the internet
16     promises growth.
17  8132                 I think they are all smart to look at
18     the internet as a good add-on, as a good cross-
19     promotion, as a good business activity to be involved
20     in, but I would look to see is it truly existing as a
21     separate business in their world to see whether or not
22     the Commission should really change its approach to
23     regulating broadcast in the context of the internet.
24  8133                 MR. CHATER:  One other point.  You
25     may have noticed yesterday in the paper that there was


 1     a giant sell-off in internet stocks in the U.S.
 2     yesterday.  They dropped -- I have forgotten -- 25 per
 3     cent in a day.  I mean, because there is nothing
 4     underneath it.  There are no earnings.
 5  8134                 I mean, the reality of every internet
 6     stock from Amazon to CD Now, which I am familiar with,
 7     there are no earnings.  They are losing money -- going
 8     that way -- and they will make money maybe in five
 9     years.  This is the classic, if you like, South Sea
10     Bubble.  I mean, we are just investing in this stuff
11     and hopefully down the road it will bring great
12     returns, but right now there are no returns.  There is
13     no base of earnings because there are no earnings.
14  8135                 THE CHAIRPERSON OF THE COMMISSION: 
15     Well, thank you very much, gentlemen.
16  8136                 MR. BASSKIN:  Thank you.
17  8137                 MR. CHATER:  Thank you.
18  8138                 THE CHAIRPERSON OF THE COMMISSION: 
19     It has been very interesting, and thank you for your
20     participating.
21  8139                 THE CHAIRPERSON:  Don't go away.
22  8140                 COMMISSIONER GRAUER:  I am not quite
23     sure I fully understood with respect to Chair
24     Bertrand's question of the impact on traditional media
25     of the new media and what we might be looking at as


 1     this world evolves.
 2  8141                 The one thing I was really interested
 3     in was presumably your role as partners with the radio
 4     industry in terms of promoting Canadian talent, and
 5     should we be looking at hours tuned.  I mean, should
 6     these be things that we are looking at in terms of a
 7     concern for Canadian expression, as well as advertising
 8     and some of the other things which I think you did
 9     touch on as a responsible regulator?
10  8142                 MR. CHATER:  I think the answer to
11     that in the short term would be yes.  I mean, I don't
12     see any substantive changes in hours tuned at the
13     moment.  Even if there were, maybe it would be going
14     somewhere else, there would be other reasons for it.
15  8143                 I mean, I take to take a bit of issue
16     again -- I'm going to take issues about the word
17     "partners".  We provide product to the radio stations
18     which is used to make money.  That is not my definition
19     of "partnership".  So I have a real concern with that
20     word.  It is bandied around by radio stations a lot,
21     and broadcasters, but we don't really consider
22     ourselves partners, we consider ourselves content
23     providers to radio for payment, thank you very much,
24     and you can do with it what you will.
25  8144                 COMMISSIONER GRAUER:  Okay.  That is


 1     helpful in fact, because I guess the question is
 2     whether or not then this is -- what I am really trying
 3     to get at is:  How important is the role of radio in
 4     your business, which is Canadian creators and their
 5     exposure to the Canadian public.  That is really what
 6     I'm getting at.
 7  8145                 MR. CHATER:  Yes, okay.
 8  8146                 COMMISSIONER GRAUER:  That is my
 9     goal.
10  8147                 MR. CHATER:  Let me come back to
11     that.  I have just written a long piece about that, so
12     I can at least say that I have researched that only
13     last week or two weeks ago.
14  8148                 The answer to that is, yes, radio is
15     important, much less so than it was previously, not
16     only because of the other media like video, like print,
17     like other marketing campaigns, like television for
18     example, television advertising campaigns as opposed
19     to, you know, the music channels.
20  8149                 Also the fact of the way radio has
21     evolved.  When I was young -- only two years ago -- it
22     used to be all top 40 AM radio.  Now there is no --
23     top 40 is slowly coming back on FM, but it used to be
24     in Canada the reality was you got 15 stations -- I'm
25     exaggerating slightly -- 15 stations across the


 1     country, played the record, charted the record, it was
 2     a hit, that was it, bang.  I mean, that option is long
 3     gone.
 4  8150                 The marketing costs in the record
 5     business have doubled in the last 6 or 7 years for a
 6     specific release.  They continue to go up.  I mean they
 7     will probably not go down because you have videos, you
 8     have internet, you have everything to do.
 9  8151                 The reality is that radio, while it
10     certainly is important, is no longer nearly as
11     important as it was, particularly given the formats of
12     radio and the fact that many formats are not there, by
13     their own admission, to sell records.  They are there
14     to sell time.  That is fair enough.
15  8152                 But, you know, for example, many
16     radio stations would not sell records.  Their listeners
17     would not be in the record-buying group, and it would
18     use music on radio that would be the substitute, if you
19     like, of buying records, they use it on radio.  That is
20     what they do.  And obviously it is our job to ensure
21     that appropriate payment is made for that through
22     rights societies or whatever it may be.  But in many
23     cases -- whereas before radio was a key player, and
24     still is in many instances but much less so than it
25     used to be.


 1  8153                 COMMISSIONER GRAUER:  Thank you.  I
 2     appreciate that.
 3  8154                 THE CHAIRPERSON:  I have a specific
 4     question I would like to pose to you.  Have you had an
 5     opportunity to read the CHUM submission?
 6  8155                 MR. CHATER:  No, I haven't.
 7  8156                 THE CHAIRPERSON:  Well, let me read
 8     to you one section.  I am not sure whether you are the
 9     best folks to put this to or whether it would be more
10     appropriate to go to CRIA or SOCAN so they can consider
11     this and respond as appropriate when they appear.
12  8157                 On page 11 of their Phase II
13     submission CHUM were noting the issue -- and this gets
14     to the point about rights issues, particularly as it
15     relates to new media.  So this is paragraph 3 on
16     page 11 if you want to refer to it later perhaps and
17     look at it in context, but I will try to put it in
18     context.  I will quote here:
19                            "To illustrate the degree to
20                            which Canadian web site
21                            operators are prejudiced by
22                            these intellectual property
23                            licensing policies ..." 
24                            (As read)
25     And that being of the recording industry:


 1                            "... we cite the example of the
 2                            popular Canadian performer
 3                            Alanis Morissette. 
 4                            Ms Morissette's new album was
 5                            released in November 1998 and
 6                            she appeared in an exclusive
 7                            broadcast on MuchMusic on
 8                            Sunday, November 1, 1998. 
 9                            Unfortunately, due to the
10                            restrictive policies of the
11                            recording industry City
12                            Interactive was not permitted to
13                            feature clips of Ms Morissette's
14                            videos on the MuchMusic Canadian
15                            web site.  By contrast, MTV
16                            Network has devoted considerable
17                            resources on its web site to
18                            Ms Morissette, including video
19                            clips and live performances
20                            found at http://www ..." 
21                            (As read)
22  8158                 Whatever.
23  8159                 MR. CHATER:  Yes.
24  8160                 THE CHAIRPERSON:  I wonder if you
25     might comment on that.


 1  8161                 MR. CHATER:  Actually, I have views
 2     on it, but this I think is much more a question for
 3     CRIA or SOCAN because they are the people involved.  I
 4     would hate to tread on their turf.  I mean, I could
 5     give you general views.
 6  8162                 The answer is that there are
 7     obviously reasons for this, whatever they may be, and
 8     I'm sure probably you could ask CRIA and SOCAN to
 9     elucidate on this matter.
10                                                        1155
11  8163                 Often it has been my finding.  For
12     example, if I digress slightly, the Oakville Beaver. 
13     They were not able to show the local Santa Claus parade
14     on cable because those nasty copyright people want to
15     get paid.  It basically said we couldn't show it
16     because rights users owners would not allow us to show
17     this, which is again a canard.  It was an excuse.
18  8164                 They didn't want to pay anything for
19     this.  I can't comment on the CHUM alliance, that sort
20     of thing, but that would be my comment in general terms
21     on a lot of these issues.  There's a lot more behind
22     that isn't said than is said.
23  8165                 MR. BASSKIN:  If I could respond in
24     particular.  Brian is absolutely right.  There may be
25     issues related to industry, entire industry policies


 1     that are evolving about the use of things like video
 2     clips on the Web.  It's not my place to speak for
 3     CRIA's members and SOCAN will obviously be addressing
 4     you shortly.
 5  8166                 The CHUM organization is an
 6     interesting example.  They use a great deal of music,
 7     not just on MuchMusic and there are other stations, but
 8     also in their programming generally.
 9  8167                 While over the years we have wrestled
10     with them on a variety of occasions when it comes to
11     licensing the music used in their programs, by and
12     large when they can't put the cost on to somebody else,
13     they are not averse to paying for it, which is what it
14     really comes down to.
15  8168                 This is an organization, after all,
16     when somebody appears on a CHUM, City or Bravo! or Much
17     production that they produce in the studio, they hand
18     the performer a form that says you sign this or you
19     don't get on.  The form says if you own any music, you
20     are giving up the reproduction right licence, the
21     synchronization licence, which my organization engages
22     in for many publishers.  You give us the
23     synchronization licence for free in consideration of
24     being allowed to appear on our show.
25  8169                 That's life.  They also say if you


 1     perform a song which you don't own, which somebody else
 2     owns, you, Mr. or Ms Performer, will go and obtain the
 3     licence at your cost for us for our benefit, but we end
 4     up owning the copyright in the show.  We can exploit
 5     the song according to the licence you get at our
 6     expense and if you don't want to pay for the licence,
 7     you don't perform the song.
 8  8170                 This is a complete inversion of the
 9     usual custom in the film and television production
10     industry where the producer goes and obtains the
11     clearances of the songs rather than saying to the
12     performer "If you want to perform White Christmas, you
13     are going to have to contact the Irving Berlin office
14     and get us a licence made out to us, but you pay for
15     it".
16  8171                 It's sort of like saying to somebody
17     "I'm hiring you to be my secretary, but you have to buy
18     me a Selectric typewriter or Word Processor on the way
19     in".  CHUM has a pretty dedicated commitment, as seen
20     in it's business practices, to putting the cost of
21     music clearance on to other people as often as
22     possible.
23  8172                 I'm quite certain that what they are
24     referring to there in their submission, which I will
25     take the trouble to read and respond to you on, I would


 1     strongly suspect that what they are saying is we
 2     couldn't get this for free, somebody wanted to be paid
 3     for the use of their works so we couldn't do it.
 4  8173                 Well, that's not a could or couldn't. 
 5     That's a will or won't.  No one is stopping them from
 6     paying for what they use, but if they think that having
 7     to pay for what they use bars them from doing it, I
 8     guess that's their world view.
 9  8174                 I would suggest that statement like
10     that need a closer examination of the underlying
11     business practices before they can be taken at face
12     value.
13  8175                 THE CHAIRPERSON:  I take your point
14     on that.  I guess what's behind my curiosity with
15     respect to this issue here is not so much strictly
16     speaking the business practices of CHUM or any other
17     radio broadcaster, more to the point of whether or not
18     we have created an environment in Canada which might
19     disadvantage Canadian artists to be on outlets,
20     whatever they are, Web sites in Canada as opposed to
21     foreign markets.
22  8176                 In fact, we may disadvantage those
23     artists from being exposed to the audience at home as
24     opposed to some other markets.
25  8177                 MR. BASSKIN:  It may be that a


 1     business decision by a rights holder to insist on
 2     payment results in a form of disadvantage to him.  It
 3     may well be that a decision to say I want to get paid
 4     for what I want to do means you lose out to somebody
 5     who will work for nothing.  That's a larger business
 6     question, but I'm not sure that is a result of the
 7     regulatory practices of the Commission.
 8  8178                 THE CHAIRPERSON:  I don't know
 9     either.  As I said, I just wanted to know whether you
10     could comment on that.
11  8179                 MR. CHATER:  In one of my other lives
12     I am presently a publisher.  I am negotiating with
13     regard to a film.  The question is how far will they go
14     before I push them over the edge and they will say "Too
15     bad, Brian, we are going to use somebody else's".
16  8180                 That's obviously a business decision,
17     I mean how far can I push them, how much money can I
18     get.  Obviously they would like it for free, I would
19     like to get $50,000.  The in-between is the difference.
20  8181                 If you own the rights, you are always
21     negotiating "advantage/disadvantage".  What is my best
22     position given I will get "X"?  Is the return two "X"
23     or half "X"?  This is a business decision.
24  8182                 I should not be precluded.  You
25     should be able to take the decision.  If you're wrong,


 1     you're wrong, you made a mistake.  You guessed wrong. 
 2     You said they won't in fact use that product.
 3  8183                 THE CHAIRPERSON:  As you suggested,
 4     maybe CRIA or SOCAN --     
 5  8184                 MR. CHATER:  We have given you the
 6     philosophical line.
 7  8185                 THE CHAIRPERSON:  I think counsel has
 8     a question.
 9  8186                 MS PINSKY:  Thank you, Mr. Chairman.
10  8187                 In your submission this morning, you
11     indicated that broadcast-like activities that are on
12     the net but are not owned by a broadcaster should also
13     be considered as broadcasting and licensed as such.
14  8188                 Could you describe the type of
15     activities that you would consider broadcast-like?  Are
16     you referring only to streaming audio and video?
17  8189                 MR. CHATER:  There is a site called
18     Virtually Canadian which is in fact a quasi-radio
19     station and they advertise themselves as a radio
20     station.  It's sites like that that are delivering in
21     effect the same product in a different form as radio
22     would essentially.
23  8190                 Streaming, that would be an issue we
24     would look at further but it is the delivery system. 
25     In simple terms, it was even more of a delivery system


 1     akin to a record store.  You are delivering music, for
 2     a fee one would hope, in a sort of retail environment. 
 3     It's not quite the same as broadcasting.
 4  8191                 MS PINSKY:  With respect to licensed
 5     entities, you said that if an entity is licensed by the
 6     Commission, its activities on the net are a direct
 7     result of its licence and should be characterized as a
 8     broadcast and they should be addressed through a
 9     separate licence and not as an add-on.
10  8192                 Is it only through those
11     broadcast-like activities where a separate licence,
12     according to your submission, should be issued?
13  8193                 MR. CHATER:  It's always a bit hard
14     to say what's a broadcast-like activity.  Again, it
15     would clearly be inappropriate to regulate commerce
16     activities.  As I said in some discussion earlier, the
17     net is not just one thing.  It's about three or four
18     things.  It's not one or the other.  It's a combination
19     of different things and you form inside the space.
20  8194                 We would lean towards broadcast-like
21     activities and maybe a further definition of what that
22     exactly means, but things like radio, television,
23     whatever, that were producing the same type of result
24     as if they were a regular broadcaster.
25  8195                 MS PINSKY:  Finally, you indicated


 1     that digital radio and television are not, in your
 2     view, new media in a real sense.  They are just ad-on
 3     versions, these are your words, of current media that
 4     are essentially based on a pre-existing content and
 5     structure.        
 6  8196                 MR. CHATER:  Yes.
 7  8197                 MS PINSKY:  I would just like to
 8     clarify the distinction that you are making between
 9     digital radio, TV and new media.  Is it your view that
10     it's simply because these services are distributed on
11     traditional infrastructure that they wouldn't involve
12     new media, regardless of the functionalities or the
13     characteristics of these services?
14  8198                 MR. CHATER:  Getting back to the
15     definition of new media, this is where we get into real
16     trouble, as a lot of people have said.
17  8199                 If I can give you an analogy. I think
18     I used the analogy earlier somewhere else, to me
19     digital radio is the next version of FM which was in
20     turn a version of AM.  AM is not nearly as good quality
21     as FM.  Digital is better than FM, but they are all
22     still radio.  They are all still doing the same thing.
23  8200                 Television, the same thing.  Black
24     and white television was the first thing.  It became
25     coloured television then comes digital delivery


 1     television.  Then it becomes digital television or high
 2     definition television, whatever you like.
 3  8201                 In other words, what's still on there
 4     is the programming.  What's still on the CBC is the
 5     same programming.  We deliver it through a nine inch
 6     black and white TV or a 73 inch digital TV, it's still
 7     programming.  It's still TV programming.
 8  8202                 MS PINSKY:  Just to follow up.  What
 9     I was trying to get to was if that programming, if the
10     nature of that changes and becomes more interactive in
11     nature and more similar to that which we currently find
12     or are expected to find on the Internet, would it still
13     be your view that that type of programming because it's
14     delivered on traditional infrastructure would not be
15     new media?
16  8203                 MR. BASSKIN:  Well, I think that
17     anything that uses terrestrial waves is inherently
18     using a scarce resource and the allocation of a scarce
19     resource is the prime justification for broadcast
20     regulation, as I have already understood it.
21  8204                 Even if you can divide the existing
22     band into a larger number of sub-band or substations,
23     there is still going to be competition for the
24     opportunity to exclusively occupy one of those
25     frequencies.  As long as there is going to be that kind


 1     of competition, somebody has to decide and I think the
 2     Commission's role is very clear in that regard.
 3  8205                 As Brian said, digital radio and
 4     digital TV are seen not only by theorists but by the
 5     broadcasting industry itself as simply an extension of
 6     their current activities.
 7  8206                 One of the policy decisions regarding
 8     licensing of digital radio I believe is that all
 9     existing radio stations would be grandfathered in for a
10     spot on digital radio, if and when it ever becomes a
11     commercial reality.
12  8207                 I have no doubt that the Commission
13     will continue to take a role in granting licences.  It
14     seems to me that the existing infrastructure needs no
15     change simply because the method of transmission has
16     gone from analog on FM to digital, but if it's going to
17     be an interactive medium taking place on the Web, there
18     may be some need for different treatment, as we have
19     suggested earlier, by means of incentive rather than by
20     prescription.
21  8208                 MS PINSKY:  Thank you very much.
22  8209                 Those are all my questions.
23  8210                 THE CHAIRPERSON:  Thank you Counsel
24     Pinsky.
25  8211                 Thank you very much, gentlemen.


