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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)

December 4, 1998                       Le 4 décembre 1998

                          Volume 10
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.

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

                 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 4, 1998                       Le 4 décembre 1998

                          Volume 10
tel: 613-521-0703         StenoTran         fax: 613-521-7668




Presentation by / Présentation par:

Friends of Canadian Broadcasting                          2569

Core Curriculum Group                                     2599

Canadian Conference of the Arts/                          2641
La conference canadienne des arts

Canadian Film Centre                                      2672

Canadian Independent Film Caucus                          2699

Communications and Diversity Network                      2733

Bell Satellite Services Inc.                              2771

Ms Leslie Regan Shade                                     2831

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


 1                               Hull, Quebec / Hull (Québec)
 2     --- Upon resuming on Friday, November 4, 1998,
 3         at 0900 / L'audience reprend le vendredi,
 4         4 décembre 1998, à 0900
 5  11106                THE CHAIRPERSON:  Good morning,
 6     ladies and gentlemen.
 7  11107                We will return to our proceeding now
 8     looking at the issues related to new media and the
 9     Internet.
10  11108                Madam Secretary, our first party for
11     the day.
12  11109                MS BéNARD:  Thank you, Mr. Chairman.
13  11110                The first presentation will be
14     Friends of Canadian Broadcasting, Mr. Ian Morrison.
15  11111                THE CHAIRPERSON:  Good morning, Mr.
16     Morrison.
18  11112                MR. MORRISON:  Mr. Vice-Chair, thank
19     you, and members of the Commission.  Thanks for the
20     opportunity to appear.
21  11113                We are here to applaud this
22     initiative, the first that this Commission has
23     undertaken on the issue of convergence in digital
24     technologies.
25  11114                The parameters you have set are not a


 1     road map to regulation.  Rather, they are an important
 2     first effort at charting the issues, determining where
 3     stakeholders and the interested public stand and
 4     avoiding the mistakes of regulators in other
 5     jurisdictions.  We regret that these laudable
 6     initiatives have been misconstrued by some intervenors
 7     and commentators.
 8  11115                We see this hearing process as an
 9     important learning opportunity for the Commission, for
10     intervenors, for other governmental bodies in this
11     country and abroad and for the Canadian public.
12  11116                The record of your discussion with
13     interested parties over two weeks should be considered
14     a state-of-the-art textbook for students of new media. 
15     This will add still more traffic to your Web site.
16  11117                Based on data compiled by the OECD
17     for the period December 197 to June 1998, almost one in
18     every 12 Internet users the world over resides in this
19     country.  Canadians are 50 per cent more likely than
20     Americans to use the Internet, three times as likely
21     than Japanese or U.K. residents and four times as
22     likely as Germans.
23  11118                The issue for Friends is the impact
24     of the convergence of new media and television.  The
25     cultural and industrial goals that underlie Canadian


 1     broadcasting were framed with television in mind.  As
 2     new media carry increasing amounts of entertainment
 3     programming, Friends' concern is to ensure that these
 4     important policy goals are sustained.
 5  11119                How or whether the Commission chooses
 6     to define new media will be an important outcome of
 7     these hearings.  The Commission observed in its call
 8     for comments that the term is likely to be defined in
 9     different ways.
10  11120                Friends notes a range of options
11     before you: the Internet in its current, largely text
12     and graphics form; a future high-bandwidth Internet
13     rich in audio/video; multimedia distributed by private
14     networks; digital television and digital audio, and a
15     complete migration of television to the Internet.
16  11121                Friends urges the adoption of an
17     expansive and forward-looking definition that can
18     accommodate future technological developments. 
19     Regulating new media mat by premature, but so too would
20     be inadvertently ruling out such regulation.
21  11122                Friends also supports the
22     recommendation of Netstar Communications that initially
23     at least broadcasting should include all new media
24     intended for reception by the general public.  Certain
25     kinds of interactive and bi-directional services that


 1     are integrated with television programs might also be
 2     included.
 3  11123                Numerous intervenors advocate a more
 4     narrow definition on the logic that new media content
 5     will be non-scheduled and on-demand.  Scheduling or
 6     simultaneity are not required elements of broadcasting.
 7  11124                Problems of definition obscure the
 8     more important issue of classification.  In its
 9     submission, Call-Net Enterprises suggested three
10     categories into which new media services might fall:
11     telecom-analogous services, e-mail, telephony, things
12     of that nature; interactive services,
13     information-oriented Web sites for example and
14     broadcast-analogous services.  The latter, of course,
15     is what is of great interest to us.
16  11125                Without underestimating the
17     challenges posed by the first two, Friends expects most
18     controversy to arise from the third.  The exhibition of
19     exclusive content through new media in a manner similar
20     to its exhibition on television raises substantial
21     regulatory questions both about new media and
22     traditional television.
23  11126                Friends broadly concurs with the
24     majority of industry stakeholders in their opposition
25     to applying traditional broadcast regulations to new


 1     media.  These intervenors are persuasive in their claim
 2     that regulation may discourage growth, disadvantage
 3     canadian companies vis-à-vis international competitors
 4     and drive content producers and aggregators to other
 5     jurisdictions.
 6  11127                Monitoring would be costly and
 7     difficult and with unlimited shelf space, Canadian
 8     content in theory should thrive in a competitive
 9     environment.
10  11128                Yet the majority of
11     broadcast-analogous content is likely to originate from
12     within the regulated industry.  We noted with great
13     interest Mr. Grant's comments yesterday about the
14     copyright as a magnetic field in which this would
15     operate.
16  11129                The Specialty and Premium Television
17     Association has noted that many broadcasters have taken
18     advantage of new media as a cross-promotion and
19     branding tool to attract audience.
20  11130                Increasingly, broadcasters' Web sites
21     offer integrated content such as interactive
22     programming, interactive program guides, discussion
23     forums and electronic commerce.  The trend has
24     progressed much further in the Untied States where
25     vertically integrated broadcasters have an enormous


 1     Internet presence.
 2  11131                We congratulate the CBC and a
 3     substantial number of specialty channels for their
 4     innovative use of Web sites as complements to their
 5     broadcast services.  These have provided some excellent
 6     Canadian content on the Internet.  We also note with
 7     dismay the failure of Canwest Global or CTV to act on
 8     this opportunity.
 9  11132                Although full convergence may
10     eventually happen, Friends suggest that the Commission
11     not hold its breath for the technology that will make
12     it possible.  We are still waiting for digital
13     television.
14  11133                I passed up a Wall Street Journal
15     from yesterday showing the likely penetration of
16     digital television in the United States to the year
17     2005.
18  11134                Moreover, according to the Specialty
19     and Premium Television Association, no working model
20     yet exists to produce cost recovery, let alone profit
21     from new media.
22  11135                It is questionable, regardless of
23     what is technologically possible, whether viewers will
24     want to be entertained on the same screen that they use
25     to download information on stock prices or the weather,


 1     or compose e-mail on a television set for that matter.
 2  11136                For now, the advent of new media
 3     presents traditional broadcasters with unprecedented
 4     opportunities to capitalize on technological change,
 5     perhaps even to lead it.  Yet several intervenors,
 6     notably the Canadian Association of Broadcasters,
 7     express substantial concerns about new media.  They
 8     fear losing audience to it and they fear competition
 9     from unregulated Internet broadcasters.
10  11137                To the extent that CAB's expressed
11     fears are genuine, the threats they outline are far off
12     if just about all the experts, and we are not among
13     those, appearing before you are to be believed.
14  11138                Notwithstanding these trends, CAB
15     would have us believe that its members stand to face
16     fierce competition from unregulated Internet
17     broadcasters. It argues that its members cannot
18     continue to meet a heavy regulatory burden if this
19     competition is unregulated.
20  11139                In the recently concluded television
21     policy hearings, CAB called for reduced regulation.  It
22     now tells the Commission prepare one day to eliminate
23     regulation entirely or jeopardize the survival of the
24     Canadian broadcasting industry.
25  11140                Friends strenuously opposes any


 1     diminution of existing regulation on traditional
 2     broadcasters, now or in the foreseeable future. 
 3     Somebody once said what is foreseeable future?  It's
 4     when the Income Tax Act is repealed and you hold your
 5     breath ten years.
 6  11141                We are supported in our contention in
 7     this position by several industry intervenors,
 8     including IBM Canada, whose December 1996 discussion
 9     paper on convergence explicitly recommended maintaining
10     and preserving the regulatory framework in recognition
11     of the role traditional broadcasting continues to play
12     in furthering cultural policy.
13  11142                Regarding the regulating of new
14     media, we share the view that any regulation of new
15     media must be structured differently from traditional
16     regulation.  We suggest the following principles as
17     points of departure, and only points of departure.
18  11143                Viewer access.  If and when
19     significant broadcasting content moves to the Intenet,
20     the Commission should facilitate inexpensive access,
21     especially in remote and rural Canada.
22  11144                We believe that limited public
23     infrastructure funding should focus on access.  We note
24     that the industry has already achieved substantial
25     infrastructure progress without public funding.


 1  11145                Content production.  Friends believes
 2     increasing content production is the best way to ensure
 3     a Canadian presence in new media, keeping in mind the
 4     need for a balance between content and infrastructure
 5     development.
 6  11146                We support the idea of a new media
 7     production fund, but in agreement with the Directors
 8     Guild and others, do not wish to see money diverted
 9     from existing funds.
10  11147                We also oppose a blanket tax on
11     Internet providers, many of which remain text based and
12     information oriented.  Telefilm Canada has identified
13     preferable funding sources:  extending the Canadian
14     Film & Video Production Tax Credit to include new media
15     and using the significant benefits test to raise new
16     funds.  We also believe priority funding assistance
17     should go to indigenous productions.
18  11148                Shelf space.  Recognizing the
19     substantial resources that traditional broadcasters can
20     bring to new media ventures, Friends supports the
21     removal of barriers whose specific effect is to
22     discourage broadcaster entry into new media.
23  11149                At the same time we endorse Netstars'
24     recommendation that in exchange Canadian content
25     providers be guaranteed fair access to shelf space and


 1     at least comparable profile to that of non-Canadian
 2     content.
 3  11150                Prominence. Friends believes
 4     prominent positioning of Canadian content should go
 5     hand in hand with shelf space.  We support Sun Media's
 6     proposal that Internet broadcasters and distributors be
 7     required to give priority placement to Canadian content
 8     on program guides and links pages.
 9  11151                We note with great concern, for
10     example, the failure of the major cable companies to
11     offer Canada-firs t platforms in their @home service. 
12     Shaw's service, for example, is baldly American in
13     nature, livened up with Newsworld ads.  It demonstrates
14     Shaw's true values when they engage in unregulated
15     activities.
16  11152                Promotion.  Just as it is on
17     television, Canadian broadcasting on new media will
18     need to be promoted effectively to attain maximum
19     audience and, therefore, cultural value.
20  11153                The CRTC might consider providing
21     regulatory certainty for fledgling broadcast analogous
22     services by an exemption order for broadcasting
23     services found on the internet.
24  11154                Such an order might contain a
25     definition which could address the extent of the


 1     exemption.  The demarcation point could be when
 2     licensed broadcasting suffers a significant loss of
 3     advertising share based on market requirements.
 4  11155                Again I note Mr. Grant's comments on
 5     behalf of the Directors Guild.  Yesterday he used the
 6     word threshold, perhaps a better word than we came  up
 7     with here.
 8  11156                Finally, the policy framework. 
 9     Friends shares the views of many intervenors that the
10     existing statutes may be inadequate to address certain
11     issues raised by new media.  A positive outcome of this
12     public hearing will be a recommendation from your
13     Commission to the government on legislative amendments
14     that may eventually be required to bring your governing
15     statutes up to date.
16  11157                We also endorse the recommendation of
17     Netstar and others that the Commission monitor the
18     progress of convergence, perhaps by convening  a
19     further hearing in, say, two years or so.
20  11158                The technology application and
21     content of new media continue to develop at a rapid
22     pace and will require continued vigilance.  If you
23     accept this recommendation, we will be there.
24  11159                Thanks.
25  11160                THE CHAIRPERSON:  Thank you, Mr.


 1     Morrison, for your presentation.
 2  11161                I particularly note your
 3     characterization of a purpose and focus of this
 4     proceeding.  While I agree with you it has been
 5     misconstrued in several fora, that has probably helped
 6     to create greater public awareness of the fact that the
 7     proceeding is going on and probably resulted in a lot
 8     more people participating in the process than otherwise
 9     might have been.
10  11162                In that sense it might have been a
11     little bit helpful.
12  11163                MR. MORRISON:  It's a new venture for
13     the Commission, a kind of marketing strategy.
14  11164                THE CHAIRPERSON:  Yes.  For
15     discussion of your views on this, I will turn to our
16     Chair, Madam Bertrand.
17  11165                THE CHAIRPERSON OF THE COMMISSION: 
18     Good morning and thank you very much for participating.
19  11166                Unless I was not totally awake, I
20     thought that your presentation this morning followed
21     the chapter heads that you had outlined and began to
22     describe in your Phase II comments as well as
23     incorporating comments on what you have been hearing
24     during the course of the hearing.
25  11167                I see that you have been following


 1     quite closely.
 2  11168                MR. MORRISON:  Yes, sometimes when I
 3     am very tired, I insist I have the right to be
 4     inconsistent.
 5  11169                THE CHAIRPERSON OF THE COMMISSION:  I
 6     didn't read any inconsistency but rather you were
 7     responsive to what you heard in the proceeding.  That
 8     is very much the experience we have had in this dynamic
 9     hearing that has evolved from intervention to
10     intervention, trying to really understand the main
11     objective of the hearing, that of exploration.
12  11170                MR. MORRISON:  We have been
13     distracted by Liberal caucus committees and challenges
14     to your authority in the courts, but other than that,
15     you have had our complete attention.
16  11171                THE CHAIRPERSON OF THE COMMISSION: 
17     We appreciate your intervention at that caucus.  Thank
18     you.
19  11172                Coming back to your presentation in
20     this hearing, the definition of new media that you
21     propose, as I see it, elements under the umbrella or
22     the wings of new media, is that how we should read the
23     five points you have made from Internet to complete
24     migration of television to the Internet.  For you, it
25     is the whole array of those elements that constitute


 1     new media.
 2  11173                MR. MORRISON:  Yes.  I will try to
 3     restate more clearly.  You would be performing a public
 4     service, we believe, in doing something that would have
 5     longer term viability  were you to cast a broad net in
 6     your description and definition of new media.
 7  11174                THE CHAIRPERSON OF THE COMMISSION: 
 8     You seem to leave out in that broad net the element
 9     that many intervenors have talked about, the digital
10     distribution and the physical distribution, the CD-ROM,
11     the multimedia form that is on the shelf and the
12     problem of it being distributed because it is swallowed
13     up in the corporate world, the global economy, mainly
14     American.
15  11175                You seem to exclude that from what
16     you call new media.  Am I right?
17  11176                MR. MORRISON:  Perhaps we should not
18     have done so.  By analogy, I suppose, it's a little bit
19     like the role of the videotape and traditional
20     regulation.  Our concern is as broad as the audiovisual
21     system, if you want to put it that way.  It is some
22     concern to other physical forms of distribution. 
23     Content should be the focus.
24  11177                THE CHAIRPERSON OF THE COMMISSION: 
25     Do you include e-mail and electronic commerce in the


 1     definition of new media?
 2  11178                MR. MORRISON:  Yes.  We would
 3     certainly include it, but with respect to the focus of
 4     your attention, we picked up the phrase from others, I
 5     think it was Call-Net -- I hope I'm not misquoting
 6     then -- the phrase broadcast analogous services.  That
 7     is in our view the area where the focus of our concern
 8     should arise because that is where the two worlds are
 9     touching.
10  11179                THE CHAIRPERSON OF THE COMMISSION: 
11     In terms of definition, you would be as broad as can
12     be, but when it comes to our focus and attention that
13     would be under the wing of the Broadcasting Act, that's
14     where you concentrate your attention on some form of
15     expression of new media which would be broadcast
16     analogous.
17  11180                MR. MORRISON:  Yes.  I suppose we are
18     making a distinction which may be somewhat artificial. 
19     You have studied this more than we, but between a
20     definition in new media and a classification of new
21     media, in that classification which Call-Net proposed
22     to you, which appealed to us, the focus of our concern
23     will always be on the broadcast analogous.
24  11181                THE CHAIRPERSON OF THE COMMISSION: 
25     What is broadcast analogous?  Can you take us by the


 1     hand and tell us when we consider the capacity of
 2     broadband services what you see as the expression of
 3     that.  It's not strictly what we see now, migrated on
 4     the Internet.  I suppose it's a bit different than
 5     that.
 6  11182                What would you say?
 7  11183                MR. MORRISON:  I am reminded of Jean
 8     Jacques Cousteau saying he was here to discuss
 9     principles.  He would not debate the facts.  You have
10     given me an opportunity to depart from the floor here,
11     so I will.
12  11184                THE CHAIRPERSON OF THE COMMISSION: 
13     Be my guest.
14  11185                MR. MORRISON:  It seems to me that
15     our concern is with audiovisual content that is
16     directed at the public, at the broad public out there I
17     suppose to certain targeted audiences.  That is the
18     principle that guides our attention to the meaning that
19     Parliament intends around the word broadcast.
20  11186                THE CHAIRPERSON OF THE COMMISSION: 
21     Let me challenge you here on your principle here.  If
22     we take, for example, community channels that are
23     presently available in the distribution of
24     broadcasting, would the capacity of the net to have
25     community net, targeted almost to the street you live


 1     on or the neighbourhood in which you live.
 2  11187                Where would draw the line in terms of
 3     what would be public without being intimate like a one
 4     on one, but still very targeted and limited in
 5     distribution?"
 6  11188                MR. MORRISON:  It seems I am
 7     worshipping at the feet of Mr. Grant here, but I noted
 8     in some of the comments that were put before you
 9     yesterday, and I think other intervenors have said this
10     as well, that there is a tendency for broader bandwidth
11     in the foreseeable future to be available in more local
12     arrangements and that the bandwidth is like the
13     bottleneck for audiovisual quality visual distribution.
14  11189                Likely the first onset of television
15     quality signals will take place not on a global basis,
16     but on a community basis.  With that in mind your
17     question is particularly apropos.
18  11190                I suppose the analogy to community
19     channel -- I don't like the word that has crept into
20     our presentation, traditional broadcasters, but until
21     we find a better one -- the analogy to the community
22     channel is interesting.
23  11191                You don't actually license community
24     channels.  You provide kind of a policy framework to
25     encourage their application.  There are a lot of


 1     problems with that.  We will talk about them, I hope,
 2     some other day.
 3  11192                Those are in our judgement
 4     broadcasting.
 5  11193                THE CHAIRPERSON OF THE COMMISSION: 
 6     Without necessarily bringing the whole apparatus of
 7     heavy handed regulation.
 8  11194                MR. MORRISON:  Yes.  Some of those
 9     instruments right now, one of their strengths and
10     defining characteristics is not too much heavy handed
11     production value added, that they are accessible to
12     people in an inexpensive way.
13  11195                We will on other occasions be coming
14     back to you with concerns about the directions of cable
15     companies, Shaw in particular regarding cable channels,
16     for another day.  There is a particular value in having
17     less production added or accessibility in those
18     channels.
19  11196                THE CHAIRPERSON OF THE COMMISSION: 
20     Taking your point it is under the umbrella of
21     broadcasting when we come to that category of new
22     media, understanding that it is not your view that we
23     should import and impose what exists as the framework
24     as we know it for lack of a better word than media,
25     that we have known since we were young, and we are not


 1     any more -- we learned that over the two weeks -- what
 2     would be the kind of elements that you would see more
 3     appropriate from your understanding of what is new
 4     media and, more so, what is broadcast analogous
 5     services?  What kind of different regime and tools?  Do
 6     you see a self-regulatory environment?  Do you see
 7     strictly exemption?  What is your view?
 8  11197                MR. MORRISON:  I think you are in a
 9     very good situation right here.  You are doing the
10     right thing in that you are looking forward and you
11     have time on your side.
12  11198                Anyone who knows the answer to that
13     question right now is probably wrong.  We are all
14     groping towards that answer.
15  11199                With that caveat, we have decided, I
16     guess along with some others, that one of the
17     mechanisms at your disposal which should be used as,
18     not an immediate but a short term measure, and I
19     referred to it and you in your question, the notion of
20     some type of exemption order which contains within it
21     some type of threshold or demarcation line regarding
22     some type of audience surrogate like advertising
23     revenues, the one that occurs to us.
24  11200                We have noticed in the Commission';s
25     behaviour before on the telecom side -- Mr. Vice-Chair,


 1     you are the expert on all of these things -- you used
 2     market share as an instrument to determine when certain
 3     things would apply to the predominant formerly
 4     monopolistic telephone company in your policies over
 5     the years.
 6  11201                I have heard as big cable barons as
 7     Ted Rogers use market share as "We will be in trouble
 8     with our shareholders if the competition gets beyond 10
 9     per cent", some type of measure.  It seemed to us that
10     the measure might come out of the advertising pie.  It
11     might be the point at which some of these emerging
12     services pass a threshold where they ought to concern
13     you and where we think at best premature concerns of
14     the Canadian Association of Broadcasters might come
15     into play.
16  11202                That's our first cut at some specific
17     policy advice.
18  11203                THE CHAIRPERSON OF THE COMMISSION: 
19     What would you answer to people, and there are many in
20     this proceeding who have told us of the necessity for
21     more certainty, that they need to know where Canada is
22     going, where the CRTC is going, so that they can invest
23     heavily.
24  11204                Do you think an exemption order, even
25     with a threshold that would be transparent to everyone,


 1     would not prevent some interesting investments in the
 2     creative world as well as the commercial world?
 3  11205                MR. MORRISON:  Just to understand
 4     you.  Are you expressing a concern that such a device
 5     might frustrate or inhibit some investments that are
 6     important investments?
 7  11206                THE CHAIRPERSON OF THE COMMISSION:  I
 8     am repeating what some intervenors have said.  Yes. 
 9     That is the idea of my question.
10  11207                MR. MORRISON:  That is the tension, I
11     guess. There are two values that you have to weigh.
12  11208                It would respond to one of the needs
13     of investors, which is a greater degree of certainty
14     and understanding the rules and at the same time not
15     laying a trap down the road, undermine the bedrock
16     cultural policies of the Canadian government expressed
17     through your Commission and otherwise.
18  11209                You have to have great concern for
19     not frustrating investment.  I think that you would be
20     making a contribution by giving the potential investor
21     some certainty of what the rules would be.  That's the
22     course that we recommend in any event.
23  11210                THE CHAIRPERSON OF THE COMMISSION: 
24     Kind of a reassurance for a few years, giving the rules
25     yet not answering totally to the clarity of the


 1     situation.
 2  11211                MR. MORRISON:  And a very active
 3     watching brief on the situation -- many of our
 4     suggestions are derivatives of those of others -- and
 5     that you announce at an appropriate time that you are
 6     going to revisit the subject.
 7  11212                You have a three year planning
 8     mechanism.
 9  11213                THE CHAIRPERSON OF THE COMMISSION: 
10     It should be part of our next Vision II.
11  11214                MR. MORRISON:  Vision II.
12                                                        0930
13  11215                Let's come to the opportunity you see
14     there for broadcasters, once we kind of discuss what is
15     new media, what should be under the Broadcasting Act
16     and what kind of treatment.  You talk also about the
17     great opportunity for broadcasters.  You underlined
18     that Global has not been involved much, or at all.  CTV
19     has been from my recollection.  From the Olympics it
20     seems to me that they had a Web site and they talked
21     about it.
22  11216                MR. MORRISON:  I visited their Web
23     site, Madam Chair, on occasion and I was getting home
24     pages that were a year old.  So, I suppose it
25     physically exists, but it might as well not.  At least


 1     Global is more forthcoming because what Global has
 2     available is strictly nothing, and I think CTV was
 3     something -- nothing masking as something.  So, I think
 4     they are essentially the same position.
 5  11217                THE CHAIRPERSON OF THE COMMISSION: 
 6     Maybe that's an element in terms of criteria that we
 7     should have if ever we go a route like you are
 8     proposing, that kind of investment that traditional
 9     broadcasters are doing on new media is a sign that
10     something is happening and until that day, even if some
11     advertising revenues are on the net, that doesn't
12     mean --
13  11218                MR. MORRISON:  I like where you are
14     going because it seems to me that we have appeared here
15     with charts and graphs trying to persuade you that you
16     should pay more attention to local and regional
17     expression on television, and our idea is that in the
18     normal course of your work when people come before you
19     saying that they want to acquire somebody else, or that
20     they want to acquire a licence that you have it on the
21     list prominently.
22  11219                It could be that this issue which you
23     are now raising is something else that you would put on
24     the list and that there should be some linkage, just as
25     forcefully I draw to your attention because I happened


 1     to be in a Shaw market on the weekend and saw their
 2     at-home service and it was shocking.  There wasn't even
 3     the kind of thing that some person with Internet
 4     knowledge who would be in our operation could have done
 5     to Canadianize the interface.  I mean, it was baldly
 6     and quite apparently an American important that they
 7     were offering to the public, in Victoria in this case. 
 8     And price of place for Canada, nothing.
 9  11220                So, that ought to be embarrassing to
10     Jim Shaw, Jr. and the next time he is sitting up here
11     and one of you asks him about it.
12  11221                THE CHAIRPERSON OF THE COMMISSION: 
13     How do you make sure -- what are your ideas on how it
14     is possible to make more visibility and that echoes a
15     lot of interventions we have had on the necessity for
16     better promotion, better marketing because it is new
17     and the branding is not Disney of course, so what are
18     your ideas on how the Commission or governments that
19     will be doing recommendations could encourage so that,
20     you know, Shaw has a better presentation of the
21     Canadian reality or the other players in that world. 
22     How do you see that?
23  11222                MR. MORRISON:  Knowing the political
24     orientation of their owners, I was impressed, if we are
25     not misquoting them, that Sun Media used the word


 1     "required".  That major service providers and Web sites
 2     should be required to put pride of place for Canada, or
 3     words to that effect.
 4  11223                I think I would -- I mean we did
 5     endorse that and we do right now.  So, there must be
 6     some -- I am not sure what the mechanisms are at your
 7     disposal, but the goal ought to be to strongly
 8     influence the behaviour of ISPs and Canadian sites,
 9     especially major ones, to give more to Canada.
10  11224                I suppose you can also -- I mean
11     there's a push/pull dimension to this as well, or an
12     upward vacuum pulling people to behave properly and we
13     have to give credit where credit is due.
14  11225                At this point, for example, the
15     presidency of the CBC is very much up in the air.  We
16     are talking about a new President and we have been
17     thinking about metaphorically the obituary for the
18     current President, and one of the things on the plus
19     side would be the emphasis on new media that the CBC
20     has developed and perhaps there will be some
21     competitive pressure in the world of television from
22     the behaviour of the CBC and the specialty channels
23     leaving the other people behind here.
24  11226                THE CHAIRPERSON OF THE COMMISSION: 
25     Tell me, if money was to be made available, and I


 1     understand from your original presentation, as well as
 2     this morning, that you don't see that the actual funds
 3     should be either way, to the more traditional form,
 4     drama, documentaries and so on, or on site, on the
 5     Internet.  For you it's different funds and a different
 6     approach to it.  You wouldn't like to have funds that
 7     are kind of limited derived towards the new media.  Am
 8     I --
 9  11227                MR. MORRISON:  Yes, that's right.
10  11228                THE CHAIRPERSON OF THE COMMISSION: 
11     But if we were to find ways to create new funds or if
12     money was made available by government to support, what
13     would be for you the appropriate criteria or what do
14     you see that should be put forward in terms of the
15     engine of creating a real development in supporting the
16     initiatives?
17  11229                MR. MORRISON:  I suppose I am not
18     really departing from the brief message or the text
19     here to say that there are two competing things.  One
20     is infrastructure funding which should be focused on
21     attempting to equalize access in a country such as
22     Canada where there are more geographic barriers to
23     participation in the audio-visual world than elsewhere,
24     that is one of the issues.
25  11230                The other is Canadian content of an


 1     audio-visual nature in new media, but I am also
 2     persuaded that we have some time to address this
 3     because of the kinds of factors including that issue
 4     regarding copyright, which suggests that much of our
 5     attention should be directed at the behaviour of
 6     existing broadcasters using new media today.
 7  11231                THE CHAIRPERSON OF THE COMMISSION: 
 8     This will be my final question, the actual behaviour
 9     into the new world.  Do you think they are the best
10     players we have in order to really have the full
11     flourishing of the promises of the new media; my first
12     question.
13  11232                My second question:  How can it be
14     encouraged concretely by the Commission without
15     impairing the capacity of doing all the other things we
16     have talked about in the TV policy, either local
17     programming and the famous 7, 8, 9 categories?  Where
18     do you see our role and do you have any ideas to
19     suggest to us?
20  11233                MR. MORRISON:  That's a really big
21     one.  I guess -- I think the very fact that you are
22     listening and you seem to be listening is a first step
23     and I wouldn't want to denigrate that.  That is in and
24     of itself important.
25  11234                The public statements that you make


 1     following digestion of this important hearing are a
 2     first step.  You can make a difference with that and
 3     you are asking me perhaps about the content of some of
 4     those statements, but I just stress for a moment that
 5     it seems to us from where we sit and as we have learned
 6     from watching the dialogue between you and intervenors
 7     before and during this hearing, and we will learn
 8     because of the record, that it may decay rather
 9     rapidly, but the knowledge that you have acquired and
10     enabled others to share is in and of itself quite
11     valuable and you might consider some efforts to go
12     beyond perhaps what you would otherwise do in a hearing
13     to package or make accessible that knowledge, to
14     indicate what you heard or to commission others to
15     comment on it.  Maybe that's a suggestion that should
16     be directed to government, beyond the Commission, I am
17     not sure.  That's one.
18  11235                Moving into the content of what you
19     might do, I mean you have to keep your eye on the ball
20     of the current world, the world of 1998 to 2001 and
21     your television hearings.  I guess what I am giving you
22     more of a process than a content answer.  Your learning
23     from this hearing is something that you put on kind of
24     a matrix; how do decisions we make in the present
25     tense, in the real world, how will they influence these


 1     new considerations that are now on our radar scope and
 2     vice versa.
 3  11236                I think that people who could quickly
 4     answer your question are probably much wiser than us,
 5     or perhaps they have the wrong answers.  I guess you
 6     are going to play some kind of leadership role by
 7     making a first stab at that.
 8  11237                The good news is that you will have
 9     an opportunity to revisit it because we have got some
10     time.  It will be very interesting in a couple of years
11     to see what is happening.  First off, that exemption
12     order and working on the threshold and it seems to us
13     that's the concrete thing you could do right now. 
14     Otherwise you are more defining issues and
15     understanding territory, your mapping in this exercise.
16  11238                THE CHAIRPERSON OF THE COMMISSION: 
17     My last, last question.  The CBC is proposing to do a
18     super site for promotion and creating attention from
19     Canadians about Canadian sites.  Do you think it is a
20     good idea and do you think it should be done with the
21     existing money of the CBC or should it be funded
22     separately if it was to be the case?  Do you think the
23     question can be asked whether it is diversification or
24     what is expected of the CBC?
25  11239                MR. MORRISON:  Yes.  In principle our


 1     judgment there would be a little bit like a Jeffrey
 2     Simpson column this morning, trust the board of
 3     directors of the CBC.  That ought to be their decision. 
 4     I wouldn't want the government -- the Commission would
 5     have more right because of your licensing capacity to
 6     lean on the CBC I suppose, but number one we welcome
 7     it.  We think it's a good idea and it begs questions
 8     about scarce CBC resources.  But it is a leadership
 9     role.  Somebody has got to do it.  We think the CBC is
10     well placed to do it and we actually agree with that
11     initiative, but that is a decision that ought to be
12     left with the CBC.
13  11240                THE CHAIRPERSON OF THE COMMISSION: 
14     Thank you very much, Mr. Morrison.
15  11241                Thank you, Mr. Chair.
16  11242                THE CHAIRPERSON:  Thank you, Mr.
17     Morrison.  We appreciate your presentation here.
18  11243                MR. MORRISON:  Thank you for hearing
19     me, Mr. Chair.
20  11244                Madam Secretary.
21  11245                MS BÉNARD:  Thank you, Mr. Chairman.
22  11246                The next presentation will be by Core
23     Curriculum Group.
24  11247                THE CHAIRPERSON:  Please begin.
25  11248                MR. GUMLEY:  Thank you.