 1  8212                 MR. CHATER:  Thank you.
 2  8213                 THE CHAIRPERSON:  We appreciate you
 3     coming here today.
 4  8214                 We will take our lunch break now. 
 5     Because we have a little business of some other
 6     activities of the Commission to conduct, we will
 7     reconvene at two o'clock.
 8     --- Recess at / Suspension à 1230
 9     --- Upon resuming at / Reprise à 1400
10  8215                 THE CHAIRPERSON:  Good afternoon,
11     ladies and gentlemen.
12  8216                 We will return to our proceeding now.
13  8217                 Madam Secretary.
14  8218                 MS BéNARD:  Thank you, Mr. Chairman.
15  8219                 The next presentation will be the
16     Canadian Recording Industry Association.
18  8220                 MR. ROBERTSON:  Thank you, Mr.
19     Chairman, Madam Chair, Commissioners.
20  8221                 My name is Brian Robertson and I am
21     the President of the Canadian Recording Industry
22     Association.  I am joined by Ken Thompson, the
23     Vice-President and General Counsel of CRIA.
24  8222                 Let me say on behalf of the
25     association and its members that we thank you for the


 1     opportunity of joining you at these hearings today.
 2  8223                 The Canadian Recording Industry
 3     Association is a not-for-profit corporation founded in
 4     1964 whose members comprise the Canadian corporations
 5     of the multinational record companies, the leading
 6     Canadian owned independent record companies and all of
 7     the manufacturers of compact discs and tapes.  In all,
 8     they are representative of 95 per cent of all
 9     prerecorded music manufactured and sold in Canada.
10  8224                 First of all I would like to
11     congratulate the Commission on its initiative to
12     convene these hearings.  You recognized at an early
13     state the realities of the new communications
14     environment and you have been willing to act decisively
15     in creating a broad and comprehensive forum for
16     discussion.
17  8225                 I think it goes without saying that
18     we are all humbled by the pace of change in the
19     communications field.  We have embraced the term new
20     media and under its umbrella we are having to adjust,
21     it seems daily, to the tidal wave of technological
22     change that washes over us.
23  8226                 Nowhere has this influence been more
24     evident than in the recording industry.  We create,
25     manufacture and distribute a remarkable product that is


 1     enjoyed in virtually every household in the civilized
 2     world and yet that very same product is the most easily
 3     stolen and illegally exploited in the world.
 4  8227                 The new media, therefore, provides us
 5     with the most optimistic and yet the darkest side of
 6     our business.
 7  8228                 The focus of these hearings in part
 8     is the influence of the new media on the regulation of
 9     the traditional broadcast undertakings as well as
10     endeavouring to determine if any of the new media
11     services constitute broadcasting or telecommunication
12     services.
13  8229                 From our perspective today, looking
14     at the influence of new media on our industry, we are
15     endeavouring to find a balance between the services
16     that are, firstly, a legitimate extension of
17     broadcasting; secondly, dedicated programming for the
18     new media; thirdly, electronic opportunities through
19     legal commercial transactions and, fourthly, grappling
20     with the illegal transactions that are already draining
21     an estimated $1 billion U.S. from our industry.
22  8230                 The Internet is the medium on which
23     electronic commerce is currently conducted.  More than
24     100 million people are using it worldwide today and
25     this is expected to escalate to 325 million in 2002.


 1  8231                 In many respects it offers unique
 2     opportunities for our prerecorded music products to
 3     reach wider markets and conversely for the general
 4     public to have access to virtually an unlimited
 5     selection of sound recordings.  It could indeed be the
 6     virtual record store.
 7  8232                 This scenario would be somewhat more
 8     fulfilling were it not for the fact that from our
 9     industry's perspective, the Internet currently
10     resembles a somewhat lawless society in which thousands
11     of sound recordings are illegally posted and an
12     estimated three million tracks are downloaded daily,
13     resulting in an estimated retail sales loss of $1
14     billion U.S. annually.
15  8233                 A recent "Time" magazine reported
16     that with a cable modem, you could download the entire
17     Encyclopedia Britannica in less than 30 minutes and a
18     music CD in a mere three minutes.
19  8234                 We raise these issues at this time
20     because it is important to reinforce that there are
21     currently many new media services that are clearly not
22     broadcasting in substance.
23  8235                 The Internet, as we know, is used as
24     a substitute for terrestrial broadcasting.  This is
25     witnessed by the number of simulcasters and webcasters


 1     that are currently occupying Web sites that are
 2     available to anyone around the globe with access to a
 3     personal computer, sound card and speakers.
 4  8236                 According to the MIT List of Radio
 5     Stations on the Internet, there are currently 81 radio
 6     stations in Canada and 852 in the United States whose
 7     broadcasts are available as rebroadcasts or simulcasts.
 8  8237                 An analysis of the current provisions
 9     in the Broadcasting Act that define the process of
10     broadcasting does so, in our opinion, in such a broad
11     manner as to extend the Commission's jurisdiction over
12     transactions involving the delivery of non-material
13     products such as sound recordings.
14  8238                 The definition of broadcasting, which
15     is exceedingly wide in scope, encompasses virtually all
16     transmissions so that in effect all transmissions of
17     recorded music on the Internet could be cast as within
18     the definition of broadcasting under the Broadcasting
19     Act.
20  8239                 We do not, of course, consider that
21     many of the services involving recorded music on the
22     Internet are by intent and purpose a broadcasting of
23     recorded music.
24  8240                 We submit that the Commission should
25     and must recommend to the government that the


 1     provisions of the Broadcasting Act be reviewed and that
 2     the definition of broadcasting in the Act be redefined
 3     so as not to encroach upon the commercial marketplace
 4     of transactions in electronic commerce.
 5  8241                 Further, in support we wish to draw
 6     the Commission's attention to the two most recently
 7     concluded international agreements, which you heard a
 8     little bit about this morning, to which Canada is now a
 9     signatory.
10  8242                 These agreements, made at Geneva in
11     1996, map out the necessary legal principles which we
12     submit must be universally applied in respect of the
13     electronic transmission of works in which copyright
14     subsists and of sound recordings and performers'
15     performances in which copyright subsists.
16  8243                 The treaties, referred to as the WIPO
17     Copyright Treaty and the WIPO Performances and
18     Phonograms Treaty, introduce a new right.  This new
19     right, which stands alone as an exclusive right of
20     producers of sound recordings, is known as the right of
21     making available.
22  8244                 In Article 14 of the WIPO
23     Performances and Phonograpms Treaty, that right is
24     provided as follows:
25                            "Producers of phonograms shall


 1                            enjoy the exclusive right of
 2                            authorizing the making available
 3                            to the public of their
 4                            phonograms by wire or wireless
 5                            means in such a way that members
 6                            of the public may access them
 7                            from a place and at a time
 8                            individually chosen by them."
 9  8245                 It is our submission that the new
10     right of making available contemplates a non-physical
11     or non-material alternative to the sale of sound
12     recordings.
13  8246                 The CRTC currently does not regulate
14     the sale of recorded music on physical carriers.  We
15     submit that the jurisdiction of the CRTC clearly should
16     not expand to encompass those transactions of making
17     available sound recordings.
18  8247                 As we referenced earlier, the
19     recording industry on a global scale is experiencing
20     infringement of copyright via electronic transmissions
21     of non-physical copies of recorded music in a
22     compressed form known as MP3 or M Peg 3.
23  8248                 This new form of piracy is directly
24     related to the inability of copyright owners under the
25     current legislation to exercise their rights in respect


 1     of new media available through electronic commerce and
 2     other means.
 3  8249                 The recording industry in Canada,
 4     which is the primary entity responsible for creating,
 5     preserving and disseminating artistic expressions of
 6     musical works, cannot continue to thrive in an
 7     environment which is hostile to the investment and
 8     development of online services for the transmission of
 9     recorded music.
10  8250                 In conclusion, we would reiterate
11     that in this review process the Commission should
12     clearly define the regulatory areas and just as clearly
13     recognize the separate marketplace of electronic
14     commerce.
15  8251                 For the former, that might be defined
16     as extensions of the existing broadcasting framework,
17     we would offer our endorsement of the need to maintain
18     fair and balanced policies that continue to encourage
19     the development of Canadian cultural works in keeping
20     with the sovereignty and cultural identifies of the
21     Broadcasting Act.
22  8252                 On the latter issue, we would
23     continue to urge our government to move forward without
24     delay to sign legislation that will implement the
25     provisions of the WIPO treaties.  These treaties make


 1     it absolutely clear that copyright holders have sole
 2     control over the interactive transmission of their
 3     works through new media services.
 4  8253                 That concludes our presentation.
 5  8254                 Thank you.
 6  8255                 THE CHAIRPERSON:  Thank you, Mr.
 7     Robertson.  I will turn the questioning to Commissioner
 8     Wilson.
 9  8256                 COMMISSIONER WILSON:  Good afternoon,
10     gentlemen.
11  8257                 MR. ROBERTSON:  Good afternoon.
12  8258                 MR. THOMPSON:  Good afternoon.
13  8259                 COMMISSIONER WILSON:  I would like to
14     begin by asking you for some clarification of some of
15     your oral comments.  I just want to get some more
16     information, mostly about the treaties that you
17     referred to.
18  8260                 I will ask you some questions of
19     clarification relating to your written submission and
20     then I would like to explore what your primary argument
21     is with respect to primary sources, secondary sourcing
22     of recordings as the basis for taking the Commission
23     has no jurisdiction over your members' works.
24  8261                 I have to tell you that my background
25     is in television.  The music that we used at the


 1     channel that I was with was public domain or, as your
 2     lawyer used to irreverently refer to it, and I hope
 3     this doesn't offend anybody, music by guys who have
 4     been dead for 50 years.
 5  8262                 The area of rights is one that
 6     presents a lot of challenges for me.  I would like to
 7     tell you right from the beginning if some of my
 8     questions seem a little bit basic, then part of this
 9     process is for us to gain a better understanding of how
10     this works and especially with respect to new media
11     which is a new environment.
12  8263                 I wonder if you could just begin by
13     telling me -- first of all, how many members does your
14     organization have?
15  8264                 MR. ROBERTSON:  Thirty.
16  8265                 COMMISSIONER WILSON:  Thirty.  Okay. 
17     The treaties that you are referring to, the WIPO
18     treaties on copyright and performers and phonograms.
19     On page 5 you say:
20                            "These agreements made at Geneva
21                            in 1996 map out the necessary
22                            legal principles which we submit
23                            must be universally applied in
24                            respect of the electronic
25                            transmission of works in which


 1                            copyright subsists."
 2  8266                 Did either of those treaties
 3     specifically contemplate the transmission of sound
 4     recordings on the Internet?
 5  8267                 MR. ROBERTSON:  I am going to ask Mr.
 6     Thompson to respond to that.  He was very much involved
 7     in international negotiations and also with having
 8     Canada endorse the treaty.  I will let him respond.
 9  8268                 MR. THOMPSON:  Thanks, Brian.
10  8269                 Yes, they do.  In fact, I have one of
11     the treaties with me here or a copy of it.  This is the
12     Performances and Phonograms Treaty which is directly
13     focused on the rights of producers of sound recordings
14     and performers.
15  8270                 As Brian had mentioned in his
16     comments this afternoon, Article 14 creates a new
17     right, a right called making available, which is an
18     exclusive right.  In a very simple sense, it means the
19     right to say no and the right to say yes.
20  8271                 Under previous amendments to the
21     Copyright Act, most specifically Bill C-32, there were
22     rights added for performers and producers of sound
23     recordings on what is usually called neighbouring
24     rights.  These are mere rights of remuneration which
25     doesn't allow the owner of copyright to actually have a


 1     choice as to whether or not a user may use something. 
 2     It is only a right for remuneration.
 3  8272                 In contrast, these new treaties
 4     create something new that allows copyright owners, not
 5     only performers and producers of phonograms but other
 6     copyright owners, the security of knowing they have a
 7     legal framework in which they can conduct commerce in a
 8     non-physical environment such as the Internet or
 9     electronic commerce as it is generally called.
10  8273                 COMMISSIONER WILSON:  When those
11     treaty discussions were taking place -- I don't know
12     how much work you have done in that area.  If you don't
13     know the answers to my questions, just don't worry
14     about it.
15  8274                 Did they discuss specifically the
16     notion -- quite apart from the notion because you make
17     that point in your submission that this is a
18     transaction that takes place over the Internet.  It's
19     the making available of a sound recording in a
20     non-physical form.
21  8275                 Was that discussed during those
22     treaty discussions?
23  8276                 MR. THOMPSON:  Most certainly.  In
24     fact, it was quite a lengthy consultation process here
25     in Canada that preceded those treaties.


 1  8277                 Internationally there were a
 2     considerable number of meetings which were referred to
 3     as meetings of experts, primarily held outside of
 4     Canada in which the Canadian delegation was present
 5     primarily from Industry and Heritage Canada.
 6  8278                 There was also a process that
 7     operated through the Stockholm group in which Canada
 8     has a prime interest and has participated which is a
 9     group of governments that sets policies and discusses
10     in the broad sense for principles for protection of
11     copyright, specifically with a future outlook.
12  8279                 Even though as a non-governmental
13     organization, because we are not directly involved in
14     that, we are certainly aware of what is happening
15     there.  In fact, this treaty or these two treaties have
16     been ratified in the United States for all intents and
17     purposes.
18  8280                 In the passage of the Digital
19     Millennium Copyright Act quite recently, and in fact
20     this probably carries on a little more than what you
21     are asking for in your question --
22  8281                 COMMISSIONER WILSON:  By all means.
23  8282                 MR. THOMPSON:  In fact you may see in
24     the upcoming year a broader approach to commerce on the
25     Internet, specifically from those copyright industries


 1     such as film and sound recording.
 2  8283                 In fact, if that answers your
 3     question, there was quite a considerable amount of
 4     discussion and consultation.  This was not a quick
 5     process.  It was quite lengthy.  And of course the
 6     Internet and electronic commerce has moved much faster
 7     than this process ever did.
 8  8284                 The application is far ahead of the
 9     legal framework that has been attempted to be put
10     together through these two treaties.
11  8285                 COMMISSIONER WILSON:  I don't know if
12     you are aware of whether or not during those
13     discussions there was any discussion about whether or
14     not the transmission of sound recordings over the
15     Internet constituted broadcasting versus a commercial
16     transaction.
17  8286                 MR. THOMPSON:  To answer that I am
18     going to return to the treaty again.  There is a
19     portion of it -- if you are actually interested in it,
20     the treaty is available on the Internet at Web site
22  8287                 If you turn to Article 15, it
23     reiterates those previous rights which we called
24     neighbouring rights.  It's a right of remuneration for
25     broadcasting and communication to the public.  That's


 1     the heading.
 2  8288                 I won't read the whole article for
 3     you, but the intent of that article is in fact to
 4     restate what had previously been the general
 5     international framework for rights of communication,
 6     public performance and broadcasting in what was called
 7     the Rome convention, which stems from the early 1960s
 8     and to which Canada recently became a signatory, I
 9     believe in the summer of -- I believe it was this
10     summer, 1998, July 4  -- June 4 or 22, one of those two
11     dates.
12  8289                 We did that by filing our Bill C-32
13     amendments, our amended Copyright Act, with the United
14     Nations, as is required under the provisions of the
15     Rome Convention.  That's Article 15.  That's a right of
16     remuneration.  It specifically is directed towards a
17     broadcasting use whereas the right of making available
18     is something new and something broader in scope.  It is
19     an exclusive right as opposed to a right of
20     remuneration.
21  8290                 COMMISSIONER WILSON:  How many
22     signatories are there to the two treaties?
23  8291                 MR. THOMPSON:  Over 30.
24                                                        1420
25  8292                 COMMISSIONER WILSON:  Over 30.  How


 1     many other countries have ratified the treaties?
 2  8293                 MR. THOMPSON:  The United States is
 3     in position to ratify; the European Union is also in a
 4     position to ratify, and that will take in the States of
 5     the Union, plus there is a separate designation for the
 6     European Union itself, which will obtain a vote because
 7     it is a single economic community.  Japan, of course,
 8     is in a position to ratify, or soon will be.
 9  8294                 The only States which have actually
10     ratified the treaties, which means that they have
11     implemented them in their own domestic legislation, are
12     Indonesia, which has only implemented one of the two
13     treaties, and Muldova.
14  8295                 But despite that, this is only a year
15     old, it is quite amazing that 30 countries actually
16     signed the treaty before December -- before January 1,
17     1997.  So in fact in legal terms, international legal
18     terms, it is moving very quickly.
19  8296                 COMMISSIONER WILSON:  Okay.  Thank
20     you.
21  8297                 I would like to go now to your
22     written submission.
23  8298                 On page 3 of your submission you
24     state that of particular concern to CRIA is:
25                            "... the use of its member's


 1                            sound recordings in new media
 2                            applications such as interactive
 3                            streaming audio services." 
 4                            (As read)
 5  8299                 Further on you talk about the
 6     hundreds of services that offer sound recordings, and
 7     in your oral comments talk about grappling with illegal
 8     transactions that are already draining $1 billion U.S.
 9     a year from your industry.
10  8300                 Are your members receiving royalties
11     for music, their music that is transmitted over the
12     internet?
13  8301                 MR. ROBERTSON:  No, we are not. 
14     There is no collective licensing of any recorded music
15     or any video that features recorded music on the
16     internet currently at all.
17  8302                 So any sound recordings by our
18     members that are posted, and there are many thousands,
19     is all illegal.
20  8303                 COMMISSIONER WILSON:  Is anybody
21     receiving any royalty payments that you are aware of --
22  8304                 MR. ROBERTSON:  No.
23  8305                 COMMISSIONER WILSON:  -- from audio
24     streaming?
25  8306                 MR. ROBERTSON:  No.


 1  8307                 COMMISSIONER WILSON:  Okay.  On
 2     page 3 of your submission you stated that:
 3                            "Although the Commission has in
 4                            the past disavowed any
 5                            jurisdiction in respect of
 6                            copyright, CRIA wishes to remind
 7                            the Commission that the sole
 8                            legal basis on which the
 9                            recording industry relies to
10                            protect its sound recordings,
11                            which are its most important
12                            commercial assets, are the legal
13                            rights it is entitled to under
14                            copyright law."  (As read)
15  8308                 Now, I'm curious about this
16     statement, just maybe because of the phraseology,
17     because the first part of the sentence says:
18                            "Although the Commission has in
19                            the past disavowed any
20                            jurisdiction ..."
21  8309                 It sounds like you are going to say
22     maybe there was a spot for you, and then you turn
23     around and say:  Although you have disavowed any
24     jurisdiction.  You are right, you have no jurisdiction.
25  8310                 So I am just trying to get at what


 1     you mean by that statement.
 2  8311                 MR. THOMPSON:  Well, it has always
 3     been our position, I think, that the Commission should
 4     take into consideration matters of copyright,
 5     specifically because, for lack of a better word, the
 6     content or the substance of most broadcasting, and now
 7     transmissions by a new media.  Well, by new media,
 8     whatever that, whatever you want to call it.
 9  8312                 COMMISSIONER WILSON:  What do you
10     mean by "take into consideration"?
11  8313                 MR. ROBERTSON:  Well, the fact
12     that --
13  8314                 COMMISSIONER WILSON:  In some way
14     other than the way that the copyright law now
15     functions?
16  8315                 MR. THOMPSON:  Well, the fact that
17     the content or the substance of those transmissions is
18     protected by a law, and if there is no observance of
19     that protection the Commission should take that into
20     consideration in making its determinations with respect
21     to licensing and policy concerning transmissions and
22     broadcasting, essentially the matters of which it has
23     jurisdiction.
24  8316                 COMMISSIONER WILSON:  Okay.  I think
25     I understand what you mean by that.


 1  8317                 MR. THOMPSON:  If you want a
 2     historical reference, we were last here during the pay
 3     audio hearings.  These are the ones that dealt with
 4     digital transmissions over cable.
 5  8318                 COMMISSIONER WILSON:  Right.
 6  8319                 MR. THOMPSON:  And we raised the
 7     issue then, which was prior to Bill C-32, that there
 8     were no broadcasting rights and that in effect pay
 9     audio was going to displace sales of sound recordings
10     to a certain extent.
11  8320                 Now, while that never transpired,
12     because there just doesn't seem to be a market for pay
13     audio, it was nonetheless the position that we took. 
14     And we were somewhat -- well, I guess historically we
15     were put in -- I won't say we were told by the
16     Commission, but it was gently suggested that copyright
17     was not an issue with respect to those hearings.
18  8321                 COMMISSIONER WILSON:  Okay.  On
19     page 9 of your written submission you talk about the
20     notion of the transactional services, which is the
21     downloading of sound recordings from the internet, and
22     you equate this to the distribution and sale of a
23     physical product.
24  8322                 When people are downloading -- and
25     maybe you have already this question.  But when


 1     consumers or end users are downloading sound recordings
 2     from the internet, are they paying for those?
 3  8323                 MR. ROBERTSON:  Mostly not.  As I
 4     said earlier, there were no sound recordings owned by
 5     our members that are legally --
 6  8324                 COMMISSIONER WILSON:  Available.
 7  8325                 MR. ROBERTSON:  -- available, with
 8     the exception of some samples that may be there on
 9     various legal web sites.
10  8326                 But from a commercial point of view,
11     there is nothing there that is legally -- that can be
12     legally downloaded.  There are a number of independent
13     recordings by independent producers that are posted
14     there, mostly for marketing and promotional purposes,
15     that are downloaded mostly without charge, without any
16     cost at all.
17  8327                 But our members have been extremely
18     cautious about, as I said, what we view as a total
19     lawless society with almost no regulation or ability to
20     control it.  Extremely cautious about legally putting
21     any of their product there.  All of the recordings that
22     are there now, with the exception of the independents,
23     are all illegally posted.
24  8328                 I can tell you that our Association
25     is sending out an average of about 20 cease and desist


 1     letters a week to illegal web sites in Canada alone
 2     that are illegally posting commercial sound recordings.
 3  8329                 So it is a major problem worldwide,
 4     but just as important here.  The proliferation of
 5     illegal web sites in the world, the two largest areas,
 6     one is the United States and one is Canada.
 7  8330                 COMMISSIONER WILSON:  The reason I'm
 8     asking about whether or not your members are receiving
 9     royalties or whether or not the consumers or end users
10     are paying for these sound recordings as they download
11     them on a transactional basis is to try to understand
12     whether or not there is any sort of consumer behaviour
13     or market behaviour that underlies your sort of
14     theoretical approach based on the WIPO treaties.  That,
15     you know, there are these two rights, one of making
16     available and one of communication, and that your
17     members works fall under the first right, the right of
18     making available.  But in fact there is -- I mean, no
19     one is paying for any of this, so none of those rights
20     are being observed.
21  8331                 MR. ROBERTSON:  No, not at all.
22  8332                 COMMISSIONER WILSON:  In the context
23     of the internet.
24  8333                 MR. ROBERTSON:  The importance of the
25     WIPO treaties is to legally -- is to put a legal


 1     framework in place that would allow the industry to
 2     develop a watermarking system whereby sound recordings
 3     have a digitally encoded message which identifies the
 4     recordings and also, to some degree hopefully, has an
 5     anti-copying device.
 6  8334                 So I think that will follow the
 7     ratification of these WIPO treaties, that in fact all
 8     current and future recordings will have watermarks in
 9     them so that the copyright owners would be identified. 
10     The whole ownership will be there, plus there will be,
11     in some form, an anti-copying device which will help
12     protect the wide-spreading copying that is going on
13     now, which is out of control virtually.
14  8335                 MR. THOMPSON:  The treaties
15     themselves, as Brian has said, are just a framework,
16     legal principles on which we can hang our own domestic
17     law.
18  8336                 As David Basskin pointed out this
19     morning, there were two matters which he raised that
20     the treaties address and which are necessary for
21     copyright owners to comfortably do business on the
22     internet and, as Brian said, one of them is an
23     encryption type.  That falls under provisions in these
24     treaties that discuss legal principles around copyright
25     management.


 1  8337                 The other aspect is the anti-
 2     circumvention that David Basskin spoke of this morning,
 3     and that is essentially providing some kind of legal
 4     framework and enforcement of devices that keep people
 5     from making copies, or keep them from stepping outside
 6     of the electronic -- legitimate, legal, lawful
 7     electronic stream of commerce, which is likely going to
 8     develop quite quickly as soon as there is a legal
 9     framework so that we can all feel comfortable, we can
10     work within in.
11  8338                 It's like everything else.  You can't
12     sell your house without working within the legal
13     framework of land titles and land transfers.  It's not
14     much different really in terms of copyright.  We want
15     to be able to sell our products and to market them in a
16     vast new and promising media, but we can't do it unless
17     there is some assurance and some comfort that we can
18     conduct business on somewhat of a level playing field. 
19     As Brian says, right now it is lawless.
20  8339                 COMMISSIONER WILSON:  And you need
21     those laws?
22  8340                 MR. THOMPSON:  Definitely we need to
23     address those issues, and we definitely need those laws
24     in place.
25  8341                 COMMISSIONER WILSON:  But you don't


 1     need any regulation by the CRTC.
 2  8342                 MR. THOMPSON:  We didn't say that
 3     exactly.
 4  8343                 MR. ROBERTSON:  No, I think we are
 5     talking --
 6  8344                 COMMISSIONER WILSON:  Because I
 7     think -- well, there are two spots.  One page 4 you
 8     say:
 9                            "CRIA wishes to impress upon the
10                            Commission that any perceived
11                            regulation of new media in which
12                            sound recordings are embodied
13                            and which would impact on the
14                            exercise of these rights and
15                            copyright will in turn impact
16                            the development of the recording
17                            industry."  (As read)
18  8345                 And then on page 12 you say:
19                            "It is therefore important that
20                            the Commission recognize that
21                            the Canadian sound recording
22                            industry's participation as a
23                            supplier of content in the
24                            future new media is dependent
25                            upon the CRTC's role in respect


 1                            of any possible regulatory
 2                            measures for new media." 
 3                            (As read)
 4  8346                 MR. ROBERTSON:  I guess to some
 5     degree -- on our oral presentation we identified the
 6     four areas that are important.  One is the legitimate
 7     extension of broadcasting -- which is on page 2, I
 8     think, of the oral presentation -- the legitimate
 9     extension of broadcasting.  Second, the dedicated
10     programming for the new media.  And then we get into
11     electronic commerce, which is the commercial
12     transactions.
13  8347                 These are the areas that we don't
14     believe, obviously, the Commission should be involved
15     in because they will essentially, in the future, be
16     replacing the -- or not replacing, but supplementing
17     the existing retail environment that we have.
18  8348                 COMMISSIONER WILSON:  What do you
19     consider a legitimate extension of broadcasting?
20  8349                 MR. THOMPSON:  Well, for example, the
21     digital audio broadcasts, which are essentially -- this
22     is a concrete example -- are poised to be commercially
23     exploited.  I'm sure you have heard from the Canadian
24     Association of Broadcasters about digital audio
25     broadcasting.  It is essentially going to replace AM


 1     and FM radio and provide better quality signal.  That
 2     would be an extension of traditional broadcasting.
 3  8350                 Webcasting, as Brian mentioned in his
 4     comments, which is essentially radio programming
 5     dedicated for the internet, may be an extension of
 6     broadcasting in that it is transmitted using a
 7     streaming technology which notionally has no ability to
 8     be downloaded.
 9  8351                 Secondly, it is programming that has
10     been developed by the person who is sending it out.  It
11     is being pushed out from a webcaster.
12  8352                 In other words, in contrast, an
13     interactive site which allows you to connect to a
14     database provided by somebody so that you can choose
15     individual sound recordings that you want to listen to
16     at a place and time that you want to listen to them is
17     probably not an extension of broadcasting in that it is
18     more -- it is very similar to you going to the shelf in
19     your house and choosing CDs that you are going to put
20     on your CD player or, even further, you going down to
21     the rental movie shop and picking movies that you want
22     to watch.
23  8353                 It is a little more sophisticated
24     than that.  In fact, you could take it further and say
25     this is just like going to HMV and picking a record off


 1     the shelf and paying for it, except I'm not getting
 2     that little piece of plastic and the fancy paper that
 3     goes with it.  That is maybe the downside.
 4  8354                 COMMISSIONER WILSON:  And also they
 5     don't have records any more.
 6  8355                 MR. THOMPSON:  The upside could be
 7     that you would have much --
 8  8356                 COMMISSIONER WILSON:  It will be all
 9     cassettes and CDs.
10  8357                 MR. THOMPSON:  You would have a much
11     larger choice electronically.
12  8358                 COMMISSIONER WILSON:  Yes.
13  8359                 MR. THOMPSON:  And of course the
14     recording industry would certainly like to service that
15     market but, once again, they have to feel comfortable
16     that they can do business in an electronic world.
17  8360                 COMMISSIONER WILSON:  The previous
18     intervenors had a comment in their oral remarks, they
19     said that CIRPA feels that the Commission, as far as it
20     is able, should ensure that rights payments are easily
21     collected by owners.  So in terms of the whole issue of
22     copyright, they see a role for the Commission.  How do
23     you react to that?
24  8361                 MR. THOMPSON:  Well, once again, I
25     think David Basskin is actually the person who


 1     mentioned it, and he said:  Should there be a place for
 2     the Commission to essentially censure those who have
 3     licences to broadcast if they don't pay copyright, if
 4     they don't pay for the use of the rights, if they don't
 5     observe that there is a legal obligation for clearance. 
 6     I think that was his point.  Of course, we would
 7     obviously endorse that.
 8  8362                 Whether or not you feel that is
 9     within your jurisdiction, it probably goes back to that
10     earlier question about whether or not -- which you
11     asked, whether or not copyright is a consideration for
12     the Commission to make.
13  8363                 I think that was the context it was
14     made.
15  8364                 COMMISSIONER WILSON:  Okay.  Thank
16     you.
17  8365                 Those are my questions, Mr. Chair.
18  8366                 THE CHAIRPERSON:  Thank you,
19     Commissioner Wilson.
20  8367                 I'm sorry.  I should be used to this
21     by now.
22  8368                 Thank you, Commissioner Wilson.
23  8369                 Just a quick question.  You
24     mentioned, Mr. Robertson, in answer to one of the
25     questions, that electronic -- you referenced


 1     broadcasting over the internet and then drew the
 2     distinction between that and electronic commerce.  I
 3     believe you said electronic commerce, which obviously
 4     the Commission should be involved in.  If that is what
 5     you said.
 6  8370                 MR. ROBERTSON:  Should not be
 7     involved in.
 8  8371                 We were trying to make the separation
 9     between broadcasting and electronic commerce, which is
10     the commercial transaction of sound recording.
11  8372                 THE CHAIRPERSON:  Which you meant
12     should not be involved in.
13  8373                 MR. ROBERTSON:  Yes.
14  8374                 THE CHAIRPERSON:  Okay.  I'm sorry, I
15     misunderstood.
16  8375                 MR. ROBERTSON:  Yes.  Yes.
17  8376                 THE CHAIRPERSON:  This is why I
18     wanted to clarify it with you.
19  8377                 Did you have a comment on the issue I
20     raised this morning with Mr. --
21  8378                 MR. ROBERTSON:  Oh, yes, I can. Sure.
22  8379                 THE CHAIRPERSON:  I thought you
23     might.
24  8380                 MR. ROBERTSON:  To reiterate, I think
25     it was the comment by CHUM that they could not obtain


 1     the licensing for the music video for Alanis Morissette
 2     in Canada, while in the United States allegedly they
 3     could.
 4  8381                 I can tell you quite clearly, because
 5     both Ken and I are involved on the international
 6     committees that deal with internet licensing, there is
 7     no collective licensing at all being done on music
 8     videos internationally, and so, therefore, when Alanis
 9     Morissette was here about three or four weeks ago and
10     CHUM were doing a live and interactive program for
11     MuchMusic and some of their other stations, they could
12     not obviously get the use -- to use music videos on
13     their web site.
14  8382                 He mentioned the States.  I don't
15     know quite exactly what the position is there, but as
16     David Basskin said, there was no -- CHUM made no
17     mention of monetary consideration here, of actually
18     paying license fees for the use of this product.
19  8383                 Now, it's possible that in the States
20     there was some monetary consideration by MTV given to,
21     not necessarily the record company but maybe Alanis
22     Morissette's management or her directly that allowed
23     them, on some restricted basis, to use the video.  It
24     is possible.
25  8384                 I don't even know whether in fact it


 1     was used in full.  I know there has been some uses
 2     granted of only 30 seconds, of just samples, and it is
 3     to my knowledge that the full length videos have not
 4     been licensed at all, other than the possible exception
 5     of that limited use that may have been done for MTV, if
 6     it happened.
 7  8385                 I mean, it is just alleged.  Whether
 8     it happened -- I don't know whether it happened or not,
 9     but I certainly know that in Canada the position is
10     that there is no licensing of any music video product
11     at all being done on the internet.
12  8386                 THE CHAIRPERSON:  And it is your
13     understanding it would be the same situation in the
14     States, or you guess it would be the same?
15  8387                 MR. ROBERTSON:  Well, we certainly
16     know it is a policy worldwide, because Ken and I sit on
17     the committees worldwide, and there is -- I mean, (a)
18     there was the licensing to start with; (b), the second,
19     is the whole monetary consideration.
20  8388                 Perhaps there was a negotiation about
21     compensation and it was never resolved.  We don't know. 
22     Maybe it was resolved directly in the States with MTV
23     possibly.  But, as I say, collectively there is no
24     collective licensing at all happening.
25  8389                 THE CHAIRPERSON:  Okay.  All right.


 1  8390                 Thank you for that clarification.
 2  8391                 MR. ROBERTSON:  Not at all.
 3  8392                 THE CHAIRPERSON:  Thank you for your
 4     presence here today.
 5  8393                 MR. ROBERTSON:  Good.  Thank you.
 6  8394                 THE CHAIRPERSON:  Madam Secretary.
 7  8395                 MS BÉNARD:  Thank you, Mr. Chairman.
 8  8396                 The next presentation will be by the
 9     Alliance of Canadian Cinema, Television and Radio
10     Artists.
12  8397                 MR. BISHOPRIC:  Thank you,
13     Mr. Colville and Commissioners.
14  8398                 My name is Thor Bishopric.  I am Vice
15     President of the ACTRA's Performers Guild, and Chair of
16     ACTRA's New Technologies Committee.  With me today is
17     Garry Neil, ACTRA's Policy Advisor.
18  8399                 I am a Canadian actor based in
19     Montreal.  I work in all areas of ACTRA's jurisdiction,
20     including new media.  My voice can be heard on several
21     CD-ROMs and on internet worldwide web sites, usually
22     associated with some of the excellent children's
23     television programs we produce in Canada.
24  8400                 Among my 11,000 ACTRA colleagues
25     there are many who work in productions available via


 1     the new digital technologies or created specifically
 2     for new media formats.  Traditional recorded media
 3     producers now regularly use the internet to promote
 4     their material.  Some are beginning to add value to
 5     their programs, making them interactive and seeking
 6     distribution as CD-ROMs or through high speed networks.
 7  8401                 The CBC is now producing material
 8     specifically for their internet site, and ACTA members
 9     across the country are called upon to perform directly
10     in the productions of the emerging new media
11     developers.
12  8402                 All of the categories which ACTRA
13     represents, from actors, singers and dancers, through
14     hosts and announcers, to stunt performers and
15     co-ordinators, have been called upon to work in the new
16     media.  So ACTRA has a vital stake in these hearings,
17     which are convened at a critical time.  We are pleased
18     to be with you today to review our concerns.
19  8403                 ACTRA members and other creative
20     artists are anxious to continue to work in the new
21     media.  It is another outlet for our creativity and a
22     source of additional remuneration, both for the
23     opportunities for existing product made possible by the
24     new distribution technologies, and for the original
25     work we perform.  But here is where we confront the


 1     first challenge of new media for Canadian performers.
 2  8404                 New media producers are sometimes
 3     unaware of the role which professional associations and
 4     guilds, such as ACTRA, play in the production process. 
 5     As a result, the products created by some of these
 6     developers fail to achieve the high quality found in
 7     Canada's television, film, radio and sound recording
 8     sectors.
 9  8405                 For ACTRA and colleague
10     organizations, there is, first of all, the challenge of
11     ensuring that our jurisdiction and collective
12     agreements are respected.
13  8406                 The process of digitization, which is
14     at the heart of new media, reduces all components of
15     the production to the same 1's and 0's.  This raises
16     the possibility of unauthorized copying or manipulation
17     of the recorded performance, and its use in ways not
18     intended by the producers, where artists are not
19     compensated.
20  8407                 In order both to ensure that
21     producers and developers can have access to the wealth
22     of talent this country has to offer, and to ensure that
23     artists are properly compensated when their work is
24     made available, ACTRA has proposed the creation of a
25     joint public/private sector agency.  The agency would


 1     be a clearinghouse for the rights needed to produce new
 2     media material and a monitoring agency to ensure that
 3     the necessary rights payments are made to performers
 4     and other creators whose material is involved.  ACTRA
 5     believes the CRTC should join with us in urging the
 6     creation of such an agency.
 7  8408                 The other fundamental part of
 8     ensuring that performers are not exploited in the new
 9     media is to amend Canada's Copyright Act to expand the
10     very narrow performers rights which currently exist and
11     provide a comprehensive right in audiovisual
12     performances to be owned by the performer.  ACTRA hopes
13     the CRTC will comment on the need for such a change in
14     its report.
15  8409                 But ACTRA is concerned about new
16     media from more than just a narrow self-interest.  Our
17     members believe that for cultural reasons Canadians
18     must have access to high quality Canadian choices in
19     every field, including information, entertainment and
20     news programming delivered to them in every conceivable
21     format.  To achieve this fundamental and legitimate
22     public policy objective requires the institution of
23     appropriate regulations and policies.  The history of
24     Canada's broadcasting system surely demonstrates this
25     need.