 2  11249                MR. GUMLEY:  Mr. Chairman,
 3     distinguished members of the Commission, I am delighted
 4     to be here this morning.  My name is Gary Gumley.  I am
 5     the President and CEO of the Core Curriculum Group of
 6     companies.  Our group consists of Ingenuity Works Inc.
 7     and Software Plus, two Canadian owned and operated
 8     companies that have been positively impacting the use
 9     of digital technology in education since 1983.
10  11250                Supplementing our initial submission,
11     I intend to provide a perspective this morning on some
12     of the issues that we feel are germane to the survival
13     of educational and cultural content creation in Canada
14     through new media.  If you could bear with me, I would
15     like to read the brief this morning into the record
16     that I have prepared, as I think there are a number of
17     points that are pretty valid that I would like to
18     discuss with you this morning.
19  11251                As a teacher for 10 years and then as
20     a businessman delivering digital technology to schools
21     for the past 15 years, I am able to present a unique
22     perspective on the challenges faced by the new media
23     industry today.
24  11252                The focus of this presentation is to
25     describe two specific challenges faced in delivering


 1     Canadian produced content to Canadians through current
 2     and emerging distribution channels.  If Canadian
 3     culture and content are to be delivered in the future,
 4     it is imperative that the CRTC be aware of these
 5     challenges and create unique methods of assisting the
 6     fledgling industry to survive during these formative
 7     years.
 8  11253                To be specific, the mission of our
 9     company is "to improve the delivery of education
10     through the creation of technology based educational
11     tools that promote understanding through involvement in
12     the process of learning."
13  11254                Since 1983, we have been producing a
14     catalogue of educational software that has been our
15     main marketing vehicle.  The catalogue is in the kit
16     that has been provided to you and this is our latest
17     version.  This catalogue has assisted thousands of
18     technology-oriented educators across Canada to choose
19     appropriate material for use with their students.  If
20     you browse through this catalogue you will find that
21     most of the content is from U.S. based software
22     developers and publishers.
23  11255                In a concerted effort to reverse the
24     dominance of U.S. publishers, we have been producing
25     award winning digital content for education for the


 1     past 15 years and that's the reason for me putting the
 2     display out behind me this morning.  I wanted to share
 3     some of that with you.
 4  11256                In addition, in the kit I have also
 5     added what we call our CD sampler which if you have an
 6     opportunity to look through it shows all of the product
 7     that we have on a CD sample product flyer that we send
 8     out to our customers and end users.
 9  11257                We have created and/or published six
10     titles with specific Canadian content.  Three of these
11     titles have been developed in both French and English. 
12     In addition, we have produced a keyboarding title that
13     is the standard used in over 70 per cent of Canadian
14     schools.
15  11258                Of all of the challenges we have
16     faced in the past 15 years, perhaps the greatest is now
17     upon us.  How do we attract our customers to our
18     product in the "Internet Age"?  IN order to transition
19     from floppy disk and CD-ROM based content delivery, we
20     have for the past three years been creating and
21     publishing content for delivery over the Internet.
22  11259                In 1997, we followed the successful
23     ascent of Mount Everest by two Canadian climbers, Jamie
24     Clarke and Alan Hobson.  Their exploits were updated
25     daily during the climb and students could communicate


 1     with them and their support teams as they made their
 2     summit bid.  In 1998, we followed the first disabled
 3     attempt to climb Mount Everest and happily reported
 4     that dreams can come true when Tom Whittaker, a climber
 5     with only one foot, successfully reached the summit in
 6     late May of this year.  Over 2,000 schools purchased
 7     access to these products.  The feedback that we had was
 8     terrific.
 9  11260                Now, in 1999 and 2000, our company is
10     embarking on the most difficult stage of our challenge. 
11     That challenge is to effectively and profitably deliver
12     Canadian content over the Internet.  We have embarked
13     on a project supported by both Industry Canada through
14     Schoolnet and Heritage Canada through Telefilm. 
15     Without the support from these government programs we
16     would not have been able to embark on our Canadian
17     Heritage interactive Journey.
18  11261                I brought along something else to
19     show you.  If the Commission would like copies of the
20     posters they could take them later.  This is the poster
21     for our journey.  It is intended to include students in
22     the process of learning about our country by producing
23     digital technology and putting it over the Internet. 
24     Their projects, learning about their community, telling
25     Canada what Canada is like from their eyes, stimulated


 1     by bicycle teams travelling across the country and
 2     stopping at 75 host schools across the country.  It's a
 3     huge project that launches next April.
 4  11262                Already over 2,000 schools have
 5     access to the journey, even though the event does not
 6     begun until next April.  The details of the journey are
 7     available at our Web site  I
 8     invite you to review what we are doing.  Please explore
 9     the creative way our Canadian programmers and content
10     creators are helping children become involved in the
11     process of learning about Canada.
12  11263                The challenge, as I stated earlier,
13     is to make the transition to this new medium.  While
14     you have heard numerous submissions about why the
15     Internet should not be regulated, there will be a
16     tremendous number of consumers that will want to access
17     content and make purchases through the media of CD-ROM
18     and DVD.  Tens of thousands of these consumers for the
19     foreseeable future will want to purchase the product by
20     "going shopping".  To make a twist on the famous quote
21     of Mark Twain "The death of the shopping mall has been
22     greatly exaggerated, in my opinion."
23  11264                I would like to focus on two
24     initiatives that I feel the Commission needs to address
25     in order to promote the continued success of Canadian


 1     owned new media companies such as Ingenuity Works and
 2     Software Plus during this period of transition.
 3  11265                The first initiative is one that has,
 4     in my opinion, been exceptionally well outlined by Mr.
 5     George Goodwin of McClelland and Stewart, the producer
 6     of The Canadian Encyclopedia on CD-ROM.
 7  11266                Mr. Goodwin in his submission to this
 8     hearing has outlined the difficulties of getting
 9     Canadian produced software bundled with hardware sold
10     in Canada.  If you have not had a chance to review his
11     comments, I would urge you to do so.  I would like to
12     add to his submission some of our findings.
13  11267                In 1996, we concluded eights months
14     of negotiations with Apple Computer Inc. to bundle our
15     award winning educational CD-ROM Adventure Canada with
16     selected Apple titles -- Apple hardware offerings
17     across the country.  We negotiated with other hardware
18     suppliers but to no avail, usually because the product
19     they sell is assembled in the United States.
20  11268                Our contract with Apple lasted for
21     one year and then was cancelled because we were told it
22     was not cost effective for Apple in a time of severe
23     constraint to make their software bundles generic to
24     Canada.  Since the bundling of Adventure Canada with
25     Apple we have been totally unsuccessful in convincing


 1     the large U.S. hardware companies to bundle any of our
 2     product line, even though it is used widely in Canadian
 3     schools.
 4  11269                I believe it is imperative that the
 5     CRTC initiate action similar to steps taken in the
 6     broadcast arena.  I wonder if we would ever have heard
 7     of David Foster, Celine Dion and Shania Twain, just to
 8     name a few fantastic Canadian talents, if the CRTC had
 9     not ruled that Canadian radio stations had to have a
10     minimum of 30 per cent Canadian content played over the
11     airwaves.  The same goes for the television medium.  I
12     submit that our new media industry is no different. 
13     Our content combines text, video and voice and will
14     continue to do so as DVD and Internet pipelines have
15     greater capacity.
16  11270                A decision by the CRTC to recognize
17     Canadian developed content for new media in the same
18     way as broadcast media would facilitate an action.  In
19     our opinion, a mandate from the CRTC that the hardware
20     manufacturers bundle a minimum amount of Canadian
21     content with their hardware would be of tremendous
22     support to the protection of our culture in the new
23     media age.
24  11271                Obviously, it would be much better if
25     the hardware companies would take this initiative on


 1     their own.  In my opinion, the CRTC could take
 2     immediate action to assist this inequity by initiating
 3     rules similar to those in the radio and television
 4     industry for software bundling in Canada.  Over 1
 5     million computers will be sold in Canada next year.
 6  11272                I would now like to address the issue
 7     of gaining retail shelf space for Canadian developed
 8     and published software.  Ingenuity Works and its
 9     predecessor companies have worked tirelessly to
10     penetrate the retail market in Canada.  As of this
11     date, our complete retail product line is only carried
12     by Chapters book stores in Canada.  We have been able
13     to position only half of our product with The Future
14     Shop chain.  Even though for the past five months we
15     have been greatly assisted by Ingram Micro, the largest
16     distributor of computer products in the country, we
17     have effectively missed the Christmas season again for
18     our product line.
19  11273                I would just like to draw your
20     attention to one of the initiative that we attempted to
21     take to make our product stand out, which is a sticker
22     which is on our product called "Great Canadian
23     Software -- Meets Canadian School Standards".  We have
24     stuck this on all of our product line to make it stand
25     out and show the difference between our product and the


 1     U.S. publishers' products.
 2  11274                We have created that initiative.  We
 3     have participated in presentations to resellers in the
 4     last seven or eight months.  We have provided our
 5     product to all of the buyers for all of the major
 6     chains in Canada last spring.  We agreed to participate
 7     in advertising campaigns and other promotional events
 8     and we are slowly succeeding, but we have been advised
 9     that once we get the shelf space that's only half of
10     the battle.  We will have a window of no more than six
11     months to ensure that the consumer seeks out the
12     product and purchases it from the retail locations.
13  11275                I have brought along some recent
14     pre-Christmas flyers from some of the major companies
15     in Canada.  I won't bother holding them up at this
16     point in time, but in those flyers if you have looked
17     at them or if you have been into any of the retail
18     stores in Canada, 99 per cent of the software
19     advertised in the flyers originates in the United
20     States.  Many of the store shelves have that same kind
21     of product mix on those shelves as well.
22  11276                There are three major points here. 
23     You may well ask what is so special about our software
24     that means that it should be carried and advertised in
25     Canada?  Well, there are three major points I think


 1     that we can address.
 2  11277                Our keyboarding program "All The
 3     Right Type" is used in over 70 per cent of the schools
 4     in Canada, as I mentioned earlier.  The product seen on
 5     almost all of the retail shelves in Canada is "Mavis
 6     Beacon Teaches Typing" from The Learning Company.  It's
 7     a good product, but our product has ben used
 8     extensively in Canadian schools for over seven years. 
 9     Our product has consistently been chosen over Mavis
10     Beacon by educators in this country and it deserves a
11     place on the retail shelves of Canada.  We can't get it
12     there.
13  11278                Our math series, "Mathville," is the
14     only product line available to retail that meets
15     Canadian standards for math in Canadian schools.  We
16     are consistent in our treatment of metric issues in our
17     math curriculum, as well as correct Canadian spelling. 
18     While it may seem unimportant o many, the spelling of
19     "colour" and "centre" among other words in our culture
20     is different from the U.S. spelling.  The constant
21     reinforcement of the spelling of these words in the
22     U.S. form will eventually lead to Canadians spelling
23     them in the U.S. way.  This has already been happening
24     consistently in the Canadian press.
25  11279                While I admit that this is a


 1     relatively minor issue, the problem is, in my opinion,
 2     that it is indicative of other less visible changes in
 3     our culture.  We must not allow ourselves to be
 4     dominated by other cultures when the product we produce
 5     is as good as, if not better, as defined by the
 6     consumer who is aware of the Canadian alternative.
 7  11280                The third point that I would like to
 8     make with respect to the value of our software is that
 9     our Canadian content software has been widely sold in
10     the school market.  The Museum of Civilization has
11     collaborated with us to secure distribution to the
12     retail market of two Canadian content CD-ROM products
13     that they built and distributed and developed, "Totem
14     Poles" and "Land of the Inuit".  We also did the
15     Canadian Treasures program in conjunction with the
16     National Archives of Canada.  It is extremely difficult
17     for us to get these products onto the retail shelves.
18  11281                Other producers are approaching us to
19     assist them in positioning their product line in the
20     retail market in Canada, that's other Canadian
21     producers.  We must continue to work hard to get
22     Canadian content for Canadian developers on to Canadian
23     retail shelves.  Individually, we have no hope of
24     gaining market share from the large players in the
25     industry.  We deserve the right to have that market


 1     share.  Canadian developers make excellent product. 
 2     That is why so many of our programmers are being drawn
 3     to the United States.  It seems ironic that Canadian
 4     programmers cannot get their product sold in Canada
 5     first, so that we can keep our valuable intellectual
 6     property in this country.  By creating a market for our
 7     Canadian talent, we will be able to leverage our
 8     Canadian success and launch our product to compete
 9     globally.
10  11282                What we require as a first step is
11     the ability to let the Canadian consumer know that
12     Canadian produced and Canadian content digital material
13     is available.  Our product must get exposure to the
14     marketplace.
15  11283                In order to assist all Canadian new
16     media publishers, my hope is that the CRTC will make a
17     recommendation to either the Heritage Ministry or to
18     Industry Canada to set up an initiative similar to the
19     ones that Industry Canada has created to promote travel
20     in Canada.  Generic advertising purchased through the
21     huge discount structure that the Canadian government
22     has negotiated with the media in Canada could be shared
23     with Canadian content new media developers and
24     publishers to more effectively promote their products. 
25     Our intellectual property is worth promoting just as


 1     much as our physical property such as the Canadian
 2     Rockies and Atlantic Canada.  There is nothing wrong
 3     with Ottawa either, by the way.  I should add that. 
 4     It's worth promoting.
 5  11284                Such a promotion program would, in my
 6     opinion, expand consumer awareness and supplement our
 7     efforts to secure shelf space in Canadian retail
 8     stores.
 9  11285                As we have seen, once our talent is
10     accepted in Canada, we are recognized worldwide for our
11     creativity and our products.  Our musicians and musical
12     talent is the prime example of that.
13  11286                In closing, I would like to state
14     that our company and our owners and employees believe
15     that Canadian new media companies must have an equal
16     opportunity to show the Canadian consumer what we are
17     able to accomplish.  Initiatives like insisting on a
18     percentage of Canadian content in radio and television
19     broadcasting have been highly successful in raising the
20     profile of Canadian talent.  The music industry and the
21     film industry are thriving as a result.
22  11287                In a recent "live chat" with Mr.
23     Colville over the Internet site CANOE that I had a
24     chance to review recently, I was very interested to
25     note the comment that you stated, "our fundamental


 1     concern," that is the CRTC's fundamental concern, "is
 2     to try and ensure access for Canadian content creators
 3     to the Canadian broadcast system."  I hope I am not
 4     taking you out of context, Mr. Colville.  I believe
 5     that is what you stated.
 6  11288                THE CHAIRPERSON OF THE COMMISSION: 
 7     It comes as a surprise.
 8  11289                THE CHAIRPERSON:  My colleague is
 9     getting tired of hearing it.
10  11290                MR. GUMLEY:  Since our new media
11     industry is so young, I believe the mandate of these
12     hearings is to ensure exactly the same thing for our
13     emerging industry.  Should the CRTC decide that new
14     media content creation and distribution must evolve
15     outside of the existing parameters of the Commission --
16     in other words, you haven't defined what new media is
17     in terms of the Commission structure at this point in
18     time, I believe this could be a recipe for devaluing
19     our culture in the new media age.
20  11291                For our part, we are determined to
21     find the answer to effective delivery of digital
22     technology for education, so that students, teachers
23     and parents will not forget our culture, our heritage
24     and the significance of our position in the world
25     order.


 1  11292                As Canadians, we must continue to
 2     celebrate our culture and our heritage and place it in
 3     the context of the Internet for the world to see.  As
 4     you know, we are rated by the United Nations as the
 5     number one country in the world in which to live.  We
 6     must continue to be able to tell our children about our
 7     story so that they can become ambassadors to the world,
 8     proud of their heritage as Canadians.
 9  11293                We have a passion in our company,
10     over 40 of us are dedicated to our work, many of us
11     since 1983.  Our struggle has been to maintain our
12     Canadian identity while surviving as a profitable
13     business.  So far we have survived and succeeded.  Now,
14     however, with the Internet, e-commerce and massive
15     consolidation of educational software publishers in the
16     United States, our existence as a Canadian company is
17     severely threatened.
18  11294                In my opinion, these hearings are not
19     about regulation.  They are more about evolution. 
20     Hopefully, my suggestions today will move the CRTC to
21     act quickly and assist the Canadian new media industry
22     to evolve effectively to compete in the global economy
23     of the new millennium.
24  11295                I thank you for your attention.
25                                                        1000


 1  11296                THE CHAIRPERSON:  Thank you for your
 2     presentation, Mr. Gumley.
 3  11297                I had a whole bunch of questions that
 4     I was going to ask you based on your first round
 5     submission that was signed by Mr. Stephen Smith.
 6  11298                MR. GUMLEY:  Yes.  He regrets his
 7     inability to be here this morning.
 8  11299                THE CHAIRPERSON:  Your presentation
 9     today has pretty much answered all the questions that I
10     had that turned on that.  Let's turn to some of the
11     other issues that arise out of your presentation here
12     today.
13  11300                I was curious by your reference to
14     George Goodwin's comments from McLellan & Stewart
15     regarding the CD-ROM business.  Having read the
16     submission and also read some newspaper interviews that
17     were conducted with him, my understanding of his views,
18     and I invite your comments on this, while it was
19     interesting that the CRTC was looking at this issue of
20     new media and the Internet, and CD-ROM can be
21     characterized as a form of new media, he acknowledged
22     that there is probably little the CRTC can do in the
23     creation and marketing promotion of CD-ROMS themselves
24     but it was a good forum to raise public attention to
25     the issues, but that there was probably directly we


 1     could do given our mandate under the Broadcasting Act
 2     to deal with content as it relates to broadcasting and
 3     the transmission vehicles that fall within that
 4     definition and so on.
 5  11301                I wonder what your own views are on
 6     that.
 7  11302                MR. GUMLEY:  I thank you for the
 8     opportunity to respond to that.  It's a good question.
 9  11303                I quoted the CANOE comment that you
10     made specifically because it did say in broadcast
11     media.  The problem that I have in distinguishing the
12     difference and why I hope actually that the CRTC
13     expands its mandate to include new media is that the
14     content that is delivered over the airwaves in Canada
15     is what the issue is.
16  11304                You mandated that the Canadian radio
17     stations in particular play a certain number of
18     Canadian songs produced in Canada or produced by
19     Canadian talent.  In effect by doing that, you were
20     saying that the product that is produced by the singers
21     and the producers of records get their exposure to the
22     Canadian marketplace through the action that you have
23     taken.
24  11305                We don't have that opportunity.  We
25     do through the Internet in the future perhaps, but


 1     that's not where I'm going.  I believe there's a fairly
 2     significant transition period here that is defining the
 3     use of the Internet with respect to Canadian content.
 4  11306                What we have right now is a situation
 5     where we are producing product that we can't get
 6     exposed to the Canadian marketplace.  There are a
 7     number of companies in Canada that have been producing
 8     software that are not here any longer.  It's
 9     unfortunate because they had so many people.  They had
10     exactly the same struggles that we have been struggling
11     with for 15 years.
12  11307                I think that the issue for me is that
13     we are producing the content that you have basically
14     given a market share for, a voice for, through the
15     radio mandate that you have given.  I'm suggesting that
16     because this is a completely new industry that you
17     perhaps have to look at your mandate slightly
18     differently and look at the delivery mechanism that is
19     going on here, how are Canadians being affected by the
20     content that is being delivered to their homes through
21     the purchase of computers.
22  11308                I know it's a bit of a difficult
23     stretch, but hey, it's new territory.  We have got to
24     look at this.  That's why you are looking at this
25     material.


 1  11309                THE CHAIRPERSON:  Well, as others
 2     have said over the past two weeks, in some respects we
 3     are the only game in town here, so if you have an issue
 4     here's the place to raise it.
 5  11310                If I go back to the question of the
 6     record industry or the film business, we have been able
 7     to achieve that because of the specific mandate we have
 8     in the Broadcasting Act as it relates to those
 9     technologies, if you will.
10  11311                To the extent one might consider some
11     aspects at least of the new transmission or
12     distribution media, the electronic distribution media
13     if you will, and to whatever extent one might see some
14     aspects of the Internet to relate to that, there may be
15     some role for us -- underscore "may".
16  11312                I am having difficulty seeing where
17     through our mandate, either under the Broadcasting or
18     Telecommunications Act, we could get involved in the
19     case of the manufacturer of computers and packaging of
20     the computer and software and the retail marketing of
21     that, which I take it is largely your problem.  Witness
22     your example with Apple computer and so on.
23  11313                MR. GUMLEY:  Yes.
24  11314                THE CHAIRPERSON:  My problem is when
25     you suggest that we -- somewhere here -- take some


 1     specific action with respect to this, by what authority
 2     do you feel we would be able to get involved in
 3     ordering some computer manufacturer to package and sell
 4     this array of software, which is probably excellent
 5     software for Canadian schools, with their computers and
 6     whether it is in Future Shop or whatever?
 7  11315                MR. GUMLEY:  I agree with your
 8     interpretation.  Currently you don't have that
 9     authority.  I think that was Mr. Goodwin's point.
10  11316                The point that I am making here and
11     trying to stress is that I think as a hearing, you are
12     looking at all different opportunities.  This is a new
13     medium.  When the CRTC was created, radio had been
14     around for quite a long time.  Television had too. I
15     don't remember quite when the CRTC was created.
16  11317                THE CHAIRPERSON:  1968.
17  11318                MR. GUMLEY:  Those two mediums were
18     in place.  You had an opportunity to define what was
19     already there, define your role with that.  Multimedia,
20     CD-ROM and new media development have come along in the
21     marketplace since the Commission was created, so now
22     instead of looking what was there and setting up the
23     terms of your mandate based on what is there, you are
24     now in place and you have got a new industry that has
25     come along that you have to try and define your terms


 1     to.
 2  11319                I am saying I think you have to
 3     expand the terms of the Commission.  I think you have
 4     to argue that the Commission needs to be expanded in
 5     its mandate and scope.  Otherwise we are going to get
 6     buried.
 7  11320                You were able to define the use of
 8     Canadian talent and Canadian produced material in the
 9     radio and television mediums because they were already
10     there.  Yes, there was a big broo-ha-ha about doing it. 
11     I understand that.  But it was a darn good thing to
12     happen, in my opinion, as I said in my submission.
13  11321                The problem is that the medium has
14     changed and the delivery of that medium has changed. 
15     We don't take the DVDs and the CD-ROMS that we are
16     putting together and put them over the television and
17     radio.
18  11322                I am suggesting that the Commission
19     needs to seriously look at its mandate and look at
20     expanding its mandate to incorporate this new delivery
21     of cultural content and cultural material.  I think we
22     are similar to the record industry that way.
23  11323                Our talented programmers who don't
24     have a voice because -- they are extremely talented
25     people in front of manipulating a computer and doing


 1     the wonderful things that they can do -- they aren't
 2     getting the same exposure as the artists in Canada
 3     through the Radio and Television Commission things that
 4     you have decided.
 5  11324                THE CHAIRPERSON:  Assuming we were
 6     able to do that, what sort of action do you think we
 7     would be able to take in order to overcome the problems
 8     you have identified?
 9  11325                MR. GUMLEY:  Specifically I think the
10     action should be first a recommendation that computer
11     hardware vendors in particular bundle Canadian content
12     software when they are delivering the computers to the
13     Canadian homes.
14  11326                One of the things that Mr. Goodwin
15     mentioned was that in Quebec they have to bundle the
16     French content and they do it there because they are
17     forced to.  They can't sell their English computers to
18     the French marketplace.  They do that kind of thing. 
19     It's just that they don't have any impetus to do it for
20     the rest of Canada for the English speaking parts of
21     Canada to put English-oriented content in with the
22     bundles.
23  11327                We would like them to take our French
24     and English titles and put them with both their
25     offerings in both Quebec and the rest of Canada, but we


 1     can't get their ear.
 2  11328                THE CHAIRPERSON:  I take it that's
 3     not because the government has taken any particular
 4     action.  It is because the nature of the consumer
 5     marketplace there demands that they do that, in Quebec
 6     I mean.
 7  11329                MR. GUMLEY:  Yes, that's right, but
 8     the point is, in my opinion, it is not equal.  It is
 9     not equal access.  It's inequitable there.  It's not
10     fair.
11  11330                THE CHAIRPERSON:  I take your point.
12  11331                What about the Internet in terms of
13     overcoming this?  A lot of people I guess have sort of
14     taken the view that this whole business of CD-ROMS --
15     set aside DVDs that may be a little bit of a different
16     situation, I don't know, but you can comment on that --
17     that there has been a bit of a window of opportunity
18     there for that.  In fact, the Internet is probably
19     going to take over in terms of its ability to deliver
20     and provide access to software and the kind of content
21     you have created here.
22  11332                Do you see the Internet as displacing
23     the particular marketing techniques that you have been
24     using?
25  11333                MR. GUMLEY:  No, I don't.  I see it


 1     being supplemental.  I have seen a number of
 2     presentations.  Lots of people continue to buy books
 3     today.  The book business is doing better than it ever
 4     has.  They haven't dropped reading books because the
 5     computer has come along.
 6  11334                I said it in my presentation that
 7     people will not stop shopping.  I think the malls,
 8     there's too much invested in the structure of the
 9     shopping mall process.  People want to handle things
10     and hold things and buy them.
11  11335                Also, I think the Internet, while it
12     is a very hyped medium today with respect to the
13     delivery of material, is not as vast as it would like
14     to be.  I heard things about the Internet as long as
15     seven, eight years ago about delivering content over
16     the Internet.
17  11336                I believe it will be probably 10 or
18     15 years before they can start putting content over the
19     Internet effectively and quickly.  That's a long time
20     in this business.  Lots of things can happen in 10 or
21     15 years.
22  11337                You mentioned DVD.  That is
23     compacting more and more information on the CD-ROM
24     delivery mechanism.  It will continue to happen.  I
25     don't think that we will be downloading material that


 1     we can create.
 2  11338                We are looking at combining, for
 3     instance, textbook material that has been produced over
 4     the years to assist in education, correlating that with
 5     curriculum.
 6  11339                Those are the kinds of things that
 7     will be facilitated by the Internet, not the content. 
 8     The content, I think, will be delivered in harder form.
 9  11340                THE CHAIRPERSON:  Doesn't your
10     content particularly lend itself to that?  I can
11     understand if I am going to buy a new suit or a new
12     car, I want to go our and try it on or take it for a
13     drive.
14  11341                It seems to me with this sort of
15     content I can "take it for a drive" by downloading it
16     from the Internet to my computer and presumably go
17     through the sampler which I presume is not worth in
18     itself $795.
19  11342                MR. GUMLEY:  No, no, that's a
20     promotion.
21  11343                THE CHAIRPERSON:  We wouldn't be
22     allowed to keep it if it was.
23  11344                MR. GUMLEY:  No, there's a gift
24     inside.
25  11345                THE CHAIRPERSON:  This particular


 1     technology would seem to lend itself to delivering it,
 2     selling it, sampling it, using the Internet.
 3  11346                MR. GUMLEY:  I agree with you it is,
 4     but I don't believe it is going to happen as
 5     ubiquitously as the industry is saying it is going to
 6     happen.  I think there is going to be a considerable
 7     length of time of transition.  It is that transition
 8     period that I am most concerned about.  That's what I
 9     addressed in my presentation.
10  11347                If you were to open the starting
11     gates today to deliver material over the Internet, we
12     could deliver some of our software that was built
13     probably five and seven years ago over the Internet
14     quite effectively.
15  11348                But at Venture Canada and some of our
16     650 megabyte CDs and Canadian Encyclopedia, no.  That
17     can't be delivered.  There's too much text.  There's
18     too much video in it.  It won't be transferred easily. 
19     56-K bought modems just won't download and upload the
20     material quickly enough for it to be cost effective and
21     efficient.
22  11349                It's just not secure enough a way of
23     transferring to make sure that there are no bugs that
24     are going to be transferred across as well.
25  11350                With all due respect to CISCO and


 1     ThreeCom and the rest of the companies that are doing
 2     wonderful things with the Internet, it is not going to
 3     be widely accepted.  The transactions of reviewing the
 4     material that we have, sure.  They will come to our Web
 5     site, they will look at a preview.  That's what the CD
 6     sampler will do.  Yes, that will be available through
 7     the Internet, but they won't purchase the product that
 8     way.
 9  11351                It's the content issue that I am
10     concerned about in this transition period.  My biggest
11     concern is that we are struggling so hard to gain
12     market share, gain mind share from the Canadian
13     consumer for the Canadian products that we produce.  We
14     are just inundated with American product.
15  11352                I know that you are the only game in
16     town.  You mentioned that earlier.  It's a forum for a
17     lot of people to speak about these issues, but if a lot
18     of people had been addressing this, there's a very real
19     reason for it.  It is that there is a very deep concern
20     by many of us that we are getting shut out.
21  11353                It's absolutely true.  I don't want
22     to publicly go into all of the situations that we face,
23     but there are many and they are difficult and they are
24     going to impact Canadian culture.  I think that is
25     what's behind the original purpose of the CRTC, the


 1     protection of Canadian culture.  You said it yourself.
 2  11354                That's why I'm saying yes, you are
 3     right, it doesn't fit the existing mandate of the CRTC. 
 4     It's a new medium.  In my opinion, you need to try and
 5     figure out how it can.  Otherwise, the development of
 6     content in this new media is going to disappear.
 7  11355                THE CHAIRPERSON:  You mentioned in
 8     your presentation, and you were showing us a label on
 9     one of them, the typing one I guess --
10  11356                MR. GUMLEY:  Yes.
11  11357                THE CHAIRPERSON:  You said the label
12     says that it satisfies or is in accordance with
13     Canadian school standards.
14  11358                MR. GUMLEY:  Meets Canadian school
15     standards, yes.
16  11359                THE CHAIRPERSON:  Do you think
17     parents understand the value of that trade mark or that
18     brand that you have got on there that that is a
19     Canadian product and it meets Canadian school products?
20  11360                MR. GUMLEY:  That's exactly what we
21     want help with.  No.  We don't yet, but we think we can
22     help Canadians understand.  They don't see this.
23  11361                THE CHAIRPERSON:  Do you think if
24     Canadian parents better understood that sort of thing
25     that you would have, let's say in English Canada, the


 1     equivalent of the market driven approach that you end
 2     up with in Quebec because of the language situation?
 3  11362                MR. GUMLEY:  I'm sorry, sir, I didn't
 4     understand your question.
 5  11363                THE CHAIRPERSON:  If Canadian parents
 6     understood that they could buy these products for their
 7     children when they are buying computers for them to
 8     use, after they have bought the computer, when they go
 9     to Future Shop or wherever they are going to buy their
10     software, that here's a particular product that
11     satisfies school standards, that that in and of itself,
12     if they were better aware of that, they would be
13     overcoming some of these problems and be more market
14     driven, if you will, just like the market driven
15     approach was in Quebec because of the language
16     situation.
17  11364                MR. GUMLEY:  I agree with that, yes,
18     and we have proof of that in the fact that we do sell
19     them into the home through the schools now which is the
20     only opportunity that we have to get to the home user.
21  11365                We sell thousands of CDs to the homes
22     through the schools, but we have to leverage off the
23     schools and that's problematic.  We don't think that's
24     a good use of the school's time, to be selling product.
25  11366                It's effective because what it does


 1     is it helps the children to keyboard more effectively. 
 2     That's why we encourage it and why the schools do it. 
 3     We think we should also be using the traditional
 4     mechanisms of distributing product through the retail
 5     marketplace.
 6  11367                We just can't get it on the shelves.
 7     Like I said earlier, it is extremely difficult. 
 8     Parents have told us "Why haven't we seen your product? 
 9     Why haven't we found it before?"  We have been asked
10     that question many, many times.
11  11368                Does that answer your question?
12  11369                THE CHAIRPERSON:  It does.  I guess
13     what I'm struggling with is how best do you think that
14     we, and I don't necessarily mean we the CRTC, I mean we
15     collectively, through federal and recognizing that
16     education, to what extent some of these packages fit
17     within normal school curriculum.  Education is a
18     provincial responsibility to the extent when we get at
19     that level.
20  11370                MR. GUMLEY:  Right.
21  11371                THE CHAIRPERSON:  To what extent can
22     the governments, federal or provincial, be of help in
23     this respect.
24  11372                MR. GUMLEY:  Significantly, I think
25     in the purchasing of advertising and promotion


 1     situations.  I used the example of the tourism industry
 2     and what Industry Canada does on behalf of the tourism
 3     industry in my presentation.
 4  11373                I have racked my brains, believe me,
 5     and so have our group of people at the office in the
 6     company trying to figure out ways of effectively
 7     letting the Canadian consumer know we have this
 8     product.  That's why I asked if the CRTC could make a
 9     recommendation to other departments in the government
10     saying "Look, you need to look at this.  You need to
11     address this issue".
12  11374                The Heritage Ministry has appointed
13     Mr. Rene Bouchard as one of the people to look at this. 
14     We have been very encouraged by the support that we
15     have had from that, but it's a beginning process.
16  11375                I think generic advertising about the
17     fact that we have extremely talented, very effective
18     Canadian programmers of content, not just Canadian
19     content but just Canadian software in general, would
20     really assist us in getting the message out to the
21     Canadian consumer that there is excellent software that
22     is just as good, if not better, than a lot of the
23     American software that comes up.
24  11376                THE CHAIRPERSON:  Do you have some
25     specific ideas as to -- you used the analogy of Travel


 1     Canada or whatever.
 2  11377                MR. GUMLEY:  Yes, the Industry Canada
 3     initiative through tourism.
 4  11378                THE CHAIRPERSON:  Do you have some
 5     specific initiative in mind that could be developed
 6     either through Heritage and/or Industry Canada with
 7     respect to making the Canadian public more aware that
 8     we have got the software that does meet Canadian
 9     education standards?
10  11379                MR. GUMLEY:  Yes, and I am not just
11     talking on our own company's behalf.  Obviously there
12     are a lot of other smaller companies that need this
13     exposure.  There are people in Atlantic Canada.
14  11380                Fortress of Louisburg was produced by
15     a company, Fitzgerald Studios.  They also produced
16     Alexander Graham Bell.  There is Inuva in Newfoundland. 
17     It is producing great Canadian software.  There are
18     lots of companies across the United States that are --
19     across Canada that need this assistance.
20  11381                THE CHAIRPERSON:  Strike that from
21     the record.
22  11382                MR. GUMLEY:  The specific initiative
23     would be, in my opinion, newspaper and magazine
24     advertising that could be purchased by the Canadian
25     government whereby we could take sections of it.  There


 1     are two components of advertising that are very
 2     expensive, the creation of the content, the creation of
 3     the ads in particular, the background.
 4  11383                We partner with Corel to do this. 
 5     They took their designers to do that because our
 6     company doesn't have the talent to be able -- they have
 7     the talent to be able to do it, but they are working on
 8     all kinds of other things like the box art and the rest
 9     of it.
10  11384                These are the problems that we have. 
11     We don't have the art departments, we don't have the
12     graphics departments to do this material effectively. 
13     The Canadian government has access to those as shown
14     through what they do with the tourism promotions that
15     they do.
16  11385                Then we can take sections to promote
17     particular components of our product mix as it relates
18     to math or as it relates to English skills or spelling
19     skills or Canadian content issues.  Then what I think
20     we would be doing and achieving in that is giving a
21     forum in media which is a place where lots of Canadians
22     see this material and say look, it is different.
23  11386                Like I said, the flyers -- there's
24     one right here.  I just quickly point to it.  "It's kid
25     days".  On that cover which says kid days, there's not


 1     one Canadian product.  There's even spelling blaster
 2     plus.  I know what centre is going to be like in
 3     spelling that.  Blaster plus, it's not going to be the
 4     Canadian spelling.
 5  11387                As I said in my presentation, that
 6     may be a small point, but doggone it, it's symptomatic
 7     of the erosion of our cultural difference between the
 8     United States and Canada.  It's one of the few places
 9     you can really point to that kind of a difference.  In
10     my opinion, it's dangerous.
11  11388                We need to do more collectively,
12     together, to get these initiatives to Canadian people
13     and let them know what's out there so that we can
14     survive and continue to grow with our passion of
15     continuing to make a difference in education and
16     Canadian technology.
17  11389                THE CHAIRPERSON:  Is this a problem
18     that you think needs sort of a short term government
19     assistance in order to kick-start it to get you to a
20     stage where the industry could sustain itself because
21     you would have the revenues that you could support your
22     own advertising programs and so on?
23  11390                MR. GUMLEY:  At this point in time I
24     think so.  The most dangerous challenge that we have is
25     the Internet.  It's a wonderful medium.  It's going to


 1     have incredibly terrific opportunities for us to go
 2     global with what we have.
 3  11391                Our business plan calls for some
 4     great excitement and initiatives with respect to that,
 5     but there is a transition.  While the schools are
 6     connected to the Internet at this point in time, they
 7     are not using it effectively.
 8  11392                There are four, five, maybe ten years
 9     of this transition that are to take place.  Five years
10     ago, CD-ROM was just coming on the marketplace.  Now
11     it's ubiquitous and all the schools have CD-ROM
12     players.  Five years is a long time in our business. 
13     It is definitely this transition period that we are
14     struggling with.
15  11393                We have to fund the Internet
16     strategies to maintain Canadian culture for education. 
17     At the same time, we have to sustain our existing
18     business model.  We can't do it because we can't get
19     the shelf space.
20  11394                In the longer term, you are correct. 
21     If we can generate these initiatives and we can form
22     these partnerships, I think that it will sustain the
23     industry to allow us to take our cultural content
24     internationally.
25  11395                I think we have a wonderful platform


 1     in Canada to let the rest of the world know how we have
 2     dealt with our cultural differences and our cultural
 3     relations.  We can create this content and export it
 4     over the Internet.  It is going to create huge
 5     opportunities for our Canadian industry to let the
 6     world know how our country survives and does as well as
 7     it does.
 8  11396                THE CHAIRPERSON:  What about the
 9     extent to which some of your product might have legs to
10     travel in global markets?  You have emphasized that a
11     lot of it is uniquely Canadian because it serves the
12     Canadian educational standards.
13  11397                Some of your products, I presume,
14     would have international appeal.  What's the potential
15     there do you think?
16  11398                MR. GUMLEY:  It's really exciting for
17     us.  May I just reach down here for a second.  It's
18     right here.
19  11399                This particular product, Cross
20     Country Canada, has been wildly successful.  May I take
21     a second to give you a wonderful story about it?
22  11400                THE CHAIRPERSON:  Sure.
23  11401                MR. GUMLEY:  It was created about ten
24     years ago.  We wanted to upgrade it.  We are creating a
25     Cross Country Canada platinum version.  It's coming out


 1     after being on the market for ten years.  It was
 2     originally created for the Apple II.
 3  11402                When we put out the application for
 4     the graphics artist to come in and help us with it, one
 5     of the applications came in that said "Look, I've got
 6     to have this job.  I've got to have this job.  When I
 7     was in grade six, they kept kicking me out of the
 8     computer lab because I was wanting to play Cross
 9     Country Canada all the time".
10  11403                It was a wonderful way for the kid to
11     apply.  We hired him right away.  He's sitting there. 
12     He's now 21.  He played with this program ten years
13     ago.  He is poring over the details of this program.  I
14     give you that example because that's the importance of
15     what Canadian technology can do to inspire Canadian
16     kids to grow up and become artists in technology.  This
17     particular person is working for us now to upgrade the
18     program so that other kids will hopefully do that in
19     the future.
20  11404                This program lends itself to our
21     Cross Country U.S.A. program which has done extremely
22     well.  It has been one of our flagship products.  It
23     also can be easily taken over to the Cross Country
24     Europe, Cross Country Australia, because of the kind of
25     engine that it is.