 1  8410                 In ACTRA's view:
 2  8411                 When an audiovisual program is
 3     distributed to members of the public, either at a set
 4     time or at a time individually chosen by them, there
 5     exists a broadcast which can and should be regulated by
 6     the Commission; and
 7  8412                 When a private audio communication is
 8     transmitted among a defined, controlled and limited
 9     audience, the carrier of that communication can and
10     should be regulated under the Telecommunications Act.
11  8413                 So you can count ACTRA squarely among
12     those appearing before you who favour the regulation of
13     new media distribution services, including internet
14     service providers -- ISPs.
15  8414                 ACTRA recognizes that the nature of
16     the regulation to be imposed will and should be
17     different.  We know for example that ISPs also transmit
18     alphanumeric text which is excluded from the
19     definitions of the Broadcasting Act.  We also know that
20     it is impossible to regulate Canadian content within
21     the system in the same way that the CRTC has done for
22     broadcasting services.
23  8415                 But we favour the adoption of
24     regulations which, at a minimum, require that
25     distributors contribute to the creation of a


 1     development fund to be made available to producers of
 2     Canadian digital media content.
 3  8416                 ACTRA also believes it is critical to
 4     begin an examination of the next generation of
 5     navigation systems which will be used to help consumers
 6     select material from among the almost limitless
 7     selections offered to them.  Surely it is not too much
 8     to ask that in the design and implementation of such
 9     systems a priority place be provided to Canadian
10     choices, not in a "Canadian" ghetto, but as one of many
11     in whatever category is being searched.  ACTRA would
12     welcome a targeted discussion of this issue among
13     content providers, distributors of digital material
14     through the internet and other high speed networks, and
15     the developers of the hardware and software which make
16     such distribution possible.
17  8417                 These are indeed exciting times in
18     our industries.  As technology continues to develop,
19     there will be a greater and greater demand for digital
20     creative content of all kinds.  Canada is well-
21     positioned to help provide this content and thus ensure
22     there is diversity in the system, not only for
23     Canadians but for audiences around the world.
24  8418                 The members of ACTRA are prepared to
25     do our part in achieving the objectives, and we believe


 1     our producers are prepared as well.  We are here
 2     looking to you to develop and implement the necessary
 3     policies and regulations which will create the
 4     environment in which such activity can flourish.
 5  8419                 Thank you.
 6  8420                 THE CHAIRPERSON:  Thank you,
 7     Mr. Bishopric.
 8  8421                 I will turn the questioning to
 9     Commissioner Pennefather.
10  8422                 COMMISSIONER PENNEFATHER:  Good
11     afternoon.  Thank you for joining us and contributing
12     to our discussions.
13  8423                 I would like to expand on just a few
14     points.
15                                                        1450
16  8424                 I won't have too many questions
17     because I think your written presentation today does
18     take us straight through some of the main components of
19     your written presentation very well.
20  8425                 The first piece that I would like
21     talk to you about, get some elaboration on, is what
22     this new media is for you and your members.  What are
23     we talking about?
24  8426                 I grant that you have described some
25     of the activities, CD-ROM, Web site, voice over,


 1     various other productions that you may be involved in. 
 2     In your paper you described three basic areas:  the
 3     enhancement of existing media, new composition and
 4     others.
 5  8427                 Could you just elaborate a little
 6     more on what we are talking about when we are talking
 7     about new media content?
 8  8428                 MR. NEIL:  Thank you very much.
 9  8429                 In a way, Thor and I were discussing
10     this at lunch time in hearing some of the other
11     intervenors.
12  8430                 We might be getting hung up a little
13     too much on trying to define new media.  A personal
14     observation, I don't think it's that difficult in fact
15     to define it if you truly want to do it because the key
16     element that draws it all together is at some point you
17     need a computer to transmit to retranslate for you the
18     ones and zeros back into a form that you can
19     comprehend.
20  8431                 The key is that a computer must be
21     processing the information at some point, whether we
22     are talking as earlier today about a refrigerator that
23     is smart and can order the stuff from the stores for
24     you or whether we are talking about high definition
25     television.  The key is the existence of that computer


 1     which processes the information.
 2  8432                 The critical issue surely for the
 3     Commission, indeed as it is for ACTRA, is what is the
 4     content?  What is the cultural objective as it relates
 5     to that content and how can we ensure that the cultural
 6     objectives are met, regardless of the form in which the
 7     production is finally being put together or the
 8     distribution technology being utilized to transmit it
 9     from point "A" to the end consumer, whoever that might
10     be.
11  8433                 It seems to me that we can get hung
12     up perhaps a little bit too much on trying to define
13     new media when rather what we should be looking at is
14     what is the content that is being produced, being
15     created or being distributed to us and which of that
16     content should be falling within existing and
17     appropriate regulatory mechanisms or new regulatory
18     mechanisms and which is clearly outside of that.
19  8434                 COMMISSIONER PENNEFATHER:  I think
20     that basically was my point.  You have labelled this
21     new media as digital production, but it is digital
22     production of a program about something.  We are
23     basically saying the same.
24  8435                 I was wanting you to expand on what
25     this content is.  It's not so much from a definition


 1     point of view but really to get a better understanding
 2     of why you see this as you call it a new form of
 3     expression for artists, new outlets for artists.
 4  8436                 I was just interested in having a
 5     little more than legal definitions.
 6  8437                 MR. NEIL:  It's a new method for
 7     telling stories presumably.  I again personally believe
 8     that is one of the steps we have not yet taken, to move
 9     beyond a traditional linear story telling approach with
10     a beginning, a middle and some kind of resolution at
11     the end to truly take advantage of the new technology
12     and all the opportunities that it would provide to us.
13  8438                 It seems to me that all we have done
14     to this point is to tell stories in a slightly
15     different way and perhaps add a few different paths to
16     get to the same conclusion or perhaps to have two
17     different conclusions from which you can choose.
18     We view that as interactive.
19  8439                 The real exciting opportunity, it
20     seems to me, for creative artists is to begin to look
21     at story telling in a totally different way.  In the
22     final analysis, much of what we are concerned about is
23     the telling of the stories.
24  8440                 COMMISSIONER PENNEFATHER:  Is the
25     interactive component also a fundamental element of


 1     what we are talking about as a new creative?
 2  8441                 MR. NEIL:  Yes.
 3  8442                 COMMISSIONER PENNEFATHER:  So you are
 4     close to the definition, excuse the word, that Sheridan
 5     College discussed with us this morning.
 6  8443                 On the delivery side then, is it also
 7     a digitally distributed product that we are talking
 8     about?
 9  8444                 MR. NEIL:  Yes.
10  8445                 COMMISSIONER PENNEFATHER:  Does that
11     always involve the Internet?
12  8446                 MR. NEIL:  No.
13  8447                 COMMISSIONER PENNEFATHER:  What other
14     forms of distribution, digital distribution, would we
15     include in our discussion?
16  8448                 MR. NEIL:  Well, the Internet is only
17     one way that computer networks themselves are organized
18     collectively.  Right?  There can be other ways that you
19     could foresee computer networks being joined together,
20     even if you are just looking at that part of the world.
21  8449                 It's not just the Internet.  For
22     example, it is any forms of computer networks that have
23     some kind of public access, an open access to them.
24  8450                 We are now getting into digital
25     television technologies which will allow for an


 1     interactivity.  Digital cable distribution which will
 2     allow for an interactivity.  That indeed is where
 3     interactivity is key.
 4  8451                 Any form of communication
 5     distribution that will allow for that interactivity,
 6     allow the consumer to go back through the same system
 7     to, for example, order up a specific program or choose
 8     to select a certain text or whatever.
 9  8452                 COMMISSIONER PENNEFATHER:  With that
10     in mind, on page 10 of your submission, your written
11     submission, you call for a public commitment.  So that
12     we are clear on what's driving you towards your
13     conclusions regarding not only what we have got when we
14     are talking about new media, what opportunities we
15     have, but what challenges we have and the future of
16     regulation amongst other points.
17  8453                 What is this public commitment you
18     are referring to and what are the components of that
19     public commitment?
20  8454                 MR. NEIL:  Where are you specifically
21     in our brief?
22  8455                 COMMISSIONER PENNEFATHER:  Page 10 of
23     your written submission -- I'm sorry, page 3, paragraph
24     10.
25  8456                 MR. NEIL:  I think we are talking


 1     here about something that is more narrow, but the
 2     public commitment in general obviously is a whole set
 3     of policies and programs and regulations and so forth.
 4  8457                 We refer within our own brief to
 5     things like the Copyright Act.  We need to have some
 6     changes and amendments to the Copyright Act, as SERPO
 7     was referring to as well.  We need to have many more of
 8     those to really allow for the necessary right payments
 9     to be made to the rightsholders.  We need to have
10     various policies of other kinds.
11  8458                 Here we are talking much more
12     specifically about how are we going to fund high
13     quality Canadian alternatives in the new media formats. 
14     There are already some public commitments.
15  8459                 A couple of provinces, both Quebec
16     and Ontario, have tax credits for production of digital
17     media content.  I would hope that the federal
18     government would look at establishing similar kinds of
19     tax credits using perhaps as a model the Film and
20     Television Tax Credits it already has implemented.
21  8460                 There may be opportunities for public
22     support for public and private sector agencies that
23     would be involved in helping to develop product for the
24     new technologies, so Internet service providers in our
25     view should be making financial contributions to such a


 1     fund and they could perhaps be matched.
 2  8461                 There's a whole range of commitments
 3     that I think would be useful in this area.
 4  8462                 COMMISSIONER PENNEFATHER:  I think
 5     the suggestion has been made that broadcasters as well
 6     could apply some of their Canadian programming
 7     expenditure commitment to new media.  Do you have a
 8     position on that?
 9  8463                 MR. NEIL:  It would depend in part on
10     the context in which that kind of regulation would be
11     promulgated.  If it is within the existing regulatory
12     framework that requires that they spend a certain
13     amount of money on Canadian material and program, a
14     certain number of hours of Canadian content in their
15     system, if it's within the existing regulatory
16     requirement it would be quite different or may be a
17     different response than if it were in a perhaps revised
18     and increased requirement for broadcasters to make a
19     contribution.
20  8464                 Clearly, if there were additional
21     requirements on broadcasters that resulted from your
22     earlier television hearings, then it might be easier to
23     say that broadcasters can move into this area as well
24     and allocate certain of their expenses in these fields
25     against their Canadian content obligations.


 1  8465                 On the other side, as we look to the
 2     future, clearly broadcasters will be more and more
 3     involved in new media developments, whether it's a
 4     repositioning of their own material that they may have
 5     an interest in or in fact production of new materials.
 6  8466                 In the long term, the answer to your
 7     question is yes, obviously they will be players -- I
 8     hope they are going to be players in the game and to
 9     the extent that they are, then spending that they make
10     on Canadian content material should count.
11  8467                 I hope that is enough of an answer,
12     that I am not waffling too much.  In the long term,
13     they will hopefully be players in the game and,
14     therefore, expenditures would count.
15  8468                 COMMISSIONER PENNEFATHER:  Let's jump
16     then to your thoughts on new media itself and
17     regulation.  As Commissioner Grauer said earlier to
18     another intervenor, you are one of the few I think who
19     has come to us and said holus-bolus we should apply the
20     maximum of our powers under both acts to this whole
21     area, to the new media environment in general.
22  8469                 Could you clarify why you are taking
23     this position?  I think even today you have heard other
24     intervenors not so ready to apply regulation to this
25     environment or at a minimum to separate out new media


 1     services.
 2  8470                 Could you tell us what the basis is
 3     for your opinion in this regard.  Why do you feel we
 4     should include new media under the Broadcasting and
 5     Telecommunications Act?
 6  8471                 MR. NEIL:  I have been quite
 7     surprised at the reluctance of other parties to come
 8     before you and say that you should be applying your
 9     regulatory powers.
10  8472                 It seems to me that where you have to
11     start is an assumption that you can and ought to and
12     have a responsibility to regulate where the content
13     being delivered is analogous to the content that is
14     being delivered by the broadcasting system.
15  8473                 If there have to be exemptions,
16     exclusions and changes to that, so be it.  Let's talk
17     about what those are.  I believe quite firmly and I
18     think ACTRA takes the position very firmly that you
19     have an opportunity here and that if you don't seize
20     the opportunity now and begin with an assumption that
21     you will be regulating in important ways that you will
22     not again have that same opportunity.
23  8474                 If the system continues to develop in
24     the way that it is, if the Internet continues to
25     develop in the way that it is, totally unregulated,


 1     then as time passes it will be more and more difficult
 2     for you to have any influence at all in developments.
 3  8475                 I think you have a critical
 4     opportunity right now.  You should seize it.  You
 5     should establish the necessary regulatory framework. 
 6     Then if there are people who make the argument that you
 7     have gone beyond your jurisdiction, so be it, let's
 8     have that fight at this point rather than ten years
 9     from now when it will be too late.
10  8476                 COMMISSIONER PENNEFATHER:  Could you
11     go a little more into that specifically.  We have a
12     number of opinions that say applying regulations as
13     they have been applied to the broadcasting environment
14     is not possible, semi-possible for some intervenors.
15  8477                 Sheridan College noted to us this
16     morning that new media is without borders or boundaries
17     and the next evolutionary step where neither limits nor
18     control can be defined, much less enforced.
19  8478                 Others have been very clear that the
20     global nature of the new media renders regulation, if
21     not impossible, not effective for the purposes that you
22     have mentioned, that the sheer number of Web sites
23     renders this impossible.
24  8479                 I think there's another component
25     that is very interesting in that.  Who exactly are we


 1     regulating if in fact the Internet is an instrument of
 2     communication by individual citizens across this
 3     country?
 4  8480                 How do you see, practically speaking,
 5     where is the basis for regulation?  How do we deal with
 6     those various opinions that paint a very different
 7     environment in which regulation may or may not work,
 8     but also may not work to the benefit of those who are
 9     developing Internet and using it?
10  8481                 MR. NEIL:  There's a number of
11     components to your question.  First of all, I think the
12     point of contact at the moment gives you every right to
13     have some involvement in the process.  The point of
14     contact for most people with the Internet is a
15     telephone wire.  It comes into the home.  It may be the
16     cable wire that comes into the home in the very near
17     future.
18  8482                 That provides a point at which I
19     think the Commission can quite properly have some
20     degree of involvement.
21  8483                 Who you would be regulating.  It
22     seems to me in the first instance the Internet service
23     providers would be subject to some degree of regulation
24     when the nature of what they are distributing to us
25     equivalent to broadcasting under the Broadcasting Act.


 1  8484                 I think that's where your powers over
 2     at least a part of what the Internet service providers
 3     would flow.
 4  8485                 I don't accept the argument that to
 5     apply regulation at this time in Canada would in any
 6     way inhibit our ability to grow and develop and
 7     continue aggressively to create and distribute new
 8     media materials.
 9  8486                 I don't accept that argument.  It's
10     the same argument that is heard in the broadcasting
11     system every time the CRTC considers a whole new range
12     of regulatory approaches.  I rejected those arguments
13     then when I was working for ACTRA before.  I reject
14     those arguments now.
15  8487                 I think it just becomes another
16     element in the system that people have to deal with and
17     they will deal with.  I think you will continue to have
18     creative people producing very creative content in
19     Canada, even if you have a regulatory system that is in
20     place.
21  8488                 COMMISSIONER PENNEFATHER:  One of the
22     things you just mentioned is the whole dial-up
23     component here.  You have put a focus on the ISP as the
24     provider of access to that content.
25  8489                 What do you say to those who say


 1     well, if you go ahead with regulation on one basis or
 2     another, not only would you put a real damper on
 3     development of the industry, but they will simply
 4     relocate because of the nature of the technology that
 5     we are talking about, that basically any such
 6     regulation will drive the Canadian industry out of the
 7     country?
 8  8490                 MR. NEIL:  I don't accept that
 9     argument.  I think if you suggest that the Internet
10     service providers ought to be allocating a certain
11     amount of revenues which they generate from the process
12     of distributing what are essentially broadcast programs
13     to the households that that is going to drive Internet
14     service providers away.
15  8491                 There would be, at least in the short
16     term, the added technical problem for them that one of
17     the keys to Internet access in North America and the
18     reason that we are so far ahead of other parts of the
19     world in the degree of Internet connectivity we have is
20     the fact that we are basing it on a local telephone
21     call which in Canada is not a metered call.  It doesn't
22     matter whether you have that access for two minutes or
23     27 minutes.
24  8492                 In Europe they don't have such a
25     system.  They have a system for local telephone calls


 1     that you pay by the length of time that you use the
 2     connection.  What you find is there is much lower
 3     penetration of the Internet in markets in Europe.
 4  8493                 I think that kind of regulation on
 5     Internet service providers would only be another one of
 6     the elements of any number that they will have to
 7     confront in doing business wherever they want to do
 8     business.  At least in the short term, we have the
 9     distinct advantage that -- they would not want a system
10     that would require a long distance telephone call to
11     connect to the Internet because that would be much,
12     much more costly for the individual consumer.
13  8494                 There would be a certain advantage to
14     them staying in Canada and providing the services
15     locally.
16  8495                 COMMISSIONER PENNEFATHER:  You are
17     quite clear then that with an original goal, which I
18     asked you about in the beginning, to ensure Canadian
19     content is available to Canadians, that a form of
20     regulation, the Broadcasting Act, the
21     Telecommunications Act as they now stand are
22     appropriate.
23  8496                 You also raised the important point
24     of marketing or knowing what's there and making sure
25     that Canadians have access to the content which our


 1     performers are providing to us.
 2  8497                 You describe a notion of a priority
 3     place provided to Canadian choices, not in a Canadian
 4     ghetto, but as one of many and whatever categories
 5     being searched.  You talk about a target discussion on
 6     this issue.
 7  8498                 Leading up to that, can you tell me a
 8     little bit more about what you mean and how this would
 9     be done?  Even technically, how would you -- we have
10     heard a lot about this and various ways of going about
11     it.  A super Canadian site, a way of attracting
12     attention to just Canadian sites.  How would you do
13     this?
14  8499                 MR. NEIL:  Unfortunately no, I can't,
15     because I am far from an expert in these areas.
16  8500                 I will tell you where for me this
17     issue first came up.  It is a matter that the CRTC has
18     very direct control over.  That's in the last round of
19     licensing of English language specialty services where
20     you had several applications for video-on-demand
21     licences.  In fact, you have licensed video-on-demand
22     services -- true video-on-demand services are not yet
23     up and running because we don't have the digital cable
24     technology.
25  8501                 It occurred to me that would have


 1     been precisely the time or an opportunity for the
 2     Commission to have insisted on seeing how consumers
 3     were going to be presented with their options.
 4  8502                 I would like to have seen more CRTC
 5     questioning at that time of the applicants.  You may
 6     get an opportunity when they get up and running, when
 7     they come back to seek a licence.
 8  8503                 What I want to see happen is a
 9     situation in which if I am a consumer sitting there and
10     I say "Okay, well I now want to watch a movie and I
11     kind of like these kinds of movies" -- well, the
12     computer will already know what kind I like to see. 
13     Then it will give me several choices from recent
14     releases.
15  8504                 I think the objective is to make sure
16     that as I am navigating my way through to the final
17     choice that at least one of the options, some of the
18     options, that I am being given should be Canadian
19     options, not because in the final analysis I am going
20     to be led to conclude that that is the one I am going
21     to choose.  I can't be forced to do that.  But they
22     should be there.
23  8505                 If I am asking for action films and
24     it's listing ten, surely we should have a system in
25     which two or three of those being listed are Canadian. 


 1     Then I will begin to narrow them down.  It will give me
 2     five of which one will be Canadian so at least before I
 3     make my choice I have Canadian alternatives presented
 4     to me.
 5  8506                 I think there was an opportunity in
 6     the vide-on-demand perhaps to have begun this
 7     discussion because I don't know if you are looking at
 8     the Internet and the Internet search engines.  I don't
 9     know how we are going to be able to have an influence
10     there beyond perhaps trying to have some sort of
11     incentive system that would provide some practical
12     incentive for someone who would have a navigation
13     system where you would have some kind of priority, out
14     of your 37,000 hits when you get your first screen of
15     25 hits, you know, four or five of them are going to be
16     Canadian choices.
17  8507                 I'm not sure how you do it in that
18     environment which is why I think what we need is to
19     have some sort of specific and targeted discussion on
20     that whole question of the navigation system.
21  8508                 COMMISSIONER PENNEFATHER:  I think I
22     understand what you are saying.  There are those who
23     would say that the other point to be raised is that
24     marketing promotion of various Web sites and products
25     is equally important.  In fact, because of the nature


 1     of the web itself, you or I as a user will be able to
 2     find all of these sites if they are marketed and have
 3     the funds to be marketed so that perhaps the energy
 4     should be placed more on funding mechanisms or
 5     incentives that support the product itself, the
 6     positioning on the Web site.
 7  8509                 I think people from the Alliance were
 8     here yesterday explaining that as well, that there may
 9     be a difficulty in putting so much emphasis on the
10     gateway which also assumes that there can be some
11     control of what's going on.
12  8510                 MR. NEIL:  Yes.  I have some
13     speculation I have shared with a number of colleagues
14     in the last few days.
15  8511                 I am a regular user of the net and
16     have been for a number of years, primarily for research
17     purposes.  I find I don't use the search engines any
18     more because they simply provide me too many junk
19     sites, useless information.  It takes me too long.
20  8512                 In fact, the way I navigate around
21     now is to assume web addresses because I am working in
22     a certain specified field and I will assume that the
23     organization or that the information that I want will
24     be on somebody's Web site.  I just sort of randomly now
25     type in web addresses until I find one that's close and


 1     then navigate from there.
 2  8513                 I find the navigation systems
 3     absolutely useless.  Typing in words and key phrases
 4     just gets too many useless sites coming back.
 5  8514                 I personally think that we will see
 6     another generation of navigation systems for the
 7     Internet, in a certain sense probably more akin to what
 8     broadcasters do.  Somebody will add value to them and
 9     begin to provide you with a narrower set of choices and
10     filter them in some way for us.  Right?  I think we
11     could easily see that kind of development.  There would
12     be a really good market there for somebody developing
13     such a system.
14  8515                 It's probably really in that kind of
15     development that we would see an opportunity to provide
16     some incentives to ensure that there are Canadian sites
17     among the possibilities, but that's purely my own --
18  8516                 COMMISSIONER PENNEFATHER:  The last
19     area I wanted to get into was really key.  Of course,
20     there was quite a bit of discussion about it today. 
21     That is the whole copyright area.
22  8517                 Could you explain a little more why
23     you are opposing a public/private agency to look into
24     copyright issues for pre-existing works or current
25     works?  What's that going to do?  I think Mr. Robertson


 1     described a pretty difficult situation where there is
 2     no collection of royalties right now for material on
 3     the Internet.
 4  8518                 What's this agency going to do to
 5     help that?
 6  8519                 MR. BISHOPRIC:  Currently ACTRA is
 7     involved with five other organizations.  We have
 8     established what we call the NRCC, Neighbouring Rights
 9     Collective of Canada, which has as its intention the
10     future collection of neighbouring rights, tariffs which
11     will be payable for neighbouring rights which will flow
12     to performers in our case and the other members of the
13     collective.
14  8520                 These sorts of tariffs are collected
15     in areas where -- well, the neighbouring rights pick up
16     where our collective agreements let off.  Our
17     collective agreements currently mandate that any
18     production which is done in new media may not be
19     exploited until such time as the producer comes and
20     negotiates use in those new media.
21  8521                 However, we are sort of pointing to
22     the model of the NRCC and collection under copyright as
23     a potential direction to go in order to ensure that
24     remuneration is made to performers.
25  8522                 MR. NEIL:  Where we start is the


 1     collective agreements which do in fact cover a
 2     substantial degree of production that is either
 3     presently occurring for CD-ROM particularly or some
 4     through the net or potentially could cover an awful lot
 5     more of that, although the collective agreement
 6     language is a little bit in question right now, actors
 7     in negotiation with the independent producers.
 8  8523                 One of the issues on the table is
 9     this whole field and how it is to be regulated.
10  8524                 What ACTRA also requires clearly is
11     amendments to the Copyright Act to provide additional
12     copyright protection to performers.  While other
13     rightsholders like the record producers which in fact
14     now have a pretty fair degree with the implementation
15     of the WPPT that the last intervenor spoke about, they
16     would have a pretty good degree of protection.
17  8525                 Performers don't yet have the same
18     degree of protection in law so we need copyright
19     amendments to ensure that we have that protection in
20     law.
21  8526                 In the final analysis, it occurs to
22     us that is still not going to be sufficient.  We have
23     already had this said to us by new media developers,
24     that it is really difficult for them to do their jobs
25     because they have to go to a whole range of different


 1     rightsholders to try to get clearance to put together
 2     material.
 3  8527                 It's much more complicated for them
 4     than for other producers, even traditional audio/visual
 5     producers because they have rights from a whole variety
 6     of different fields, including publishing and sound
 7     recording and film and television and so on.
 8  8528                 On the one hand there is that problem
 9     of clearance, particularly for new media developers. 
10     On the other hand, all of the rightsholders that we
11     know share our problem, which is how do you monitor and
12     how do you enforce your rights when the material is
13     available digitally.
14  8529                 That's where our idea comes from that
15     what we really would like to see develop in the end is
16     some kind of agency that would be involved in this
17     field.  It could be on the one hand a grouping together
18     of a number of different collectives, copyright
19     collectives that exist, as well as other organizations
20     who may have rights that arise not from copyright but
21     from collective bargaining or contract law.
22  8530                 To group us all together so that we
23     could act as both on the one hand as a clearinghouse
24     for new media developers, so they would have easy
25     access to the people they would need to negotiate with


 1     to acquire the rights for material, that would also
 2     open up the possibility on the other side to have joint
 3     monitoring of developments.
 4  8531                 That will probably require
 5     technological developments that would allow the
 6     encrypting of the ownership information on all of the
 7     information that is being distributed.  You could have
 8     technology itself address the issue of who is using
 9     what and who owns the material, the intellectual
10     property on what is being distributed.
11  8532                 That's a pretty big undertaking for
12     to get there.  It seems to us that the only way you are
13     going to be able to achieve that kind of development
14     would be if government is involved as well to try to
15     bring the parties together, bring all those groups
16     together to kickstart it so you could develop it.
17  8533                 COMMISSIONER PENNEFATHER:  I have one
18     last question.  It is back to you, the performer.
19  8534                 Is new media an opportunity for
20     artists in this country?  Is it important for the
21     future of performers?
22  8535                 MR. BISHOPRIC:  Absolutely.  I
23     believe it is.  I am one of the performers who has been
24     fortunate, and I have been working in this area almost
25     from the very beginning, involved in a variety of


 1     projects which have found their way into new media,
 2     some which have been produced expressly for new media
 3     in some sense or another.
 4  8536                 I also work as a writer.  I am a
 5     member of the Writers' Guild of Canada.  I am involved
 6     in developing a variety of projects.  This is an area
 7     where I see a great deal of opportunity to create
 8     material, as Gary has outlined, which is specifically
 9     targeted for this area, real content in this area which
10     we have not seen yet.
11                                                        1520
12  8537                 Canadian artists I think generally
13     are very well positioned to exploit this new media,
14     this new opportunity, perhaps more so than other
15     artists in other countries just because we have such a
16     well-established system.
17  8538                 And it is our belief that some
18     regulation in this area would help the artists of
19     Canada to get a foothold and to tell our stories and to
20     really have a presence on the international worldwide
21     web.
22  8539                 COMMISSIONER PENNEFATHER:  Just to be
23     clear, do you think it is regulation or do you think it
24     is the incentive programs or the results of frameworks
25     which assure contributions and funding to production


 1     itself, and to marketing your productions.  Isn't that
 2     the result that you are looking for?
 3  8540                 MR. BISHOPRIC:  I think it sounds
 4     like a combination of all of those.
 5  8541                 We believe that regulation is a key
 6     component, it is something which we believe the CRTC
 7     has been very successful with in the past which has led
 8     to the promotion and funding of Canadian content in a
 9     very meaningful way.  And so we are not looking solely
10     to new funding sources.  We are looking for a
11     comprehensive package which we believe will see us
12     through in the long term, ensure the development of a
13     real Canadian presence in this area.
14  8542                 COMMISSIONER PENNEFATHER:  Thank you
15     very much.
16  8543                 Thank you.
17  8544                 THE CHAIRPERSON:  Thank you.
18  8545                 I thought Commissioner Pennefather's
19     last question was going to be whether you were worried
20     about the creation of virtual actors.
21  8546                 MR. BISHOPRIC:  And we are.
22  8547                 THE CHAIRPERSON:  I think Counsel
23     Moore may have a question or two.
24  8548                 MS MOORE:  Thank you, Mr. Chairman.
25  8549                 Could you please elaborate on what


 1     type of internet services in your view are analogous to
 2     broadcasting?
 3  8550                 MR. NEIL:  I guess those that are
 4     providing access to what would be considered to be
 5     programming.
 6  8551                 Now, it is how long is a piece of
 7     string, right?  Where does it begin and where does it
 8     end.
 9  8552                 You know, certainly there are --
10     there is certainly a lot of material that is now on the
11     internet which has the look and feel of programming,
12     and looks like a television program.  And it is being
13     delivered in a different way, but when you see it on
14     your computer screen with your appropriate speakers it
15     could easily be a television program.  Some of it, in
16     fact, in the past, has been.
17  8553                 Now, there is not a lot of material
18     like that that is there yet because of the limitations
19     of the connection that one has between one's own
20     computer and these other computers.  It still requires
21     an awful lot of storage space to try to, for example,
22     electronically digitally put up a movie.  But that
23     really is only a short-term situation.  I think you
24     will see more and more that you can have longer formed
25     programs, things that look and feel much more like


 1     television programs.
 2  8554                 So how we define those, I'm not sure. 
 3     I'm not sure.  But it is what I think all the other
 4     intervenors today have been talking about that, well,
 5     this is just the added value to the broadcasting
 6     system.
 7  8555                 MS MOORE:  In your view, with those
 8     types of services, if there was some degree of
 9     interactivity, would you still consider them to be
10     analogous to programming in broadcasting?
11  8556                 MR. NEIL:  Absolutely.  Absolutely,
12     because the interactivity can be as simple as -- I
13     mean, the CBC.  This is the CBC's second go-round at
14     involvement on the internet.
15  8557                 In fact, about six or seven years ago
16     the CBC has a web site up that was offering excerpts
17     from programs, radio programs.  They had quite a number
18     of programs on their web site.  They didn't have the
19     rights to most of the programming there, but they had
20     them there.
21  8558                 But the interactivity in that case
22     was very simple, it was:  Do you want to listen to the
23     one minute and 23 second interview that Arthur Black
24     had with, you know, this particular person or that
25     person, and then you could download it to your own


 1     computer and then listen to the interview.
 2  8559                 So that kind of, you know, material
 3     is there.  The interactivity in that case can be as
 4     simple as finding your way through that and then
 5     selecting a particular segment of a program or a whole
 6     program to download and listen to.
 7  8560                 MS MOORE:  Thank you.
 8  8561                 Those are my questions, Mr. Chairman.
 9  8562                 THE CHAIRPERSON:  Thank you, Counsel
10     Moore.
11  8563                 Thank you very much, gentlemen.  We
12     appreciate your participation this afternoon.
13  8564                 We will take a short five minute
14     break and reconvene at 3:30 to hear our last presenter,
15     SOCAN.
16     --- Short recess at / Courte suspension à 1525
17     --- Upon resuming at / Reprise à 1535
18  8565                 THE CHAIRPERSON:  Madam Secretary.
19  8566                 MS BÉNARD:  Thank you, Mr. Chairman.
20  8567                 The next presentation will be by the
21     Society of Composers, Authors and Music Publishers of
22     Canada / la Société canadienne des auteurs,
23     compositeurs et éditeurs de musique.
25  8568                 M. VALIQUETTE:  Monsieur le


 1     Président, Mesdames et Messieurs les Commissaires,
 2     bonjour.
 3  8569                 Mon nom est Gilles Valiquette. Je
 4     suis auteur-compositeur et président de la Socan, la
 5     Société canadienne des auteurs, compositeurs et
 6     éditeurs de musique.  Je suis accompagné aujourd'hui du
 7     chef du contentieux de la Socan, Me Paul Spurgeon.  Je
 8     suis également avec un autre membre de notre société,
 9     M. Paul Hoffert, qui est président de la guilde des
10     compositeurs canadiens de musique de films, c'est-à-
11     dire l'Association nationale des compositeurs de
12     musique pour le cinéma et la télévision.
13  8570                 La Socan est une association
14     canadienne sans but lucratif qui représente les
15     compositeurs, paroliers, auteurs-compositeurs et
16     éditeurs d'oeuvres musicales au Canada et à l'échelle
17     mondiale.  Au nom de ses membres canadiens actifs, qui
18     sont au nombre de plus de 18 000, et en celui des
19     membres de ses sociétés internationales affiliées, la
20     Socan administre les droits d'exécution liés aux
21     paroles et à la musique.
22  8571                 Le droit d'exécution est un droit
23     d'auteur qui accorde au propriétaire de l'oeuvre
24     musicale le droit exclusif d'exécuter ou de diffuser
25     son oeuvre, ou d'autoriser ces actes en contrepartie de


 1     redevances.  C'est important de comprendre ici qu'on ne
 2     parle pas de la reproduction sur disque mais bien de
 3     l'exécution publique d'une oeuvre musicale.  On peut
 4     dire, en termes pratiques, que le droit d'auteur, dans
 5     ce sens, c'est le salaire du créateur.
 6  8572                 La Socan s'intéresse au plus haut
 7     point aux nouveaux médias.  Comme vous le savez sans
 8     doute, nous avons déjà déposé un projet de tarif
 9     Internet à la Commission du droit d'auteur afin de
10     s'assurer que nos membres pourront toucher des
11     redevances lorsque leurs oeuvres musicales feront
12     l'objet d'exécution sur Internet.
13  8573                 Étant nous-mêmes des créateurs de
14     contenu canadien, nous sommes extrêmement intéressés
15     par ce qui se passe dans les domaines de la Loi sur la
16     radiodiffusion et des dispositions du CRTC en matière
17     de contenu canadien.  De plus, nous sommes fort
18     préoccupés quant à l'impact culturel de ces domaines.
19  8574                 Étant donné que les oeuvres musicales
20     de nos membres font l'objet d'utilisations de plus en
21     plus nombreuses sur Internet, nous croyons que votre
22     examen des nouveaux médias a été organisé en temps très
23     opportun et nous vous remercions de nous fournir la
24     présente occasion de vous faire part de nos idées sur
25     cette question importante.


 1  8575                 Nous n'aurons le temps aujourd'hui
 2     que de rappeler les points saillants des deux mémoires
 3     déjà déposés devant le Conseil.  Nous présumons, bien
 4     entendu, que vous tiendrez compte de la totalité des
 5     recommandations de ces deux mémoires dans le cadre de
 6     votre examen.
 7  8576                 Nous nous contenterons pour le moment
 8     de souligner les deux points suivants:  Premièrement,
 9     Paul Spurgeon abordera la question de savoir si le
10     Conseil devrait réglementer l'Internet.  Deuxièmement,
11     Paul Hoffert discutera de la façon dont le Conseil
12     devrait appliquer les exigences relatives à la
13     production et à la présentation de contenu canadien au
14     moment où nous nous préparons à aborder le nouveau
15     millénaire.
16  8577                 Permettez-moi, avant de terminer
17     cette introduction, d'établir tout de suite une
18     distinction importante, celle entre média et contenu,
19     afin d'éviter toute confusion possible durant le reste
20     de notre plaidoyer.
21  8578                 Quand on parle de média, on veut dire
22     les moyens par lesquels un contenu est communiqué. 
23     Nous croyons donc que la présente enquête sur les
24     nouveaux médias doit être focalisée sur les nouveaux
25     moyens par lesquels les oeuvres musicales de nos


 1     membres et autres contenus sont présentement
 2     communiqués, y compris les médias de transmission
 3     numérique comme l'Internet et les services intranets
 4     tels le modem transmis par câble, l'ADSL et America
 5     Online.
 6  8579                 Au nom de mes confrères créateurs,
 7     l'idée primordiale que j'aimerais souligner aujourd'hui
 8     est la suivante:  Le fait que les médias ont évolué ne
 9     veut pas dire que le Conseil doive automatiquement
10     laisser tomber ces dispositions relatives au contenu,
11     qui, elles aussi, ont bien évolué avec le temps.
12  8580                 J'aimerais maintenant céder la parole
13     à Me Paul Spurgeon, qui apportera d'autres arguments en
14     faveur de la réglementation des nouveaux médias par le
15     Conseil.
16  8581                 MR. SPURGEON:  Thank you, Gilles.
17  8582                 As you know, new media are already
18     broadcasting music and other content to Canadians,
19     however, many do not consider themselves bound by the
20     Broadcasting Act's requirement that each broadcasting
21     undertaking shall make maximum use of Canadian creative
22     and other resources in the creation and the
23     presentation of programming.
24  8583                 SOCAN is concerned that the current
25     lack of regulation of new media is diluting the


 1     Commission's effectiveness and creating, in effect, two
 2     classes of broadcasters, those who are subject to
 3     parliament's policies, and those who are not.
 4  8584                 We believe that when new media
 5     communicate our members musical works or other programs
 6     to the public they are subject to the Broadcasting Act,
 7     and the Commission should apply its licensing
 8     requirements and regulations.
 9  8585                 For example, Rogers Communications is
10     now using its cable to provide internet and intranet
11     access and programming to Canadians through its new
12     service Rogers At Home.  At the present time the
13     Commission licenses Rogers Cable, and other cable
14     operators, when they communicate programming to the
15     public, as does SOCAN in respect of the music content
16     they communicate, through our Tariff 17.
17  8586                 When Rogers At Home communicates
18     programming there is no reason why it should not also
19     be subject to parliament's laws and regulations.  Some
20     however would argue that the Commission has no role
21     regarding the new media because the internet does not
22     respect traditional national boundaries or
23     jurisdictions.  SOCAN disagrees.
24  8587                 In particular, we do not agree that
25     parliament or the Commission should abdicate its


 1     responsibilities when confronted by the challenges of
 2     new technology.  SOCAN for almost 70 years has had
 3     experience in meeting technological and jurisdictional
 4     challenges because music has always been an
 5     international and new high tech enterprise that knows
 6     no national boundaries.
 7  8588                 In response to these challenges SOCAN
 8     has worked with performing rights societies around the
 9     world to develop a system comprised of several
10     components, including Canadian law, international
11     treaties and a network of arrangements between national
12     and international organizations.
13  8589                 When Industry Minister John Manley
14     hosted the recent OECD electronic commerce meeting that
15     was referred to earlier today, he and his colleagues
16     did not conclude that the current lack of regulation
17     meant that it is impossible to tax the internet. 
18     Instead they agreed to work together creatively to
19     adapt current policy instruments to new realities.
20  8590                 In a similar vein, when confronted
21     with cable and satellite technological developments in
22     the past, this Commission did not conclude that its
23     role was outmoded.  Instead, your policies were adapted
24     to ensure they remain relevant to Canadians.
25  8591                 The fact that you may not have all


 1     the answers today does not mean that there are no
 2     answers.  We therefore urge you to continue to regulate
 3     content when it is broadcast to the public, no matter
 4     what the means of communication may be.
 5  8592                 Thank you.
 6  8593                 We will now conclude with some
 7     remarks from Paul Hoffert on the need for new media
 8     Canadian content production and exhibition
 9     requirements.
10  8594                 Thank you.
11  8595                 MR. HOFFERT:  Thank you, Paul.
12  8596                 Mr. Chairman, I would like to respond
13     to some questions the Commission raised in the public
14     notice regarding Canadian content.  In particular I
15     would like to focus on the following two questions.
16  8597                 First:  How do we promote the
17     development and production of Canadian content?
18  8598                 And, second:  How do we ensure that
19     Canadian content has access to the new media?
20  8599                 The Commission currently has several
21     policies that promote the development and production of
22     Canadian content.  For example, radio and television
23     broadcasters make financial contributions to the
24     production of Canadian content when they broadcast
25     programming to Canadians over the air or by cable.