 1  11405                So yes, a lot of our product has the
 2     capability to be transported.  So does our Internet
 3     journey.  It doesn't have to be the Canadian Heritage
 4     interactive journey. It can be the castles of Britain
 5     or the United Kingdom or Europe or whatever.
 6  11406                We need to be able to generate the
 7     concepts and ideas.  The lesson plans that we create
 8     around this content assist teachers to teach this
 9     material more effectively.  Bringing education alive in
10     the classroom is the crucial component of what this can
11     do.
12  11407                We can't let that die.  It has to
13     happen from here in Canada because we are good at what
14     we do.  We have to let the world know how good we are.
15  11408                THE CHAIRPERSON:  When you go to the
16     U.S. market with --
17  11409                MR. GUMLEY:  Cross Country U.S.A.
18  11410                THE CHAIRPERSON:  Cross Country
19     U.S.A., are you able then to convince either the retail
20     stores, the Future Shops or whatever or the computer
21     manufacturers to either give you shelf space or bundle
22     the packages with their computers at the point of sale?
23  11411                MR. GUMLEY:  To be perfectly blunt,
24     we are just not strong enough.  The retail market in
25     the United States has incredible demands with respect


 1     to NCAP, costing, commitments to advertising.  It's
 2     tough enough getting into the Canadian marketplace with
 3     the promotion dollars that are required to get space on
 4     the shelves and in the advertising flyers.
 5  11412                THE CHAIRPERSON:  You talked about
 6     the partnership here with Corel.  I was wondering
 7     whether the opportunities for partnerships there might
 8     be greater if they see the value in the content itself.
 9  11413                MR. GUMLEY:  Yes, they are and we are
10     exploring them actually.  That is an excellent
11     suggestion and we are exploring those opportunities.
12  11414                To be perfectly frank, Corel
13     struggles with exactly the same issues that we do
14     because they are fighting in a market share perspective
15     with the largest company in the world.  They have their
16     own issues at this point in time.
17  11415                THE CHAIRPERSON:  Thank you.  Those
18     are all my questions.
19  11416                I think Commissioner Grauer has a
20     question.
21  11417                COMMISSIONER GRAUER:  Thank you.
22  11418                I want to go at this from a slightly
23     different angle.  Earlier last week we had IMAT, the
24     interactive multimedia arts, some of these new media
25     companies, content producers.  We had a lot of


 1     discussion about the issues of branding, marketing
 2     promotion and how important those elements are with
 3     respect to new media companies.
 4  11419                In fact, IMAT had recommended what
 5     they called four pillars of support, two of which were
 6     access to capital for investment, interactive new media
 7     products and companies and support for marketing and
 8     promotion.
 9  11420                I guess what I'm really wondering is
10     when you go to a Future Shop or some of these
11     companies, what you are up against with the large
12     multinationals or American companies is that they have
13     much more cash available to support the distribution,
14     as you say, whether it's buying shelf space, whether
15     it's advertising to support the activities of being on
16     those shelves and whether -- I guess what I'm asking,
17     and I would appreciate your comments on this, is
18     whether some form of support or access to tax
19     incentives or funds to support marketing and promotion
20     along the lines of what Commissioner Colville was
21     saying would go some distance in assisting you in the
22     growth and development of your company.
23  11421                MR. GUMLEY:  Yes.  Thank you for the
24     question.  The tax incentive would be terrific.
25  11422                One of the things we are burdened


 1     with currently in our company is the amount of debt we
 2     have to incur to be able to get into the marketplace. 
 3     There is a fair amount of capital available from the
 4     Business Development Bank who have taken some great
 5     initiatives.
 6  11423                Telefilm has recently been terrific. 
 7     Without them we wouldn't have made a couple of the
 8     products we have put on the marketplace.  They have
 9     recently begun to recognize the importance of
10     marketing.
11  11424                Their support comes in the form of
12     debt to our company and we have to repay it, not that
13     we are averse to doing that, but it does make it
14     problematic because it reduces the amount of money that
15     we can put into the investment of more intellectual
16     property and the creation of more content.
17  11425                To answer your question specifically,
18     absolutely.  I know that our industry in British
19     Columbia, New Media B.C., is approaching the British
20     Columbia Government for a tax credit similar to what
21     the film industry has been able to secure in British
22     Columbia and initiatives like that.
23                                                        1030
24  11426                One of the initiatives that has long
25     been taken is the initiative for scientific tax


 1     research, but we have found, unfortunately, in the last
 2     few years there has been a significant tightening of
 3     the parameters of the tax research from a content
 4     development perspective for our industry and new media. 
 5     Much of our applications for content creation have been
 6     turned down for tax credit, which kind of defeats the
 7     purpose.  It is kind of frustrating.  We go back and
 8     forth on issues, the definition of what does qualify
 9     for tax credit.  We can't understand what it is.  It
10     seems to be like trying to figure out -- put a nail in
11     jello.  It's that amorphous.
12  11427                I think a clearer definition of
13     support for our industry, recognizing the cultural
14     importance of the industry I think would take it out of
15     some of the scientific parameters that the tax credits
16     are currently in and that I think would be an important
17     initiative and recommendation that the CRTC could make,
18     if you can make those kinds of recommendations to other
19     departments of the government.
20  11428                COMMISSIONER GRAUER:  Thank you very
21     much.
22  11429                MR. GUMLEY:  You are welcome.
23  11430                THE CHAIRPERSON:  Thank you very
24     much, Mr. Gumley.  We appreciate your presentation here
25     today.


 1  11431                We will take our morning break now to
 2     give you an opportunity to take down your product
 3     display.
 4  11432                MR. GUMLEY:  I sincerely thank you
 5     very much for the opportunity to be here today.
 6  11433                THE CHAIRPERSON:  Thank you.
 7  11434                We will take our break now and
 8     reconvene at a quarter to eleven.
 9     --- Short recess at 1030 / Courte suspension à 1030
10  11435                THE CHAIRPERSON:  We will return to
11     our proceeding now.
12  11436                Madam Secretary, the next party.
13  11437                MS BENARD:  Thank you, Mr. Chairman.
14  11438                The next presentation will be the
15     Canadian Conference of the Arts, la conference
16     canadienne des arts.
17  11439                THE CHAIRPERSON:  Thank you.
19  11440                MR. CRAWLEY:  Thank you.  Thank you
20     once again, ladies and gentlemen.
21  11441                My name is Alexander Crawley.  I am
22     the Director at the Board of the Canadian Conference of
23     the Arts for Film and Television -- for Film and
24     Broadcasting.
25  11442                I am sure you have all had a chance


 1     to look at our submission.  In watching the proceedings
 2     of this hearing we are quite gratified that a lot of
 3     your intervenors seem to be feeling towards a model. 
 4     The other day we were discussing a model when I was
 5     here as the Executive Director of the Canadian Screen
 6     Training Centre -- I have to remember which Canadian
 7     thing it is.  I wasn't empowered to support any
 8     particular model at that time.  However, there are some
 9     very specific recommendations that this committee
10     report -- basically, this submission comes out of a
11     committee because like many organizations we have been
12     feeling towards this moving target called new media for
13     some time.
14  11443                However, we are very happy now that
15     finally and, in fact, this is the first time we have a
16     representation specifically from the sector and some
17     real expertise from the new media sector, in the person
18     of Ana Serrano who is with me.  Ana is the Director of
19     the Medialinks Habitat new media development centre at
20     the Canadian Film Centre in Toronto, and also now is
21     serving at the Board of the CCA as a new media
22     representative.
23  11444                So, without further ado I would like
24     to turn this time period over to her to talk about our
25     submission and how our thinking has developed since we


 1     gave you this submission.  Also, since she is the next
 2     one our list for the Medialinks Habitat, we could just
 3     treat this, with your permission, as a block of time
 4     that you have here to discuss the issues with Ms
 5     Serrano and ask her any questions that you may have. 
 6     So Ana.
 7  11445                MS SERRANO:  Thank you very much,
 8     Sandy.
 9  11446                I should have brought two hats today,
10     so that you will know from which mouth I am speaking,
11     but I will obviously start with the CCA.
12  11447                I was very pleased when Sandy asked
13     me to sit as part of the Board of Directors on the CCA
14     and came at this fairly recently.  So, I have to say
15     that I didn't have a hand in writing this new media
16     submission to the CRTC, but I was extremely happy to
17     see that the tone of the document matched what I felt
18     was important from which artists should be speaking. 
19     That is, that I think it is really important that
20     Canadians know that artists are actually quite excited
21     about the opportunities presented by new media and this
22     new technology, and that we should, as artists and
23     content creators, take a proactive stance, rather than
24     a reactive and defensive stance against some of the
25     changes that are taking place in the new economy, and


 1     in fact can probably benefit from a lot of these
 2     opportunities.
 3  11448                I think you will notice from the
 4     submission that this tone is indeed present in all of
 5     the points that were made.
 6  11449                I would like to speak about three of
 7     them, which I think speaks more clearly about what my
 8     personal beliefs are in terms of the relationship
 9     between the technology and the arts.  The first one is
10     this whole notion of protection of artists' rights.  I
11     think that the CCA is quite sophisticated in its
12     understanding of intellectual property, and instead of
13     having sort of this defensive cry against what could
14     potentially be a terrible sot of outcry against the
15     fact that artists' rights -- or artists' copyright may
16     be violated on the net, they actually have put forth a
17     series of recommendations that will allow -- and this
18     is in section 4, I believe, -- a series of
19     recommendations, section 3 and 4, that will look at
20     sort of a hierarchical notion of copyright for artists,
21     and that they would like to play a role in determining
22     what some of these copyright hierarchies may be.
23  11450                The second point that they talked
24     quite clearly about is this whole creation of a new
25     media commission, which I think is terribly important


 1     as well.  Sandy had told me earlier this week that when
 2     Robin King from Sheridan had spoken, he had actually
 3     mentioned this whole notion, that the new media
 4     commission is also important, filled with people on the
 5     committee that actually do know something about new
 6     media, as opposed to a series of appointees that come
 7     from other sectors.  So, I think that is also
 8     incredibly important.
 9  11451                Then, the third point is this whole
10     notion of trying to create some kind of point system
11     that will determine what we mean by Canadian content. 
12     I think we all know that the Internet is presenting an
13     opportunity to tape into a global marketplace, so we
14     are not really talking about creating content that's
15     purely Canadian, but instead creating content that has
16     as part of its team a series of Canadian members.
17  11452                The Cavco model, as it stands, is
18     probably not the best one, but I think the CCA placed
19     it in this particular document as a potential model
20     that we can look at for this kind of a point system and
21     new media.
22  11453                So, I would urge that the CRTC look
23     at these three particular points that come from the
24     CCA.
25  11454                Now, we can either sort of talk about


 1     the CCA's role and this particular document now, or I
 2     can segue into some of the points I would like to make
 3     on behalf of the CFC.  Which would you prefer?
 4  11455                THE CHAIRPERSON:  The person who was
 5     going to question you on the first part prefers the
 6     former.
 7  11456                MS SERRANO:  All right.
 8  11457                THE CHAIRPERSON:  So perhaps we can
 9     do that and we can have a discussion around those
10     issues and then move into the other one.  Is that your
11     presentation on that issue then?
12  11458                MS SERRANO:  Yes.
13  11459                THE CHAIRPERSON:  Commissioner
14     Wilson.
15  11460                COMMISSIONER WILSON:  Good morning,
16     Ms Serrano and Mr. Crawley.  Thank you for being with
17     us today.
18  11461                I would like to begin our discussion
19     by asking you a number of questions of clarification
20     about statements that you have made in your submission. 
21     I am going to do this by taking you through the
22     specific recommendations that you have very usefully
23     summarized at the beginning of your submission.  Then I
24     would like to explore a couple of concepts with you
25     with respect to your particular approach to the idea of


 1     regulating new media, as well as the whole notion of
 2     cultural identity in this new environment.
 3  11462                Your first recommendation suggests
 4     that the federal government amend the Broadcasting Act
 5     so that it specifically applies to new media.  You also
 6     state that this amendment should include the
 7     differentiation between traditional broadcasting, which
 8     is controlled by a system of licensing and multipoint
 9     digital delivery which is not.  You then go on to state
10     that it would include a statement expressing the
11     government's policy objective to ensure access to
12     content produced by Canadian on the Internet.
13  11463                First of all, I am curious as to what
14     precedent you are looking to to apply the Broadcasting
15     Act to new media, especially in light of the fact that
16     you are suggesting that new media be differentiated
17     from traditional broadcasting in the Act.  Are you
18     saying that new media is broadcasting or is analogous
19     to broadcasting, or is it just sort of -- you are
20     looking for some place to put this and that was your
21     best instinct?
22  11464                MS SERRANO:  Do you want to go first?
23  11465                MR. CRAWLEY:  Go ahead.
24  11466                COMMISSIONER WILSON:  Ms Serrano, I
25     know you said you didn't participate in the writing of


 1     this.
 2  11467                MS SERRANO:  Yes.
 3  11468                COMMISSIONER WILSON:  Please do
 4     whatever you want in terms of providing me with the
 5     background.
 6  11469                MS SERRANO:  I think we should just
 7     have a conversation with everyone involved here.
 8  11470                The way I understand this particular
 9     point is that one of the key problems in the new media
10     industry is no one knows who is going to pay for
11     content.  So, looking at I think the Broadcasting Act
12     allows -- well, allowed the CCA to look at a model
13     where they can take some of the best practices in that
14     particular model and then apply it for the development
15     of new media content.
16  11471                So, if you notice, one of the points
17     that they actually made was this whole notion that ISPs
18     be mandated to provide at least 5 per cent of their
19     gross earnings, if they make over $500,000, towards
20     content development.
21  11472                So, I think it is just a way to try
22     to fund what is one of the most important things in the
23     industry, which is going to be this whole content
24     development portion of new media.  So, I think that is
25     really why they took a look at the Broadcasting Act.


 1  11473                Sandy, do you have more to add?
 2  11474                MR. CRAWLEY:  Yes.  I think as with
 3     several of the intervenors you have heard over this
 4     hearing, there needs to be an attempt to specifically
 5     define those activities over the net, as the model that
 6     we are using now, which are analogous to broadcasting. 
 7     So, even this morning I think Mr. Morrison with Friends
 8     was saying if it's the same or a very similar linear
 9     delivery of a continuous story or a product or a
10     program that happens to be delivered by this medium, we
11     have to find a way to capture that in terms of the
12     Broadcasting Act.
13  11475                The example I could give is --
14     perhaps a negative analogy is that we might not be
15     having this struggle if the powers that be in
16     government had listened to the CCA's position at the
17     time that they removed the word "culture" from the
18     Telecommunications Act.  We wouldn't perhaps be having
19     this struggle right now, and that was a very
20     unfortunate decision that we still maintain was a wrong
21     one and perhaps there is a solution there.  Perhaps
22     there is a solution that involves not only looking at
23     the Broadcasting Act and bringing it up to a modern
24     standard to cope with the technological developments,
25     but perhaps going back, even though I know it was only


 1     1991 or so, and looking at the Telecommunications Act
 2     and rectifying that.  Because if we had the cultural
 3     mandate once again in the objectives of the
 4     Tele-communications Act, I think the convergence of
 5     your responsibilities here at the Commission would be
 6     simpler in that sense.
 7  11476                But other than that, I think Ana has
 8     made the essential point.  The practical realities now
 9     are for you to decide whether through your legal
10     mandate or through moral suasion, which can be quite
11     effective at times, whether we can get some of the
12     revenues flowing back from the larger ISPs into
13     production.
14  11477                COMMISSIONER WILSON:  So the funding
15     is really your central concern?
16  11478                MR. CRAWLEY:  In a sense it's the
17     allocation of resources, yes.  Also, access and,
18     obviously, the Copyright Act, as you have been
19     exploring --
20  11479                COMMISSIONER WILSON:  Yes, and we
21     will go there later.
22  11480                MR. CRAWLEY:  Yes.
23  11481                COMMISSIONER WILSON:  Why in that
24     recommendation do you say that multipoint digital
25     delivery would not be licensable under the amendment


 1     that you are suggesting?  You are saying that
 2     traditional media is licensed and multipoint digital
 3     delivery is not.  Why would you make that distinction?
 4  11482                MR. CRAWLEY:  Again, I have to
 5     confess that if we had greater resources I would have
 6     the entire committee here with me, but I think that was
 7     perhaps the feeling of that committee, that they were
 8     accepting the idea that if it's multipoint --
 9     multi-point delivery is not exactly analogous to
10     broadcasting.
11  11483                I feel a bit caught up there because
12     I am not convinced that it isn't, myself personally. 
13     So, I am sorry, I have to sort of beg off that one.
14  11484                COMMISSIONER WILSON:  That's fine. 
15     Maybe as we go along it will become clear, but I guess
16     the reason I am asking about that is that the next part
17     of that recommendation says that the amendment would
18     also include a statement expressing the government's
19     policy objective to ensure access to content produced
20     by Canadians on the Internet.  If the multipoint
21     digital delivery is not licensable how would you
22     envision that access to content be ensured?
23  11485                Are you suggesting in that statement
24     that we establish a Canadian content requirement for
25     new media?


 1  11486                MS SERRANO:  I don't think so.
 2  11487                COMMISSIONER WILSON:  So how are you
 3     ensuring access?
 4  11488                MS SERRANO:  I actually can't talk to
 5     that particular point because this is one of the things
 6     that I am actually quite -- feel strongly about this
 7     whole notion of the fact that what we mean by Canadian
 8     content is not necessarily about the content itself and
 9     that it should be about the people who are creating the
10     content, or a certain portion of the people creating
11     the content be Canadian because there is no such thing
12     as the Canadian marketplace when it comes to digital
13     network delivery systems.
14  11489                So, it really doesn't make any sense
15     at all to talk about Canadian content as having a
16     Canadian spin requirement in the content itself.
17  11490                And in terms of access, I think that
18     universal access is actually probably going to be a
19     reality and if not in the home, then certainly in
20     public spaces like schools and libraries, et cetera.
21  11491                You can have content aggregators
22     which again the CCA document talks about, this whole
23     notion of perhaps creating a national portal site
24     through the CBC or through some other Canadian
25     recognizable entity, which could serve as the portal


 1     through which schools and libraries and these public
 2     spaces can go through, but that's different from a
 3     Canadian content requirement.  I don't know if that
 4     makes --
 5  11492                COMMISSIONER WILSON:  I guess what I
 6     am --
 7  11493                MR. CRAWLEY:  Sorry, I have just
 8     reread this and I am not sure -- as I look at the
 9     wording there I am not sure that the intention of this,
10     No. 1, the first paragraph, is not to point out the
11     fact that perhaps multipoint digital delivery, which is
12     not currently licensed needs to be captured somehow. 
13     So that it is not saying -- it is not accepting holus-
14     bolus that this could never be licensed in any way.  At
15     least that's how I would interpret it from my point of
16     view.
17  11494                So, it's not accepting the fact that
18     multipoint delivery -- it isn't necessarily regulated
19     through a licensing regime of the Commission.  Again,
20     it is again trying to capture the different mechanisms
21     that are available, including the Copyright Act, of
22     course.  If the Copyright Act comes into line in terms
23     of the digital universe that is avowed public policy
24     now to do some more reform of the copyright regime in
25     order to make sure that creators and producers' rights


 1     are protected that might serve.
 2  11495                Again, it is trying to capture the
 3     situation between the pieces of legislation.  We
 4     understand that all the answers aren't going to come
 5     from the CRTC.
 6  11496                COMMISSIONER WILSON:  I guess that's
 7     what I am really struggling with when I go through this
 8     because you have sort of taken certain elements of
 9     what's in place now with respect to film and television
10     and sort of pulled them together.
11  11497                I just might abandon this plan and go
12     right to the sort of conceptual question.  At the end,
13     which is at -- this is quite a controlled model that
14     you have presented, in terms of how to manage new
15     media.  I mean, we have had a number of presentations
16     over the last couple of weeks.  Some people have said,
17     "Keep your hands off it."  Some have even gone as far
18     as to say that, you know, the way that new media is
19     going to develop will require you to dismantle the
20     broadcasting regulatory regime because that will be
21     meaningless in this new environment.  Others have
22     suggested sort of a light-handed approach to the
23     regulation of new media, perhaps through the notion of
24     an exemption order with a threshold.  We had a
25     discussion with Mr. Grant from the Directors Guild


 1     yesterday.
 2  11498                But this model that you have
 3     presented is very detailed and pulls out a whole lot of
 4     the elements of the existing system, and I am trying to
 5     figure out how they all fit together in terms of what
 6     you are really saying about what you want us to do with
 7     new media.  Do we license it?  Do we apply Canadian
 8     content regulations and the notion of the Cavco
 9     criteria?  Are you suggesting that those be used to
10     assess whether or not to fund Canadian content, or
11     whether or not it is Canadian content?
12  11499                If you are suggesting that we use it
13     to determine whether or not it is Canadian content --
14     well, what's the point if there is no requirement?  So,
15     these are the questions that I am sort of tossing
16     around in my head.  I guess I am just wondering if in
17     all of this, and, Mr. Crawley, you have been here quite
18     a lot during the last couple of weeks, thinking about
19     the comments that have been made by a number of the
20     people who work in this industry, that if you start
21     trying to apply these regulations from the traditional
22     broadcast medium, the old paradigm, if you will, that
23     you are going to drive this industry out of the
24     country.  If you start requiring Canadian content,
25     requiring -- I mean that's the nub of their argument


 1     really, that they can locate anywhere.  They don't have
 2     to be here and they can still offer their services. 
 3     They can still create their content and still make it
 4     available to Canadians from across the border or from
 5     across the ocean, it really doesn't matter.
 6  11500                So that's what I am struggling with
 7     because from what I have read and from what I have
 8     heard over the last two weeks, this is by far the most
 9     controlled model of regulation that has been presented.
10  11501                MS SERRANO:  I would like to reply to
11     that.  I think I come at this with sort of a slightly
12     objective eye because I didn't participate in writing
13     this document.  I have to admit that when I first read
14     the document my instinct was similar to yours, and then
15     I thought, like wow, everyone has been talking about
16     how we shouldn't be regulating the Internet.  In fact,
17     I was talking to a colleague of ours earlier today and
18     she had mentioned that she was in an elevator recently
19     with three what seemed to be computer geek guys, and
20     they were saying, "Did you hear that the CRTC is going
21     to regulate the Internet?" and all the hype that
22     surrounds these particular hearings.
23  11502                What I came to realize after having
24     pondered this document is that there is always going to
25     be -- there has been extremes in this debate for so


 1     long, for five years or more, especially in the United
 2     States.
 3  11503                There was this wonderful article, for
 4     example, written in the Atlantic Monthly, I think two
 5     months ago, three months ago, on the whole notion of
 6     copyright, where they were looking at the two extreme
 7     positions.  On the one hand, the libertarian movement
 8     in the States, led by the digurodi(?), like Ester Dyson
 9     and John Perry Barlow, who say that, you know, digital
10     bits should be free and that we should not regulate
11     them at all.  All the way to the other extreme, who
12     claim that everything should be sort of coded, so that
13     you know exactly where everything comes from.
14  11504                COMMISSIONER WILSON:  These are the
15     digital watermarks.
16  11505                MS SERRANO:  Yes, exactly, which
17     technologically speaking may or may not work.
18  11506                So, when I reread this document, I
19     think what became clear is that the CCA has actually
20     presented just a document that is not necessarily -- I
21     didn't read it as a prescriptive document the second
22     time around, but more like a document that presented
23     the best parts of certain models in the broadcast and
24     telecommunications industries that could be applied to
25     the -- I hesitate to use the word regulation, but to


 1     the sort of shaping and development of the new media
 2     industry.
 3  11507                That's why in my introduction -- I
 4     was a bit nervous earlier, so I think I can speak more
 5     clearly now.  In my introduction I was really -- I
 6     wanted to stress that these are models that we should
 7     look at.  It doesn't make sense for us to pull out new
 8     models out of thin air, when there are models out there
 9     already which we can see how they might apply to the
10     new media industry.
11  11508                I think you are right in saying it
12     looks like a mishmash of things, but to quote sort of
13     Arthur Kessler, sometimes creativity is about
14     mishmashing things and putting them together and making
15     something new.  Really, that's how I see the CCA
16     document, as now we can actually take a look at it.  It
17     is something tangible that we can then say, "Okay,
18     let's pull it apart, let's see what makes sense and
19     let's throw out the stuff that doesn't make sense." 
20     It's more useful an exercise in fact than just saying
21     these grandiose things, like, "Do not regulate the
22     Internet," because how are you supposed to move from
23     that position?
24  11509                COMMISSIONER WILSON:  Well, the quote
25     that came to my mind when I reading through it was a


 1     Marshall Macluhan quote from "The Medium is the
 2     Massage," which is we look at the world through a
 3     rear-view mirror.  We march backwards into the future." 
 4     Which of course is whenever you are trying to deal with
 5     something new you always look back at what is familiar
 6     and sometimes hang onto that because you are not quite
 7     sure.  Certainly the resounding message that we have
 8     received is that this is a big unknown.
 9  11510                So, I think what we are looking at is
10     do we look back at that or do we make this paradigm
11     shift.
12  11511                MS SERRANO:  I think we do both.  I
13     don't think you can do anything else but both actually,
14     because you -- I talk a lot about when I was in art
15     school in high school and whenever my art teacher says,
16     "Draw anything you want," people went into a panic
17     because they could draw anything and they didn't know
18     how to do it.  So, the results were actually worse than
19     if the teacher had said, "You have a two by two box and
20     you can only use grey ink, draw something."  At that
21     point they could actually stretch out of the parameters
22     that were set for them and think of something more
23     creatively.
24  11512                Now, I am not suggesting that we
25     should apply everything from old models into the new


 1     media industry, but I think it's important to actually
 2     have something tangible to hold onto, while still
 3     looking into the future.  I know it's a more difficult
 4     task, but I think it's the more measured, carefully
 5     thought out and sensible task that people can do, as
 6     opposed to just jumping into this vacuum and then
 7     trying to scramble to try to get something pulled
 8     together.
 9  11513                MR. CRAWLEY:  To answer your specific
10     question, and I think it's a good one, in terms of the
11     Canadian content point system, something like that.  It
12     is my perception that the committee was looking at some
13     kind of criteria for a public investment or an
14     investment period, a funding mechanism for development,
15     as opposed to saying, "You can't get on the net if this
16     doesn't get Canadian -- Cancon branding --"
17  11514                COMMISSIONER WILSON:  Certification.
18  11515                MR. CRAWLEY:  "-- for the net,"
19     because, as you say, with the current state of affairs
20     it doesn't make any different whether you do or not
21     because it could go on from anywhere.
22  11516                So, I really think it was in terms of
23     the investment, the critical investment that is
24     required.  So, perhaps those funds, if we could bring
25     in a regime where ISPs were making a contribution to


 1     production, development creation, that those funds
 2     would then be dispensed based on some kind of criteria.
 3  11517                COMMISSIONER WILSON:  Let me ask
 4     you -- I want to ask you about the CBC and enshrining
 5     that, the role of the CBC in the fostering and
 6     distribution of Canadian content, and you are
 7     suggesting that this be defined in the Act.  Would this
 8     be similar to the concept suggested by SPTV of creating
 9     a super-Canadian Web site?
10  11518                Part two of the question is:  Given
11     that the CBC has already stated that it is interested
12     in doing this, in the absence of being designated to do
13     so, why bother?  Why would you define it in the Act if
14     they are going to do it anyway?
15  11519                MS SERRANO:  Personally, I don't
16     think you need to.
17  11520                COMMISSIONER WILSON:  Okay.  That's a
18     good, straightforward answer.
19  11521                MR. CRAWLEY:  I think there was a
20     recognition there that they were -- that the CBC was
21     trying to get out front of this thing and do something
22     useful, as an aggregator I guess is the word that we
23     have come to use, and that they should be supported. 
24     We have been engaged in a number of struggles to make
25     sure that public broadcasting was supported


 1     appropriately in this country, so this is a bit of a
 2     smorgasbord perhaps, a good chance of saying there's
 3     something that is going on that relates to this.  Let's
 4     make sure that if a regime emerges of say Telefilm or
 5     some other agency or a new agency is overseeing public
 6     investment in new media development, that the CBC might
 7     be a logical partner there.
 8  11522                I tend to agree that you don't want
 9     to put that kind of detail in the legislation.
10  11523                COMMISSIONER WILSON:  Maybe it's a
11     good thing your committee members aren't here.  You are
12     diverging from their view.
13  11524                MR. CRAWLEY:  They are going to see
14     on TV.
15  11525                COMMISSIONER WILSON:  The funding
16     approach that you have suggested, I guess we have had
17     some submissions that have suggested direct public
18     funding, but for the most part the creators of new
19     media content seem to be telling us that what they
20     really want is incentives, most of which are tax based,
21     and you do include a couple of tax-based incentives in
22     your recommendations.
23  11526                I guess the rationale put forward for
24     the notion of avoiding sort of the public funding,
25     direct public funding regime is that it can't respond


 1     quickly enough to the nature of the market.  If you
 2     have to fill out applications and maybe line up or
 3     something, you are not doing what you really should be
 4     doing, which is creating, and if you can use the tax
 5     incentives then it allows you to move forward at the
 6     pace at which you need to and deal with that stuff in a
 7     different way.
 8  11527                MS SERRANO:  I think that in the
 9     absence of any kind of private sector capital that
10     small content creators can access public funding for
11     grants and/or loans for original content development is
12     going to be important.  Until the private sector,
13     through venture capital firms, through banks, through
14     angel investors, through a number of different
15     mechanisms that are already in place in the States gain
16     a higher tolerance for risk, we are not going to have a
17     lot of original content development happening in
18     Canada.
19                                                        1120
20  11528                I have spoken with a lot of small
21     multimedia companies in Toronto and B.C. and in Ottawa. 
22     Many of them who aren't actually here -- most of them
23     probably didn't have the opportunity to present a
24     paper -- would love to have some capital to actually
25     develop content rather than develop corporate Web sites


 1     that they have been doing for the past five years.
 2  11529                It's just really difficult out there
 3     now to get money for this kind of stuff from the
 4     private sector.  I don't know.  I don't know how you
 5     would legislate people to give money to small content
 6     creators, but if they don't then someone is going to
 7     have to.
 8  11530                Otherwise our gaming industry is
 9     going to suffer, our entertainment industry is gong to
10     suffer, our entertainment content industry is going to
11     suffer, new media that is.
12  11531                MR. CRAWLEY:  Also, there is an
13     incentive based program that is possible.  Obviously we
14     have seen it work in some other sectors.  You could
15     come up with a tax incentive that would encourage
16     private investment.
17  11532                If we can in fact get similar
18     contributions coming from ISPs, IAPs or whatever, as
19     the cable has created a critical mass, the distribution
20     centre in the conventional media -- I know a lot of
21     people would want to call it a tax.  It's not a tax as
22     far as we are concerned.
23  11533                Is that public funding or is it
24     funding that is overseen in the public interest, that
25     you create a critical mass of investment hopefully.  If


 1     this industry grows the way we have been told for
 2     decades now it is going to, we would create the
 3     resources there which might be overseen in a public way
 4     but it wouldn't actually be coming from tax dollars in
 5     that sense.
 6  11534                COMMISSIONER WILSON:  You just raised
 7     this.  I want to ask you about the idea of acquiring a
 8     5 per cent contribution by the ISPs.  This issue has
 9     been talked about quite a bit during the course of the
10     hearings.
11  11535                My first question is how did you
12     arrive at the threshold level of 750,000?
13  11536                MR. CRAWLEY:  I can't answer you.
14  11537                MS SERRANO:  I have no idea.
15  11538                COMMISSIONER WILSON:  Can you write
16     me?
17  11539                MR. CRAWLEY:  Yes.  We will make a
18     note and try and answer that question for you.
19  11540                COMMISSIONER WILSON:  Okay.  The
20     second question that I want to ask with respect to
21     this, as you were sitting talking about finding sources
22     of funding and what not, you know, in my mind the
23     rationale for requiring funding from cable companies is
24     that they own infrastructure and they control that
25     there and they are called gatekeepers by many people.


 1  11541                The same is not true with the ISPs. 
 2     They are customers presently of the people who own
 3     infrastructure, just like anybody else.  So why would
 4     you require of them and again if you did, are you not
 5     concerned they would just say "See you!  I'm heading
 6     south".
 7  11542                MS SERRANO:  I think one of the main
 8     problems -- it's a good idea, but I'm not sure how
 9     feasible it is.  I know quite a few people who have
10     ISPs in the States.  They don't necessarily need to use
11     Canadian ISPs at all.  There is going to be an issue
12     there.
13  11543                I'm not sure how that can be
14     resolved.
15  11544                MR. CRAWLEY:  To be absolute about
16     it, it may be true that you won't have a local service
17     provider because of that extra cost of doing business. 
18     However, I am personally not convinced that is true.
19  11545                I still like to make sure that my ISP
20     is someone that I can communicate with directly in my
21     own country and if I have to go down and knock on their
22     office door because I'm not getting the service I want,
23     I want to be able to do that.  I want to see my
24     cultural values reflected there.  Maybe I'm just an old
25     fashioned guy.  Maybe it doesn't work that way.