 1  8600                 We believe that when new media
 2     generate advertising revenues by transmitting programs
 3     to Canadians, they too should contribute to Canadian
 4     content production funds.  These contributions will
 5     promote the development of Canadian content, which in
 6     turn will attract Canadian audiences, generate revenues
 7     and further the development of the new media and other
 8     industries.
 9  8601                 We recognize that it will be
10     necessary to define what is required to be considered
11     Canadian for funding and support purposes.  As is the
12     case with the current television production support
13     programs, criteria must be developed that promote
14     Canadian cultural and industrial objectives.  These
15     criteria should reflect the fact that the role of music
16     in new media is at least as important as it is in
17     traditional broadcasting.
18  8602                 However, it is not sufficient to
19     merely promote the production of Canadian content.  And
20     I guess this brings us to my second point, we must also
21     promote the exhibition of Canadian content and ensure
22     it has shelf space that is located where Canadians can
23     access it.
24  8603                 SOCAN therefore believes that both
25     the distribution channels and the growing numbers of


 1     content aggregators must allocate some of their shelf
 2     space to Canadian content.  The best way to ensure that
 3     this shelf space exists is to apply Canadian content
 4     exhibition requirements to new media like the internet.
 5  8604                 In the past Canadian content rules
 6     have been an effective policy instrument, and we
 7     believe they have an important role to play in the
 8     future as well.  For example, the Commission has just
 9     announced a new commercial radio policy which contains
10     a renewed commitment to Canadian content.  SOCAN shares
11     this commitment and we urge you to pursue it in your
12     new media review.
13  8605                 The bottom line is that Canadians
14     must continue to have the right and the ability to
15     choose to hear and see the creative works of our fellow
16     citizens.
17  8606                 On behalf of SOCAN's members, thank
18     you again for this opportunity to express our views,
19     and we look forward to continuing to work with you in
20     this important review.
21  8607                 We will now be pleased to respond to
22     any questions that you have.
23  8608                 LE PRÉSIDENT:  Merci,
24     Monsieur Valiquette, Mr. Spurgeon and Mr. Hoffert.
25  8609                 I will turn to Commissioner


 1     Pennefather.
 2  8610                 COMMISSIONER PENNEFATHER:  Good
 3     afternoon.  Monsieur Valiquette, merci pour la
 4     présentation.
 5  8611                 Thank you, gentlemen.
 6  8612                 If I miss any points you have raised
 7     this afternoon, please bring them back as we go through
 8     our discussion, but I would like to start -- and it is
 9     no surprise to you, I'm sure -- to take a step back and
10     just look again at what we are talking about.
11  8613                 Accepting your point in this
12     afternoon's presentation and your written submission
13     that we are dealing with the means -- you would prefer
14     to focus on the means by which a product, namely in
15     this case music, is communicated, if I am -- I am
16     quoting directly from your submission here.
17  8614                 That means, if you agree, you
18     mentioned the internet certainly as one of the, if not
19     the, major means which we are talking about.  Can you
20     describe to us how this means, the medium called the
21     internet, has impacted on your members?  What does it
22     mean for them in terms of opportunities and challenges?
23  8615                 Just so we speak about the reality of
24     being a music composer in this new media world, before
25     we get into regulation and all the other details?  Just


 1     could you clarify for us exactly for you what this
 2     internet is all about?  I was going to ask for your
 3     definition of "new media", but I would prefer, since
 4     you asked us to distinguish between content, we take
 5     the "content" as the "music", we take "new media" as
 6     the "internet", how is the internet impacting on the
 7     lives of composers in this country?
 8  8616                 M. VALIQUETTE:  Si vous me permettez,
 9     je répondrai en français.
10  8617                 CONSEILLÈRE PENNEFATHER:  Oui, ça va. 
11     Certainement.
12  8618                 M. VALIQUETTE:  Premièrement,
13     j'aimerais bien distinguer le fait qu'écrire une pièce
14     de musique est bien différent que de l'interpréter. 
15     Chez nous, au Québec, par exemple, quelqu'un comme Luc
16     Plamondon est un auteur.  Luc ne chante pas.  Vous ne
17     voulez pas l'entendre chanter.  D'un autre côté vous
18     avez Céline Dion, qui chante mais qui n'écrit pas ses
19     propres chansons.
20  8619                 Alors lorsqu'on écrit une chanson,
21     par exemple, ça peut nous prendre quelques heures mais
22     ça peut aussi nous prendre quelques mois.  Quand on
23     termine une chanson, nous ne sommes pas payés pour
24     l'acte que nous venons de faire.
25  8620                 C'est un petit peu différent de ce


 1     qui se passe ailleurs dans la société parce que, si
 2     j'engage un électricien ou un serrurier, en quelque
 3     part je dois le payer au moment où il va travailler,
 4     quand il vient, le nombre d'heures qu'il travaillera.
 5  8621                 L'entente qu'on a avec la société
 6     canadienne, c'est qu'on sera rémunérés au moment où nos
 7     pièces seront exécutées.  Alors la route est longue
 8     pour en arriver jusque là parce que, quand vous avez
 9     votre pièce, il faut trouver un bon interprète. 
10     Ensuite de ça, est-ce que cet interprète-là va amener
11     ça dans son spectacle, sur ses disques?  Ensuite de ça,
12     est-ce qu'on va la mettre en marché, en faire la
13     promotion?  Et, ensuite de ça, est-ce que les radios ou
14     d'autres diffuseurs vont faire jouer cette pièce-là? 
15     Maintenant, quand ça, ça arrive, après avoir passé
16     toute ces étapes-là, quand ce moment-là arrive, là,
17     nous avons le droit d'être rémunérés.
18  8622                 Alors nous sommes rémunérés dans des
19     places évidentes, comme la radio, la télévision, le
20     spectacle, mais aussi si notre musique joue dans un
21     ascenseur, quand on fait l'épicerie, si on l'entend sur
22     un répondeur; ce sont différentes façons d'exécuter nos
23     oeuvres.
24  8623                 Alors dans toute cette histoire de
25     nouveaux médias là, peut-être que notre approche est un


 1     petit peu simpliste, mais pour nous ce n'est qu'une
 2     autre façon de faire entendre nos oeuvres.  Et, à ce
 3     moment-là, quand on apprécie nos oeuvres, nous trouvons
 4     que c'est logique d'être compensés pour ça.
 5  8624                 Alors ce n'est pas parce qu'on a des
 6     nouveaux médias qu'il faudrait laisser tomber cette
 7     entente que nous avons parce que force est d'avouer que
 8     jusqu'ici ça a bien fonctionné dans notre société.
 9  8625                 CONSEILLÈRE PENNEFATHER:  Je
10     comprends très bien.  Je suis l'argument.
11  8626                 La question alors est la suivante: 
12     Étant donné qu'on parle du médium Internet, qui --
13     j'espère que j'ai bien raison -- n'est pas du théâtre,
14     n'est pas une live performance, n'est pas la radio ni
15     la télévision, c'est quelque chose de nouveau, comme on
16     avait dit, quelle sorte de défis spécifiques l'Internet
17     amène à la discussion que vous venez de déposer sur
18     l'importance d'avoir rémunération pour la présentation
19     de l'oeuvre musicale?  Est-ce que le fait, par exemple,
20     que c'est un médium global, est-ce que le fait que
21     c'est un médium par lequel moi, comme citoyenne, j'ai
22     accès directement à votre présentation musicale... est-
23     ce qu'il y a des aspects spécifiques de l'Internet qui
24     rendent la discussion différente, par exemple, de quand
25     on parle de la performance à la télévision?  À titre


 1     d'exemple, l'interactivité.
 2                                                        1555
 3  8627                 M. VALIQUETTE:  Je pense que le
 4     domaine le plus interactif que vous pouvez rencontrer,
 5     c'est un spectacle.  Alors, pour nous, ce n'est qu'une
 6     autre façon de le faire.
 7  8628                 Pour répondre à votre question, non,
 8     c'est simple dans le sens qu'en quelque part nos
 9     oeuvres sont entendues sur ce nouveau médium là. 
10     Effectivement, parfois on va emprunter des oeuvres qui
11     ont été peut-être pensées pour un autre domaine, mais
12     d'autres fois on va nous demander de créer des oeuvres
13     spécifiquement pour ce domaine-là.
14  8629                 En fin de ligne, le résultat est le
15     même.  Nous attendons notre rémunération au moment où
16     elle est exécutée, au moment où on l'entend.
17  8630                 COMMISSIONER PENNEFATHER:  Now that I
18     have got Mr. Hoffert plugged into translation, I am
19     going to -- I will go back and forth.
20  8631                 Is just that -- and if I repeat
21     myself, I am sorry, Monsieur Valiquette -- for example
22     you and I have had discussions about this new medium of
23     communication called the Internet as something very
24     different, and what I am concerned to have clear is, I
25     understand the principle that you have put on the


 1     table, namely that the musical work remains a musical
 2     work by whatever means it is communicated, it does not
 3     change the principle of remuneration, but I am
 4     wondering, the fact that this delivery system is the
 5     Internet, with all its particular characteristics, what
 6     really does that do to our ability to in fact render
 7     that remuneration?  Does it change the relationship
 8     between the citizen consumer of that performance --
 9     does it add any particular challenges?
10  8632                 The reason I am asking that is we
11     have had many different descriptions of new media --
12     and when I use "new media" here, Internet, means of
13     delivery -- and amongst those is interactivity, that
14     is, a one-to-one relationship between product and user,
15     that is global in its nature, that is a massive number
16     of Web sites.
17  8633                 When we come later to how we should
18     address your principle, I am just interested in your
19     experience and expertise on putting the Internet into
20     this whole world of music and performance.
21  8634                 MR. HOFFERT:  I think that's four
22     questions --
23  8635                 COMMISSIONER PENNEFATHER:  Probably.
24  8636                 MR. HOFFERT:  -- and I will try to
25     get to them in order.


 1  8637                 COMMISSIONER PENNEFATHER:  Backwards.
 2  8638                 MR. HOFFERT:  Firstly, in terms of
 3     how different is the medium, let's discuss what a
 4     medium is and what perhaps the new media are.
 5  8639                 From our perspective, and from my
 6     personal perspective of spending the last nine years at
 7     a university research centre looking into the
 8     intersection of culture and technology on digital
 9     networks, the new media is normally taken to be digital
10     media which has a capability of some interactivity, but
11     more specifically digital networks and CD-ROM type
12     things.
13  8640                 For the purposes of our discussion
14     now, unless we wish to widen it, our comments are with
15     respect to digital networks.
16  8641                 Secondly, what does it mean to have a
17     new medium which is a digital network as the method of
18     delivering my message, if you will, or the content, if
19     you will, of music?  The answer is that every medium
20     that's used presents his own context and its own need
21     for being dealt with.  When Socan licenses the use of
22     music in broadcast television, it uses a very different
23     context and a very different formula than when it
24     licenses the use of music in a cinema, and a very
25     different context and a very different formula than


 1     when it licenses the use of music in an elevator or an
 2     airplane.  To that extent, it would be Socan's
 3     submission that the digital media are just another one
 4     on the list, if you will, that requires its own
 5     particular context.
 6  8642                 I hope the Commissioners will go with
 7     me for a moment, if I take a moment to -- I will choose
 8     my words carefully -- perhaps either correct some what
 9     I would consider misunderstandings or to clarify some
10     of the submissions that I have read and heard over the
11     past week or so with respect to in fact what are the
12     new media or what is the Internet.
13  8643                 The most commercially important
14     portion, where all the growth is occurring, is not
15     necessarily what one calls the Internet today.  For
16     example, there was a merger announced last week between
17     America Online, which had a valuation in the
18     marketplace of, I don't know, $4 or $5 billion -- and
19     perhaps it is not clear that America Online is not on
20     the Internet.
21  8644                 We have heard a lot about -- and we
22     know many of us have the new cable modem services,
23     Rogers, Saw, Cogeco @Home.  Those services are not on
24     the Internet.
25  8645                 The telephone services which are


 1     being rolled out across Canada -- I believe in Ottawa
 2     you have had them for about six months now; not to
 3     belabour any acronyms, but I think in general they are
 4     called ADSL; it is a kind of a service -- is not on the
 5     Internet.  One cannot find the content, the programming
 6     that we speak about on those kinds of services, which
 7     have been the largest growth section of the Internet,
 8     on the Internet.  The term we use is "intranets".  The
 9     two words sound very similar.
10  8646                 The reason I make this distinction
11     before I go on any further is you ask what is the
12     Internet and what are digital media, and I think it is
13     very important that all of the comments that have been
14     made about the Internet being a wild west kind of land
15     without the possibility of regulation, none of those
16     kind of comments relate to intranets.  The reason that
17     intranets, which are private what we called fire-walled
18     or cordoned-off networks, are so popular is because,
19     unlike the Internet, they are ultimately controllable,
20     regulatable and friendly to commerce.
21  8647                 What happened historically is that
22     the Internet which we normally speak of, which has many
23     wonderful attributes -- and I won't go into the
24     historic origins of the Internet; I am sure you are all
25     familiar with them -- changed significantly when the


 1     Internet began to permit commercial transactions to
 2     take place and when governments decided that they would
 3     not become involved and let the free market take its
 4     course.  At that point the initial purpose of the
 5     Internet, which was a combination of a military secure
 6     communications network and a way for researchers to
 7     communicate with each other, changed dramatically.  It
 8     also became much more popular.
 9  8648                 But the thrust of the development of
10     what has been the Internet at that point branched into
11     two quite different branches, one of which remains true
12     today to the interest of researchers and those who
13     believe that information should be essentially free,
14     and those who are trying to conduct some kind of
15     commercial transactions.  As it turns out, it is the
16     second branch that is the part of the Internet perhaps
17     that the CRTC would be most interested in because
18     almost all of the activity that we speak about that has
19     to do with broadcasting or broadcast-like services tend
20     to be involved in moving pictures, sound, music and
21     things that generally have been considered commercially
22     valuable and are being treated as such.
23  8649                 So, on the one hand, we have a
24     resource -- and here, if you don't mind, I will go back
25     and make what I hope isn't a big leap to not try to be


 1     a lawyer and say whether the definition of
 2     "broadcasting" applies to the Internet, because my
 3     colleague, who is a lawyer, will be happy to speak to
 4     that issue in terms of whether it is.
 5  8650                 The principles behind whether
 6     broadcasting should be regulated had a lot to do with
 7     whether a resource was scarce and whether it was
 8     important to have shelf space and a prominent place for
 9     your cultural expression.  And the argument that the
10     Internet is an infinite resource and is not scarce,
11     number one, doesn't apply to intranets -- which have
12     incredibly scarce resource that looks a lot like
13     channels on television, where essentially the people
14     who put these things together aggregate content and
15     sell advertising and then they schedule the content and
16     change it every day, which one could argue sounds a lot
17     like broadcasting -- and it doesn't pertain very much
18     to the commercial portion of the Internet; this year,
19     the buzzword you have heard a lot of is "portals", and
20     if you think of what a portal does is, people who have
21     portals accumulate content, sell advertising and
22     schedule the content and change it every day, but they
23     certainly control what could feel a lot like
24     programming.
25  8651                 So I guess the thrust of our


 1     submission is not that the CRTC should, say, regulate
 2     the Internet, which is something that's very confusing,
 3     in a big box it might not fit, but just as if I send
 4     you a letter through the postal system it is not
 5     regulated but if I send you an offer to buy something
 6     that contains fraudulent information it might come
 7     under the legal system of Canada's jurisdiction, in the
 8     same way the Internet is not one homogeneous thing, and
 9     e-mail is a very different thing than aggregating
10     programming and offering it.
11  8652                 Again, it is a long-winded answer --
12     I am an academic -- but my suggestion is that in fact
13     those who have been saying, if it quacks like a duck
14     and looks like a duck, I am sort of in agreement with
15     that.
16  8653                 To come to your third question, which
17     is what does it mean to me as a musician -- because I
18     am a musician and I compose music -- it is hard for me
19     to understand why, when a Lighthouse song plays on a
20     radio station, if I was a co-author of that particular
21     song, I am able to get some payment for it, but if I
22     listen to the same song on an Internet radio station,
23     which sounds, feels identical to being delivered over
24     the radio, somehow it shouldn't be regulated, the
25     Canadian content rules should be different or I should


 1     be paid at a different rate.
 2  8654                 This concept of having two classes of
 3     organizations doing very similar things in some cases
 4     is a regime that I don't think will last.  Either the
 5     CRTC has to get out of regulating broadcasting, which
 6     is one possible answer, or, if you are going to
 7     regulate it, I do think you have to look at certainly
 8     those parts of the new media that look and feel a lot
 9     like broadcasting and in some cases a little like
10     broadcasting and make sure that you are not just
11     getting a part of the activity, because whether the
12     Internet will supplant or supersede the other activity,
13     certainly broadcasting as we know it will likely go
14     down somewhat and the Internet is certainly going up.
15  8655                 I will just finish this part of the
16     answer by giving the Commission an example of what is
17     coming down the pipe commercially -- I think you have
18     licensed it, but certainly the new set-top boxes
19     deliver television channels through a set-top box over
20     Internet protocols through a system called
21     "multicasting".  On those new set-top boxes, which I
22     have seen demonstrated in Canada by some of the
23     suppliers who will be I believe making them available
24     in this coming year, you can have a channel that's a
25     television station, that's CTV or CBC or Global or one


 1     of those things, and then you can have another channel
 2     that's an Internet Web site.
 3  8656                 So, when I ask myself the question is
 4     there room for regulation under the Broadcast Act of
 5     some of these activities, I wonder how your Commission
 6     is going to deal with this fact of intersection of
 7     broadcasting in the traditional sense and the Internet,
 8     which is just about on us.
 9  8657                 That would be my reply.
10  8658                 COMMISSIONER PENNEFATHER:  Did you
11     want to jump right in, Mr. Spurgeon?
12  8659                 MR. SPURGEON:  If I could add and put
13     a legal gloss on it, we have always believed the
14     Copyright Act and, to a large extent, the Broadcasting
15     Act and many other laws now are technology neutral. 
16     The government in fact has made a public policy
17     statement to try to move towards ensuring that the laws
18     they enact are technology neutral so that technology
19     doesn't end up making existing laws anachronistic.
20  8660                 We believe that the Internet -- let's
21     put it in context.  Sure it is new, but they are doing
22     the same things; people still want to listen to music,
23     people still want to watch television shows.  Perhaps
24     we are not at pure convergence yet, but people still
25     want to do those same, same things.