 1  11546                I'm not --
 2  11547                COMMISSIONER WILSON:  It may not be a
 3     case of what you want because the ISP will be the one
 4     deciding whether or not to stay or go.
 5  11548                MR. CRAWLEY:  Exactly, but I think
 6     that the ISP's customers have some say in that.  I
 7     would like to see some real research done on this. 
 8     Maybe the Commission has the resources to do that, to
 9     see how many people choose an ISP based on the fact
10     that's it's a local company, someone who is
11     communicating directly with them, seeking their
12     business.
13  11549                There is a cultural identity, if you
14     will, even with the ISP.  Maybe that's not accurate,
15     but that's what my instincts tell me, that people will
16     still want to go to -- as we found out with
17     conventional media like television.
18  11550                When the Commission has created a
19     critical mass of quality programming through its
20     regulation, people have chosen to go to those service
21     providers for their entertainment because they see
22     their values reflected there.
23  11551                I'm not sure that the same thing
24     can't work in the digital universe.  As I said the
25     other day, you know, all culture is local.  Maybe it


 1     was McLuhan who said that originally too.
 2  11552                There is still an incentive and a
 3     business opportunity based on the fact that you are
 4     actually located in the same place, not necessarily the
 5     same city or whatever, but that you share a kind of
 6     cultural identification with each other, including the
 7     people you choose to buy your services from.
 8  11553                COMMISSIONER WILSON:  That kind of
 9     leads me into the final question that I wanted to pose
10     to you.  This really had to do with the whole idea of
11     culture and how local it is.
12  11554                We heard from a number of ISPs.  Your
13     concern is Canadian content.  That's the focus of your
14     submission to us.  They have told us that there is
15     really quite a compelling business case for it because
16     people do want to see Canadian things.
17  11555                The appeal of the Internet, of
18     course, is that it's international and you can travel
19     the world on the Internet, but maybe there's a comfort
20     level, you know, starting with Canada or just the
21     convenience or the practicality of knowing what's
22     available in your community or in your country and, you
23     know, not having to worry about whether or not there's
24     duty or anything if you are making purchases.
25  11556                MR. CRAWLEY:  Canadian dollars.


 1  11557                COMMISSIONER WILSON:  Yes.  They have
 2     said there is a really compelling business case for
 3     doing this, this is what our consumers are demanding. 
 4     Why intervene in that?
 5  11558                MR. CRAWLEY:  I wish I had been here
 6     for the particular intervention you are talking about. 
 7     Did they say they were then going to invest maybe 5 per
 8     cent of their revenues into developing Canadian
 9     content?
10  11559                COMMISSIONER WILSON:  I don't think
11     they mentioned a figure.
12  11560                MR. CRAWLEY:  No.  But they said they
13     were developing Canadian content.
14  11561                COMMISSIONER WILSON:  And giving a
15     prominence on their sites.
16  11562                MR. CRAWLEY:  That's great.  I think
17     the CCA is firmly in favour of voluntary regimes, if
18     they work.  I believe that the power of government
19     policy and of regulatory policy should still be held
20     there as a possibility in case voluntary regimes don't
21     work.  These are measurable.
22  11563                I suppose that that's an option, to
23     say pure market forces are going to work in this case,
24     we don't need to intervene at all.  I have my doubts
25     personally, but --


 1  11564                MS SERRANO:  I think one of the more
 2     important points to make is what they are calling
 3     Canadian content, which is just good business.  The
 4     Internet works well because it promotes -- community
 5     based sites are what sells on the net.  We have seen
 6     that with e-bay, we have seen that with GO Cities, et
 7     cetera.
 8  11565                It's kind of, I don't know,
 9     interesting that they would call that -- it is Canadian
10     content, of course, but it is also just good business. 
11     I mean when they are talking about Canadian content and
12     they are saying "We want to create", I don't think they
13     are talking about creating the sweet hereafter
14     interactive movie when they are talking about creating
15     Canadian content.
16  11566                They are talking about shopping for
17     Canadian goods or putting Eddie Bauer online.  I don't
18     even know if Eddie Bauer is still Canadian or not.  I
19     think we have to be very careful that we make the
20     distinction between original content development that
21     has at its soul an art to it and content that is, you
22     know, what I call information based content which is
23     typically about electronic commerce, about -- yes,
24     actually about electronic commerce, shopping, and
25     that's different.


 1  11567                When Sandy talks about voluntary
 2     regimes, I think yes, everyone will tell you we will
 3     support the creation of Canadian content, but they are
 4     talking about Canadian shopping.  They are not talking
 5     about interactive narratives, virtual environments,
 6     whatever, Canada or the Rockies, entertainment titles.
 7  11568                COMMISSIONER WILSON:  Then, of
 8     course, there is the third Canadian content that you
 9     pointed to.  Actually another intervenor pointed to it
10     as well.  That is Canadians creating the content.
11  11569                MS SERRANO:  Yes.  I mean I think
12     that it's important for us to create the growth of
13     original content development that is entertainment
14     based, that is education based, that is not just about
15     shopping.  I think that more and more people will
16     probably want that kind of content in the future.
17  11570                Where I sort of disagree with some of
18     the people that have spoken, to me what Canadian
19     content is is about those people who are Canadians
20     creating the content rather than having a Canadian
21     content requirement in it.
22  11571                COMMISSIONER WILSON:  Thank you very
23     much.  Those are my questions.
24  11572                MS SERRANO:  Great.
25  11573                THE CHAIRPERSON:  Thank you,


 1     Commissioner Wilson.
 2  11574                Ms Serrano, did you want to make a
 3     brief presentation on behalf of the Film Caucus before
 4     we switch horses here?
 5  11575                MS SERRANO:  Yes.
 6  11576                THE CHAIRPERSON:  It was not meant to
 7     be a pejorative comment on my colleagues.  I have to be
 8     careful what I say here.
10  11577                MS SERRANO:  My presentation is
11     actually on behalf of the Canadian Film Centre.  For
12     those of you who don't know, the Canadian Film Centre
13     recently received funding to develop a new media
14     department called Media Links Habitat which has been
15     funded in part by Bell Canada.
16  11578                Media Links Habitat's mandate is
17     actually to promote the development of original
18     content.  My main point here today is that I think it's
19     really important that one of the key areas in the new
20     media industry is going to be training.
21  11579                It's really important for us to
22     remember that right now we are still at the infancy of
23     this medium.  Most people don't even know what it is. 
24     I'm sure when you looked at all your submissions, there
25     are many different definitions of what new media is and


 1     what it could be.
 2  11580                Certainly in our submission, we spoke
 3     a lot about how new media is actually quite different
 4     from film and television and print.  We are in the
 5     early stages of trying to define what the salient
 6     characteristics of this media might be.
 7  11581                The Film Centre believes that the
 8     type of training that people need is going to be more
 9     than just about software training.  All of you know
10     that content is going to be king in this industry and
11     for this industry to evolve, we need to have more and
12     better content in the future.
13  11582                The training of content developers is
14     crucial.  Training content developers is not about
15     training them in software, but about providing them
16     with both soft and hard skills.  The Canadian Film
17     Centre is committed to doing that.
18  11583                In fact, it is more than just
19     training in the new media industry.  We also believe
20     that they have to be trained how to be successful
21     knowledge workers.
22  11584                To that end, we believe in team
23     building and leadership training because we think that
24     people who will be working in the future have to have
25     particular skillsets that aren't really being met in


 1     traditional educational institutes right now.
 2  11585                Skills like entrepreneurialism, the
 3     ability to create a vision for themselves and
 4     articulate that vision with others; the ability to
 5     oscillate between working individually and working as
 6     part of the team.
 7  11586                Secondly, the reason why we put the
 8     new media design program together is that we felt there
 9     was a vacuum in the marketplace in terms of training. 
10     You either had higher education universities doing a
11     lot of research and development in new media and then
12     you had private training institutions doing these
13     typical software training courses.
14  11587                There was no middle ground where
15     people were actually thinking conceptually about what
16     this media might be and creating solid conceptual
17     frameworks, not only for the content but also in terms
18     of business models -- how do you make money on the
19     net -- as well as organizational models, what's the
20     most appropriate kind of company to form for this
21     industry, as well as doing production base training.
22  11588                The new media design program has done
23     that.  Really that is the main point that I would like
24     to make on behalf of the Canadian Film Centre, that is
25     there are enough training institutions out there that


 1     are pumping out sort of robots who know particular
 2     software applications.
 3  11589                We need to start creating and helping
 4     people become better critical thinkers and better
 5     creators for this industry.
 6  11590                THE CHAIRPERSON:  Thank you very
 7     much.
 8  11591                MS SERRANO:  Thank you.
 9  11592                THE CHAIRPERSON:  I will turn the
10     questioning to Commissioner Pennefather.
11  11593                COMMISSIONER GRAUER:  The other
12     horse.
13  11594                THE CHAIRPERSON:  Commissioner Grauer
14     has had trouble containing herself here, so she may
15     have a question or two at the end.
16  11595                COMMISSIONER PENNEFATHER:  Thank you
17     very much.  You have actually begun to answer some of
18     my questions which I was really anxious to hear you on.
19  11596                I would like to start, if you don't
20     mind, by going back to your "definitions".  I think in
21     your paper you talked about the convergence of the
22     creation, the commerce and the communication or
23     transactions.  You raised this point earlier, how
24     important it is to understand that those are all
25     different but they are all happening sometimes through


 1     the same media.
 2  11597                Could you just help us again with
 3     your take, your vision on what new media is.  There are
 4     a number of definitions, but where I am heading, and
 5     you can just keep going with this if you want, is also
 6     to tell us then what kind of courses, what kind of
 7     specific training relates to that.
 8  11598                You mentioned earlier too virtual
 9     reality and three dimensional environments.  You could
10     describe those and, therefore, what skills would be
11     developed.  It's really just expanding on what you said
12     already.
13  11599                MS SERRANO:  Sure.  One of the
14     philosophies that we have at the new media design
15     program, and we have a faculty of seven -- one of them
16     is Daryl Williams who founded the media arts program at
17     Ryerson and actually was a colleague of Marshall
18     McLuhan's.  Another faculty member is an associate
19     professor at York.  We come from diverse backgrounds.
20  11600                The first philosophy we have is that
21     diversity is important in this industry.  Simply
22     because you are going to have Bill Buxton from Alias
23     Way who actually calls it the new multiculturalism,
24     which is not about ethnicity but about a series of
25     people in a cluster, working as a team, from specific


 1     specializations.  This could be an artist, a screen
 2     writer, a programmer, a film maker, et cetera.
 3  11601                Part of that philosophy involves this
 4     notion that we still don't know what new media actually
 5     is.  There's no definitive definition of it because, as
 6     I said, it's changing all the time.  It's still in its
 7     infancy.  We don't actually know what the ultimate
 8     delivery channel is going to be.
 9  11602                However, having said that, what is
10     important is that it is a communications medium.  It is
11     two ways and it is non-linear.  It has as part of its
12     grammar a spacial and temporal thing about it.
13  11603                Cinema is simply temporal and so is
14     television.  New media encompasses both.  That's where
15     you find the terms information architects coming from
16     because it's really about architecting a space in this
17     virtual world as well as creating a story or something
18     like that.
19  11604                I don't know if that helps in terms
20     of the definition of new media, but we do think that
21     because it is a communications medium, that's why you
22     have growth of community based sites, the growth of
23     chats, the growth of forums.  That's why people like
24     using that stuff because you can in this particular
25     medium.


 1  11605                It's known that your nature is also
 2     very interesting to us because that's where you might
 3     get new entertainment genres emerging.  This whole
 4     notion of interactive story telling or this notion of
 5     virtual reality is part and parcel of that. the notion
 6     that one could choose to go into spaces as opposed to
 7     being led through those spaces.
 8  11606                In terms of those two things, we are
 9     definitely clear that those are salient characteristics
10     of the medium.
11  11607                In terms of what the language for
12     creation in this medium might be, and what I mean by
13     that is things like in film, for example, you have the
14     jump cut and the closeup and the pan.  In new media we
15     still don't have that grammar, so that's part and
16     parcel of what we are trying to do and define and find
17     out about in our programs.
18  11608                COMMISSIONER PENNEFATHER:  That's
19     very, very interesting because the tendency is always
20     when discussing this to imagine a finished product
21     which is something that has a beginning and an end or
22     it has a defined "script" which is delivered to me as a
23     user via television or via the Internet or I pick it up
24     at the store.
25  11609                You are entering into a world where


 1     there is artistic work going on in the medium of
 2     communication, so it may have an ongoing life.
 3  11610                MS SERRANO:  Yes.
 4  11611                COMMISSIONER PENNEFATHER:  If you
 5     take something like virtual reality or 3D environments,
 6     and let's get to the delivery point now.  We hear a lot
 7     of talk about the Internet and we have almost merged
 8     the two discussions together.
 9  11612                Will you be able to participate in 3D
10     environments via the Internet?
11  11613                MS SERRANO:  Absolutely.  You can
12     now.
13  11614                COMMISSIONER PENNEFATHER:  In that
14     sense, what is the impact of the Internet on the kind
15     of art that you are developing and on the kind of
16     skills that you feel we need to develop in the training
17     side of things?
18  11615                MS SERRANO:  I would just like to
19     talk about this whole notion of art.
20  11616                One of the things that we believe in
21     is that we are not just -- even though we do research
22     and development, or you could say that we do research
23     and development, we don't just sort of do experimental
24     artwork.
25  11617                One of the most important things


 1     about our program is we actually want to see what kind
 2     of interactive entertainment and entertainment genres
 3     will be commercially successful in five years time.
 4  11618                As part of the training, we also look
 5     into business models.  That's where I talked a lot
 6     about transaction.  I think I talked a little bit about
 7     what are some of the revenue models in the submission
 8     that I gave, how you have to be able to combine a
 9     different series of revenue models.
10  11619                One of them might be advertising. 
11     One of them might be sponsorship.  One of them might be
12     transaction.  One of them might be data mining.  You
13     want to be able to see which combination of those
14     things would fit into the art or entertainment content
15     that you are developing.  I just wanted to make that
16     clear.
17  11620                In terms of virtual reality, the
18     major skillsets that I think are going to be important
19     for that is in fact not about learning how to use the
20     SGI machine, but learning how to conceive of space.
21  11621                Architects actually make very, very
22     good new media developers because they have a good
23     understanding about the relationship between humans and
24     space.  In terms of virtual reality training, I would
25     say that is probably one of the most important things,


 1     how does one create positive space as well as negative
 2     space in an environment and then how does the user then
 3     navigate through that space so that it's simple, it's
 4     easy to use and they don't get lost.  I think that's
 5     important.
 6  11622                Perhaps, you know, a series of case
 7     studies on traditional buildings and talking about how
 8     they function as good uses of space.  A series of
 9     lectures on that as well as some software training that
10     will allow people then to start using these tools to
11     implement some of their ideas.
12  11623                I don't know if that sort of answers
13     your question on the skills based.
14  11624                COMMISSIONER PENNEFATHER:  What I
15     hear is not just new media as an art form in itself,
16     but how new media is used in other forms of art or of
17     such things as architecture or industry development or
18     anything else.  It seems also to be a tool of a
19     different kind of learning.
20  11625                You do mention the term lifelong
21     learning.
22  11626                MS SERRANO:  Yes.
23  11627                COMMISSIONER PENNEFATHER:  And Media
24     Awareness brought that term to us.
25  11628                MS SERRANO:  Yes.


 1  11629                COMMISSIONER PENNEFATHER:  What does
 2     it mean, lifelong learning, for you?
 3  11630                MS SERRANO:  Well, lifelong learning
 4     to me is about this whole notion of the creation of the
 5     knowledge worker.
 6  11631                I think what we are finding is that
 7     the whole definition of education is changing. 
 8     Lifelong learning is about the ability to have the
 9     appropriate kinds of skills to know when to say "You
10     know what?  I don't know this stuff" and then to be
11     able to have the skills to be able to research or ask
12     people on those things that you don't know and to be
13     able to be open to change and learning and to perhaps
14     potentially use technology as a tool to facilitate your
15     learning when you are on the job.
16  11632                Lifelong learning is actually about
17     developing an insatiable curiosity and a set of skills
18     that will allow you to satisfy that curiosity and build
19     on your knowledge assets.
20  11633                COMMISSIONER PENNEFATHER:  You are
21     obviously developing courses in skills training in all
22     these areas.  You mentioned that Media Links at Habitat
23     is funded by Bell Canada.
24  11634                MS SERRANO:  Yes.
25  11635                COMMISSIONER PENNEFATHER:  With that


 1     in mind, a couple of questions.
 2  11636                Is there a link between the courses
 3     that are developed and where the students will end up
 4     working and the funder?
 5  11637                MS SERRANO:  At the moment no.  It's
 6     funny.  If you work in a multimedia firm, you end up
 7     working for Bell Canada at some point.  Either you
 8     create their corporate Web sites or you create some of
 9     the floppy discs they need.  Indirectly they end up
10     working for Bell anyway.
11  11638                They typically tend to be hired on by
12     development companies rather than the telcos or Bell.
13  11639                COMMISSIONER PENNEFATHER:  We have
14     heard a lot in fact about the importance of skills
15     development in the country and also the importance of
16     keeping people in the country.
17  11640                What are you hearing from your
18     students in terms of the challenges, what they need in
19     terms of skills development and the job opportunities
20     that are or are not available in Canada?
21  11641                MS SERRANO:  One of the biggest
22     challenges that my students face is that in our
23     program, which is four months long, they actually
24     create a prototype, so it's a prototype that they can
25     potentially develop further for commercial


 1     distribution.
 2  11642                One of the challenges they have is
 3     that they love doing that.  They love the idea of
 4     working on a team, working on a project from concept to
 5     prototypical delivery.  They find that most jobs out
 6     there don't have these kinds of activities or they
 7     don't do these kinds of activities.  They do fee for
 8     service work.
 9  11643                They would love to have an
10     opportunity where -- in fact some of my students have
11     done this, where they have formed their own companies
12     because they refused to work for other people and just
13     do your sort of run of the mill corporate Web sites and
14     are now starting their own companies and trying to
15     develop models for funding projects that they want to
16     do.
17                                                        1150
18  11644                Right now there aren't any mechanisms
19     out there for helping people who want to develop
20     original content to do that.
21  11645                COMMISSIONER PENNEFATHER:  What would
22     you suggest would be those mechanism?  You mentioned a
23     really important thing earlier and that's risk and the
24     difficulty now in this country.  I think it was another
25     intervenor or two or three, also mentioned the same


 1     problem, particularly at the start-up point.  It's just
 2     the segue you were leading to there.
 3  11646                MS SERRANO:  One of the things that
 4     is missing is that most of the capital that is being
 5     given by the private sector and by the government
 6     actually, Telefilm, et cetera, they typically fund
 7     medium to larger-sized companies, or what they look at
 8     is a degree of professional history in many of the
 9     management teams that they would fund.
10  11647                Now, I am not saying that is a bad
11     idea.  I think that's probably a good idea.  However,
12     this industry, as you know, is actually populated by a
13     lot of young, really successful people.  I mean, if you
14     look at the companies that have done well in the
15     States, their CEOs are under the age of 29, so how do
16     you balance this seemingly competing notions that on
17     the one hand you want a certain level of maturity
18     because you want to make sure that your investment is
19     protected, but on the other hand the people with the
20     creativity, the people with the chutzpa typically tend
21     to be younger.
22  11648                So, one of my recommendations, and
23     this is something that we would like to work on at the
24     Canadian Film Centre, is the creation of an
25     incubator-type idea, where the management expertise is


 1     provided by a mature, or you know -- I don't know,
 2     someone who has had a long career, set of people, but
 3     it actually funds a whole host of smaller companies
 4     that may be populated by younger people.  That's one
 5     model.
 6  11649                I know that Canada has had a long
 7     history of incubators in its universities, et cetera,
 8     and some of them haven't been very successful at all. 
 9     However, again in the U.S. there is a good model run by
10     Bill Gross, called The Idea Lab, which seems to be
11     doing really well.  So, that's one model that we could
12     use.
13  11650                Another one is again, as much as I am
14     a proponent of kickstarting entrepreneurialism and
15     people, I think grants do help, especially for these
16     young people.  They don't have to be large.  They can
17     just be small development grants that they can get
18     access to, so that they can then market it or large it
19     to a larger sponsor who is in the private sector.
20  11651                COMMISSIONER PENNEFATHER:  Thank you
21     for that.  I think my colleague might take up that
22     point again a little later.
23  11652                So, let me ask you to get back to --
24     what you were describing could be part of what a number
25     of players in this country could take on as a strategy


 1     to support new media.  We have had suggestions like
 2     yours and I appreciate it and I really want you to
 3     focus on the training and development side, although I
 4     know you made some comments on the production and
 5     delivery or marketing as well.
 6  11653                But, if we put all of this together
 7     what role do you see for the CRTC in all of this?
 8  11654                MS SERRANO:  I was hoping you weren't
 9     going to ask that question.
10  11655                COMMISSIONER PENNEFATHER:  Let me ask
11     it another way then.  Let me go back to your point, all
12     of this discussion and a lot of what you have been
13     saying fits the larger discussion which is, of course,
14     part of the presentation earlier about regulation is
15     one piece of a series of things done in this country to
16     support the culture of this country through its
17     artists, through its artists in technology, as our
18     previous intervenor said, through to the
19     infrastructures themselves, that they be Canadian for a
20     number of reasons.
21  11656                So, those objectives are part and
22     parcel of the Broadcasting Act and because of the
23     nature of the infrastructure and the communication
24     medium that is represented by what is interpreted in
25     the Broadcasting Act, there are regulations which


 1     support that content.
 2  11657                To some that word means -- limits
 3     that content, but to some it means it supports that
 4     content and it has certainly had success in terms of
 5     film production.  We could also include national
 6     institutions which have supported film production,
 7     either through producing or granting, and we have had
 8     other mechanisms inclusive of regulation that, for
 9     example, have brought Canadian music artists to at
10     least their own audience, let alone a world audience.
11  11658                How does this paradigm then fit the
12     new media?  We will come back then if there is any
13     place for regulation.  You have a place on one point I
14     think for regulation, but we can talk to that too.
15  11659                MS SERRANO:  I think one of the key
16     challenges that the CRTC will have for the future if
17     they decide, let's say, to adopt some kind of Cavco
18     model is that the people who are going to be part of
19     the new media industry in about five years, seven
20     years' time, are young people who have no conception of
21     what this kind of regulation may mean.
22  11660                What I mean by that is that the
23     students that we teach, and we have a large gamut of
24     them from 23 to 45, but most of them from about 35 on,
25     including myself, have lived in an environment where we


 1     have been taught that government support is bad, where
 2     we have been taught that government regulation is bad.
 3  11661                Now, we may not agree with that
 4     ideologically, but there is a learning curve I think
 5     that this particular demographic needs to go through in
 6     order to feel comfortable, (a) accessing some of the
 7     funds that the CRTC may create or may mandate someone
 8     else to create to see themselves as being part of this
 9     government shaping of the industry, as opposed to being
10     outside of this government shaping industry, and that's
11     probably what the challenge is.
12  11662                I don't know whether you have noticed
13     that most of the people that you have talked in the new
14     media industry have this same sort of stance.  I don't
15     think it's so much that they actually don't want help
16     from the government.  It's just psychologically it's
17     alien to them.
18  11663                So, I think one of the things that
19     the CRTC could actually do is if they were to put in
20     place some form of regulation of content that's not
21     obviously onerous or let's say just requires one person
22     to be a Canadian producer, et cetera, I think it's
23     important that accompanying that particular piece of
24     regulation should be some kind of, I don't know, a
25     series of training that will tell people why actually


 1     you are doing it and why it might be of benefit to them
 2     because they may not -- I know that some of my students
 3     just don't even consider the government as a potential
 4     source for funding for a lot of their projects.  They
 5     would much rather go to the States because it's quicker
 6     and easier and all that sort of stuff, to try to get
 7     some kind of angel investor to think that they would
 8     have to jump through the hoops to get some kind of
 9     government funding.
10  11664                I don't know if that makes sense to
11     you at all.
12  11665                COMMISSIONER PENNEFATHER:  It's a
13     fascinating perspective.  I appreciate you bringing it. 
14     My son always reminds me, it's your point of view,
15     mother, and your history, not mine.
16  11666                I appreciate that and it brings me to
17     your other point.  If that's the case and that's the
18     reality, it is important, however, that Canadians as an
19     artist find the training here and find access to the
20     tools they need to develop here, as opposed to going to
21     the States.
22  11667                MS SERRANO:  Yes.
23  11668                COMMISSIONER PENNEFATHER:  Is it not
24     your thesis then that the effort has to be placed in
25     the training and the skills development and job


 1     opportunities and, therefore, the content will follow? 
 2     I would assume this is your thesis, that Canadian
 3     content is defined by the team, by the people actually
 4     doing the work?
 5  11669                MS SERRANO:  Yes.
 6  11670                COMMISSIONER PENNEFATHER:  How does
 7     their creation survive in the global marketplace then? 
 8     Are we going to have sufficient people working to have
 9     a Canadian presence in the marketplace of the world? 
10     It's an age-old problem here, the size of our market. 
11     Now we have this huge market, so there shouldn't be a
12     problem, but it still remains a little mystery of how
13     you still maintain your particular voice and your
14     particular stories.
15  11671                MS SERRANO:  Yes.  It is a problem
16     and most people will probably say so what/
17  11672                COMMISSIONER PENNEFATHER:  Ah ha!
18  11673                MS SERRANO:  Which is that clusters
19     are formed.  I forget this management consultant's
20     name, but he calls them clusters and they are like
21     communities.  Hollywood is a cluster.  The Silicon
22     Valley is a cluster, et cetera.  But more and more you
23     are going to find transcontinental clusters forming, so
24     these are people who are macromediasts authoring
25     specialists and they chat to each other from Hong Kong


 1     to -- you know.
 2  11674                So, some people may argue that that
 3     doesn't matter, that there is no Canadian branded stamp
 4     on content that gets distributed across the world.  I
 5     think then that perhaps one way of ensuring the Canada
 6     brand on content, without having to instill some kind
 7     of Canadian content requirement on Canadian content
 8     that gets developed is to create some kind of, if you
 9     will, brand committee that looks at all the different
10     Canadian brands out there in the global marketplace and
11     then promotes them as Canadian content to Canadians and
12     the international community.
13  11675                So the onus of branding Canadian
14     content does not necessarily belong to the creator
15     themselves, but belongs to some other form of -- some
16     government body that will market Canada through the
17     products that she creates, as opposed to putting that
18     responsibility on the creator.
19  11676                COMMISSIONER PENNEFATHER:  I am going
20     to leave some time for Commissioner Grauer to ask you
21     some questions.  I may come back.
22  11677                MS SERRANO:  All right.
23  11678                THE CHAIRPERSON:  I will turn to
24     Commissioner Grauer, but I am worried that you have so
25     piqued our curiosity --


 1  11679                COMMISSIONER GRAUER:  No, I won't be
 2     long.
 3  11680                THE CHAIRPERSON:  I just remind you
 4     both that it's twelve noon and most of us are going to
 5     want to eat sometime in the next few hours.
 6  11681                COMMISSIONER GRAUER:  Yes.  I won't
 7     keep you long because I know you have been here a
 8     while.
 9  11682                One of the things that I was really
10     interested in is when you talked about the
11     multi-disciplinary approach and what we have heard a
12     lot actually throughout this hearing is this whole
13     notion of partnerships.  One of the things I have been
14     wrestling with is are we talking about people working
15     together in different ways in this environment than in
16     traditional business, if I can even put it that way. 
17     So I was intrigued by that and your discussion of the
18     skills required, like learning leadership skills and
19     team building and that kind of thing.  I wonder if you
20     could just elaborate a little on that piece of it.
21  11683                MS SERRANO:  Sure.
22  11684                I think what happened was that as the
23     new media industry was growing there was also this
24     parallel movement happening, which was that the
25     traditional way of doing business was being questioned. 


 1     So, at that time, you know, the whole sort of command
 2     and control hierarchy, the whole notion of wearing
 3     suits to work, I mean as sort of banal as that, was
 4     being questioned at the same time that the new media
 5     industry was growing.
 6  11685                So what in fact started to happen was
 7     you noticed that the IT companies, and especially the
 8     more creative IT companies, started to develop --
 9     started to adopt the new theories that were being
10     placed on the traditional business community.  So, in
11     fact it was the new media industry that first promoted
12     the whole notion of teams, project-based teams, this
13     whole notion of open spaced concept workplaces,
14     tele-working or the ability to work at home, and all
15     these new sort of -- part of this new re-engineering
16     movement that occurred in the business community.
17  11686                I think that one of the key parts of
18     that movement, I mean there are some that have been
19     proven not to work, but one of the key mainstays of
20     these particular movements was this whole notion of
21     interdisciplinary teams.
22  11687                It is quite different from just
23     traditional business partnering, in that the team
24     itself becomes in essence a small company within a
25     larger company and the skills required to create a new


 1     media product are so diverse that each member of the
 2     team actually has equal say in the development of the
 3     product.
 4  11688                While typically -- and the film
 5     industry is a good analogy to this.  You can say films
 6     are created by teams too, but their organizational
 7     structure is hierarchical in nature, in that it's the
 8     producer who typically gets the money and the director
 9     calls the shots for everyone.
10  11689                In a new media team that can't happen
11     because there is no such thing as design being more
12     important than programming or the video or audio
13     elements, et cetera.  So, it has to be flatter,
14     although the requirement for a project manager becomes
15     even more important when you have these kinds of teams.
16  11690                So, yes, it's sort of the same in
17     that it grew at the same time as this whole notion of
18     team building and the business community, but it's
19     different in that at the end of the day the product is
20     actually created equally by all the team members.  Does
21     that sort of answer your question?
22  11691                COMMISSIONER GRAUER:  Yes, and that's
23     very helpful.  Thank you.
24  11692                Just again with respect to some of
25     the financing issues, and you talked about the lack of


 1     risk equity, which Commissioner Pennefather said other
 2     people have as well.  I am wondering if -- I mean this
 3     has been a traditional problem in Canada, the lack of
 4     venture capital and I mean there's nothing new about
 5     this, but if we were going to be making recommendations
 6     to other parts of government or doing a report, I
 7     wonder if it is not worth -- well, I guess I should
 8     come back and talk about it seems that what is required
 9     here, and someone else has used the term, is a climate
10     of innovation in Canada in order to really nurture,
11     incubate and develop this talent and let's say on the
12     business side.
13  11693                We have had some recommendations.  I
14     guess I would just like your response to that, and if
15     you have anything specific to add.
16  11694                MS SERRANO:  Are you going to --
17  11695                COMMISSIONER GRAUER:  Yes.  IMAT, who
18     talked about four pillars of support, which was support
19     for research and development, for content development,
20     education and training support, support for marketing
21     and promotion and access to capital for investment in
22     interactive new media products and companies, and that
23     was what they called four pillars of support.
24  11696                Torstar had some specific
25     recommendations with respect to education and training


 1     and tax incentives.  I would appreciate your views on
 2     that, and also appreciating that you talked about the
 3     need that there may be a place for government grants in
 4     there as well.
 5  11697                MS SERRANO:  I tend to agree with all
 6     the tax incentive recommendations that a lot of the
 7     different associations have talked about.  I think
 8     definitely that's quite important.
 9  11698                I think that obviously the whole
10     notion of supporting training is equally important, but
11     I think what we haven't figured out yet is how to
12     actually create sort of a partnership between the
13     government and the private sector to share risk for
14     investment and new media product, or new media content
15     development.  I think that's something that we can
16     definitely do.  That way you might skirt around the
17     whole issue of do I get a government grant or do I go
18     to an angel investor.
19  11699                If there was some kind of model where
20     the risk is shared by a company and the government, and
21     then that can be even -- a new fund could be created
22     based on that shared partnership or a shared risk, then
23     that might actually be really useful for a lot of
24     different people.
25  11700                The more important thing is to have


 1     sort of tiered investment or tiered funding activities,
 2     so that it's not only products that are going to be
 3     placed in the market that are mature, but also seed
 4     capital funding for small firms.
 5  11701                There is obviously investment in
 6     products and investment in companies, so creating those
 7     kinds of distinctions and having a whole series of
 8     services, if you will, or funds that this body or this
 9     particular fund can create.
10  11702                COMMISSIONER GRAUER:  That's very
11     helpful.  Thank you.  I really won't keep going on and
12     on.
13  11703                THE CHAIRPERSON:  As much as you
14     would like to.
15  11704                COMMISSIONER GRAUER:  As much as I
16     would like to.
17  11705                THE CHAIRPERSON:  Commissioner
18     Pennefather, did you want to go?
19  11706                COMMISSIONER PENNEFATHER:  No.  Thank
20     you very much.
21  11707                MS SERRANO:  Thank you.
22  11708                THE CHAIRPERSON:  Counsel?  No.
23  11709                Thank you very much, Ms Serrano.  It
24     has been an interesting discussion.
25  11710                We will take our lunch break now and


 1     reconvene at 1:30.
 2     --- Recess at 1210 / Suspension à 1210
 3     --- Upon resuming at / Reprise à 1330
 4  11711                THE CHAIRPERSON:  Good afternoon,
 5     ladies and gentlemen.  We will return to our proceeding
 6     now.
 7  11712                Madam Secretary, would you call the
 8     next party, please?
 9  11713                MS BÉNARD:  Thank you, Mr. Chairman.
10  11714                The next presentation will be the
11     Canadian Independent Film Caucus.
13  11715                MR. BOWIE:  Good afternoon.  Let me
14     begin by thanking you for giving us the opportunity to
15     present to you today.
16  11716                My name is Geoff Bowie.  I am a
17     member of the national board of the Canadian
18     Independent Film Caucus, known as the CIFC.
19  11717                My colleague is Andrew Male of our
20     New Media Committee.
21  11718                Our organization represents over 300
22     private sector independent production companies from
23     across Canada that primarily produce broadcast
24     documentaries.
25  11719                Increasingly, our members are also


 1     producing on-line content, as well as CD-Roms for the
 2     educational and home markets.
 3  11720                Over the last few years, the CIFC has
 4     made several submissions to the CRTC on issues of great
 5     concern to our membership.  These have included the
 6     hearings on convergence, Bell Canada's broadcast
 7     trials, and most recently, the Canadian Television
 8     Policy Review.
 9  11721                The difficult issues before the
10     Commission today are no less important.  Given that new
11     media will revolutionize the way independent producers
12     create and do business, we are eager to present our
13     perspective to assist the Commission in its
14     deliberations on the role of new media in our
15     communications system.
16  11722                Communications has the fundamental
17     importance of providing a stage for the public debate
18     that is so crucial to democratic societies.  This
19     public debate is not restricted to news and current
20     affairs.  Rather, communications should be thought of
21     as providing a stage for the public debate in the
22     broadest cultural sense.  It refers as well to the
23     expression of visual artists, performers, writers, film
24     makers, dancers, song writers, composers and designers.
25  11723                It is the play of expression of all


 1     these groups that forms the crucial public debate for
 2     Canadian society; and it is the vitality of this
 3     ongoing debate that creates Canada's culture and
 4     defines our national identity.
 5  11724                It is perfectly consistent for a
 6     government that values this kind of citizenship and
 7     community to use regulation to limit the influence of
 8     free market forces to achieve these higher values; to
 9     ensure social inclusion and equality of citizenship.
10  11725                The CIFC believes this certainly
11     applies to the Information Highway communications
12     system and new media content as much as it does to
13     broadcasting.
14  11726                Our excitement over the opportunity
15     of the Information Highway stems from its potential of
16     being more inclusive, less homogeneous, than the
17     traditional broadcasting system.
18  11727                More specifically, the free market
19     forces that government regulation is required to limit
20     is the undue influence of large vertically integrated
21     media companies.  Their influence needs to be limited
22     to foster the production and availability of a diverse
23     range of Canadian new media on the Information Highway
24     and a plurality of political standpoints.
25  11728                The CIFC envisions a structure for


 1     the Information Highway that fosters the greatest
 2     diversity and quantity of high quality Canadian new
 3     media content.  In our remarks today, we would like to
 4     expand on this vision and to suggest regulation to
 5     support it.
 6  11729                MR. MALE:  We echo the need for a
 7     broad partnership among key stakeholders expressed by
 8     many intervenors, particularly the Digital Media
 9     Champions Group, Communications and Information
10     Technology Ontario, and the Interactive Media Arts and
11     Technology Association.  The key stakeholders are the
12     distribution sector, the technology provider sector and
13     the production sector.
14  11730                The distribution sector divides into
15     two groups, the carriers, including cable, satellite,
16     wireless and telephone companies; and the ISPs,
17     broadcasters, electronic publishers and other
18     distributors of content.
19  11731                Technology providers are the foreign
20     and Canadian companies that provide the software and
21     hardware to run both the production and distribution
22     sides of the information highway.
23  11732                The content production sector
24     includes all the producers, performers, artists and
25     technicians who create new media content.


 1  11733                If these three key stakeholders can
 2     be made to work together as equal partners, it will
 3     harness Canada's full productive capacity.  To achieve
 4     this kind of partnership regulation is needed that
 5     encourages structural separation between the
 6     stakeholder sectors.  This means there should be
 7     vigorous competition within each sector; and, at the
 8     same time, each sector's jurisdiction should be
 9     acknowledged and respected.
10  11734                This is most important for the
11     independent production industry, historically a less
12     capitalized weaker sector than either the distribution
13     or technology sectors.  The independent Canadian new
14     media production industry will remain marginal and
15     fragile if carriers, broadcasters, ISPs or technology
16     companies are encouraged to vertically integrate into
17     the production sector.  This is already occurring. 
18     Many companies from the distribution or technology
19     sector produce content or own production companies.
20  11735                Only regulations, such as those at
21     the Canada Television Fund, for instance, that reserve
22     access to independent production companies, somewhat
23     check this free market trend towards vertical
24     integration.
25  11736                The production industry will be able


 1     to partner on an equal footing with the distribution
 2     and technology sectors if regulation encourages the
 3     recognition and protection of the jurisdiction of the
 4     independent production industry over the production of
 5     new media content.
 6  11737                This is the basis for Canada's
 7     Information Highway to move ahead in a horizontally
 8     integrated manner.
 9  11738                What does this vision for a
10     horizontally integrated Information Highway suggest
11     about regulation in the new media environment?
12  11739                MR. BOWIE:  Financing new media
13     content production; we have some ideas for generating
14     funds for the production of new media content.  Similar
15     to regulation governing broadcast distribution
16     undertakings, all companies with Internet revenues over
17     $750,000, which we will talk about later I am sure,
18     earned from distributing new media audiovisual content
19     should contribute 5 per cent of gross revenues to the
20     production of new media.  This would include the
21     carriers' revenues earned from ISPs and other
22     Internet-based companies.  These contributions should
23     be divided equally between the industry development
24     fund -- an industry development fund and a Canadian
25     content fund, as proposed by the Wall study.


 1  11740                Secondly, new media related
 2     technology companies operating in Canada with gross
 3     revenues exceeding $5 million annually should be
 4     encouraged to contribute 1 per cent of gross earnings
 5     to a new media production research and development
 6     fund.
 7  11741                The federal government, we would
 8     recommend, should match the contributions raised
 9     through these measures for the first five years.
10  11742                For any policy-created production
11     funds established, it is important that the board of
12     directors be independent, with only minority
13     participation from the distribution technology and
14     government sectors.  This maintains the principle of
15     the production sector becoming an equal partner with
16     distribution and technology sectors and handing the
17     production sector the tools to control its own future.
18  11743                The role of the board of each of
19     these funds should be to carry out a new media agenda
20     that is determined by the production sector itself. 
21     This agenda will be set with a view to achieving the
22     public interest communications goals of Canada, as set
23     by government in the Broadcasting Act.
24  11744                Broadcasters and others from the
25     distribution sector should not have access to programs


 1     and incentives designed to encourage the production of
 2     new media content.  Broadcast programming undertakings
 3     are rightfully in the distribution sector.  It
 4     contradicts the principle of equal partners respecting
 5     each other's jurisdictions if broadcasters are
 6     encouraged to vertically integrate into new media
 7     production.
 8  11745                Also, the CBC should not be the focal
 9     point of public support for new media production.  It,
10     too, is a broadcaster, and should not be encouraged to
11     use its access to public money to produce its own new
12     media content in competition with the private sector.
13  11746                Rather, we see the CBC as becoming a
14     very important partner of the independent new media
15     production sector.  We should strive together to
16     develop leading edge interactive broadcasting for new
17     programming that is in the public interest -- new media
18     programming that is in the public interest.
19  11747                The CBC archive could be an important
20     resource to create a wide range of new media content,
21     if it is made affordably available to the independent
22     production sector.
23  11748                As mentioned by the Directors Guild,
24     the Canadian Film and Television Producers Association
25     and the Friends of Canadian Broadcasting, financing for


 1     new media program production and for research and
 2     development should not come from diverting existing
 3     sources of funding for traditional film and television
 4     production.  The financing sources ideas mentioned
 5     above should provide enough capital to successfully
 6     kick-start the production of new media.
 7  11749                In the medium term, if regulation
 8     encourages the independent new media production
 9     communities jurisdiction over content, these companies
10     will become self-sustaining from revenues earned from
11     the licensing of their rights.
12  11750                MR. MALE:  The licensing; today's
13     Internet does not have the capacity for broadband
14     communications that we equate with the Information
15     Highway.  While the Internet is experiencing phenomenal
16     growth and changing quickly, it remains a narrow band
17     communications system.  It is not capable of providing
18     broadcast audiovisual content in a linear
19     video-on-demand fashion, let alone interactively.
20  11751                It is too soon to contemplate
21     changing the regulations of the broadcasting system
22     because of the similarity in competitiveness of new
23     media content on the Internet with broadcast material. 
24     We agree with the Friends of Canadian Broadcasting and
25     strenuously oppose any reduction of existing regulation


 1     on traditional broadcast at this time or in the near
 2     future.
 3  11752                Similarly, it is too early to decide
 4     on how to appropriately regulate the Internet.  We
 5     agree with the submission of Netstar that the
 6     development of the Internet needs to be monitored
 7     closely, and in two years the question of regulation
 8     should be revisited.
 9  11753                In the meantime, services that are
10     distributing audiovisual and new media content over the
11     Internet, that could be considered broadcasting under
12     the definition of the Broadcasting Act, should operate
13     under exemption orders.
14  11754                In the longer term, we suspect that
15     licensing all companies connected to the Internet and
16     attaching complex conditions of licence, as in the
17     current broadcasting system, may not be feasible or
18     desirable.
19  11755                It may be workable in the future to
20     have a simpler registration system for Canadian ISPs
21     and other new media distribution entities attached to
22     the Internet.
23  11756                The money generated by a registration
24     system would go to the production of new media content. 
25     Companies will choose to register to become eligible


 1     for any government incentives available to the key
 2     stakeholder sector to which they belong.
 3  11757                Registered broadcasters, for
 4     instance, will be eligible for government incentives to
 5     develop their interactive broadcasting capacity. 
 6     Registered broadcasters and other new media
 7     distributors would also be required to acknowledge the
 8     jurisdiction of the independent production sector over
 9     new media production.
10  11758                In the case of the independent
11     production industry, companies and individuals that
12     register could gain more affordable access to
13     production technology and computer services and become
14     eligible to access public and private new media
15     production funds.
16  11759                MR. BOWIE:  Finally, we have noted
17     the energetic resistance to any form of regulation of
18     the Internet and new media expressed by, for example,
19     the Interactive Media Arts and Technology Association,
20     and other new media organizations. These groups clearly
21     regard regulation as an inhibiting rather than an
22     enabling tool.
23  11760                The regulation of broadcasting,
24     restricted access to the distribution system to all but
25     a relatively small number of broadcast programming


 1     undertakings who gatekeep the system; the unregulated
 2     Internet has been just the opposite.  It is a level
 3     playing field where access is affordable and available
 4     to anyone.  Many are afraid that regulation will ruin
 5     this democratic access.
 6  11761                The CIFC believes that the role for
 7     regulation is to enable the growth of independent small
 8     companies, like the majority of the members in IMAT,
 9     the CIFC and in the CFTPA, as well as the growth of
10     Canada's self-employed artists, performers and
11     technicians.  Regulation following the principles we
12     have outlined is meant to limit the ability of large
13     vertically integrated media companies from taking over
14     or marginalizing the independent new media production
15     sector.
16  11762                Building a strong independent new
17     media production sector is the way for Canada's
18     Information Highway communications system to
19     demonstrate social inclusion, diversity of voices and
20     equality of citizenship.
21  11763                We would like to thank the Commission
22     for giving us the opportunity to speak.  We would be
23     pleased to answer any questions that you may have about
24     either our written or our oral presentation.
25  11764                THE CHAIRPERSON:  Thank you very


 1     much, gentlemen, for your presentation.  For a
 2     discussion of your views, I will turn to Commissioner
 3     Pennefather.
 4  11765                COMMISSIONER PENNEFATHER:  Thank you. 
 5     Good afternoon and welcome back.
 6  11766                MR. BOWIE:  Thank you.
 7  11767                COMMISSIONER PENNEFATHER:  I was
 8     wondering earlier if you had brought any e-mails this
 9     time.
10  11768                MR. BOWIE:  We got one.  Our friend
11     in Quyon is obsessed with the CAB, and it was so full
12     of expletives that we didn't think we could bring it.
13  11769                COMMISSIONER PENNEFATHER:  Too bad.
14  11770                By saying that I do not mean in any
15     way that I am not looking forward to my discussion with
16     you viva voce; and I would like to go through your
17     written presentation, but I have to say that, listening
18     to you today, unless I am mistaken, I hear a few
19     changes or different wording to some of your ideas.  So
20     I would like to revisit the main points of your
21     position and hope that I have heard them correctly
22     today.
23  11771                Just as a start, in your written
24     presentation, and I think the fundamental underpinnings
25     of your recommendations are based on your historical


 1     review, in which you state that the development of new
 2     media, in terms of its production and distribution, is
 3     no different than that of old media and, therefore, you
 4     proceed to suggest the various measures that you are
 5     suggesting, for example, measures of regulation to
 6     prevent vertical integration which we will come back
 7     to.
 8  11772                I did pull a couple of comments from
 9     other intervenors. You have mentioned yourselves IMAT,
10     where they have said very clearly that:
11                            "As creators of interactive new
12                            media content in Canada, IMAT
13                            and its members do not seek the
14                            projection of regulation."
15  11773                Sheridan College:
16                            "New media is without borders or
17                            boundaries which renders
18                            meaningless any discussions
19                            about the pros and cons of
20                            attempting to impose a
21                            regulatory framework. 
22                            Regulation evolved from the
23                            history of licensing, and
24                            regulating finite and measurable
25                            entities, such as bandwidth and


 1                            content where control was
 2                            possible.  The environment has
 3                            taken the next evolutionary step
 4                            where neither limits nor control
 5                            can be defined, much less
 6                            enforced."
 7  11774                This is a very different view of the
 8     nature of new media versus traditional media and the
 9     value of a regulatory approach.
10  11775                I wonder if you could expand on your
11     comments in that regard.
12  11776                You quoted IMAT, if I am right, this
13     afternoon, in one sense, and my understanding was they
14     didn't want any kind of regulation whereas --
15  11777                MR. BOWIE:  That is what I --
16  11778                COMMISSIONER PENNEFATHER:  -- your
17     proposal, as I read it in your written submission,
18     certainly brought to new media some of the existing
19     approaches for regulation in this country, for a number
20     of reasons.  I am not sure how you react to that.
21  11779                MR. BOWIE:  I think in the written
22     submission, and in the oral submission, I think our
23     concept is similar with IMAT's on one side and not on
24     the other.  I think, as we have said in the written
25     submission, in terms of the kind of licensing that


 1     exists now for the broadcasting system, won't work for
 2     the new media -- for the distribution outlets.
 3  11780                I think one of the main things that
 4     we hope that regulation can do is provide a system for
 5     getting funding into the production of content because
 6     I think, as you mentioned this morning, there is a
 7     perennial problem with finding the money to produce
 8     distinctly Canadian content, whether it is about
 9     international issues or about particularly Canadian
10     stories.
11  11781                COMMISSIONER PENNEFATHER:  I think
12     you have put your finger on it.  My point is that they,
13     and others, have recommended other means than
14     regulation to support new media content.
15  11782                MR. BOWIE:  Tax incentive.
16  11783                COMMISSIONER PENNEFATHER:  I think
17     Commissioner Grauer listed four different versions of
18     that.
19  11784                Certainly, our presenter this morning
20     had other ideas and other models have been presented,
21     all of which do not include regulation, and yet you
22     seem to be including regulation in principle.
23  11785                MR. BOWIE:  Yes.  The reason for
24     that, I think, is that it is the -- it is the creators
25     in the traditional area that have the most experience


 1     with creating the kind of Canadian content that we are
 2     interested in as far as -- as new media is concerned.
 3  11786                The new media companies basically
 4     come from a computer background; and, as IMAT has
 5     pointed out, most of their work is fee-for-service work
 6     that's corporate and training and so on.  I think it
 7     comes from being in the -- more in the sort of
 8     traditional cultural sector and understanding the
 9     history of that that makes us, I think, value the
10     important role that regulation can play.
11  11787                We, frankly, don't see any difference
12     in trying to make distinctly Canadian new media content
13     available to Canadians than the traditional media.
14  11788                COMMISSIONER PENNEFATHER:  Just to be
15     clear, when you say "new media content", what are you
16     referring to?
17  11789                MR. BOWIE:  I am referring to
18     interactive, audiovisual material, and I think our
19     vision is for a broadband highway -- Information
20     Highway where there is full video, full motion video,
21     and full audio, and the capacity of having what we call
22     database programming, which means you could have --
23     take any subject and have a database of material and
24     have many different ways into that material.  They
25     could be from 30-second segments done by a poet to a


 1     half an hour linear presentation.  It is just a million
 2     ways into -- into new media content that would be
 3     server based.
 4  11790                COMMISSIONER PENNEFATHER:  So the
 5     element of interactivity, which many have said is a
 6     defining feature of new media, is still, for you, the
 7     product would be a program, even if it were
 8     interactive?
 9  11791                MR. BOWIE:  I didn't quite understand
10     that.
11  11792                COMMISSIONER PENNEFATHER:  A new
12     media product, even if it was interactive, which I
13     gather from many here is one of the defining
14     characteristics of new media.
15  11793                MR. BOWIE:  I agree.
16  11794                COMMISSIONER PENNEFATHER:  If such a
17     product was interactive, would it be a program as we
18     understand it under the Broadcasting Act?
19  11795                MR. BOWIE:  Yes.  My understanding --
20     at first I was confused, you know is new media
21     broadcasting?  If you look at it technically, I would
22     say not.
23  11796                For me, the interactive distribution
24     Information Highway will be point to point whereas
25     broadcasting is point to multi-point -- it is "broad"


 1     casting.  On that basis, it would not -- new media
 2     would not be broadcasting.
 3  11797                But my understanding is that in the
 4     Broadcasting Act it is really not about technical
 5     issues at all.  It is about audiovisual material; and
 6     it doesn't matter if it is distributed simultaneously
 7     or on an individual basis or to many people at once.
 8  11798                So I would say that, then, any
 9     audiovisual material that is not alphanumeric text
10     would come under the Broadcasting Act.
11  11799                COMMISSIONER PENNEFATHER:  Different
12     people are drawing different lines there.  One of the
13     reasons I am asking you is to discuss with you this
14     licensing process which you have proposed in your
15     written submission.  You called it a registration
16     system today.  Is that one and the same?
17  11800                MR. BOWIE:  Yes.
18  11801                COMMISSIONER PENNEFATHER:  Why have
19     you called it a registration system as opposed to the
20     licensing process?  I am curious.  Why did you change
21     the description?
22  11802                MR. BOWIE:  The wording?
23  11803                COMMISSIONER PENNEFATHER:  Yes.
24  11804                MR. BOWIE:  I think I was a little
25     embarrassed by saying it was like getting a licence for


 1     your car.
 2  11805                COMMISSIONER PENNEFATHER:  The motor
 3     vehicle?
 4  11806                MR. BOWIE:  The principle of it, I
 5     think, is different than what we have now with
 6     broadcasting.  Instead of trying to impose regulations
 7     on the resistant broadcasters to get them to do their
 8     bit, this would provide incentives.  I think it goes to
 9     the SPTV -- I thought the SPTV idea of a web ring kind
10     of connects with it and, that is, you need to get the
11     players to buy into the Canadian system and there
12     should be incentives, tax incentives or whatever kind
13     of incentives we can think of for each sector to become
14     registered, to make a contribution.
15  11807                So, for instance, I mentioned the
16     broadcast sector. There could be incentives for them to
17     develop their interactive broadcasting capacity.
18  11808                The basic principle we have is that
19     if those three key sectors all can focus on what their
20     main business is, and work together, you are going to
21     be able to develop a very powerful interactive media
22     system that will -- and you will be able to develop it
23     differently than the United States; and, if we got on
24     it, more quickly.  And that would be a huge advantage
25     to all three sectors and to the information economy


 1     generally.
 2  11809                COMMISSIONER PENNEFATHER:  Let me --
 3     I still am not sure I understand, you having explained
 4     that the purpose of this licensing process is
 5     incentives.  Just to be clear, it is a registration or
 6     a licence that you would issue to all Canadian program
 7     undertakings attached to the digital network.  You
 8     state that every Web site owner may be licensed in a
 9     similar way -- sorry to the licensing of motor
10     vehicles -- but the cost of a licence should be on a
11     sliding scale from a nominal fee for small Web sites
12     engaged in very limited economic activity to a
13     percentage of gross revenues for entities connected to
14     the digital network with economic activity exceeding
15     $750,000.
16  11810                Given the sheer number of Web sites
17     attached to the network, how would you monitor such a
18     system to ensure that no one was operating without a
19     licence, for example?
20  11811                MR. BOWIE:  I think the thing is that
21     people who were operating without a licence, or may
22     very well be, but they wouldn't be eligible for any of
23     the benefits that are there for people who do become
24     registered and who buy into the system.
25  11812                COMMISSIONER PENNEFATHER:  So the


 1     purpose of this licensing regime is to register and
 2     therefore you have the right to other incentive
 3     programs?
 4  11813                MR. BOWIE:  Yes.
 5  11814                COMMISSIONER PENNEFATHER:  What would
 6     be the objective for licensing a small Web site engaged
 7     in very limited activity, because you note the economic
 8     activity exceeding $750,000 would seem to put the
 9     emphasis on the larger company; and, as Commissioner
10     Wilson asked earlier, where did this $750,000 come
11     from?
12  11815                MR. BOWIE:  I was one of the --
13     ironically enough, I was one of the people on the
14     committee that the Canadian Conference of the Arts
15     brought together to draft the report that was presented
16     this morning.
17  11816                It was a committee that met about
18     five times in telephone conferences from across the
19     country.  There was -- Adam Frohman from IMAT was on
20     the committee.  There was a new media distribution
21     company from Edmonton.  There was a production company
22     in Vancouver.  There was a company from Halifax,
23     Montreal.
24  11817                It was, generally -- I think it was
25     mainly put forward as a figure by the distribution


 1     company in Edmonton.  It is a little bit of a grab from
 2     the air, but it is kind of, well, it is companies that
 3     are making that amount of money that are -- that have
 4     achieved a level where they really have a business and
 5     anything beneath that shouldn't be -- shouldn't have to
 6     contribute.
 7  11818                COMMISSIONER PENNEFATHER:  Shouldn't
 8     have to contribute but could have a licence and
 9     therefore access to incentive programs, is this your
10     idea?
11  11819                MR. BOWIE:  I guess I think of the
12     smallest Web sites as being production, you know,
13     production Web sites or people that are making content
14     and using their Web site to present it.  They would
15     want to become registered in order to be part of a
16     production network that would be eligible for the
17     various funds that are there to -- for new media
18     production.
19  11820                COMMISSIONER PENNEFATHER:  I want to
20     be sure I understand that what you are talking about
21     is, bottom line, a levy on the ISPs, for example,
22     percentage of their revenues towards the creation of
23     new media content.  How do you respond to the
24     intervenors who have said that that form of incentive,
25     as you say, would simply drive ISPs or Web sites out of


 1     the country because it would be to them -- and again
 2     IMAT says very clearly that they not only do not need
 3     this kind of protection but these kind of regulations
 4     and licensing procedures would be a barrier to their
 5     growth?
 6  11821                MR. BOWIE:  I think -- to me, there
 7     is a bit of a contradiction because I think IMAT and
 8     other organizations support the Wall study, support the
 9     idea of an industrial fund, and they kind of value more
10     the industrial fund than they do value the Canadian
11     content fund.
12  11822                To me, those funds are going to come
13     about because of some kind of regulation, or some --
14     who is going to contribute to those funds?  I think the
15     problem at this stage and the confusion is that it is
16     early in the development of the Information Highway or
17     the Internet and exemption orders kind of -- the idea
18     of having exemption orders and them operating under
19     exemption orders until they are making a significant
20     amount of revenue from their "broadcasting
21     distribution", I think that is sort of why it is
22     confusing because we don't know yet if they are going
23     to make any money at distributing this kind of content.
24  11823                COMMISSIONER PENNEFATHER:  This kind
25     of content.  Let's be clear that if you got a licence


 1     in your process, it would go to the Web site or the
 2     Internet service provider, who in fact is providing a
 3     variety of services, as I understand it, and very
 4     little of that, and you yourself have said at this time
 5     certainly not of the quality we call for the long-form
 6     program, but most of what they are delivering is text,
 7     or others have defined it as interactive analogous
 8     communication as opposed to broadcast.
 9  11824                If you asked for a licence to act as
10     an ISP, are you then licensing all of these services,
11     in effect?  Under what authority would you do that if,
12     for example, alphanumeric text is not in any way
13     broadcasting and therefore not within our jurisdiction,
14     for example, here to licensing?
15  11825                MR. BOWIE:  I think maybe we have
16     kind of crossed over where now we are talking about the
17     idea of licensing the ISPs rather than having the kind
18     of programs where the ISPs would want to be registered
19     and would want to pay for that; and then that kind of
20     system, if that could be set up, would work, and then I
21     think the 5 per cent of gross revenues, we won't be
22     able to do that until it has become clearer that how
23     that new media content, that is, broadcasting is
24     distributed and they are making money with it.
25  11826                COMMISSIONER PENNEFATHER:  Are you


 1     saying that your concept would not take effect
 2     immediately because I think this afternoon you said
 3     that it is too early to regulate the Internet?
 4  11827                MR. BOWIE:  Yes.  I think the -- we
 5     could take steps towards the registration idea,
 6     although it is fairly involved, as far as organizing
 7     that.
 8  11828                COMMISSIONER PENNEFATHER:  Who would
 9     do this registration and under what authority would it
10     be done?
11  11829                MR. BOWIE:  I don't know.  That would
12     need to be developed.  I suppose it would be some -- I
13     guess a body that is attached to government.
14  11830                COMMISSIONER PENNEFATHER:  Let's go
15     to another mechanism for support which has been
16     recommended, and you talked about SPTV.  They suggested
17     a super Canadian site be established as a central
18     clearing house or focal point for Canadian content
19     because we have certainly -- you are addressing the
20     financing of the content provider.
21  11831                This point is also addressing the
22     marketing and the visibility of the Web site and/or the
23     products that are carried by that Web site.  What do
24     you think of this concept of the super Canadian site? 
25     Would it serve as an effective way of promoting


 1     Canadian new media?
 2  11832                MR. BOWIE:  Yes.  What it has sort of
 3     made me think of is a kind of, on a broader scale, on a
 4     bigger scale than just an aggregation of Canadian
 5     sites.  Kind of a web ring, network, where those three
 6     key stakeholder sectors could all be participating.  It
 7     would be almost -- it would be -- what would be
 8     registered, everything that belonged to that.  That web
 9     ring, for want of a bigger term, would be the focus of
10     Canadian regulatory policy.
11  11833                COMMISSIONER PENNEFATHER:  You
12     mentioned the role of the CBC.  The CBC has also come
13     up in terms of being the leader, exercising a
14     leadership role in terms of not only a new media super
15     site, if you will, a Canadian site, but also in the
16     production of new media content.  I think you had a
17     different point of view on that.  Why is that -- this
18     is in your area?
19  11834                MR. BOWIE:  We think the future
20     should be in the self-employed private sector
21     performers, producers, artists, technicians; and that
22     the CBC's role is as a distributor.
23  11835                We have this problem with the CBC in
24     the current broadcasting environment where they are in
25     competition basically.  They are going into business to


 1     protect their copyrights, to produce their own content
 2     that they own and can sell.  It is almost like there is
 3     a public sector -- they have a monopoly on public
 4     sector money.  I mean that is not the case any more;
 5     they used to.  We think that the process -- it would be
 6     more fruitful for both of us if the independent
 7     production sector was doing the production and working
 8     with the CBC more as their -- as an important public
 9     sector distribution partner.
10  11836                COMMISSIONER PENNEFATHER:  When you
11     are talking about the independent sector, you are the
12     film caucus, are you including in that the producers of
13     new media content?
14  11837                MR. BOWIE:  Yes.
15  11838                COMMISSIONER PENNEFATHER:  And
16     calling them the independent sector?
17  11839                MR. BOWIE:  Yes.  IMAT, I would say
18     would be the representative organization for them.  It
19     is the producers association, at least; and I think it
20     should also include the performers and writers and
21     artists and technicians and their associations.  There
22     should be a kind of a converging of that whole
23     production milieu, I think.
24  11840                COMMISSIONER PENNEFATHER:  Well,
25     certainly, one of the members of the committee for CCA


 1     was also here with the Association des Producteurs en
 2     Multimédia de Québec, M. Allard, and, again, just to
 3     be -- try to be clear on why you are proposing a system
 4     of support which would include regulation, he certainly
 5     did not feel the need for any form of regulation. 
 6     Quite contrary to what you said in the beginning, the
 7     business models would really move this forward and that
 8     the content production side of the -- this new business
 9     really should not be fettered with any regulation
10     whatsoever or any component of it.
11  11841                MR. BOWIE:  I just don't understand
12     how that could ever work.  I just -- I mean, part of
13     the problem of being Canada next to the United States
14     is that if you want to make -- you know, if you want to
15     have even public interest programming, if you want to
16     have other kinds of content other than what is the most
17     commercial kind of U.S.-style programming, how are you
18     going to get that?
19  11842                It is not to say that you can't have
20     Canadian content that becomes internationally
21     successful.  We all know examples where that has
22     happened.
23  11843                In other cultures, the best work that
24     is most successful is deeply rooted in their local
25     culture and in their national culture; it is not


 1     generic drama series.  That is what you are always
 2     striving for, and you will have successes but you have
 3     got to have support.
 4  11844                I think one of our points is that the
 5     production sector, historically, hasn't had that
 6     connection to distribution.  It has always been kind of
 7     cut off from it.  There has always been money at the
 8     front end but never money at the back end.  You
 9     couldn't control your rights and make, you know, use
10     them to make an income.  We want to strengthen that so
11     we can become self-sustaining.
12  11845                I think that is the whole point to
13     what I am talking about the production funds and that
14     the board of directors be independent and be carrying
15     out an agenda that is set by the production industry,
16     not with, you know, broadcasters and carriers and all
17     those with their vested interests basically controlling
18     it.
19  11846                COMMISSIONER PENNEFATHER:  Yes, I
20     took that point in this -- it is difficult when there
21     is such a convergence of new media content with a
22     delivery system called the Internet. It is difficult to
23     see how they can be kept that separate and not assure
24     growth of both components.
25  11847                But I wanted to focus on another


 1     point you just raised.  You state, and you just said,
 2     that it is important to deal with rights, the rights
 3     issue and in your written submission you state that it
 4     is important that copyright clearance for new media
 5     products be streamlined.
 6  11848                Can you elaborate on how you believe
 7     this might best be accomplished?
 8  11849                MR. BOWIE:  Yes.  We think that -- I
 9     think there is a couple of parts to that.  We think the
10     producers associations, like IMAT, the CIFC and the
11     CFTPA should be negotiating a new media production
12     contract with the creative community, with the writers
13     and the artists and the performers and the technicians. 
14     That would govern a kind of a production network that
15     would be comprised of all those people, and then there
16     should be a model like the electronic rights licensing
17     agency model, where once you have a production contract
18     that includes this whole -- all these producers and
19     creative community, which sort of details a sharing of
20     royalties for their creative work, that will itself
21     facilitate the clearance.
22  11850                So, you will already have -- the
23     whole production community will have come up with a
24     fair arrangement and, then, through an electronic
25     rights licensing agency, that money -- that is a


 1     one-stop shop for the distributors and a disbursing of
 2     the income to the production side.
 3  11851                COMMISSIONER PENNEFATHER:  From what
 4     we have heard this week and last from associations
 5     representing various artists and performers and record
 6     producers and so on, this is an important point, and a
 7     long discussion internationally, and it is a very
 8     serious bottom line issue for one intervenor until this
 9     issue is resolved.  In fact, there won't be a lot of
10     certain kinds of content on the Internet, such as
11     long-form cinema.
12  11852                MR. BOWIE:  It should be a big
13     bottleneck.  I mean anybody even now trying to clear
14     rights for documentaries for archival footage or for
15     music, it is a complicated and expensive process.
16  11853                COMMISSIONER PENNEFATHER:  Just in
17     summary, you have, I think, some suggestions here for
18     financial incentives, but that includes a licensing
19     process, but you would not regulate the Internet as
20     such, you would wait until you saw how things evolve?
21  11854                Just one last point.  You said at the
22     beginning that this is a stage for public debate for
23     citizenship and community.  That component of the
24     Internet and its global medium, you say will not be
25     achieved by free market forces and, therefore, as I


 1     understand it, the need for regulation.  Yet, many have
 2     put to us, and I am sure you would agree, in fact you
 3     said yourself that it is going to be as easy to be a
 4     content provider as a user of the Internet.
 5  11855                When you come to regulation, many
 6     would interpret that as saying that you are preventing
 7     access by individuals to content; you are controlling a
 8     medium which is the ultimate, as you yourself have
 9     said, in creating a plurality of standpoints.
10  11856                How do you reconcile those two things
11     because this is a medium unlike some of the media that
12     you have been talking about that, historically, we have
13     dealt with, does have this global communication aspect? 
14     It is a communication medium.  It is a transaction
15     medium.  It is a content providing medium.
16  11857                I am sure you recognize that.  So one
17     of the interesting things to think about is this
18     combination of content, providing delivery to a product
19     to a user, traditional, to this also being a forum for
20     public debate in which many would say freedom of
21     expression is the ultimate goal and must be preserved
22     at all costs and no regulations whatsoever.
23  11858                MR. BOWIE:  I think the real world
24     that we are living in is that there are huge media
25     conglomerates and the Internet is at its -- in its


 1     early -- it is even less now, but it is in its anarchy
 2     phase, and it is not even certain that the broadband
 3     highway is going to be the Internet.  I mean if the
 4     Internet -- I am not an expert on this, but from what I
 5     have heard, the Internet runs on a protocol called
 6     TCPIP and it comes down from the military and it has
 7     this feature to it about if you send something this way
 8     and it gets interrupted because a bomb drops, it can go
 9     the other way and it will still get there.  It is a
10     great system, but it might not be a great system for
11     broadband and they talk about ATM systems as being the
12     protocol.
13  11859                So you might end up with, in an
14     interoperable world of network of networks, that the
15     Internet is going to be one network that is alongside
16     the broadband network, and that broadband network is
17     not, perhaps, going to be quite as anarchic.  It is
18     going to tend towards, you know, the kind of huge
19     investments that are being made in it are from those
20     largest corporations in the world.  That is what is
21     going to tend to having that system, which is probably
22     going to be the most -- the one with the most
23     interesting content, perhaps, and most powerful one,
24     most widely accepted one, having less diversity of
25     voices, becoming more homogeneous.


 1  11860                COMMISSIONER PENNEFATHER:  Thank you
 2     for your comments.  Thank you, Mr. Chairman.
 3  11861                THE CHAIRPERSON:  Thank you,
 4     Commissioner Pennefather.  Thank you very much,
 5     gentlemen.  We appreciate your being here today.
 6  11862                MR. BOWIE:  Thank you.
 7  11863                THE CHAIRPERSON:  Madam Secretary.
 8  11864                MS BÉNARD:  Thank you, Mr. Chairman.
 9  11865                The next presentations will be the
10     Communications and Diversity Network and Professor
11     Karim H. Karim.
12  11866                THE CHAIRPERSON:  Good afternoon,
13     ladies and gentlemen.  I will let you proceed when you
14     are ready and in the order that you wish to go.
16  11867                MS KORAH:  Mr. Chairman, and members
17     of the Commission, I would like to introduce this
18     group.  We are called the Communications and Diversity
19     Network.  It is a loosely knit organization of groups
20     and individuals.  Our main goal is to ensure that a
21     variety of voices and perspectives are included in the
22     Canadian media.
23  11868                To my right here is Dr. Karim Karim. 
24     He is a professor of mass communications at Carleton
25     University; and next to Mr. Karim is Heather de Santis. 


 1     She is a research consultant.  She specializes in
 2     issues relating to cultural policy and media and she
 3     has recently done a paper on combatting hate on the
 4     Internet.
 5  11869                To her right is Anne Clarke.  She is
 6     the Executive Director of the Pearson Sharama Institute
 7     which researches issues of inclusive policy.
 8  11870                Behind me is Kamal Jama.  He is an
 9     Internet consultant involved in developing Web sites
10     for non-profit organizations.
11  11871                And next to Kamal is Mr. Rubin
12     Friedman.  He is a research associate of the Pearson
13     Sharama Institute, and a member of the Diversity
14     Network.
15  11872                My name is Susan Korah.  I am a
16     freelance writer and communications consultant.  I have
17     recently been involved in creating curriculum materials
18     to combat hate on the Internet.
19  11873                So, now it is over to Dr. Karim.
20  11874                MR. KARIM:  Thanks, Susan.
21  11875                Good afternoon, Mr. Chairman,
22     Commissioners.
23  11876                The Communications Diversity network
24     is delighted to have this opportunity to present this
25     brief to the CRTC's public consultation on new media. 