 1  8661                 I guess, to reiterate what Brian
 2     Chater said and what Paul said, it walks like a duck,
 3     it quacks like a duck, it looks like a duck, you should
 4     assert your jurisdiction over that duck and regulate
 5     that duck because it is in fact the same duck as the
 6     one you were regulating before.
 7  8662                 I think you asked the last panel
 8     about what kinds of services are broadcast like.  There
 9     are a number of them out there now that, for all
10     intents and purposes, are radio stations.  But even if
11     they are not, there are other activities that are in
12     effect, in our view, caught by the Broadcasting Act and
13     the definitions which, in my view at least, are very
14     broadly drafted and have allowed that flexibility to
15     allow this Commission to ensure that in fact you do
16     assert your jurisdiction and can assert your
17     jurisdiction over those activities.  If you don't,
18     then, as Mr. Neil stated in the last panel, you run the
19     risk of being redundant in many ways.
20  8663                 This is very important I think that
21     Canada has this ability to maintain jurisdiction over
22     these kinds of activities.
23  8664                 COMMISSIONER PENNEFATHER:  I want to
24     continue and just clarify, and maybe the lawyers will
25     have some other clarification.


 1  8665                 It just occurred to me, though -- and
 2     this is just a little lightness in the whole thing --
 3     we have referred to the duck constantly in this
 4     discussion.  I think Mr. Neil used the goose, brought
 5     the goose in this picture.
 6  8666                 This is Canada.  Why don't we talk
 7     about a loon, for goodness sake.
 8  8667                 MR. SPURGEON:  About a what?
 9  8668                 COMMISSIONER PENNEFATHER:  A loon.
10  8669                 MR. SPURGEON:  A loon?
11  8670                 COMMISSIONER PENNEFATHER:  Yes. 
12     After all ---
13  8671                 MR. SPURGEON:  Or a Canada goose
14     perhaps.
15  8672                 COMMISSIONER PENNEFATHER:  All right.
16  8673                 Let me go back, then, to the
17     discussion, just to be sure we are clear.  I had
18     written the question in this way:  What types of new
19     media services do you consider to be broadcasting?  So
20     I guess you were telling us that, within all that we
21     have been discussing, whether it is the Internet or the
22     intranet, which, if I am correct, are entities which,
23     in your words, Mr. Hoffert, are closer to what is
24     broadcasting-like services than perhaps other services
25     on the Internet, some of which are commercial, some of


 1     which are more in the realm of e-mail or voice or
 2     communication.
 3  8674                 Could you help us with, again, what
 4     are the broadcast-like services that you feel are out
 5     there, brought to us by the new media delivery system
 6     that resemble broadcasting specifically?  You mentioned
 7     I think radio.
 8  8675                 MR. SPURGEON:  Rogers @Home, for
 9     example, these kinds of -- and I didn't say this.  This
10     is actually in the second submission of the CCTA.  They
11     state, on page 4 of the downloaded version:
12                            "The fusion of content and
13                            services [and by that I assume
14                            they mean the service that they
15                            provide] will become more common
16                            as digital media are
17                            personalized to meet the
18                            requirements of particular
19                            consumers [i.e. their
20                            subscribers, I am assuming]."
21  8676                 That would go for Internet people who
22     don't subscribe to Rogers but who subscribe to
23     Sympatico on the telephone line, whatever.
24                            "Today's portals or gateways on
25                            the Internet represent the


 1                            beginning of this trend."
 2  8677                 COMMISSIONER PENNEFATHER:  What do
 3     you think that means?
 4  8678                 MR. SPURGEON:  I think what they are
 5     saying there is -- and this is what we predicted back
 6     in 1995 when we filed a tariff as against these kinds
 7     of services.  We predicted that there is going to be a
 8     consolidation in the industry and what will happen is
 9     the industry will consolidate -- even as Netscape and
10     AOL are, and now we are seeing the cable systems and
11     perhaps some of the smaller Internet access providers
12     will consolidate and join forces and provide, as it
13     says here in this excerpt:
14                            "Today's portals or gateways on
15                            the Internet represent the
16                            beginning of this trend. 
17                            Entertainment content, news,
18                            weather information, stock
19                            quotes, email, and Web page
20                            hosting are all being combined
21                            to provide personalized service
22                            to each visitor."
23  8679                 Delivered to a subscriber for a
24     monthly fee with advertising -- to me, it really looks
25     like broadcasting, read large and maybe even read small


 1     in the sense of its component parts, but certainly it
 2     has a feel to it that resembles an activity that you
 3     are currently licensing under, as I indicated earlier,
 4     one of your many licence approval processes either for
 5     broadcasting or for cable, for satellite, for
 6     SMAT-Vs (ph.), for MPP, multipoint systems.  That's the
 7     conclusion we came to several years ago and it seems to
 8     be developing that way.  That's why we filed a tariff;
 9     that was the most practical approach -- and I could
10     refer back to Gilles Valiquette -- of ensuring
11     remuneration comes in for this use of music when it is
12     enjoyed by the subscriber to the service.
13                                                        1615
14  8680                 COMMISSIONER PENNEFATHER:  Getting
15     back, then, to that world you were talking about, how
16     practically do you regulate Canadian content, for
17     example, on the Internet or intranet?
18  8681                 MR. HOFFERT:  I will take a stab at
19     that.
20  8682                 In searching for an answer to that
21     question, which I am sure is of absolute central
22     interest to the CRTC, I think it is instructive to look
23     at the existing mechanisms of supporting Canadian
24     content and regulating, looking at them and seeing if
25     there is a way to map them into the new media. 


 1     Perhaps, for clarity, I will deal with three potential
 2     methods -- these are not methods that we are suggesting
 3     to the CRTC are the best or the only methods, but I
 4     found it quite easy to do that.
 5  8683                 We support Canadian content with
 6     public support, with private support and with tax
 7     incentives.  Looking at them one at a time, perhaps
 8     backwards this time, if one looks at the tax incentive
 9     our income tax recent amendment Bill C-58 -- and I will
10     read to you from it section 19.1, which says:
11                            "Limitation re advertising
12                            expenses on broadcasting
13                            undertakings.
14                            Subject to subsection 2, in
15                            computing income no deduction
16                            shall be made in respect of an
17                            otherwise deductible outlayer
18                            expenditure of a taxpayer made
19                            or incurred after a certain
20                            date, directed primarily to a
21                            market in Canada and broadcast
22                            by a foreign broadcasting
23                            undertaking." (As read)
24  8684                 And "foreign broadcasting
25     undertaking" is defined a little bit later.  It means:


 1                            "a network operation or a
 2                            broadcasting transmitting
 3                            undertaking outside of Canada or
 4                            on a ship or an aircraft not
 5                            registered in Canada" (As read)
 6  8685                 So, without proposing anything new
 7     necessarily, one could say that by my definition the
 8     important economic activity that I would like to
 9     capture as a creator of content, because that's where I
10     might make some money, those activities certainly
11     currently are being driven on the Internet and intranet
12     side of it by advertising, whether it is a portal or
13     this or that.  Those are the real ones.
14  8686                 I personally have no great interest
15     in trying to regulate a grandmother at one end of the
16     country playing or singing happy birthday to a
17     grandchild at another end of the country.  But if you
18     said that Canadian advertisers, who are gaining
19     benefits by getting the eyeballs of Canadians to these
20     sites -- and the same language is being used for these
21     activities as broadcasting exactly -- if they could
22     only get income tax benefit when they advertised on a
23     site that was in compliance with some Cancon
24     regulation, that would be one way to have an
25     encouragement based on the tax rule.


 1  8687                 I think it would be quite easy for
 2     the CRTC to put up a Web site of those Web sites or
 3     those intranets that were in compliance with Cancon, so
 4     advertisers would know where they could get a tax
 5     write-off on.  That's one thing that comes to mind
 6     looking at an existing regulation and how it might be
 7     mapped into the new system.
 8  8688                 If you look at private support, we
 9     have a history of in the music business FACTOR, in the
10     television and film business the Cable Fund, where the
11     private sector has been contributing funds to help
12     create more quality and a larger quantity of Canadian
13     programming.  There it is my view that the most logical
14     place to apply this encouragement is at the Internet
15     access provider because they look a lot like the cable
16     provider who is contributing to the Cable Fund.
17  8689                 So, just as the cable provider is
18     asked to take a percentage of their monthly access
19     rental income and put it into a fund, I don't see any
20     reason why it would be so difficult to apply that at
21     the IAP level, and I don't believe you would have a
22     problem with what everybody always says, "We are just
23     going to move our site to Timbuktu, and then where do
24     you go", because the person who has a wire into your
25     home or even a satellite aimed at your home, there are


 1     very few of these entities and they can't go anywhere. 
 2     They can't get that wire into your home in Timbuktu
 3     unless you live in Timbuktu.
 4  8690                 So there is a potential mechanism
 5     that you could involve the private sector support.
 6  8691                 In the public sector there is
 7     primarily the issue of shelf space, what I call shelf
 8     space, and Canadian content regulation.  Just for a
 9     minute, without saying exactly what the potential point
10     system or something of that nature might be, there is
11     Telefilm Canada that was created that is part of the
12     CRTC regulatory system, and either Telefilm or some new
13     organization could be used for the new media.
14  8692                 Just last week I was looking for a
15     book review -- I have a book out, and somebody said
16     there was a bad review in Eye Magazine, so I said, I
17     want to see that.  So I went on the search engine that
18     comes through my Internet supplier and I put in the key
19     words "Toronto" and "Eye Magazine".  I got a page that
20     said, okay, this is all of the media in Toronto.  I had
21     a list of the newspapers, radio stations, television
22     stations, all that kind of stuff.  I said, "This is
23     great".
24  8693                 I went down and I looked for Eye
25     Magazine.  Not there.  What's wrong?  I found Now


 1     Magazine, which is a competitor to Eye Magazine.  I
 2     looked at the radio stations and there are only six
 3     radio stations listed.  There is more than that in
 4     Toronto.  Then I realized that the only stations,
 5     newspapers and other companies that were on this portal
 6     to Toronto were those that bought ads on this
 7     particular site.
 8  8694                 I got a deeper meaning at that moment
 9     of what "shelf space" really means and how important it
10     is because, if I was looking for a magazine in Toronto
11     I would have only seen those magazines that had a
12     particular relationship.
13  8695                 If you look at the history of media
14     penetration throughout the world, certainly in North
15     America, you see that one of the reasons that we have a
16     CRTC in Canada is that the big bucks are south of the
17     border, and if the differentiating issue for finding
18     stuff is ability to pay or take advertising, and if
19     there isn't some sort of other countervailing process
20     involved, that Canadian material could easily get lost. 
21     I have given you an example where there are two
22     Canadian publications and one got bumped, but it could
23     easily be if taken to the next step.
24  8696                 So those are three mechanisms that
25     come to mind that I don't think are very different than


 1     what the CRTC does today that you could conceivably
 2     move into the new media.
 3  8697                 COMMISSIONER PENNEFATHER:  Thank you
 4     for those.  Some do apply, but it is still not entirely
 5     clear to me what specific Cancon regulations -- what
 6     would be the ones that we would monitor and how would
 7     we implement compliance to those regulations.
 8  8698                 MR. HOFFERT:  Perhaps I will just
 9     give you a brief answer and pass the question to some
10     of my colleagues, but it is my feeling that the key
11     decision that the CRTC has to make is, should you
12     regulate and is it possible to regulate.  And, if you
13     decide that you should regulate and that it is possible
14     to regulate, it is my feeling that the specifics of
15     regulating, which are very context sensitive, one site
16     that lists 15 choices the regulation might take the
17     form of make sure you got the first five things.  On a
18     search engine, which we have heard some interesting
19     comments that I share, you could go search for a couple
20     of key words and you get 25,000 hits.  The key thing
21     is, what are the first five on the page.  Usually
22     people don't go to the last page and look at those
23     hits.
24  8699                 There are all sorts of means that are
25     not very difficult by which Canadian content could be


 1     given a fair chance to compete in those markets, but
 2     you have to look at the context of the individual Web
 3     activity, and I would say that probably over the years
 4     that's going to change as well and, just as you do in
 5     other media, the CRTC would have to react to the
 6     realities.
 7  8700                 Again, this year, it is portals.  It
 8     is pretty easy to figure out what you can do with
 9     portals.  Portals, their No. 1 page is the most
10     valuable page, what is going to be on that.  How many
11     clicks do you have to go to the next one?
12  8701                 All you have to do if you want to
13     find out what the mechanism is is look at the economic
14     activity.  My proposal to you is that this is the
15     easiest way for the CRTC to figure out these
16     complicated things -- find out where they charge the
17     most advertising dollars; that's likely going to be the
18     most economically important, where most of the eyeballs
19     are, and then just make the decision that's appropriate
20     for that.
21  8702                 COMMISSIONER PENNEFATHER:  Did you
22     want to add to that?
23  8703                 MR. SPURGEON:  Some of the
24     broadcasters probably already are complying if they are
25     playing in effect their broadcasts, which hopefully


 1     comply with the Canadian content regulations.  Those
 2     that aren't previously radio broadcast but are
 3     Internet-only radio stations, then they should, in our
 4     view, be subject to the same rules.
 5  8704                 You asked how could you ensure that
 6     that is done.  Well, if you tune on to let's say the
 7     CHUM Web site, you will hear the music that CHUM would
 8     play and you would assume that it would be the same as
 9     what CHUM would be playing if you were listening to
10     hertzian waves or if it were on cable or whatever. 
11     Likewise, when you click on to a site that is only on
12     the Internet, it would be hopefully subject to the same
13     rules.
14  8705                 COMMISSIONER PENNEFATHER:  So,
15     assuming for a moment that we decide that certain new
16     media services, Internet services, are broadcasting,
17     and therefore the Broadcasting Act applies, what kind
18     of regulation would assure shelf space for Canadian
19     product, considering the technology we are talking
20     about?  How do you go about lining up Canadian sites? 
21     Do you have a site on which there is a list of other
22     Canadian sites and then you --
23  8706                 MR. SPURGEON:  That might be an
24     approach.  I think if it is like an existing means, if
25     we go back to that word, an existing media, if it is


 1     like that, then it should be treated like that, as it
 2     is now.  If it is something brand new -- I know you
 3     handled the digital radio approval in a kind of
 4     different way than say other radio, but you did create
 5     a system because it was a new kind of service and you
 6     created some new rules for that, as you did for other 
 7     things like cable.
 8  8707                 If something like that already
 9     exists, then, really, I think it is incumbent on you to
10     follow the same rules that you apply to those existing
11     services.  If it is something new, then, you will have
12     to decide whether you want to apply the same rules that
13     you apply to the other services, the old services, or
14     come up with something new.
15  8708                 I hate to keep going on with that
16     duck business, but if it is like that it should be
17     treated the same in our view and you should assert the
18     jurisdiction you have.  If you are wrong -- we don't
19     believe you are wrong if you do that.  If you are
20     wrong, of course, people will challenge the application
21     of the section, and if it is wrong, either the courts
22     will uphold you or they won't.  Then it is up to the
23     parties to go to Parliament to have the rules changed. 
24     But we believe you have the jurisdiction and you should
25     assert it, if in fact it is the duck.


 1  8709                 M. VALIQUETTE:  Si vous me permettez,
 2     au-delà de ça, je crois que, évidemment, nous ne sommes
 3     pas des spécialistes; alors on n'a peut-être pas des
 4     solutions définies, comme peut-être vous souhaiteriez
 5     avoir, mais j'aimerais mentionner le fait que souvent
 6     au Canada, dans ces domaines, nous avons été quelque
 7     peu réactifs.  Certaines personnes ont peur des
 8     changements, mais nous, les créateurs, nous voyons ça
 9     comme des opportunités.
10  8710                 Alors nous encourageons beaucoup
11     votre Conseil à sauter sur l'occasion de créer un
12     modèle qui sera bénéfique mais aussi qui sera un
13     exemple à travers le monde pour la relation qu'une
14     société peut avoir entre les artistes d'un côté, le
15     domaine des arts, et de l'autre côté l'auditoire, qui a
16     besoin de retrouver des oeuvres où cette société-là
17     peut se voir comme un miroir et surtout s'afficher. 
18     C'est une réalité, ça, qui est essentielle à la survie
19     d'un pays comme le Canada.
20  8711                 Évidemment, nous n'avons pas toutes
21     les solutions, mais j'aimerais juste souligner le fait
22     que les créateurs vous encouragent à ne pas rater
23     l'occasion.
24  8712                 CONSEILLÈRE PENNEFATHER:  Merci,
25     Monsieur Valiquette.