 1     You will recall that the network has appeared before
 2     you over the last weeks to present its briefs on the
 3     Canadian Television Policy Review and in support of the
 4     national application for the Aboriginal Peoples
 5     Television Network.
 6  11877                We shall attempt today to address a
 7     few of the issues raised in the CRTC's call for
 8     comments regarding new media, as they reflect the
 9     interests of our network.
10  11878                At the outset, we would like to state
11     certain key principles that we believe should guide
12     governmental involvement in the new media.  These are: 
13     a) assisting the development of Canadian content; b)
14     ensuring the inclusivity of and access by all
15     Canadians; and c) advancing social justice and
16     equality.
17  11879                Secondly, the network would like to
18     address certain issues which frame the consideration of
19     the new media.  One: Are the new media either
20     broadcasting or telecommunications services?
21  11880                We would like to suggest that such
22     categorization limits the understanding of the services
23     and technologies that include on-line media, such as so
24     many technologies, such as the Internet, the worldwide
25     web, electronic bulletin boards, Usenet, List Serve,


 1     Internet Relay -- I will summarize here because you
 2     have the document -- as well as web TV and off-line
 3     technologies like compact disks, CD-Roms, digital video
 4     disks, as well as other emergent hybrid forms.
 5  11881                The new media present us with new
 6     paradigms of communication that merge in varying
 7     degrees the one-to-one model of telephony and the
 8     one-to-many model of broadcasting.  Therefore, policies
 9     for the various new media need to be placed within
10     innovative frameworks that address their unique
11     characteristics.  Perhaps, the way to avoid constantly
12     second-guessing what policy and regulatory challenges
13     the next generation of new media technology will put
14     forth is to focus our attention away from the
15     technology and on the contents that they carry and the
16     users of their contents.
17  11882                Two:  Who are the users of the new
18     media?
19  11883                It is common to think of the users
20     only as consumers.  However, this aspect of users'
21     identity only speaks to the business sphere of
22     activity, which is important but should not eclipse the
23     identity of users as citizens.  Revalorizing
24     citizenship in our national discussions about the new
25     media helps to underline the issues of access, equality


 1     and social justice.
 2  11884                The network would like to urge the
 3     Commission to maintain the critical balance between the
 4     needs of citizens and consumers with respect to the new
 5     media.
 6  11885                Three:  Who should develop the new
 7     media?
 8  11886                Even the U.S. government, which has
 9     favoured massive private sector control of the
10     development of the new media, has poured enormous sums
11     of money into, first, establishing and maintaining the
12     Internet network, as well as into the production of
13     digitized education and heritage materials.
14  11887                The American government has also
15     supported the involvement of minorities in the
16     production, management and operation aspects of the new
17     media industry.  The network believes that the
18     successful development of the new media in Canada
19     cannot be carried out without the close collaboration
20     of government, industry and community groups of all
21     background.
22  11888                The governments at all levels,
23     particularly the cultural and educational departments,
24     and the private sector, especially telecommunications
25     firms, broadcasters and cable companies, have a key


 1     role to play in financing community participation.
 2  11889                I will now move on to our key
 3     recommendations.
 4  11890                One:  Access, use and participation.
 5  11891                The network generally supports the
 6     recommendations of Telecommunities Canada, which has
 7     presented its brief to you earlier, regarding access to
 8     the new media.  Research has indicated that the poorer,
 9     the less educated, and the older a Canadian is, she is
10     less likely to have access to the Internet.  Certain
11     provinces are doing better than others, and urban over
12     rural areas.
13  11892                We have less information on access by
14     ethnicity, however, but if the U.S. is any indication,
15     certain disadvantaged minorities tend to have much less
16     access than the average population.
17  11893                In any case, with the bulk of the
18     content on the worldwide web being in English,
19     aboriginal peoples, unilingual francophones, and ethnic
20     minorities without a facility in only that official
21     language are not able to fully utilize the medium.
22  11894                While the gender gap is gradually
23     being closed, men still tend to be the heavier users of
24     new media.
25  11895                Another disadvantaged group is


 1     composed of persons with disabilities.
 2  11896                However, we need to distinguish
 3     between access, use and participation in the
 4     information society.  Access in itself does not
 5     guarantee that the technology will be used.  For
 6     example, even though a community may have a number of
 7     computers with on-line services available at the local
 8     library, for example, an elderly immigrant with a
 9     limited knowledge of either official language would
10     find it difficult to compete for the use of a computer
11     with other more savvy users of the technology.
12  11897                Secondly, even though people may be
13     using the new media, are they participating socially,
14     economically or politically in the development of the
15     country?  One of the most heavily accessed material on
16     the Internet is pornography.  Does this lead to
17     positive participation in Canadian society?
18  11898                Therefore, access does not
19     necessarily mean use, and use does not necessarily lead
20     to participation, as producers and consumers of new
21     media products.
22  11899                Our interpretation of the data on new
23     media access should be tempered by this realization. 
24     We need to develop policy and regulatory mechanisms
25     that encourage positive social, political and economic


 1     participation with the use of the new media.
 2  11900                Assistance should be priorized with
 3     preference given to community groups, non-profit
 4     groups, independent producers, artists, collectives and
 5     other independent voices of all cultural backgrounds
 6     over major corporations.
 7  11901                The second recommendation: 
 8     Encouraging the development of Canadian content.
 9  11902                We firmly hold that there needs to be
10     a clear strategy to support the development of Canadian
11     content.  The Broadcasting Act lays down the principle
12     of the development of radio and television content that
13     reflects the diversity of the Canadian population.  The
14     global nature of some of the new media and the current
15     environment of trade liberalization takes this issue
16     into the transnational context.
17  11903                One set of calculations suggests that
18     less than 5 per cent of material on the Internet is
19     Canadian made.  Assuming that this figure is accurate,
20     let us put it in to perspective. Given that Canadians
21     make up 0.006 per cent of the world population, one
22     could argue that we are already doing quite well. 
23     However, such a comparison would be fatuous, since much
24     of humanity has little access to telephones, let alone
25     the Internet.


 1  11904                If the question is how to address our
 2     competitiveness in global new media markets, we need to
 3     address the needs of the future users of what is
 4     expected to become a much more widely used medium
 5     around the planet.
 6  11905                We have all heard about the enormous
 7     potentials of the markets in places such as China,
 8     India and Latin America.  How are we preparing to serve
 9     those markets?  Are we looking at our own linguistic
10     and cultural resources to build the human
11     infrastructure that will put us in a position,
12     nationally, to meet the needs of overseas markets?
13  11906                Unfortunately, previous work, like
14     that of the Information Highway Advisory Council,
15     largely disregarded this vital aspect of our
16     preparation for what is touted as the "global
17     information society".  However, a singular focus on
18     markets should not preclude the cultural production by
19     those Canadian minorities who do not have ready access
20     to markets abroad.
21  11907                Therefore, the network recommends
22     that the CRTC develop bench-marks for public and
23     private support for the development of Canadian content
24     for the new media that meets the diverse cultural needs
25     of all Canadian citizens and consumers, as well as the


 1     potentials for overseas markets.
 2  11908                One of the means of enhancing
 3     relevant material may be through co-production
 4     agreements with other governments, models for which
 5     already exist in television and film production.
 6  11909                Three:  Recognizing the globality of
 7     the new media.
 8  11910                Certain new media, particularly those
 9     based on open electronic networks and digital
10     broadcasting satellites, have allowed for
11     inter-continental communication among individuals and
12     groups of a kind -- a communication of a kind that was
13     not possible before.  We have seen how people in
14     different parts of the world can link together around
15     particular issues, such as the opposition to the
16     Multilateral Agreement on Investment, human rights and
17     environmental issues, opposition to land mines, and
18     even the recent crash of the Swissair airliner off Nova
19     Scotia.
20  11911                I have already submitted a written
21     submission on "New Media Use Among diasporic
22     communities" and will only sketch some of the main
23     points of the this topic here.
24  11912                Global migration trends have produced
25     transnational groups related by culture, ethnicity,


 1     language and religion.  Whereas members of some of
 2     these groups had generally operated weekly newspapers
 3     and occasional broadcast programming to meet the
 4     information and entertainment needs of their
 5     communities, the emergence of digital technologies is
 6     enabling them to expand such communication activities
 7     to a global scale.
 8  11913                The relatively small and widely
 9     scattered nature of diasporic communities have
10     encouraged them to seek out the most efficient and cost
11     effective means of communication.  Technologies that
12     allow for narrow casting to target specific audiences
13     rather than those that provide for mass communication
14     have generally been favoured.  Ethnic broadcasters,
15     having limited access to space on the electromagnetic
16     spectrum, are finding much greater options opening up
17     for them through DBS in Canada, the U.S. and Europe.
18  11914                Indeed, in certain cases, ethnic
19     media have led the way in the adoption of this
20     technology and are in competition with mainstream
21     broadcasters.  Not only are they disseminating their
22     material to audiences in their regions, but also
23     intercontinentally, for example, the Spanish-language
24     network Univision in the U.S. reaches Hispanic homes
25     coast to coast and Latin America; and the programming


 1     of the Orbit Network in Europe, which broadcasts
 2     Arabic, English and French, is received in Europe as
 3     well as in the Middle East.
 4  11915                National regulatory bodies which have
 5     prohibited the growth of ethnic media find that their
 6     minorities are tuning in to programming disseminated
 7     from their respective home countries or diasporas.
 8  11916                For example, when France's Conseil
 9     supérieur de l'audiovisuel excluded Arabic stations
10     from licensed cable networks, the Maghrébin-origin
11     population in southern France put up the pizza-sized
12     dishes to receive programming from Northern Africa.
13  11917                Diasporic communities are similarly
14     maintaining links through the Internet and worldwide
15     web services.  Web sites are already creating global
16     directories of individuals, community institutions and
17     businesses owned by members of diasporas.
18                                                        1430
19  11918                Instead of viewing this as a threat
20     to our sovereignty, we should be putting ourselves in a
21     position to take advantage of the growing transnational
22     connections that can foster trade, global cultural
23     co-operation.
24  11919                The Network recommends that the CRTC
25     take into account the global nature of some of the new


 1     media in developing its policies and regulations.
 2  11920                The final area, four, offensive
 3     material.
 4  11921                The Network has already submitted the
 5     written report by Heather De Santis titled "Combatting
 6     Hate on the Internet:  An International Comparative
 7     Review of Policy Approaches".  Heather is present.  She
 8     is sitting next to me today.
 9  11922                We have several views on this issue
10     among our members of the Network.  One may be
11     overstating the case in saying that hate propaganda is
12     pervasive in the new media and that a user comes across
13     a hate site as soon as he or she logs on to the World
14     Wide Web.  On the whole, we feel that the presence of
15     hate materials is a serious issue that has to be
16     addressed by the Commission.
17  11923                Given that there are very different
18     kinds of new media, we feel that the operation of
19     certain services, such as DBS, should continue to come
20     under the Broadcasting Act whereas it may be more
21     difficult to apply this legislation to other services.
22  11924                The Network favours a multifaceted
23     approach to dealing with hate in the new media.  The
24     Australian government, for example, plans to adopt a
25     multifaceted approach in consultation with the


 1     community, the online industry, the states and the
 2     territories and international organizations.  It is
 3     also encouraging the development of awareness through
 4     educational materials.
 5  11925                We would like to support the Media
 6     Literacy Awareness Network's recommendation for what it
 7     calls web literacy to make users aware of the dangers
 8     of hate-related material in the new media.
 9  11926                Our final recommendation is that the
10     CRTC work with a variety of partners to deal with the
11     issue of hate materials in the new media.  These
12     partners should include community groups, researchers,
13     Internet service providers, telecommunications and
14     cable companies as well as federal and provincial human
15     rights commissions, departments of the attorneys
16     general and police forces.
17  11927                Thank you.
18  11928                THE CHAIRPERSON:  Thank you for your
19     presentation, Dr. Karim, Ms Korah.
20  11929                To discuss your views, I will turn
21     the microphone to Commissioner Grauer.
22  11930                COMMISSIONER GRAUER:  Thank you.
23  11931                Thank you very much for your
24     presentation and also your very substantive written
25     submissions.


 1  11932                Your submissions and your
 2     presentation today covers quite a wide range of areas. 
 3     What I would like to try to do initially is focus in on
 4     those areas where perhaps we have jurisdiction and try
 5     and get your sense of that and then go from there.
 6  11933                I'm not sure from your presentation,
 7     or if it is something you have reached any conclusive
 8     position on, as to whether or not the Internet and new
 9     media fall in your view within our jurisdiction on the
10     Broadcasting Act or the Telecommunications Act.
11  11934                It's not so much a technical
12     question.  Really it leads to pursuing some of the
13     specific areas in your presentation and what we might
14     be doing and how we might approach it.
15  11935                MR. KARIM:  I will start off and then
16     the other people will respond as well.
17  11936                We did discuss that.  One of the
18     things, as I said in my presentation, that sort of
19     frames our understanding of this issue is that the new
20     media as such are comprised of a variety, a very broad
21     variety of technologies and services.
22  11937                There are certain aspects which may
23     be considered broadcasting, as I said DBS, whereas
24     others may not.  It is difficult for us to have a
25     blanket approach on all new media as such.


 1  11938                Certainly so far as the Internet uses
 2     telephone lines, I would imagine it does come under the
 3     Telecommunications Act.  Insofar as DBS is a
 4     broadcasting system, it would fall in our understanding
 5     under the Broadcasting Act.
 6  11939                I guess our approach has been to
 7     suggest to you that this be looked at on a case by case
 8     basis.  The paradigm is new because many of these media
 9     are hybrid media.  Perhaps we need to approach the
10     whole issue from a totally different paradigm.
11  11940                As I said in my presentation, the
12     hybrid is off the one to one model of the telephone and
13     the one to many of broadcasting.  Even that is
14     simplifying issues.
15  11941                We really need to develop an innovate
16     paradigm which looks at this whole unique set of media
17     in a very, very fresh way.  Unfortunately, I don't have
18     a complete answer.
19  11942                COMMISSIONER GRAUER:  That's just
20     what I was going to ask you.  Where is the paradigm?
21  11943                MR. KARIM:  There is a paradigm, at
22     least a graphic model that I have developed with some
23     of my colleagues.  Again, that is only for certain
24     media like the Internet.  Unfortunately, I don't have
25     it here, but perhaps I could submit it for the next


 1     stage of submissions.
 2  11944                Whereas in broadcasting we had a very
 3     linear, centralized model in which you have the source
 4     which is providing content, whether it has developed it
 5     itself or through a production company, and along the
 6     line then uses a medium, television or radio, and then
 7     after this linear progression is continued up to there,
 8     it sort of branches out to one to many, but there is a
 9     very linear centralized approach as far as the source
10     material, content and medium in which it is possible to
11     have certain kinds of regulation because this can be
12     cut off.
13  11945                This linear hierarchical centralized
14     approach can be cut off at various points, either at
15     the point of the source or in terms of the kind of
16     content we just produced or the limitations of the
17     medium or the restraints and constraints which can be
18     put on the medium.
19  11946                On the other hand, what we have in
20     network technology is that there are so many different
21     sources who are all, or many of them, are producing
22     content.  There are all kinds of receivers.
23  11947                Sources are also receivers.  It's
24     interactive.  It's two way, three way.  One source can
25     send out to so many so it can be broadcasting, it can


 1     be one to one, a whole combination and permutations of
 2     so many different.
 3  11948                In a way, that's something that we
 4     have been able to at least develop graphically at least
 5     as far as the Internet goes, so in terms of developing
 6     regulations and rules, we obviously need a very, very
 7     different model that begins to think in terms of
 8     networks, which are decentralized, lateral or
 9     multilateral, definitely non-hierarchical.
10  11949                Obviously if you are thinking in
11     terms of control, control is very, very difficult, so
12     even the paradigm of what we would like to control or
13     regulate has to be rethought, in what manners, in
14     collaboration, self-regulation, education.
15  11950                We prefer sort of the multilateral
16     approach, the multipronged approach.
17  11951                COMMISSIONER GRAUER:  Perhaps then
18     what I could do -- I don't know if you heard some of
19     the presentations we had from some of the intervenors. 
20     Some of the interpretations by legal communications
21     lawyers who really understand this, some have suggested
22     that what we might do is while it might technically be
23     considered broadcasting, we talk about new media for
24     the moment and the Internet and those activities, that
25     the Commission should consider issuing a broad


 1     exemption order, perhaps for a certain period of time,
 2     which would exempt all of these activities that weren't
 3     broadcast quality.
 4  11952                I am paraphrasing and perhaps quite
 5     unfairly, but maybe for the sake of this discussion if
 6     we were to say given we don't know exactly how it is
 7     going to evolve and we don't know what the model should
 8     be because it's so early that we should exempt many of
 9     these activities and continue to monitor their
10     development, would it be fair to say that that kind of
11     an environment, given the attention you have given to
12     some of the concerns you have raised by various
13     government bodies, might fit for you?
14  11953                MR. KARIM:  I would like to just
15     quickly answer and perhaps Anne might want to say
16     something.
17  11954                I think perhaps we need to move away
18     from a technology centred approach of regulation and
19     policy towards content and a human centre of users,
20     citizens and consumers.  That might provide us with a
21     better understanding of what is the end result of our
22     regulation and our policies that we seek to create.
23  11955                What you said about sort of the
24     moratorium or sort of hiatus in terms of regulatory
25     restrictions assumes that somewhere along the line we


 1     are going to have a stable structure that has evolved
 2     before we go into a future stage.
 3  11956                From what we have seen, to give the
 4     example of a paper -- I can only read newspapers on a
 5     weekly basis -- the Globe and Mail has this column
 6     every week on new media.  Every week there is some
 7     development or the other which is reported on.
 8  11957                It's almost like the terrain is
 9     constantly shifting.  I don't think it would be wise to
10     assume that five years, seven years, ten years down the
11     road we will have achieved some sort of stability and
12     we can start regulating then.
13  11958                I think we should prepare for
14     continual change because that seems to have been the
15     trend.
16  11959                Coming back to my original point,
17     perhaps because of this environment of continual change
18     the safe route perhaps is to move to content and
19     audiences or basically citizens and consumers so as to
20     understand, you know, what's the end result of our
21     policies.
22  11960                COMMISSIONER GRAUER:  I am interested
23     to hear you say that any sort of exemption order or
24     moratorium assumes that we would get to a stable place
25     at which time we would regulate.  I don't think that's


 1     what was intended.  It was absent a clear understanding
 2     of what we might do at this point was one route.
 3  11961                I am interested in your proposal, but
 4     I'm wondering what specifically you have in mind.  Do
 5     you know what I'm saying?  I understand what you are
 6     saying, that our goal should be looking towards the end
 7     user and consumer and meeting those needs and our
 8     pluralistic values in this country, but I'm not quite
 9     sure what mechanism you would suggest we use to achieve
10     those goals.
11  11962                MR. KARIM:  I have to confess that I
12     myself have not been able to come up with a specific
13     mechanism in mind.  I don't know if some of my other
14     colleagues would like to suggest certain mechanisms or
15     elaborate on this topic generally.
16  11963                MR. FRIEDMAN:  We, as you know, we
17     have had an opportunity to look at this.  It's exactly
18     correct that the problem is that there is no limit or
19     barrier in moving from one medium to the other.
20  11964                Basically you are dealing with the
21     flow of electrons and electrons don't care whether they
22     are flowing through a telephone wire or a cable or
23     whether they are being transformed into electromagnetic
24     waves.
25  11965                Given that fluidity, I would say


 1     that's why people are looking for a moratorium.  No one
 2     is yet sure how you set up the borders, how you pass
 3     from where is the correct point to say at this point we
 4     can consider it to be like sort of in a black box.
 5  11966                Think of it as the black box model. 
 6     It's inside the black box.  Now it has come out of the
 7     black box.  Now we are going to call it broadcasting. 
 8     I think that's where it becomes difficult.
 9  11967                Someone has mentioned an individual
10     who is rebroadcasting broadcasts on the west coast. 
11     It's very hard to control the person because they are
12     doing it over the Internet.  They are using their Web
13     site as a broadcast source.
14  11968                It does become difficult.  I think in
15     the current state individuals are not yet at the point
16     where they are producing a lot of programming that is
17     being broadcast all over the world.  We are not there
18     yet.
19  11969                It does require us to sit down and
20     watch what kind of balance will be developed in the
21     next few years.  I understand that the balance may be
22     temporary.  It may last a year.  But we are looking for
23     what will happen in terms of the economics and social
24     and cultural forces that Karim was talking about.  How
25     will these balance out, especially factoring in the


 1     fact that most of it is in English right now.
 2  11970                Is that going to continue?  Are we
 3     going to see some kind of massive change?  Right now we
 4     are dealing with a small semi-universe where English
 5     predominates.  Will we then have five universes
 6     competing in different languages?  Will that happen
 7     down the line?  We aren't really sure.  The whole
 8     dynamics will change if that does occur.
 9  11971                That's why I think people are looking
10     for a moratorium, those two reasons.  One is no one is
11     quite sure of the rapidity of the change and no one is
12     quite sure at this point where to draw a particular
13     line.
14  11972                As some of the lawyers said, you
15     could argue that it is broadcasting.  Some uses of the
16     Internet could be deemed as broadcasting.  A lot of
17     other uses you can't argue that they are broadcasting. 
18     You know e-mail isn't broadcasting.  Electronic
19     bulletin boards isn't exactly broadcasting.
20  11973                There are all sorts of things that
21     you can't really claim that they are broadcasting.  On
22     a first step perhaps, following up on Karim's lead,
23     what we can do is at least identify the things that are
24     not broadcasting and then simply deal with everything
25     else.


 1  11974                COMMISSIONER GRAUER:  Thank you.
 2  11975                Just so I am clear with respect to a
 3     moratorium or exemption order, it would just be to
 4     ensure that it's not done in such a way that people
 5     would assume at the end of the period that we were
 6     going to put it into a box and use certain
 7     prescriptions that may in fact not be appropriate.
 8  11976                Is that a fair characterization?
 9  11977                MR. KARIM:  I would like to reiterate
10     that -- there's a colleague of mine at Carleton
11     University in the mass communication program who has
12     done some groundbreaking research looking at the
13     archives of policy development over the last several
14     decades.  I believe it goes back to the beginning of
15     the century when the technologies of telegraph,
16     telephones, broadcasting, were emerging.
17  11978                There were, according to him, very
18     specific decisions which were taken both by government
19     and by the industry to keep broadcasting and
20     telecommunications separate.
21  11979                In a way, this is a policy
22     construction.  We talk about this being the great era
23     of convergence.  He is arguing that convergence has
24     been possible all along.  It's just that decisions were
25     made to keep the technology separate.


 1  11980                Perhaps we need some historical
 2     understanding of how we came about first of all
 3     separating the technologies and then developing the
 4     regulations and policies around them as we now enter
 5     this new phase.
 6  11981                If we are to put a moratorium, it
 7     should take into account the history of our
 8     policymaking, of our separation of spheres, as well as
 9     coming back to my earlier point, moving away from a
10     technologically deterministic approach in which the
11     technology is determining how we should regulate and
12     moving on to understanding what sort of a world do we
13     want as citizens primarily and then consumers.
14  11982                This sort of a human centred approach
15     I think will really help us redevelop.  I know I am not
16     giving you specifics.
17  11983                COMMISSIONER GRAUER:  No.
18  11984                MR. KARIM:  But I think we are at the
19     threshold of developing a paradigm.  It hasn't been
20     sort of expressed yet, but these are the kinds of
21     thinking that I hear around me.
22  11985                COMMISSIONER GRAUER:  I guess what
23     I'm trying to get at, and I don't want to put words
24     into your mouth.  I am not trying to do that in talking
25     about a moratorium.


 1  11986                What I am trying to do is say the
 2     points you are making are valid in terms of something
 3     that is evolving, but what do we do right now until we
 4     have a sense of what to do?  Part of the issue for us
 5     and part of the rationale for this hearing, one of the
 6     reasons is that we are hearing from many people who
 7     might be inclined to be making investments that they
 8     are looking for an indication from the Commission are
 9     we going to regulate or not and what will the rules be
10     and what will the regulations be to just create a
11     little more certainty, as someone put it, in a very
12     uncertain world.
13  11987                It's that I am just struggling with
14     in terms of what you are saying.  To say there's a
15     period right now and yes, in fact, it is evolving.
16  11988                MR. KARIM:  I would suggest before an
17     exemption order is granted that perhaps there needs to
18     be some sort of study as to what the possible effects
19     might be, if this is going to be for five years, ten
20     years, however long the window is, what sort of effects
21     there would be primarily on Canadians.
22  11989                That would be sort of the bottom
23     line.  If it's a carte blanche in which you can do
24     basically anything you like, there may be a certain
25     rather regrettable kind of consequences which we may


 1     basically regret.
 2  11990                I would imagine we would need to
 3     understand, at least in terms of the trends, yes, it is
 4     an uncertain universe, but in terms of the trends, I
 5     think we can speculate over the next three, five years
 6     what sort of technologies and beyond that what sort of
 7     social consequences that they will produce.
 8  11991                Obviously we can't know everything,
 9     but there are certain things that we could do.  I would
10     suggest this is a course that perhaps may be taken.
11  11992                COMMISSIONER GRAUER:  Thank you.
12  11993                MS DE SANTIS:  I would just like to
13     add a comment from the controversial content point of
14     view, which is one of our specific points of interest
15     and my area of specialty in particular.
16  11994                If we take a look at the examples in
17     the report that was submitted to looking abroad,
18     looking to other countries who have a similar social,
19     cultural, legislative background as Canada, aside from
20     some very distinct examples which get a lot of
21     publicity, such as the Communications Decency Act in
22     the United States and the German telecommunications
23     laws that do attempt to regulate content on the
24     Internet, specifically pornography or you could say
25     hate, it falls into that auspices, countries such as


 1     the Netherlands, the United Kingdom, New Zealand,
 2     Australia, the appropriate body or their equivalent of
 3     the CRTC or their government ministry or department has
 4     taken instead of a regulatory role, the role of a
 5     facilitator, in coming up with some kind of
 6     non-regulatory framework that does establish certain
 7     criteria that are relative to citizens that address
 8     issues of controversial content.
 9  11995                For example, encouraging responsible
10     user activities such as educational programming or
11     literacy or voluntary filtering in the home, for
12     example, by parents, encouraging ISP codes of conduct. 
13     Certainly I'm sure that none of the ISPs that have been
14     here would say that they could possibly monitor the
15     content on their side.
16  11996                Codes of conduct, agreements with
17     users, for example, user recourse action.  For example,
18     if -- part of what we are talking about here is citizen
19     use.  We are not talking about consumer.
20  11997                If citizens have a sense that they
21     are empowered in some way, if they come across a site
22     that they find offensive, that may or may not be
23     illegal -- that's up to the Human Rights Commission or
24     whatever body to decide -- that they know who to
25     contact.  They know to contact the police or the


 1     authorities.
 2  11998                There have been cases where they have
 3     called the police, the police have directed them to
 4     somewhere else in Canada, for example.
 5  11999                Perhaps the role of the CRTC or
 6     another body, that's not for us to decide here, we are
 7     not lawyers, is to facilitate a framework that citizens
 8     feel is addressing the issues, but is not regulating
 9     the Internet because it is in its infancy.
10  12000                Nowhere in the world have we seen
11     successful legislation or successful regulation of the
12     Internet because of its international jurisdiction.
13  12001                COMMISSIONER GRAUER:  I have some
14     questions for you on just those areas.  I was also
15     going to ask -- I think your study is about a year old
16     now.  A year is a long time in the world of the
17     Internet.
18  12002                I was wondering if you had any
19     updates that would be of interest to us.
20  12003                MS DE SANTIS:  I must admit I haven't
21     been watching my file as closely as I should have been. 
22     I have been clipping, but I haven't been reading.
23  12004                There was a case in Germany which
24     when I was writing the report at the time, I don't
25     think it had yet been in front of the courts with


 1     CompuServe and Philipson, who was the person in control
 2     of the server over there.  Are you familiar with the
 3     case at all?
 4  12005                COMMISSIONER GRAUER:  No.
 5  12006                MS DE SANTIS:  Correct me if I'm
 6     wrong.  Jump in because the details are sketchy.
 7  12007                The service provider there was
 8     hosting child pornography, I believe.  The authorities
 9     stepped in and deemed it to be illegal under the new
10     Telecommunications Act.  If it's within reasonable
11     expectation that an ISP server is aware or could have
12     been aware of the content, then they are criminally
13     liable.
14  12008                They shut down the site.  What
15     happened was the site was mirrored then by civil
16     libertarian groups all around the world.  It
17     demonstrated that you can't shut down sites because
18     there is going to be a haven, particularly the United
19     States.  It is always pointed out as the example for
20     the haven for controversial sites.  Mirrored sites will
21     pop up.
22  12009                He did go to court and he was
23     convicted because in Germany the ISP is considered to
24     be responsible.
25  12010                ISP servers in Canada and certainly


 1     in most countries that I surveyed argue that there is
 2     no way that they can possibly monitor all the content
 3     on all their servers.  However, if they do have
 4     knowledge of a site, most of them agree that yes, if
 5     they are aware a site is illegal and a site is on their
 6     server then they will shut it down.
 7  12011                I believe we saw that in British
 8     Columbia earlier this year.  There were ISPs that shut
 9     down sites.
10  12012                Another interesting finding I just
11     found the other day was that Sweden has also passed a
12     new Telecommunications Act specifically on DBS
13     services, but the legislation -- a few academics say
14     that it will apply to Internet services, web services,
15     even though it is specifically targeted to DBS.  They
16     say the same thing, that Internet service providers are
17     not responsible for monitoring their content unless
18     there is a reasonable way they could have known about
19     it.
20  12013                What they have done instead is they
21     have set up a tribunal or some kind of body in which
22     users can report the illegal content or what is
23     perceived to be illegal to this agency, this body, this
24     tribunal, which will then determine whether it is and
25     then pass it on to the authorities.


 1  12014                Sweden, which is generally seen as a
 2     rather liberal country, we often find parallels between
 3     Canada and Sweden.  It has also attempted to regulate,
 4     but this is yet to be tested before the courts.
 5  12015                I am a researcher, but I will always
 6     say that there is more research to be done in this
 7     area, a tremendous amount of research.
 8  12016                In terms of a moratorium, I would
 9     certainly agree that this technology is in its infancy. 
10     There are a number of multilateral organizations that
11     are working on this issue, the European Commission,
12     UNESCO, the United Nations.
13  12017                If anyone wants to jump in.  From the
14     information that I have read, the Swedish law, the
15     German law they are so new, the German law has only
16     been tested before the courts, there is no way of
17     telling just yet whether or not they are going to be
18     successful.
19  12018                It is a matter I think of wait and
20     see instead of maybe a moratorium.
21  12019                COMMISSIONER GRAUER:  I will never
22     now be able to find my way through my notes between
23     your various papers.
24  12020                If I can just on this matter then. 
25     You have done a lot of research, even here in Canada I


 1     take it, with ISPs and what's happening here.  We have
 2     had the Canadian Association of Internet Providers
 3     here.  They have a code of conduct.
 4  12021                Would you say that for the most part
 5     the Internet service providers in Canada,
 6     notwithstanding your suggestion that there is perhaps a
 7     facilitating role for ourselves or some other part of
 8     government, that for the most part these matters are
 9     being dealt with in a timely way by the industry?
10  12022                MS DE SANTIS:  I would say so.  I
11     would say in Canada and abroad that generally there is
12     co-operation between industry and government.  From a
13     consumer point of view, I don't think it's imminent in
14     ISPs' interest to host sites that the majority of users
15     will disagree with or take offence to.
16  12023                Even from just a business point of
17     view, it is not in the server's interest to carry sites
18     that users are going to take offence with.
19  12024                I will admit that I am not as
20     familiar with what is going on in Canada at the moment,
21     but the service providers that I am familiar with, and
22     I participated in a workshop in Montreal sponsored by
23     the Canadian Human Rights Commission.  I was in a
24     workshop and there was somebody representing B.C.Tel
25     there.


 1  12025                By all means he was certainly
 2     agreeable that ISPs do have a role to play, but it's
 3     not a monitoring role of their content.  I would say
 4     generally that the Canadian industry is agreeable.
 5  12026                COMMISSIONER GRAUER:  I know a lot of
 6     your work or your research was looking at what is
 7     happening internationally.  You talked about the need
 8     for co-operation between Canada and these other
 9     countries.
10  12027                Is that happening?  Is there a fair
11     amount of work taking place intergovernmentally and
12     within the industry internationally?
13  12028                MS DE SANTIS:  Definitely. 
14     Particularly in Australia, which is one of the examples
15     I pulled out of my study to recommend in terms of
16     policy recommendations that the industry is working
17     hand in hand with government and with different levels
18     of government.
19  12029                It's still not certain in some
20     countries at which level this responsibly falls,
21     whether it's the state or the province or the federal
22     government.
23  12030                Also, for example, in the U.K. we
24     have seen that the industry is quite active in
25     developing rating systems, not filtering but rating


 1     systems in terms of something that would pop up and say
 2     the site is applicable for children or good for
 3     children, that kind of thing.
 4  12031                Yes.  It is also in industry's
 5     interest to come up with a non-regulatory alternative. 
 6     If that means a code of conduct, if that means a rating
 7     system, I am sure it is more in their interest to have
 8     those types than have the CRTC, for example, come in
 9     and say it is your responsibility to make sure these
10     types of materials are not on your site.
11  12032                Do you feel, for the most part,
12     that -- I know we have heard from various organizations
13     about, you know, the role of the Internet in allowing
14     for freedom of expression and more ability to combat
15     hate, and other people have said, "No, it perhaps
16     incubates and nurtures hate groups."
17  12033                On balance, I take it from what I
18     have read that you feel that it is more a force of good
19     than a force of evil.  Is that a fair characterization?
20  12034                MS KORAH:  I think it is a 50/50
21     two-way street thing because I have been involved, as I
22     said, in developing curriculum materials specifically
23     aimed at students in the secondary level and elementary
24     level where they are particularly vulnerable.  Research
25     has shown that secondary school students, adolescents,


 1     are particularly vulnerable to hate materials,
 2     offensive materials; but the answer seems to be to
 3     develop other alternatives to teach them critical
 4     thinking skills.
 5  12035                So I would say it is a 50/50 thing. 
 6     It is a force for enormous good, as well as it can be a
 7     destructive force.
 8  12036                COMMISSIONER GRAUER:  So the real
 9     challenge, then, for us is to promote awareness, media
10     literacy, critical thinking skills, as opposed to
11     attempting to censor or restrict access?
12  12037                MS KORAH:  I would agree.
13  12038                MS DE SANTIS:  If I could just add
14     that we need to become more savvy, just as hate mongers
15     have become more savvy.  Research has shown that,
16     initially, when -- well, the Web in its infancy hate
17     mongers tended to go to interactive sites in which you
18     could -- like discussion groups.  So, for example, you
19     could go on site with a hate monger, refute their
20     views, have an intelligent conversation in which you
21     were combatting the hate directly through dialogue and
22     discussion and, certainly, that is constructive and
23     positive.
24  12039                What research now shows is that they
25     are not necessarily using interactive sites any more


 1     but they are retreating to non-interventionist Web
 2     sites, so Web sites that look just like magazines, that
 3     there is no fora for discussion within the site.  So it
 4     makes it less easy to refute such views.  As I say,
 5     they have become more savvy and now it is time for the
 6     other side of it to just become more creative in ways
 7     of educating users.
 8  12040                COMMISSIONER GRAUER:  Thank you.  As
 9     I say, with three separate papers, I am not really
10     going to have a chance to get into all of them, but I
11     did want to ask specifically Dr. Karim, and I know this
12     was also in your paper, you refer to national
13     regulatory bodies which have prohibited the growth of
14     ethnic media find that their minorities are tuning into
15     programming disseminated from their respective home
16     countries or diasporas.  I wonder if you could -- I
17     know you have referred to France and I am wondering
18     how -- where the CRTC and the Canadian regulatory
19     agency fits in all of this, or if you are referring to
20     non-Canadian bodies?
21  12041                MR. KARIM:  Generally, I think --
22     well, the problem has been that every country has a
23     limited amount of space on the electronic spectrum. 
24     The priority in most countries is to serve mass
25     audiences, first of all.  So, in Canada, if you are


 1     going to take the example of Canada, our priorities
 2     first of all is to serve Canadians in English and
 3     French.
 4  12042                So, certain licences may not have
 5     been -- more licences may have been refused for ethnic
 6     broadcasters than, perhaps, for others.  Generally,
 7     what I have seen in Canada is, especially recently, a
 8     more opening up to ethnic broadcasters, even on DBS
 9     television, TeleLatino, in Spanish and Italian, the
10     Salvation Network, the Chinese network, Fairchild
11     Television, and other -- radio channels as well.
12  12043                The example I gave of France was,
13     perhaps -- I don't know -- I haven't studied -- done a
14     global study, but certainly it was a clear example in
15     which those people found alternative sources for
16     entertainment and information.  It is this particular
17     kind of technology which is making it easier and
18     easier.  This -- obviously, it was much more difficult
19     before.  You might have newspapers from the old country
20     or you might produce a weekly yourself, and so on. 
21     Broadcasting was much more difficult to obtain,
22     broadcasting content; and now, since people are using
23     satellites, this is what we are faced with.  So, if we
24     don't provide these services to our minorities, they
25     are going to get them from somewhere else.  That is the


 1     situation we face, whether it is through satellites or
 2     Web TV or other digital media.  That is the point I was
 3     making.
 4  12044                COMMISSIONER GRAUER:  Thank you.  I
 5     could go on for quite awhile but I think we have some
 6     other -- thank you very much.
 7  12045                THE CHAIRPERSON:  Thank you.  Thank
 8     you very much, ladies and gentlemen.  We appreciate
 9     your participation in our proceeding.
10  12046                I think we will take our afternoon
11     break at this point and reconvene at 3:25.
12     --- Short recess at / Courte suspension à 1508.
13     --- Upon resuming at / Reprise à 1525.
14  12047                THE CHAIRPERSON:  We will return to
15     our proceeding now.
16  12048                Madam Secretary, would you
17     introduction the next panel, please?
18  12049                MS BÉNARD:  Thank you, Mr. Chairman. 
19     The next presentation will be by Bell Satellite
20     Services Inc.
21  12050                THE CHAIRPERSON:  Good afternoon, Mr.
22     Gourd.
24  12051                MR. GOURD:  Mr. Chairman, Madame la
25     Présidente, Commissioners.


 1  12052                I am Alain Gourd, President and Chief
 2     Executive Officer of Bell Satellite.  I have with me
 3     today on my immediate right Mr. Chris Frank, Vice
 4     President, Government Relations & Corporate Development
 5     at Bell ExpressVu; Mr. Terry Snazel, Vice President,
 6     Technology; and Mr. David Elder, our regulatory counsel
 7     for this proceeding.
 8  12053                I am pleased to be with you today to
 9     discuss the new media services which is important for
10     our company, Bell Satellite.
11  12054                Today, I would wish to address you
12     from a broadcasting perspective, as a broadcaster who
13     views the future of the broadcasting sector with
14     considerable enthusiasm.  I will limit my part of the
15     presentation, if you agree, to three key areas:  First,
16     the Broadcasting Act; second, the regulatory context;
17     and, third, new opportunities coming for multimedia for
18     broadcasters and independent producers.
19  12055                Monsieur le Président, permettez-moi
20     donc de commenter par un certain regard sur la Loi sur
21     la radiodiffusion et son application au monde des
22     nouveaux médias.
23  12056                Premièrement, ce que je voudrais
24     souligner d'entrée de jeu, en tant qu'ancien
25     sous-ministre des Communications à Ottawa, est que,


 1     comme on l'a dit et redit, la Loi sur la radiodiffusion
 2     de 1991, dont je fus l'un des artisans, se veut
 3     évidemment technologiquement neutre.  Elle a donc
 4     vocation à s'appliquer à toute forme de transmission
 5     d'images et d'informations couvertes par la définition
 6     de la radiodiffusion à l'article 2.  Cette définition
 7     s'applique donc à la radiodiffusion conventionnelle, à
 8     la radiodiffusion sur le câble, sur le SBM, au système
 9     de diffusion multipoints, sur le satellite, et nous en
10     sommes, ou sur l'Internet.
11  12057                Évidemment, la définition de
12     radiodiffusion vise la distribution de programmes et
13     non le texte alphanumérique qui constitue, et
14     constituera pour de longues années, l'immense majorité
15     des contenus Internet.
16  12058                À mon sens, l'objectif du législateur
17     en révisant la loi de 1968 était certainement de
18     s'assurer que les autorités réglementaires canadiennes
19     aient tous les outils nécessaires pour continuer de
20     régir le système canadien de radiodiffusion en tenant
21     compte de l'intérêt public, mais aussi des changements
22     technologiques.
23  12059                En effet, comme vous le savez, le
24     législateur a également prévu, par son article 3(d),
25     que le système canadien de radiodiffusion devait


 1     s'adapter aux changements scientifiques et
 2     technologiques.  L'article 5, particulièrement aux
 3     sous-sections (c) et (f), cherche aussi à favoriser le
 4     progrès scientifique et technologique.
 5  12060                Par conséquent, à mon sens, la Loi
 6     sur la radiodiffusion fournit au Conseil la latitude
 7     voulue pour établir des règles appropriées pour
 8     favoriser l'évolution de la radiodiffusion canadienne,
 9     y compris sous sa forme nouveaux médias.
10  12061                Le contexte réglementaire maintenant. 
11     Nous croyons à ce sujet, comme tant d'autres, que la
12     réglementation de la radiodiffusion, sur l'Internet,
13     par exemple, devait être la plus légère possible, entre
14     autres pour favoriser l'évolution technologique prévue
15     par la loi.  De plus, le Conseil pourrait envisager un
16     certain nombre d'initiatives qui favoriseraient une
17     synergie entre les différents partenaires de la
18     radiodiffusion et des nouveaux médias.  La neutralité
19     technologique ne veut pas dire évidemment un traitement
20     réglementaire similaire.
21  12062                C'est ainsi que le Conseil pourrait
22     choisir de fonctionner par exemption de licence dans le
23     secteur des nouveaux médias, comme il l'a fait dans
24     d'autres secteurs, c'est-à-dire si une entreprise
25     rencontre certains critères de base, elle pourrait être


 1     exemptée d'avoir une licence de radiodiffusion.
 2  12063                Le Conseil pourrait aussi envisager
 3     de reconnaître certaines dépenses de titulaires de
 4     licences de radiodiffusion dans des programmes
 5     canadiens destinés à la fois aux médias traditionnels
 6     et aux nouveaux médias.
 7  12064                Dans la même veine, le Conseil
 8     pourrait évaluer la possibilité de nouveaux fonds
 9     destinés à la production de programmes canadiens 
10     destinés à la fois aux médias actuels et aux nouveaux
11     médias.  On pourrait aussi procéder à l'ajustement de
12     fonds existants.
13  12065                D'autre part le Conseil pourrait,
14     d'un commun accord avec le ministère du Patrimoine
15     canadien, envisager d'élargir la définition d'une
16     coproduction dans le domaine du cinéma et de la
17     télévision, pour inclure le traitement multimédia d'une
18     production télévisuelle ou cinématographique.
19  12066                On pourrait également envisager
20     l'établissement de nouvelles mesures fiscales -- par
21     exemple, un crédit d'impôt pour la création d'un
22     traitement multimédia pour une production télévisuelle
23     et cinématographique.
24  12067                Au niveau des opportunités que
25     représente le multimédia, je voudrais vous mentionner,


 1     comme vous le savez, que Bell a lancé un fonds Bell de
 2     la radiodiffusion et des nouveaux médias en septembre
 3     1997, avec comme objectif de favoriser et d'accroître
 4     la production de contenu canadien à la fois sur les
 5     nouveaux médias et la radiodiffusion au Canada, et
 6     stimuler les partenariats entre ces secteurs.
 7  12068                Doté d'un capital de 12 millions de
 8     dollars, ce fonds a déjà accordé à ce jour un peu plus
 9     de 5 millions de dollars pour la production de 28
10     projets.  Pour qu'un projet soit reçu, il est
11     nécessaire qu'un producteur indépendant y soit associé.
12  12069                Les projets sélectionnés touchent
13     divers secteurs d'intérêt: séries éducatives et
14     documentaires, productions destinées aux enfants,
15     émissions de variétés, et séries dramatiques.
16  12070                Les productions multimédias associées
17     à ces projets ont misé sur un vaste éventail
18     d'expressions, allant à des sites de références aux
19     jeux interactifs, en passant par les forums de
20     discussion et le laboratoire virtuel, utilisant pour ce
21     faire des sites Web, des CD-ROM branchés, ou encore des
22     services en ligne.  D'ailleurs, les responsables du
23     fonds de la radiodiffusion et des nouveaux médias de
24     Bell ont déposé hier un premier rapport très positif
25     sur la performance du fonds.


 1  12071                La synergie entre les industries de
 2     la télévision du multimédia et du secteur de la
 3     production indépendante se confirme.  À titre
 4     d'exemple, signalons que Robert Lepage, qui bénéficiera
 5     de l'assistance financière du fonds Bell, prépare
 6     actuellement en parallèle une version télévisée et une
 7     version Internet de sa prochaine production.
 8  12072                D'autres exemples d'alliance entre
 9     les producteurs et les télédiffuseurs qui ont bénéficié
10     du fonds Bell sont les émissions bien connues:
11     "Riverdale", au réseau CBC, et "Diva", au réseau TVA.
12  12073                La raison pour laquelle je me suis
13     attardé, monsieur le Président, un peu plus longuement
14     sur le fonds, c'est que nous souhaitons aujourd'hui
15     indiquer au Conseil notre désir de rendre ce fonds
16     permanent, en consultation avec son conseil
17     d'administration et l'industrie.
18  12074                Comme il se doit, après avoir
19     finalisé, en consultation, les détails de ce projet,
20     nous serons heureux de le présenter au Conseil pour
21     approbation.
22  12075                Bell Satellite a donc l'intention de
23     participer activement au développement de programmes et
24     de services pour les nouveaux médias, entre autres en
25     effectuant prochainement un investissement majeur dans


 1     une importante compagnie canadienne de multimédia. 
 2     Notre but est d'optimiser les contenus de
 3     radiodiffusion à la fois sur les mécanismes de
 4     distribution traditionnels, tels le satellite, et
 5     l'Internet.
 6  12076                Enfin, Bell Satellite a conclu [une
 7     entente] avec le laboratoire de recherche sur les
 8     nouvelles technologies du département de communications
 9     de l'Université de Montréal, dirigé par M. Caron, le
10     professeur Caron.  Cette entente nous permettra de
11     réaliser en commun des travaux de recherche sur
12     l'exploitation des multimédias et sur leur application
13     dans le secteur de la radiodiffusion.
14  12077                Mr. Chairman, Madame la Présidente,
15     Commissioners, I am confident that, as we have done in
16     the past, both the Commission and the industry will
17     strive to maximize the potential benefits being offered
18     to us through the new media.
19  12078                The Canadian Broadcasting System must
20     fully participate in the new media universe which is
21     developing not only in Canada but also internationally.
22  12079                I believe that the Commission and the
23     government can continue to play a role in ensuring a
24     stronger Canadian content presence in the multimedia
25     universe.


 1  12080                I would now ask Mr. Frank to continue
 2     with our presentation, particularly regarding the
 3     satellite new media capability of Bell ExpressVu. 
 4     Merci.
 5  12081                MR. FRANK:  Thank you, Alain.
 6  12082                Bell ExpressVu, BSSI's direct-to-home
 7     distribution system, has not as yet launched any new
 8     media transport services.  Our inability to do so has
 9     been caused largely by our lack of satellite capacity.
10  12083                With the advent of Nimiq, Canada's
11     new high-powered, direct broadcast satellite, the
12     capacity challenge will be alleviated.  Telesat Canada
13     has advised us that Nimiq will launch in April of next
14     year.  This means we could have commercial service in
15     May.
16  12084                Current plans envisage the subsequent
17     and near-term roll-out of at least two new
18     applications.  First, a fully interactive Internet
19     access service with the out route or main feed direct
20     from Nimiq and the in route or return loop via
21     terrestrial facilities.  Second, with the introduction
22     of new set top boxes next year which have interactive,
23     multimedia capability, we hope to provide existing
24     broadcasting services which we distribute with the
25     ability to enhance their respective services and create


 1     incremental sources of revenue for the broadcast
 2     industry through additional data and image capability.
 3  12085                For instance, information services
 4     such as the Weather Channel could provide additional
 5     layers of text, graphic and video information for local
 6     and regional consumption.  For a national service
 7     provider such as Bell ExpressVu, this is an exciting
 8     development because it allows for additional, specific
 9     information for our subscribers, which is not available
10     from a national feed or takes time to access because of
11     the broad scope of the primary service.
12  12086                Perhaps I can now comment briefly on
13     the three themes that the chairman has raised in his
14     introductory remarks.  The first of these themes asks: 
15     In what way and to what extent does or will new media
16     affect regulation of the traditional broadcast
17     undertakings of radio, television and BDUs?
18  12087                Mr. Gourd has already stated that one
19     of the key underpinnings of the Broadcasting Act is
20     technological neutrality.  As a result, broadcasting
21     services are unaffected, in the public policy sense, by
22     the means of distribution.  It is clear that one of the
23     important objectives of the Broadcasting Act is to
24     further the growth and development of the domestic
25     broadcasting system so as to provide all Canadians with


 1     choice, variety and excellence in programming that is
 2     relevant to them.  That is, giving Canadians the
 3     opportunity to see themselves and their society fairly
 4     represented in the broadcast programming which they
 5     watch and listen to.
 6  12088                We have said in other appearances and
 7     submissions to the Commission that Canadian programming
 8     is an important point of product differentiation for us
 9     from at least one of our competitors, the unauthorized
10     U.S. grey market service providers.  Having established
11     our belief in and our need for quality and diversity in
12     Canadian programming and in the present context, we
13     suggest that it is early days for new media and
14     therefore difficult to fully assess this question at
15     the present time.
16  12089                However, what is clear is that new
17     media offers Canadian broadcasters and consumers new
18     opportunities, opportunities that can be developed
19     through prudent fiscal support and light-handed
20     regulation as suggested by Mr. Gourd.
21  12090                I would also note parenthetically
22     that we believe that we are some number of years away
23     from the point where the worldwide Web will actually
24     provide reasonable quality in video delivery thereby
25     providing any degree of competition in the conventional


 1     television, specialty or premium TV mass markets.
 2  12091                The second theme identified by the
 3     Commission is:  To what extent do some or any of the
 4     new media services constitute broadcasting?  Or
 5     telecommunications?  How do we treat them consistent
 6     with the objectives of their respective acts?
 7  12092                On this matter, BSSI observes that
 8     the record of this proceeding demonstrates that it
 9     appears difficult to characterize and predict how new
10     media will evolve.  What we are seeing on the Internet
11     now, and will continue to see in the short term, is
12     overwhelmingly text-based service, and hence clearly
13     telecommunications.
14  12093                It appears to us that virtually all,
15     if not all, intervenors believe this new media should
16     be encouraged to develop, and that Canadians should be
17     encouraged to be at the forefront of this development. 
18     So while the objectives of the Broadcasting Act may be
19     a reasonable starting point in some instances, the
20     tools used by the Commission to achieve those goals
21     should be chosen in a pragmatic fashion, where
22     applicable.
23  12094                The Commission's third theme is: 
24     What recommendations should the Commission make to the
25     government on broader policy issues, particularly the


 1     government's connectedness agenda?
 2  12095                BSSI feels that it can make an
 3     important contribution to the government's agenda of
 4     connectivity.  We note that Telesat Canada, originally
 5     a mixed enterprise involving both government and
 6     Canadian telephone companies, has been instrumental in
 7     bringing DBS service to Canadians, which will give us
 8     the opportunity to compete with the U.S. grey market
 9     services head on and with a comparable platform.
10  12096                Satellite-delivered Internet services
11     will provide all Canadians, and especially those in
12     rural and underserved areas, with the opportunity to
13     access new media services and not be by-passed because
14     of cost constraints associated with terrestrial
15     facilities in thin route/low population areas. Among
16     other things, this will keep rural schools, businesses
17     and homes the opportunity to get on and stay on line.
18  12097                We would now be pleased to answer
19     your questions.
20  12098                THE CHAIRPERSON:  Thank you very
21     much, Mr. Frank, Mr. Gourd.
22  12099                Let me first just ask a question,
23     since you have raised it in your presentation, about
24     the grey market.  I guess I have been under the
25     understanding that between yourselves and your


 1     competitor a number of the issues or concerns with
 2     respect to the grey market were being addressed and
 3     that that had probably been stabilized, if not
 4     shrinking, with your presence in the marketplace with
 5     some stories we have seen recently in the newspapers. 
 6     You seem to be suggesting that in fact the grey market
 7     may still be growing.  I appreciate it is not directly
 8     related to our proceeding here today, but you did raise
 9     it in your presentation, so maybe we can get a little
10     update on that from you.  What is your sense of that?
11  12100                MR. GOURD:  Please allow me to give
12     the general introduction and then turn to Mr. Chris
13     Frank for the details.
14  12101                We are pleased to report, indeed,
15     that both Star Choice and Bell ExpressVu, indeed,
16     through particularly specialty programs to facilitate
17     the transfer from the grey market to Canadian DTH
18     undertaking services, that the two combined in our
19     opinion has indeed reduced the grey market.  So it has
20     not only plateaued but there were some transfers with
21     broader reduction, which means that the theory that an
22     offering of both the best of foreign services and the
23     best of Canadian services does work.  We have no
24     evidence, quite frankly, that there has been a new
25     momentum given to the grey market in recent times.


 1  12102                Chris?
 2  12103                MR. FRANK:  I would simply add that
 3     although our service has been enthusiastically received
 4     across the country, and the service of our competitor
 5     Star Choice as well, that DirectTV remains the biggest
 6     DTH company in Canada.  So we have to be very vigilant. 
 7     We have to continue to add new services and improve our
 8     service to make sure that we are ultra competitive.
 9  12104                There is no question this is a very
10     competitive market and it is a challenge, a challenge
11     that we relish.
12  12105                THE CHAIRPERSON:  So, are they
13     getting new customers? This story that we saw in the
14     press recently that suggested I think it was --
15  12106                MR. GOURD:  They are probably getting
16     new customers but they are losing customers.  So we
17     believe that the net is a slow reduction of the grey
18     market.
19  12107                However, if, for example, Echo Star,
20     with their new deal with Rupert Murdoch and MCI were to
21     increase very dramatically the number of services --
22     the number of 500 was mentioned in the newspapers --
23     and the Canadian direct-to-home undertakings would
24     plateau, let's say at 100 TV services, then indeed the
25     grey market would pick up.


 1  12108                But, if Star Choice occupies some 30
 2     transponders on F1, and if we -- if and when we migrate
 3     to Nimiq and add significant number of transponders,
 4     and add a mix of additional Canadian and foreign
 5     services, then we are quite confident that the trend of
 6     slow reduction of the grey market would be reduced. 
 7     But it would be maintained.
 8  12109                However, as Chris has said, the
 9     expansion of the programming menu, the orderly
10     expansion of the programming menu, using a Canadian
11     expression, in par with the increase of the menu of the
12     U.S. providers will be very important, which will
13     represent additional expenditures on the part of both
14     Canadian licensees.
15  12110                THE CHAIRPERSON:  Let's switch -- I
16     guess you are here sort of wearing two hats, one
17     perhaps a little old and dusty, and no grey or white
18     hair.
19  12111                You talked in your presentation today
20     about aspects of the Broadcasting Act.  We have had a
21     lot of discussion, as you can probably appreciate,
22     around the broadcasting -- the definitions in the
23     Broadcasting Act and what they mean and what they were
24     intended to mean and so appreciate your comments here
25     today.


 1  12112                A number of parties have noted and
 2     stressed the fact that the concept of regulation of
 3     broadcasting was fundamentally based on the notion of
 4     scarce resources.  I wonder if you would just comment
 5     on that aspect of this issue.
 6  12113                MR. GOURD:  The Broadcasting Act,
 7     1968 might have been rooted in that concept of scarcity
 8     and, perhaps, it might have been rooted as well in a
 9     certain type of delivery mechanism, most importantly
10     conventional television; and, at the last moment, we
11     all know that there was a cable section added to the
12     1968 Broadcasting Act.  So cable was covered a bit at
13     the last moment in the parliamentary committee that met
14     during 1967 and 1968.
15  12114                With the 1990 and 1991 parliamentary
16     committee, and I should even say that the attempt to
17     review the Broadcasting Act started even in 1985, and
18     you all know that there were three attempts and a lot
19     of committees.  But from day one the various
20     parliamentary committees with the officials that
21     supported them, including yours truly, wanted to
22     achieve a certain number of objectives.
23  12115                I remember endless discussions around
24     these objectives, and positive discussion, because the
25     objective was to further the Canadian identity and the


 1     modernity of the Canadian broadcasting system.  So
 2     therefore there was a strong conviction by everybody. 
 3     Only the means really were discussed, but the
 4     objective, the section 3 and section 5 and other
 5     sections were the object of a very large consensus and
 6     they were, "Let's try to capture the essence of
 7     broadcasting programming."  So therefore the
 8     Broadcasting Act should apply to a certain type of
 9     programming.
10  12116                Then, the other complementary
11     consideration was it should not be rooted on any given
12     technology or in any given distribution technique.  Of
13     course, at the time, we didn't talk a lot about
14     Internet in 1985.  We knew somehow there was a thing
15     called Internet but, basically, we were of the opinion
16     at the time that the telephone system -- we didn't say
17     it is Internet on the telephone system -- but we were
18     saying to ourselves, probably one day the telephone
19     system will become a major delivery mechanism.  We were
20     not sure, but there was a strong desire on the part of
21     the members of the parliamentary committee to make
22     certain that if suddenly the telephone system, or any
23     other system, because there was also a consensus that
24     nobody really knew, because nobody had really foreseen
25     cable in the fifties, and then nobody had really


 1     foreseen satellite when CanCom started, and the members
 2     of the committee were saying, "Can we foresee
 3     everything?  There is probably a delivery mechanism
 4     dormant in some laboratory that will emerge one day and
 5     we don't know about it."
 6  12117                So there was a strong desire, that is
 7     my second comment, to make sure that the Broadcasting
 8     Act was not rooted in any type of delivery mechanism,
 9     in any type of delivery technology.  Therefore, there
10     was a conviction that the Commission of the day, within
11     the umbrella of section 3 and the umbrella of its
12     power, would find ways to achieve the objectives of the
13     Broadcasting Act, whether the program is delivered
14     through this delivery mechanism or that other one.
15  12118                THE CHAIRPERSON:  But I take it even
16     notwithstanding all that you have said there were
17     certain limitations on the technology that we would be
18     considering.  For example, are we are not considering
19     the distribution of content in cinemas. We are not
20     concerned about the distribution of content in video
21     stores.  And, even in the act, even where it is using
22     telecommunications for the delivery, for example, it
23     was -- it specifically excluded -- does not include,
24     even if it is delivered using telecommunications
25     technology, programs that are made solely for


 1     performance or display in a public place.
 2  12119                So, the government of the day did try
 3     to put some kind of a fence around.  We are going to be
 4     technologically neutral, but we are going to put a
 5     fence around the kind of ways this would be delivered. 
 6     I wonder if you might comment on how you tried to sort
 7     of narrow, if you will, where that fence or -- position
 8     is perhaps a better way to put it -- where that fence
 9     would be?
10  12120                MR. GOURD:  I may have misunderstood
11     your question, Mr. Chairman.
12  12121                THE CHAIRPERSON:  I don't think you
13     did.
14  12122                MR. GOURD:  There was certainly a
15     desire not to step in provincial jurisdiction.  I
16     remember that the members of the committee felt that
17     they should focus on what was clearly a federal
18     jurisdiction, so cinemas, video stores, even display in
19     public places were either square and fair provincial or
20     grey zones.  So that was a first fence.
21  12123                Another one was, indeed, the desire
22     to focus on what was the core of the broadcast
23     programming and therefore alphanumeric services were
24     not included.  The desire of the part-time member, the
25     chairman, I think it was Mr. Edwards, the chairman of


 1     the committee, was saying, "Let's focus really on what
 2     is the basic core broadcast services, have a definition
 3     which is general enough, even though it excludes
 4     certain types of activities for the reasons I have
 5     mentioned, and then it will be up to the Commission of
 6     the day to do the implementation."
 7  12124                But you are totally correct, the
 8     desire was not to throw so wide a net that it would be
 9     very difficult to manage implementation, or so wide a
10     net that it would include non-essential information
11     distributed through these delivery mechanisms, like
12     pure data or things like that.
13  12125                THE CHAIRPERSON:  Now, there has been
14     lot of discussion that has been raised over the past
15     two weeks about different sort of characteristics or
16     ways of approaching the technology in the sense of
17     delivery, if you will.  There has been talk about push
18     versus pull; that broadcasting is largely understood to
19     be a push technology, that the signal is sent out
20     whether over the radio waves or using wire, from one to
21     many sort of thing, rather than an individual going and
22     pulling out the information.
23  12126                There has been some talk about the
24     question of what has been referred to as simultaneity,
25     whether the same program is delivered to one or more


 1     individuals at the same time.  The notion of
 2     interactivity has also been raised in terms of whether
 3     or not the subject we are talking about constitutes a
 4     program.
 5  12127                Maybe I am throwing too many terms
 6     here for you to catch up with.  I wonder if you might
 7     comment on some of those notions that have been raised
 8     with us.
 9  12128                MR. GOURD:  Of course, my perspective
10     is not that of a legal expert because even though I was
11     a long, long time ago a practising lawyer -- it was at
12     least 25 years ago -- I am simply, perhaps, bringing to
13     the attention of the Commission that when the
14     Broadcasting Act was discussed in that parliamentary
15     committee in the House of Commons there was no real
16     focus on push versus pull, on direct focus on
17     simultaneity, or a direct focus on interactivity.
18  12129                However, there was a clear vision,
19     and it is a tribute to the quality of the membership on
20     that committee, there was a clear conviction that
21     things like that would happen, would emerge, and
22     therefore there was a desire to have a Broadcasting Act
23     which would have a set of general objectives that would
24     be kind of the mission of the system, plus enough power
25     and enough flexibility to be able to -- to enable the


 1     Commission of the day to deal with these issues.
 2  12130                Whether or not the legal advisors to
 3     the committee would have considered a pull approach
 4     broadcasting, or a lack of simultaneity is still
 5     broadcasting, or full interactivity as opposed to mass
 6     one-way delivery, remains to be seen.  But in fact
 7     there was simply that basic desire to allow the system
 8     and the regulatory component of the system to evolve.
 9  12131                THE CHAIRPERSON:  Now, there has been
10     some discussion around the notion of the concept of
11     program itself, and you can approach this from the
12     point of view of the definition of broadcasting, which
13     is largely around the technology, and that gets into
14     the delivery, if you will, of programs.
15  12132                If you look at the issue of the
16     program, or of the content, if that is the fundamental
17     concern, is the content regardless of how it is
18     delivered, subject to being in federal jurisdiction.  A
19     number of parties have suggested that what was meant by
20     program is largely what we understand to be a typical
21     broadcast program today, something that has a
22     beginning, a middle and an end and even, in some cases,
23     may have some multiple ends, but is for the most part
24     not something that I as an individual can interact with
25     and if I go to, I think the term that Astral used in


 1     their second round presentation, was the ability of me
 2     as a user of this -- or accessor of this information to
 3     alter it, to customize it, to tailor it to my
 4     particular needs; and some have suggested that that
 5     would no longer be a program; or, if it was, it
 6     shouldn't be.  I wonder what your views would be on
 7     that.
 8  12133                MR. GOURD:  At the time the
 9     Broadcasting Act was reviewed, Mrs. Sauvé had stated
10     her famous comment, "Pay TV is inevitable."  However,
11     there were no real discussions of pay-per-view, for
12     example.
13  12134                However, at the end of the debates of
14     the committee, there was an a suggestion from certain
15     experts that service à la carte, that pay-per-view-like
16     services would happen one day, and therefore I remember
17     quite clearly that some members said, "Let's make sure
18     that the division of a program or a programming service
19     can allow the regulator to apply it to something like
20     pay-per-view."  As I said, full interactivity, I don't
21     remember that being discussed directly.
22  12135                So, therefore, like every definition,
23     like every general statement, there is a bit of
24     discretion at the end of the day.
25  12136                THE CHAIRPERSON:  And we have had


 1     considerable discussion, and kind of gone through
 2     almost the hierarchy, if you will, of interactivity,
 3     associated with this.  You start with plain TV; then
 4     you add specialities; go to pay television; then
 5     pay-per-view; then video-on-demand, where
 6     video-on-demand would be that the timing for me might
 7     be, even if it is just milliseconds might be different
 8     from the timing that you interact with it, and any
 9     individual, depending on what the node size would be.
10  12137                I think it is probably fair to say
11     that there has been at least some acknowledgement that
12     video-on-demand may still be a program because the
13     program itself has not changed.  My experience with
14     that program is no different than your experience with
15     it, even though the time may be different.
16  12138                My question was:  If you take that
17     next step then, and if I heard you correctly you were
18     saying there was no consideration of that next stage
19     where now I have the ability to actually interact with
20     the substance of the program itself, and possibly alter
21     that, and whether that now takes us out of the realm of
22     what was considered to be a program.
23  12139                MR. GOURD:  The definition is
24     quite -- as we know, is quite general because sounds
25     and visual image or a combination of sounds and visual


 1     images that are intended to inform and entertain.
 2  12140                Therefore, I really would agree that
 3     the members of the parliamentary committee had in mind,
 4     probably, broadcasting content as they knew it.  It is
 5     true that things have evolved very, very rapidly, and
 6     that the technology does enable us to move towards
 7     video-on-demand, and towards interactive systems that
 8     can impact the content itself.  Would it be
 9     broadcasting? I don't -- I am not sure we can have the
10     answer now.  That is why we are saying that probably
11     the best way to go is to let the system evolve; is to,
12     perhaps, after recognizing that the Commission has in
13     my opinion the tools that could allow it to try to
14     regulate certain components of the system, which are
15     clearly broadcasting, that perhaps since these content
16     are extremely limited as we speak, and they will be
17     extremely limited for quite a number of years, to let
18     the system evolve and review it after a given point in
19     time.
20  12141                There is a point, indeed, where, as
21     you move towards more and more individual reception,
22     more and more individual interactive reception of
23     content, towards an individual interactive reception
24     and content which impacts the content, that at a
25     certain point in time you are probably out of the


 1     definition.  But the definition itself is not really
 2     essentially of great use because of its generality.
 3  12142                THE CHAIRPERSON:  Given that, I am
 4     wondering -- we had a discussion yesterday,
 5     Commissioner McKendry had a discussion with Peter
 6     Grant, who is, I guess one would characterize as, an
 7     expert in this field.
 8  12143                MR. GOURD:  An expert legal mind,
 9     which I am not.
10  12144                THE CHAIRPERSON:  Of the act and its
11     application.  A number of parties have suggested in the
12     proceeding as well that we should consider the use of
13     an exemption order for certain types of programming
14     here.
15  12145                I guess one of the things that I am
16     interested to get your opinion on, given your
17     background here and given what you have just said
18     about, perhaps, the looseness of the definition of
19     program here, when we come to the Internet and think
20     about the possibilities and the capabilities of using
21     that technology, whether one could look, at least,
22     perhaps, three levels, or three approaches here; one
23     being as today virtually all of the material on the
24     Internet is alphanumeric text.  Clearly, that is
25     excluded from the definition of program.  So that is


 1     out.
 2  12146                The next level could be, or an
 3     approach the Commission could take, if you will, would
 4     be to interpret the definition of program as to not
 5     include programming which could be customized by the
 6     individual user of that information or altered to serve
 7     their need.
 8  12147                My sense is that combination of the
 9     first two would probably take virtually everything that
10     is currently on the Internet out of broadcasting today.
11  12148                The third level could be what is
12     understood to be broadcast type programming, which
13     sometimes has been referred to here as long-form
14     programming, and given the current state of the
15     development of that programming on the Internet, and
16     you have acknowledged that in your presentation here
17     today, that that is probably going to be quite some
18     time before the development of the Internet can handle
19     that sort of programming in any sort of reasonable
20     quality, that one would simply issue an exemption order
21     for that sort of programming.
22  12149                I am wondering what your view would
23     be on that approach by the Commission, and I guess in
24     particular the latter two elements of it, because I
25     think all would agree that the alphanumeric material is


 1     out in any event.
 2  12150                MR. GOURD:  Radio -- a Canadian radio
 3     station based, let's say in Montreal and Toronto,
 4     delivered on the Internet is certainly broadcasting
 5     because it is a broadcasting content delivered by one
 6     additional delivery mechanism.  A pure data stream is
 7     certainly not broadcasting.  So the issue is the grey
 8     zone, which everybody tries to focus on.
 9  12151                The three level approach that you
10     have mentioned in my mind does make sense provided, in
11     my mind, that it does not create a precedent that would
12     make it difficult later to try to regulate some form of
13     customized content.  I think the basic thing we don't
14     really know what it will be in five years.  If I put
15     myself back in 1990, we didn't see the Internet coming. 
16     I think that is the big truth.  Even NMDS and even
17     LMDS, there was no -- we never thought that what we
18     call LMDS would be there, small radius of five
19     kilometres, we never really focused on that.
20  12152                Therefore, yes, I think basically it
21     is a very good structurization of the three layers of
22     content, and understanding that there is some overlap,
23     and certainly to say that every alphanumeric content is
24     not covered, that what is truly customized is probably
25     not covered and therefore refocus on the more


 1     traditional broadcasting content and it is exempted, it
 2     is a good approach.  But who knows in five years what
 3     the technology will be; and there might be a wish then
 4     to try to cover some form of customized content because
 5     there might be, in five years from now, many layers to
 6     a broadcasting service.
 7  12153                There might be the -- partly in terms
 8     of specialty services, there might be, let's say, the
 9     traditional layer, let's say satellite to cable to the
10     TV set.  But with Web TV there might be some continuing
11     delivery of video content that cannot find its place on
12     the main layer, but are still interesting for segments
13     of the audience.  They will probably be able to have it
14     in the corner of their screen -- not probably, we know
15     it is being done.  They will be able to call it on the
16     corner of their screen.  So main video, complementary
17     video.
18  12154                They might be able to then call the
19     data stream and therefore do we -- maybe we should make
20     sure that if it is the right thing to do at that time
21     that we can have some form of regulatory coherency
22     between, let's say, the various components that will be
23     delivered by that service because I am convinced
24     personally that in five years from now specialty
25     services will have a number of information streams


 1     towards the TV set.  Probably, they will have
 2     additional information streams to the computer at the
 3     same time, on weather, on whatever it is.
 4  12155                So, coming back to the conclusion,
 5     not to be too long, I think it is a very good
 6     structuring, provided that it maintains a degree of
 7     flexibility to adjust, if and when a review is
 8     conducted some years from now.
 9  12156                THE CHAIRPERSON:  I suppose it
10     remains to be seen whether or not the very nature of
11     this technology allows us to overcome some of the
12     inherent problems that we have had with access, if you
13     will, since I have been -- it has been referred to me
14     as noting that is a fundamental concern here of content
15     to distribution and then audiences to that content. 
16     The very nature of this technology may overcome some of
17     those problems, we may discover at some point in time. 
18     It may not, but it may overcome those.
19  12157                MR. GOURD:  Certainly.
20  12158                THE CHAIRPERSON:  Okay.  Some of my
21     colleagues may want to pursue some these issues, I
22     don't know.
23  12159                Let me turn to a couple of other
24     points you raised in your submission.  You talked about
25     the Bell fund and how you expect this to become a


 1     permanent fund and it may change somewhat.  Then, you
 2     suggested that you might come to the Commission for
 3     approval for this fund.
 4  12160                I am wondering why -- I was curious
 5     to note that you said that.  I am wondering why you
 6     would come to the Commission for any sort of approval
 7     or authorization.
 8  12161                MR. GOURD:  I will cover the first
 9     part and I will ask Chris Frank to cover the rest.  The
10     approval, let me start with a general comment.
11  12162                We would really wish to make the fund
12     permanent.  We believe that it has performed well from
13     what we see.  Therefore, we feel that from our
14     perspective, even though it might represent a
15     continuing financial contribution, that is probably the
16     thing to do.
17  12163                In order to achieve that, there is a
18     need for comprehensive consultation with the board;
19     and, of course, we would not mention that possibility
20     today without some consultation with the board of the
21     fund.  But they have to take a formal position through
22     a resolution.  We feel also that, most importantly, the
23     industry has to be consulted.
24  12164                In terms of the Commission, what we
25     wanted to make sure is that the fund be recognized; so,


 1     perhaps, the term "approve" was the incorrect one, but
 2     we would wish the fund to be recognized as a valid fund
 3     for the purpose of a financial contribution by certain
 4     licensees who may wish to put some money in the fund. 
 5     So the fund has to be recognized in order to achieve
 6     that.
 7  12165                But since I have the -- our best
 8     satellite expert right beside me, and he was whispering
 9     in my ear to make sure that I would recognize the
10     complexity of that, I will turn to him right now.
11  12166                MR. FRANK:  So much for discretion.
12  12167                The only point I would like to add is
13     that this would be a consultative process.  It is early
14     days.  We are trying to put the pieces together and we
15     want to keep the Commission involved in the process.
16  12168                THE CHAIRPERSON:  Well, when we talk
17     about being recognized in terms of contribution from
18     licensees, I wonder if you would be a little clearer
19     about what you have in mind there.
20  12169                MR. GOURD:  For example, in some
21     cases, licensees, like some of our licensees have a
22     certain amount of discretion where they put part of
23     their fund and, therefore, let's say if we were to get
24     a new licence, let's say -- I don't want to focus on
25     some applications we have in front of the Commission,


 1     but we have some; and, of course, a part of the
 2     cross-revenues of these services that we might or might
 3     not get can be invested, part has to go to, let's say,
 4     the TV fund, and another part might be a bit more
 5     discretionary and go somewhere else; or we might wish
 6     to come back to the Commission, if and when we have
 7     these new licences, and suggest that, perhaps, 20 per
 8     cent of the 5 per cent of these -- of the gross volume
 9     be invested in the Bell broadcasting and media fund.
10  12170                So that is the kind of thing I had in
11     mind.  So therefore the fund has to be recognized for
12     that purpose.
13  12171                THE CHAIRPERSON:  I guess I would
14     have to check the details here, but I think today that
15     fund is designed for -- and this may be a bit of a
16     circular argument I guess -- designed for programs.
17  12172                MR. GOURD:  But it would be programs. 
18     In our mind it would be programs that would be
19     delivered both through the traditional, if I may use
20     the term, traditional delivery mechanism of the
21     broadcast system, plus a complementary form for
22     distribution.
23  12173                THE CHAIRPERSON:  So that would not
24     necessarily require an alteration of the rules around
25     the 5 per cent and where that money can be spent.