 1  8713                 Ceci m'amène à une dernière question,
 2     qui est un peu plus large dans ce contexte.  En effet,
 3     ça touche à un point très important que vous avez
 4     soulevé quand on parle de l'Internet comme d'un média
 5     qui peut nous faire valoir et nous rendre l'accès à
 6     notre culture nationale.
 7  8714                 What I am interested in having a last
 8     discussion on is how you see the impact of the Internet
 9     and new media on national cultures.  One of the
10     intervenors we had here referred to this as a mass
11     medium and one which could become a global culture,
12     create a global culture, its own culture, and perhaps
13     begin to bring various cultures together.  Others, on
14     the other hand, from a very practical point of view,
15     have talked about the importance of the Internet and
16     the business of the Internet being improved, if you
17     will, by its ability to bring local cultures closer to
18     those who use it.
19  8715                 Do you have any comments on this
20     whole aspect of the impact of the Internet on our own
21     identity and those of other nations?
22                                                        1630
23  8716                 MR. SPURGEON:  I think both those
24     things are right.  My view is that, like anything, it
25     has dangerous opportunities, it presents both.


 1  8717                 This is a great opportunity for
 2     Canada to show that it is distinct from other cultures,
 3     other countries in the culture that it puts out -- its
 4     books, its music, its plays, its television shows, its
 5     movies.  We have noticed in the last few years that our
 6     music is becoming more and more popular; as technology
 7     develops and the tentacles of distribution get better,
 8     our music is becoming more important around the world. 
 9     We know that.  How do we know it?  Because we are
10     getting more money from other countries; it is flowing
11     into Canada from other countries, the use of our
12     members' music in foreign lands.  We think that this
13     will hopefully improve even more as these networks
14     improve.
15  8718                 That's why it is important, as Gilles
16     said, and I think it was said earlier by the ACTRA
17     panel, we have to ensure that our culture is maintained
18     and that there are mechanisms that sustain it, and we
19     just don't throw in the towel and in effect allow --
20     give up, I guess is the best way to put it.  We have to
21     ensure that we keep this jurisdiction over what we do
22     to make sure that Canadians hear it, which will then
23     allow other Canadian creative people to create product
24     or create works that will then be exported around the
25     world.


 1  8719                 So, yes, it does provide
 2     opportunities, and I think it will get better for
 3     Canadians.  It will present some dangers, I guess, but
 4     hopefully we will deal with them.
 5  8720                 M. VALIQUETTE:  Au-delà des
 6     opportunités, si le CRTC organise un cadre comme nous
 7     souhaitons que vous le fassiez, ce que vous lancerez,
 8     c'est également un défi.  Nous avons dans notre
 9     communauté canadienne des gens qui sont extrêmement
10     créatifs, et là-dedans je n'inclus pas seulement les
11     créateurs; il faut être créatif pour être un bon
12     diffuseur, il faut être créatif pour, je ne sais pas,
13     être un gérant d'artiste.  En quelque part, quand on
14     fixe un cadre qui va mettre en évidence les talents de
15     chez nous, vous les encouragez à s'afficher, et c'est
16     tout un pays qui s'affiche comme ça.  On dit souvent
17     qu'on reconnaît un pays par sa culture.
18  8721                 Alors, encore une fois, il ne faut
19     pas passer à côté de cette réalité qui dit qu'il y a
20     toujours eu un lien étroit entre les nouvelles
21     technologies et les arts.  Par exemple, je ne crois pas
22     que le rock'n roll aurait existé si ce n'était pas de
23     la guitare électrique.  Aujourd'hui on a le new age
24     suite au synthétiseur.  Vous donnez un autre outil aux
25     gens créatifs de chez nous et vous aurez ce que


 1     certains appellent ça une oeuvre d'art, d'autres
 2     appellent ça un produit, mais vous aurez quelque chose
 3     qui sera canadien et dont nous serons tous fiers.
 4  8722                 COMMISSIONER PENNEFATHER:  I realize
 5     that.  I think that what one is balancing -- and
 6     perhaps you would want to comment -- is the importance
 7     of encouragement, a word I heard you use earlier, not
 8     regulation but encouragement, of promotion of Canadian
 9     culture on the Internet and access to that work.  But,
10     at the same time, you mentioned that this is an
11     opportunity for greater exposure and transactions,
12     presentations around the world than perhaps we have had
13     before.
14  8723                 I guess the concern on some parts is
15     that regulations or other activities may be barriers,
16     in fact, and limit those opportunities for Canadians
17     working within new media or Canadians taking a current
18     work and using the new media to promote or present that
19     work.
20  8724                 It is that balance that I would like
21     you to comment on, in this new media world, if it is
22     more or less important that we be very careful than it
23     has been in the past.
24  8725                 MR. SPURGEON:  If you could give me
25     an example of what you mean by that, where it would be


 1     a barrier, for example, to say an artist or a creative
 2     person in Canada -- if they are not getting paid, of
 3     course, that's a barrier, but that's why Socan has
 4     filed a tariff against Internet access providers who
 5     are located in Canada to ensure that creators are
 6     compensated when their works are exploited in Canada --
 7     not just Canadians, but everyone from around the world.
 8  8726                 Obviously, we have to ensure that
 9     this new medium is -- when you say "regulated" -- I
10     don't use the word "support".  A legal colleague of
11     mine wrote a paper for the government called,
12     "Cyberspace is not a No-Law Land".  I thought that was
13     a good title because it accurately summed up the notion
14     that cyberspace is not a no-law land in terms of
15     copyright, obviously, in our view, nor defamation law,
16     nor hate law, hate crime law, nor obscenity law, nor,
17     in our view, broadcast regulation law.  The list goes
18     on.  There is a litany of the laws that it is not a no-
19     law land of.  It is important to keep that in mind.
20  8727                 So I don't think the barriers are any
21     more than they are posed for anything else, for any
22     other law.  So we have to look at it in that context. 
23     Obviously we have to put some thinking into the
24     problem, but certainly we are moving towards many
25     solutions, as was explained earlier, about copyright


 1     management issues and anti-copyright circumvention
 2     issues on the copyright side, and I am sure we have
 3     solutions on obscenity and defamation, things like
 4     that.
 5  8728                 Obviously, there are, as I say,
 6     dangers, but we are working on the problems.
 7  8729                 MR. HOFFERT:  Some fine lines travel
 8     well and some don't, and some fine content travels well
 9     and some travels less well.  I don't think you could
10     get a single answer to that.
11  8730                 The larger issue is how do you
12     balance the localization with globalization.  Some
13     academics use the tem nowadays "glocalization", which
14     isn't actually a misspelled word.
15  8731                 It looks like the best evidence we
16     have is that people want to have access to everything
17     in the world, but actually what they want is just a few
18     things whose names they recognize and which are more
19     local to them.  The small amount of research evidence
20     that exists with wired communities -- there is one in
21     France that has been run by Microsoft for a few years
22     and actually one in Canada that I have been privileged
23     to direct for about four years in Newmarket, Ontario. 
24     Both of these communities have been given very high
25     bandwidth -- as a matter of fact, part of the services


 1     we give our Canadian community are under an exemption
 2     of the CRTC for research, like video telephones,
 3     entertainment on demand, all this kind of stuff.
 4  8732                 It is interesting that -- the
 5     research is starting to become publicly available over
 6     the last six months -- there is almost the same sort of
 7     results, which is that the people value the local stuff
 8     more than anything else.  In our community the first
 9     thing that they wanted was a list of everybody's e-mail
10     address in their community.  We asked permission,
11     everybody said, "Okay, you can do that."  Then they
12     made a list.
13  8733                 The first message was, "We are having
14     a barbecue next Friday; we will do the dogs, everybody
15     bring the drinks", and all the neighbours got to meet
16     each other.  So, instead of cocooning and sitting in
17     front of the terminals, as others might have suggested,
18     what we found in Canada and what Microsoft found in
19     France was that people who are connected with the new
20     media tend to use it more like the telephone, which is
21     different essentially from broadcasting in that it is a
22     target marketing or target messaging which has the
23     potential for being much more a disseminator of local
24     culture, one might say.
25  8734                 COMMISSIONER PENNEFATHER:  Thank you. 


 1     I think that you have hit just the point that I was
 2     looking for, is that important line between the concept
 3     of communication among people and our discussion about
 4     a broadcasting activity within all that world on which
 5     we see the need to apply some regulation or support, or
 6     all of the above, and we wouldn't want one to interfere
 7     with the other or be seen to.
 8  8735                 Thank you very much.  Thank you for
 9     this conversation.
10  8736                 THE CHAIRPERSON:  Thank you.
11  8737                 Counsel Pinsky.
12  8738                 MS PINSKY:  Thank you, Mr. Chairman.
13  8739                 First, if I could, I would like just
14     to clarify for the record precisely what new media
15     services you are calling broadcasting.  Perhaps, for
16     the sake of convenience, if I could just paraphrase
17     what I understand your position to be and if you could
18     just clarify whether that's the case, you have
19     basically said that if music is being communicated,
20     regardless of the technology, then it is broadcasting.
21  8740                 Is it your position, then, if music
22     is transmitted to an end user, regardless of the degree
23     to which the end user can interact with the content or
24     regardless of the degree to which the end user can
25     control what he or she receives, that the transmission


 1     of that content is broadcasting?
 2  8741                 MR. SPURGEON:  Yes, from the point of
 3     view of Socan's Tariff 22 -- indeed, for that matter,
 4     it is Tariff 1, Tariff 2, all its so-called
 5     broadcasting tariffs -- or the tariffs that are
 6     founded, under the Copyright Act, under the heading
 7     3(1)(f), which states that we have a right to
 8     communicate to the public by telecommunication, our
 9     view is that we have the right to license entities that
10     are communicating to the public, and those entities
11     would be anyone from an IAP that you subscribe to, that
12     you can access a Web site that has music, or a content
13     aggregator, America Online, Compuserve, all these kinds
14     of entities.  These entities are all communicating to
15     the public.
16  8742                 The IAP is not, in our view, a common
17     carrier, they are providing a service.  The common
18     carrier, of course, is the telephone line, but if they
19     are doing what we consider to be an act that is an act
20     that only we control, which is the act of communicating
21     the work to the public, then it is caught and, in our
22     view, you want to call it broadcast for the purposes of
23     the legislation.
24  8743                 Under the Copyright Act, the old
25     right that we had was the right to communicate by radio


 1     communication.  Of course, that was deemed to be
 2     inadequate by Parliament and they changed it to be all
 3     inclusive.  Now it means any transmission of signs,
 4     signals, writing, images or sounds or intelligence of
 5     any nature by wire, radio, visual, optical or other
 6     electromagnetic system.  So that really includes
 7     everything under the Copyright Act.
 8                                                        1645
 9  8744                 Now, if we look at the definitions in
10     the Broadcasting Act, they are very similar and they
11     cover, if you look at the definition of "broadcasting",
12     any transmission of programs; other means of
13     telecommunications has the same kind of wording:  any
14     wire, cable, radio, optical or other electromagnetic
15     system, or any similar technical system.  So it has
16     kind of caught that same technology neutral language in
17     it.
18  8745                 Obviously, Socan has no interest in
19     licensing e-mail or, as Paul Hoffert referred to, if
20     someone sings Happy Birthday over the telephone.  We
21     don't do that now and we wouldn't do that under any
22     kind of regime.  We are only looking at entities that
23     are communicating to the public.  I will give you an
24     example.  Pay-per-view is a good example where, sure,
25     there is a performance in someone's home, that's a


 1     private performance, but it is a communication
 2     nevertheless to the public, which is caught by the
 3     definition of the Copyright Act.
 4  8746                 Now, perhaps under the Broadcasting
 5     Act there might be people who would argue that some of
 6     these transmissions aren't broadcasting, but, in our
 7     view, they are wide enough to catch I would say most
 8     Internet transmissions, which, in our view, are similar
 9     to broadcasting.
10  8747                 MS PINSKY:  First, just to be clear,
11     obviously, when you ask the Commission to regulate
12     these services and to extend its mandate, clearly we
13     are talking about the definition of "broadcasting"
14     under the Broadcasting Act --
15  8748                 MR. SPURGEON:  That's correct.
16  8749                 MS PINSKY:  -- and the definition of
17     the Copyright Act is a separate issue.
18  8750                 MR. SPURGEON:  That's right.  That's
19     quite correct.
20  8751                 I didn't say "extend the mandate".  I
21     don't think a mandate need be extended; I think it is a
22     mandate.
23  8752                 MS PINSKY:  Include within its
24     jurisdiction.
25  8753                 MR. SPURGEON:  Yes, that's right.


 1  8754                 MS PINSKY:  Okay.  That's the content
 2     that you would consider to be broadcasting.
 3  8755                 Then, of course, what you need to do
 4     for the purpose of the Broadcasting Act to the
 5     Commission's jurisdiction is identify the broadcasting
 6     undertaking.
 7  8756                 MR. SPURGEON:  That's correct.
 8  8757                 MS PINSKY:  So if we could just sort
 9     of go through that, you have referred specifically to
10     the Internet access providers and portals, et cetera. 
11     I understand your submission is you would be focusing
12     on those as the broadcasting undertakings.
13  8758                 MR. SPURGEON:  Uh-huh.
14  8759                 MS PINSKY:  First, just to clarify
15     that, with respect to Internet service providers, would
16     you be referring only to those which create their own
17     content or would you include within that category ISPs
18     that merely provide access to the Internet and don't
19     also create or keep their own content?
20  8760                 MR. SPURGEON:  I think certainly the
21     description I gave you that was found in the second
22     submission of the CCTA would be caught.  As to the
23     first, I think it too would be caught by the
24     Broadcasting Act definition in the sense that you would
25     have to look at, again, what the business is doing.  If


 1     the activity is like the activity that you are
 2     currently licensing, our submission is that you must
 3     make the decision to assert your jurisdiction.
 4  8761                 I don't know whether I can look at
 5     any examples, but certainly the example of Rogers @Home
 6     or AOL or any content aggregator or -- I don't know
 7     whether Paul could give me some more examples of the
 8     kinds of things.
 9  8762                 MR. HOFFERT:  Sympatico would be an
10     example of not an Internet -- of an Internet.  Canoe.
11  8763                 MS PINSKY:  If we take any of those
12     examples, and presumably we are only talking about
13     those services which would fall within the context of
14     broadcasting, many parties have argued on the record
15     that, even in the case of these types of undertakings,
16     the primary purpose of these undertakings is not
17     broadcasting and that, when you look at the types of
18     services, in fact only a very small amount of the
19     services they are distributing do involve broadcasting,
20     and they would argue that, as a result, those
21     undertakings couldn't be called "broadcasting
22     undertakings".
23  8764                 How would you respond to that type of
24     argument?
25  8765                 MR. SPURGEON:  If you say "a small


 1     percentage", it is like saying, well, if a broadcaster
 2     is only broadcasting some of the time, then it is not a
 3     broadcaster.  I couldn't agree to that.  If they are
 4     doing something that is like broadcasting, then they
 5     are broadcasting.
 6  8766                 I really can't add anything more to
 7     that.
 8  8767                 MS PINSKY:  Okay.  Then, just to pick
 9     up on something like broadcasting, you argued that ISPs
10     are not common carriers.  If we take those ISPs that
11     aren't involved in content aggregation or creating
12     their own content but mainly provide access, the wire
13     to the end user, some have argued that those types of
14     undertakings are indeed carriers, and the term has been
15     used that they are gateways as opposed to gatekeepers. 
16     What is the activity of that type of ISP that you would
17     consider to involve the activities of a broadcasting
18     undertaking?
19  8768                 MR. SPURGEON:  Again, I have to keep
20     the Copyright Act separate from the Broadcasting Act.
21  8769                 From the Copyright Act, in our view,
22     there is clear liability on their part for what they
23     are doing.  In terms of broadcasting, I haven't really
24     looked at issue.  I haven't really considered it, but I
25     would assume that, based again on a wide definition,


 1     they probably would be caught.
 2  8770                 You see, the way we looked at this
 3     from the copyright point of view was, it was both a
 4     practical and a realistic approach to licensing.  These
 5     are bodies that carry on business in Canada and they
 6     are not common carriers, in our view.  As I say, they
 7     are providing a service beyond that of a mere pipe.
 8  8771                 They don't say that, we say that. 
 9     They obviously say they are a pipe.  Well, they are not
10     the pipe.  The pipe is the telephone line.  They are
11     doing something else.  The thing they are doing is
12     providing a service which we consider to be licensable. 
13     They are engaging in an activity which attracts
14     liability, and I believe it does as well under the
15     Broadcasting Act, but I think we would have to look at,
16     again, the activity because we again are saying that,
17     if they are doing what broadcasters are doing, then
18     they should be subject to those same rules.
19  8772                 MS PINSKY:  Finally, a point of
20     clarification of terminology in terms of your use of
21     the term "intranet".
22  8773                 As I understood the context in which
23     you were using that term, do I take it you were
24     referring to sort of the AOLs or the type of situation
25     where there is restricted access to content?  Content


 1     is accessible only to subscribers?
 2  8774                 MR. HOFFERT:  Yes.  One of the
 3     technical terms sometimes used is a semi-permeable fire
 4     wall which allows the owner of the intranet to control
 5     traffic in and out of the intranet to and from the
 6     Internet.  Basically, if you have to pay to get access
 7     to the content, that's one simple measure that's not
 8     technical.  So I can't go on the Internet and get
 9     content that's on AOL without paying AOL a content fee,
10     and the same would be true with the Rogers @Home
11     network and the ADSLs, et cetera.
12  8775                 You can't get to the stuff that they
13     have unless you sign on with them, and that's a pretty
14     simple way to understand it as opposed to something
15     that anyone can get anywhere in the world on the
16     Internet.
17  8776                 MS PINSKY:  Okay.  You were just
18     referring to in terms of access to content as opposed
19     to perhaps a more technical interpretation in terms of
20     the network structure.
21  8777                 MR. HOFFERT:  Both.  An intranet is a
22     network that uses Internet protocol but is fire-walled.
23  8778                 MS PINSKY:  Thank you very much. 
24     Those are my questions.
25  8779                 THE CHAIRPERSON:  Thank you, counsel.


 1  8780                 Thank you very much gentlemen.  I
 2     guess, as you can tell, we are struggling with whether
 3     or not this is a virtual duck that isn't really a duck
 4     at all or whether it really is a duck.
 5  8781                 Thanks again.
 6  8782                 MR. SPURGEON:  Thank you.
 7  8783                 MR. HOFFERT:  Sometimes if it walks
 8     and quacks like a duck it is Groucho Marx.
 9  8784                 THE CHAIRPERSON:  That concludes our
10     proceeding for today.  We will resume tomorrow morning
11     at nine o'clock.
12     --- Whereupon the hearing adjourned at 1655,
13         to resume on Wednesday, December 2, 1998
14         at 0900 / L'audience est ajournée à 1655,
15         pour reprendre le mercredi 2 décembre 1998
16         à 0900
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