 1  12174                MR. FRANK:  Perhaps I could just add
 2     that with respect to one of those applications that we
 3     have in front of the Commission, we are very definitely
 4     on the public record as how that money would be --
 5  12175                THE CHAIRPERSON:  I don't want to
 6     turn this into a hearing about your application.  That
 7     is next week.
 8  12176                MR. GOURD:  That is why we want to be
 9     very --
10  12177                THE CHAIRPERSON:  Let's just talk
11     about the current one.
12  12178                Looking at this whole 5 per cent
13     issue, and maybe this takes us back into a bit of a
14     definitional question, some of the ISPs appeared before
15     us last week and raised a number of issues and, in
16     particular, some telecommunications issues.
17  12179                A number of them had suggested that
18     they, in fact, probably would or should be treated as
19     telecommunications carriers or, perhaps, at least
20     resellers.  During this whole discussion many people
21     have suggested that we should be, in an effort to try
22     to put more money into this business and in terms of
23     content creation, content development, we should be
24     looking at levying a fee similar to the one we have
25     just talked about, this 5 per cent, on certain players


 1     in this business.  Some of those players could be the
 2     ISPs.
 3  12180                I guess we posed the question to a
 4     few of them:  By what authority would we levy this 5
 5     per cent fee on an ISP?  I am wondering whether you
 6     have a view on that because some of it -- some people
 7     have suggested we should treat an ISP as if it was a
 8     BDU, a broadcast distribution undertaking; or, in other
 9     words, a cable-like undertaking.  Maybe that takes us
10     back to this definitional issue, but I wonder if you
11     have a view on that.
12  12181                MR. GOURD:  I will ask Chris and our
13     legal advisor to focus on whether or not there is the
14     authority to impose a levy or a tax or whatever.  But I
15     would like to table, first, a general position that it
16     is our belief that to let a thousand flowers bloom, you
17     know, on the new media, it would probably be better to
18     let it alone for awhile.  Let it grow.  Let's see how
19     it will unfold and then we might see if it's
20     appropriate to gather some of the revenues, whether 5
21     per cent or not, for reinvestment in the content.
22  12182                Just as an aside, I said to my
23     colleagues privately that having worked with a lot of
24     deputy ministers of finance, if and when the government
25     of the day, in five to ten years, decides that it is


 1     important to get some of the money back, they will find
 2     a way.  So that is what I said about the creativity of
 3     the successive departments of finance.
 4  12183                But whether or not it is possible
 5     now, maybe I would like to turn to Chris and David.
 6  12184                MR. ELDER:  I guess we would be of
 7     the view that, from the telecom act perspective, there
 8     isn't the jurisdiction in the telecom act to impose
 9     that sort of a broadcast objective oriented condition
10     on the provision of a telecom service.
11  12185                I don't know that I can say any more
12     than that.
13  12186                THE CHAIRPERSON:  Would it be your
14     view that an ISP would be more likely to be
15     characterized as a carrier or reseller than a BDU?
16  12187                MR. ELDER:  Definitely.  I think
17     there are a number of characteristics that would
18     differentiate an ISP from a BDU.  I think mainly of an
19     ISP as providing connectivity.  It is a completely open
20     user group.  It is not this sort of closed market where
21     the BDU is effectively picking the services and the
22     programming to which subscribers will have access.
23  12188                THE CHAIRPERSON:  Going back to your
24     point about letting a thousand flowers grow, a lot of
25     people have raised the issue both before and during


 1     this proceeding that there is a considerable amount of
 2     uncertainty about the regulatory regime around these
 3     flowers, and that there could be a number of huge rocks
 4     that are preventing the growth of these flowers, and
 5     one of these rocks is the question of the potential
 6     threat of regulation, taxation and so on, and that in
 7     order to remove those rocks from the -- and create a
 8     more fertile ground for these flowers to grow, that the
 9     Commission should be very certain about the regulatory
10     world that these flowers likely would grow up in and
11     blossom or bloom in; and that the threat hanging over
12     their head of potential taxation or regulation within
13     the foreseeable future will stifle the growth of those
14     flowers and, perhaps, let a lot of weeds grow, I don't
15     know how far to carry this.
16  12189                Going back to my scenario that the
17     Commission might adopt here, what is your view on this
18     issue of the regulatory certainty?  I am particularly
19     concerned about this business about, well, if you
20     wanted to do it, you could tax it at some point down
21     the road.  Does that not still keep the threat of some
22     sort of regulation or taxation?  What would your view
23     be in terms of what the Commission should do to address
24     this question of uncertainty?
25  12190                MR. GOURD:  I don't believe that,


 1     personally, we can have certainty in this world except
 2     for a few things like --
 3  12191                THE CHAIRPERSON:  Death and taxes.
 4  12192                MR. GOURD:  That proves my point.  So
 5     we cannot have certainty that there will be no
 6     taxation.  If e-commerce on the Internet explodes and
 7     becomes a very, very significant -- already there is
 8     some form of taxation, and David can speak on that, but
 9     at the end of the day certainty is not really possible.
10  12193                Therefore, I would say that, one, the
11     Broadcasting Act can apply to broadcasting on the
12     Internet.  Second, I feel personally, like many others,
13     that it is preferable to let it emerge before there is
14     a real regulatory framework put on it.
15  12194                Yes, there are rocks and
16     uncertainties, but that is a bit like life.  Therefore,
17     I don't believe that it is really realistic to expect
18     that there can be a certainty that it will be never
19     taxed more or never regulated more.  It all depends
20     what it will become.  If it becomes culturally and
21     socially critical, there will be some form of taxation
22     and additional regulation.  So I think that there can
23     be a consensus on giving it a period of time to emerge.
24  12195                Also, I remember prior to the
25     unfortunate paedophilia events, I remember some inside


 1     conference where people were saying there will never be
 2     any regulation.  My reaction then was, if there is a
 3     critical targeted -- a public opinion position on
 4     something, the government will feel bound to do
 5     something about it, and then later that unfortunate
 6     event emerged and various governments tried to do
 7     something about it.
 8  12196                Singapore tried a way; it was a bit
 9     drastic.  Others are using -- and their way was to put
10     responsibility square and fair on the ISP -- discipline
11     the system.  Other jurisdictions used the Criminal Code
12     in order to focus on the person who has -- who creates
13     the offence, and so on and so forth.
14  12197                My conclusion is that, as the system
15     evolves, as pressure points develop, or revenue
16     opportunities develop, nobody can ensure that a few
17     things will never happen.
18  12198                THE CHAIRPERSON:  Going back to the
19     taxation question, even if one was to not do it today
20     but consider it a possibility of doing it some point in
21     time in the future, given the comment we just had about
22     ISPs being carriers and no provision under the
23     Telecommunications Act, at what point would you levy
24     this tax?  At what point in the value chain would you
25     levy this tax?


 1  12199                MR. GOURD:  Two comments. 
 2     Personally, I feel, and we feel, that the new media
 3     should be given a lot of years to emerge.  If the
 4     question is:  Can there be a technique through which a
 5     tax in 25 years can be put on certain activities, I
 6     remember that some years ago there was a tax on telecom
 7     revenues.  There was one and then it was abolished, but
 8     there was a specific need.  They found a technique. 
 9     They slapped it on it and then later they removed it.
10  12200                But our position, irrespective of
11     whether or not creative tax lawyers can find a
12     technique, our position is that let's see what form it
13     will take, what forms I should say, plural, how it will
14     emerge.  I don't know if colleagues have a special
15     comment on these matters.
16  12201                MR. FRANK:  Just a couple of general
17     thoughts, that this is the worldwide Web we are talking
18     about and Canada is a small part of that.  We have to
19     stay competitive.  We don't want to burden our
20     businesses unless there is a specific public need,
21     public policy reason to do so.  To be creative, to be
22     competitive, I think it makes a lot of sense, as Alain
23     said, to give this industry as much freedom as possible
24     to actually grow and mature.
25  12202                THE CHAIRPERSON:  Mr. Elder, did you


 1     have a comment?
 2  12203                MR. ELDER:  I guess I was just going
 3     to say that no matter what unfolds I think down the
 4     road you, the Commission, are still going to have that
 5     jurisdictional problem if you are talking about the tax
 6     in that sense.
 7  12204                But, as Mr. Gourd said, I mean there
 8     are other means, and those would likely be legislative,
 9     I would think.
10  12205                THE CHAIRPERSON:  Now, in your
11     comments, in your oral presentation, you said you
12     believe the Commission and the government can continue
13     to play a role in ensuring a stronger Canadian content
14     presence in the multimedia universe.
15  12206                Beyond the issue of the fund that we
16     have discussed, and allowing some contributions to go
17     into support this sort of fund, did you have other
18     specific initiatives in mind for the Commission?
19  12207                MR. GOURD:  Perhaps not exclusively
20     for the Commission, but in terms of, for example,
21     co-production agreements, which is an approach where
22     you recognize the content produced by producers of two
23     countries as fully Canadian in Canada and fully
24     Canadian elsewhere, and both the government does that
25     for funding purposes and the Commission for Canadian


 1     content purposes.  There, I remember negotiating myself
 2     a certain number of these agreements with France, Italy
 3     and Belgium and elsewhere, and of course at the time,
 4     1984-1985, we didn't have in mind the Internet and the
 5     multimedia.  It was pretty straightforward; it was
 6     either on the TV screen or on the movie screen and that
 7     was it.
 8  12208                I feel that we should revisit the
 9     parameters of these agreements and make sure that a
10     part of the funding be put on distribution on new
11     media, and also on different packaging of the content
12     for the new media.
13  12209                Another one is the certification
14     program.  When a production is recognized, it is
15     entitled in certain -- to certain tax advantages, and
16     we should make sure that the -- a content which is both
17     on the television screen and also repackaged for
18     another form of distribution be able to receive a
19     certain funding there.  The percentage of it, is it 10
20     per cent of the total or whatever, could be left for
21     others, like the officials of the department to figure. 
22     But I think it would be a good approach to open a bit
23     this funding mechanism.
24  12210                We can talk about Telefilm as well. 
25     I think it would be worth it to consider opening some


 1     segment to content which would be both on the
 2     broadcasting system and on the other delivery
 3     mechanism.
 4                                                        1630
 5  12211                I'm not sure at this point in time we
 6     should fund a content which is exclusively delivered to
 7     the new media.  We might wish to walk before we run. 
 8     It might be a good step if the content is definitely
 9     delivered to the broadcasting system.
10  12212                There is also another version or
11     another delivery, that other version receive some
12     degree of funding.
13  12213                THE CHAIRPERSON:  Let me switch to
14     the technology here just a little bit, but not too
15     technical because we had Francois Menard here last
16     week --
17  12214                MR. GOURD:  There's no risk with me,
18     Mr. Chairman.
19  12215                THE CHAIRPERSON:  We have had some
20     concerns raised by a number of the ISP in terms of the
21     problem that we have got in this country with the last
22     mile.
23  12216                I think a lot of people would
24     acknowledge that a fairly good job has been done by
25     providing dial-up access throughout the country and in


 1     many jurisdictions telephone companies serving areas I
 2     suppose I should say.
 3  12217                Toll free access is provided to the
 4     Internet even if there is not an ISP in your own
 5     community and so on, but there has been a concern
 6     raised about higher speed access.
 7  12218                You talked in your presentation here
 8     today and in your written brief about some of the
 9     opportunities that you might be able to provide through
10     the use of satellite technology.  I'm wondering if you
11     could describe for us how that is going to work in
12     general terms, again not too technical.
13  12219                We tend to think about your
14     capability, getting back to push versus pull, as a push
15     technology.  You deliver to the ground those signals. 
16     You have mentioned here the loop back would be a
17     terrestrial facility.
18  12220                I'm wondering what role Telesat can
19     play in terms of providing higher speed access to and
20     from the Internet, particularly in some of the more
21     rural areas where maybe some of the terrestrial
22     facilities aren't available or aren't as affordable.
23  12221                MR. GOURD:  Chris and perhaps Terry.
24  12222                MR. FRANK:  Perhaps I can start and
25     very briefly because I will get out of my depth that


 1     quickly.
 2  12223                The two opportunities that we spoke
 3     about in our presentation today are the ones we are
 4     focused on most directly.  That is real Internet
 5     service and enhancements to existing broadcasting
 6     services.
 7  12224                We have the technology or the
 8     technology in the services are available today to offer
 9     the first.  It just requires capacity and that will be
10     available very shortly.  As to the second, it requires
11     new set-top boxes which I think Terry can describe and
12     which I understand are going to be available very, very
13     shortly.
14  12225                Having said that, Terry, maybe you
15     could flush out the details.
16  12226                MR. SNAZEL:  You said top boxes will
17     be available very shortly.
18  12227                THE CHAIRPERSON:  My colleague says
19     we have heard that before and I decided long ago that I
20     am not going to hold my breath waiting.
21  12228                MR. SNAZEL:  Before I get into
22     that --
23  12229                MR. GOURD:  They are actually being
24     introduced in Spain by our supplier, so it is coming
25     pretty soon.


 1  12230                MR. SNAZEL:  The new set-top boxes
 2     that Chris is talking about are not fictitious.  There
 3     are some boxes that allow a much greater degree of
 4     interactivity than we have now.
 5  12231                In a sense, the box that we have now,
 6     the box that we use, has a crude form of interactivity
 7     within it.  I mean impulse pay-per-view and the
 8     interactive program guide is a very basic form, but it
 9     is actually interacting with data in a data way rather
10     than a broadcasting fashion.
11  12232                Going back to the earlier question or
12     the question I guess you asked was the last mile and
13     how satellites are perhaps different from other
14     broadcast undertakings.
15  12233                THE CHAIRPERSON:  In your case I
16     guess it's the last 23,000 miles.
17  12234                MR. SNAZEL:  You're right.  Actually
18     it's the last three feet, that little connection
19     between the box and the display device.
20  12235                Satellites are quite different
21     obviously from other technologies, particularly a
22     telephone system, because they are asymmetric.  They
23     are very good at delivering things one way.  They are
24     very bad or very expensive at delivering things in the
25     reverse direction which is interesting.


 1  12236                Essentially, a lot of the data
 2     interactivity is in fact asymmetrical as well.  The
 3     high speed that everyone wants is in one direction and
 4     the interaction and the calling for that speed is
 5     obviously slow speed, much less of a pipeline you need
 6     to make it work.
 7  12237                Satellites can deliver data at much
 8     higher speeds than, say, a telephone connection can
 9     deliver, but the one satellite connection if you like
10     serves many thousands of people as opposed to the
11     single person on the telephone.
12  12238                Anyway, the issue is that satellites
13     are quite different, I think, than telephones.  The
14     opportunity is to deliver slightly services or the same
15     services perhaps in different ways.  I think that's
16     where we will see satellites take their part within the
17     system.  It will be quite a different way that
18     satellites get utilized.
19  12239                THE CHAIRPERSON:  If I went out to
20     the local electronics store and bought my computer,
21     what type of service could ExpressVu provide me in
22     terms of it being able to access the Internet?
23  12240                You said in your written submission:
24                            "With the advent of new
25                            incremental satellite capacity,


 1                            Bell ExpressVu intends to offer
 2                            high speed data service through
 3                            connectivity to the Internet."
 4  12241                MR. SNAZEL:  The most obvious one is
 5     similar to services that already exist whereby you
 6     deliver the main high speed data to the subscriber over
 7     the satellite.  The telephone is used to connect back
 8     to the service provider to call down that particular
 9     data.  That's one way of doing that.
10  12242                The other type of service you can
11     offer is whereby you are putting out a great quantity
12     of data that can be of more general interest and the
13     filtering is taking place in the computer in the home. 
14     The person at home is actually deciding what part of
15     that data they want to have access to and to use.
16  12243                It may not be coming down totally in
17     real time.  It could be coming down in non-real time. 
18     It's transmitted in real time but it's actually
19     accessed in non-real time.  The person using it could
20     be looking at it at a totally different time from when
21     it was actually transmitted.
22  12244                Those two sorts of services are what
23     I would call the computer and the data side of
24     multimedia, new media if you like.
25  12245                The other piece of the puzzle, and


 1     this is where you are going back to the definition of
 2     what is broadcasting and what is not broadcasting.  It
 3     gets to be quite difficult.  Perhaps a definition or a
 4     partial definition could be the fact that some services
 5     are suited only to be enjoyed by a solitary person
 6     working with a keyboard and a screen right in front of
 7     them.
 8  12246                Perhaps entertainment and
 9     broadcasting is enjoyed or can be enjoyed by more than
10     one.  Members of the family can sit together and look
11     at that.  Some of the applications we are talking about
12     are much more suited to the livingroom display upon the
13     television as opposed to the basement person working on
14     their PC.
15  12247                That's the other piece of the puzzle
16     that we would perhaps evolve our service towards.  As I
17     mentioned, there are set-top devices.  France, for
18     instance, has a fairly interesting interactive service
19     that is using DVB technology, the same technology as we
20     use, to deliver those services whereby you can
21     customize weather reports, travel information.  You can
22     listen to various customized versions of commercials
23     and so on.
24  12248                That sort of interactivity would be
25     delivered from the set-top device rather than from a PC


 1     card or computer connected device.  I think ExpressVu
 2     will be looking at delivering both kinds of services.
 3  12249                MR. GOURD:  If I may, Mr. Chairman.
 4  12250                THE CHAIRPERSON:  Sure.
 5  12251                MR. GOURD:  In terms of the set-top
 6     box, we will conduct very shortly a pilot project in
 7     Quebec using the CanalPlus media highway box which is
 8     interactive as we speak in France.  We will test it in
 9     Quebec for business television application, but
10     business TV in a way is broadcasting but it's
11     unregulated.  Therefore, it is scattered.  It is for
12     commercial purposes.  Therefore, it's not regulated as
13     we speak.
14  12252                From a technology perspective, I have
15     to be very careful with that --
16  12253                THE CHAIRPERSON:  We should go back
17     to what you said before.
18  12254                MR. GOURD:  Yes.  I know.  I was
19     listening to myself.  Let's stick to the fact, Mr.
20     Chairman.  We have an agreement with CanalPlus that we
21     will test their box in the coming months with partners
22     in Quebec.
23  12255                The second comment I wanted to make
24     is you mentioned Telesat.  As we know, Telesat as we
25     speak, the high speed Internet capability which has


 1     been used, for example, to link thousands of school
 2     under the SchoolNet program.  Therefore, there is as we
 3     speak with Telesat that Internet capability that has
 4     been implemented partly inside the SchoolNet program.
 5  12256                THE CHAIRPERSON:  Do you expect to
 6     have a service offering that would be functionally and
 7     price competitive with that of a terrestrial based ISP?
 8  12257                MR. GOURD:  Again, I will be rapidly
 9     out my depth and I will turn to Terry, but probably
10     not.  Again, if I go back to the SchoolNet approach, it
11     is for institutions because of the price point.  It's
12     for companies.  It's for organizations.
13  12258                Terry.
14  12259                MR. SNAZEL:  I think you're right. 
15     That form of true Internet interactivity delivered by
16     satellite where there is no terrestrial at all, the
17     option of using something like a V-set technology is
18     still quite expensive.
19  12260                It can work and does work very
20     nicely.  You can gather a group of people together like
21     a school or a school board or various other places
22     where it becomes cost effective to use the return path
23     by the satellite.
24  12261                The telephone return path is
25     practical.  It works.  Obviously there is a service


 1     that was alluded to that is functioning now.  The
 2     service that it provides though is quite expensive and
 3     it's not quite the same as you would provide on a true
 4     full-blown Internet service where you have an
 5     individual connection directly by your phone line back
 6     and forth and it's symmetrical and so on and so forth.
 7  12262                For remote and rural areas, it's a
 8     wonderful opportunity to get connected to the Internet,
 9     but it's perhaps more likely that a terrestrial service
10     will be more competitive in an urban area.
11  12263                COMMISSIONER GRAUER:  If I may again,
12     Mr. Chairman.  When I was President of Cancom, the
13     Cancom engineers had developed what we used to call a
14     trunk Internet which was a fully interactive two way
15     Internet by satellite using a V-set platform.
16  12264                It was trunk in the sense that it
17     needed the local ISP, whether the cable operator or an
18     ISP, using the telephone line to have the last mile.
19  12265                Various satellite Internet activities
20     have been introduced in this country, but they face, as
21     compared to the terrestrial ones, some price challenges
22     and, in the case of a full Internet one, some bandwidth
23     challenges as well.
24  12266                That's why the Cancom Internet was
25     really targeted at more remote areas where the number


 1     of users is naturally a bit more limited, even though
 2     usage per user was high.  There were some bandwidth
 3     limitations, so you could accommodate a certain number
 4     of users only per transponder.
 5  12267                THE CHAIRPERSON:  Thank you.  Those
 6     are all my questions.
 7  12268                I think Commissioner McKendry has one
 8     or two.
 9  12269                COMMISSIONER McKENDRY:  Thank you,
10     Mr. Chair.  What is business TV and in light of the
11     points you made about broadcasting, why isn't it
12     broadcasting?
13  12270                MR. GOURD:  Because it is delivered
14     in the form of a private network to a single
15     organization normally with delivery of content two or
16     three times per week, for example, typically.
17  12271                Let me give you a specific example. 
18     Again when I was at Cancom, we obtained the contracts
19     to deliver business television to first Ford Motors and
20     then to General Motors.  These were networks that we
21     were very proud of and very proud to have gotten the
22     contracts.
23  12272                They were designed, quite frankly,
24     for one application which was interactive distance
25     training.  Once a week, depending on the program, there


 1     was really not continuous training activities, so once
 2     a week there would be a training activity pertaining to
 3     the introduction of a new car for, let's say, the
 4     technicians.
 5  12273                The trainer would be at the studio,
 6     fully automated with one technician, automated robotic
 7     cameras, laser beam on the mike, and for half an hour
 8     the trainer would push a button so there would be music
 9     in the intro.
10  12274                This is the Ford Training Network,
11     FTN, then push another button.  A VCR would start and
12     show the car rolling on a platform or whatever.
13  12275                He would then push another button,
14     introducing the engineer, the main engineer from
15     Detroit who would explain how the car was technically
16     built.  Then the trainer would move to questions and
17     answers and they would use an electronic path for text
18     and audio interactivity.
19  12276                Each path would be individualized so
20     the trainer would see the name of the caller.  There
21     would be one per week, let's say, for technicians.  The
22     next one would be two days later for the salespeople,
23     but it would all go to specific boardrooms, fixed
24     points, and, therefore, it was considered as a private
25     network.


 1  12277                COMMISSIONER McKENDRY:  If the same
 2     service was delivered over the Internet and required
 3     password access for the users in order to keep it
 4     private, would it be broadcasting then?
 5  12278                MR. GOURD:  Again, I would rather
 6     rely on my legal advisers.  As I said, I was a
 7     practising lawyer more than 25 years ago.  If it is in
 8     the form of a private network towards dedicated points,
 9     normally it wouldn't be, but I think I should rely on
10     David for that.
11  12279                MR. ELDER:  I would say the short
12     answer is no.  I would say a private network is a
13     private network regardless of the means to deliver it.
14  12280                Really what you are talking about is
15     when you are looking at the Broadcasting Act and the
16     definition you are talking about for reception by the
17     public, I know certainly in other instances the
18     Commission has interpreted that as not meaning for
19     reception by a closed user group.
20  12281                COMMISSIONER McKENDRY:  On the
21     Internet, if password access is required to a site,
22     then it is not intended for the public and it's
23     private.
24  12282                MR. ELDER:  Well, again, you are
25     talking here about a private network, something along


 1     the lines of distance TV.
 2  12283                COMMISSIONER McKENDRY:  I am asking
 3     if it was delivered on the Internet and password access
 4     was required.
 5  12284                MR. ELDER:  Just to clarify your
 6     question.  The passwords would only be provided then to
 7     the members of this corporation.  Then I would say yes,
 8     that is also a private network and would not be
 9     broadcasting.
10  12285                COMMISSIONER McKENDRY:  Would it also
11     apply to a service -- would the same rule apply to a
12     service that was being offered, for example, a movie
13     being transmitted over the Internet but password access
14     was required and one had to be a member of a group to
15     have that password?
16  12286                MR. ELDER:  I don't think that that
17     password access, if you are talking about something
18     that's available to the general public, I don't think
19     takes you out of the definition of broadcasting.
20  12287                In your question we are again talking
21     about the Internet.  For a number of reasons, a number
22     of arguments, you have heard ad infinitum I think this
23     week, I don't think you are talking about broadcasting. 
24     You are looking at predominantly alphanumeric services. 
25     You don't have program coherence.  You have


 1     customization of programming.
 2  12288                I don't really think that the
 3     password is determinative in that scenario.
 4  12289                COMMISSIONER McKENDRY:  I thought in
 5     the training program scenario where the members of the
 6     corporation had the password that was in fact
 7     determinate.
 8  12290                MR. ELDER:  I guess it helps assure
 9     you that it is indeed a private network.  I guess you
10     can come at this two ways.
11  12291                You can look at it and say are there
12     programs being distributed here?  If you can conclude
13     that there are programs being distributed but they are
14     only being distributed over the Internet to a closed
15     user group and it involves a corporation, I would say
16     they are still not being distributed to the public.
17  12292                COMMISSIONER McKENDRY:  But you don't
18     extend that to individuals who require a password and
19     don't work for a corporation.
20  12293                MR. ELDER:  Right.  If you make the
21     determination that what is being provided over the
22     Internet are programs and those are being distributed
23     to members of the public who only have to get a
24     password in order to access the service, this would be
25     equivalent to a pay TV sort of service.  Not everyone


 1     gets pay TV, but if you pay your money you get it.
 2  12294                If you are talking about that sort of
 3     scenario, once you have made the determination that it
 4     is programs being provided over the Internet, then that
 5     would be, I suppose, a broadcast service, but there's
 6     an awful lot of ifs in there I guess is the point I am
 7     trying to make.
 8  12295                COMMISSIONER McKENDRY:  And the use
 9     of the password is not determinate in any way.
10  12296                MR. ELDER:  I don't think in that
11     situation.  If it is to the public and all you have to
12     do is get a password to get on, I think it is the same
13     as accessing the specialty services.
14  12297                COMMISSIONER McKENDRY:  It's the same
15     in your situation where you said the password is
16     determinate.  Members of the corporation, all they have
17     to do is get a password.
18  12298                MR. ELDER:  Yes, but they are members
19     of a restricted user group.  They are not members of
20     the public.
21  12299                COMMISSIONER McKENDRY:  Surely you
22     don't have to be in a corporation to establish a
23     restricted user group.
24  12300                MR. ELDER:  There certainly is a grey
25     area here.  I know that the Commission has looked at


 1     this in other situations.  To be honest with you, I
 2     haven't looked at some of the case law on this point
 3     about exactly what constitutes the public for these
 4     purposes.
 5  12301                Certainly segments of the public can
 6     constitute the public, but the conventional wisdom I
 7     guess is if it is not publicly available, it is only a
 8     closed user group.  There is some unifying
 9     characteristic that defines that group.  That is not to
10     the public.  That is a private communication.  That is
11     not broadcasting.
12  12302                I think that is consistent with the
13     intentions certainly behind the drafting of the
14     legislation.
15  12303                MR. SNAZEL:  The comment I was going
16     to make was in fact with pay TV or pay-per-view or
17     other broadcasting programs that are available to the
18     public, there is in fact a password.  It's an
19     electronic password.  People are given access to that
20     program only upon having access to the password.  You
21     can call it technically a password which allows them to
22     do that which I think is the analogy you are trying to
23     make.  Is it?
24  12304                MR. ELDER:  Yes.
25  12305                COMMISSIONER McKENDRY:  Thank you.


 1  12306                THE CHAIRPERSON:  Thank you.
 2  12307                I think those are all our questions. 
 3     We appreciate your participation here today and your
 4     history lesson.
 5  12308                Madam Secretary, our last presenter
 6     for today and for this week.
 7  12309                MS BÉNARD:  Thank you, Mr. Chairman.
 8  12310                The next presentation will be by
 9     Leslie Regan Shade.
11  12311                MS SHADE:  This probably will be
12     short and sweet.  I reiterate a lot of what Dr. Karim
13     said.
14  12312                My name is Leslie Regan Shade.  I am
15     currently an Assistant Professor at the Department of
16     Communication at the University of Ottawa where I teach
17     classes in the history, theory, effects and social uses
18     of mass media, including new media.
19  12313                Before joining the University of
20     Ottawa, I was a consultant on information technology
21     issues in Montreal, Toronto and Ottawa.  Some of my
22     clients included the Government of Ontario in a study
23     looking how non-profit groups could use and benefit
24     from e-mail.
25  12314                I did a report for Status of Women


 1     Canada on how Canadian women's groups are using the
 2     Internet and some of the barriers to access and
 3     Industry Canada through the Information Policy Research
 4     Project at the University of Toronto and a
 5     collaborative series of workshops and discussion papers
 6     and research on issues of universal access, of which
 7     you have heard from Andrew Clement the very first day
 8     of the hearings.  I have been working with him on a lot
 9     of these issues.
10  12315                One of the areas that I am most
11     concerned about are the issues surrounding what I like
12     to call the social infrastructure of the new media and
13     in particular the very vital issues of universal
14     access.
15  12316                Partly what I would like to do today
16     is reinforce the oral presentations of Andrew Clement
17     of the University of Toronto who presented the National
18     Access Strategy, as well the Media Awareness Network
19     who emphasized the need for ongoing web literacy,
20     particularly for Canadian school children, and Mr.
21     Garth Gram who will appear on Monday next on behalf of
22     Telecommunities Canada and the Community Networking
23     Movement in Canada and as well Dr. Karim and his
24     associates.
25  12317                Many of my comments here uncannily


 1     echo what Dr. Karim was saying this afternoon, which
 2     probably isn't surprising since we both graduated from
 3     the same university at the same time.
 4  12318                Canada has a unique history of
 5     providing national communication links through federal
 6     government intervention, through subsidies and content
 7     quotas and principles of universality, but what we see
 8     with the development of new media, or as its also
 9     referred to as ICTs or information and communication
10     technologies, the government has decided to let market
11     led forces and industry initiatives prevail, admits an
12     environment characterized by competition,
13     telecommunications, deregulation and increasing cuts to
14     social services, issues of national and cultural
15     sovereignty and citizenship remain crucial.
16  12319                We need to ask ourselves what should
17     be considered essential services to new media and
18     information and communication technologies and what
19     information governments should be required to provide
20     to citizens free of charge.
21  12320                Moreover, how well can such access
22     provision fulfil individual needs and societal goals
23     and how can access to new media and ICTs encourage and
24     enable social, political and economic participation.
25  12321                One of the visions of the information


 1     infrastructure is that of the electronic marketplace or
 2     e-commerce.  What is noticeable about the Canadian
 3     government strategy towards a Canadian electronic
 4     commerce strategy is its neglect in considering issues
 5     relating to the social infrastructure.
 6  12322                Access is referred to in terms of
 7     physical infrastructure only and the policy
 8     infrastructure that will support this market driven and
 9     competitive environment.
10  12323                If electronic commerce is to be
11     successful for Canadians, it would seem to make sense
12     to consider more carefully the nature of access which
13     is very multifaceted and whether or not there should be
14     some sort of regulations concerning universal access
15     for Canadian citizens.
16  12324                It's important to note that
17     throughout the background documents on electronic
18     commerce that Industry Canada put out, Canadians are
19     referred to as consumers.  It is consumers who are
20     concerned with the security of their network
21     transactions over the Internet and consumers who are
22     concerned with disclosure of their personal information
23     over the Internet.
24  12325                In these market driven scenarios,
25     what is the role of the digital citizen?  Are we solely


 1     purchasers and sellers of services and products in the
 2     digital realm?  Are these transactions interactive or
 3     are they governed by a one way flow of information?  Is
 4     the role os communication here restricted to a
 5     merchandising function?
 6  12326                If you look at recent surveys on who
 7     is connected to ICT services in Canada, it highlights
 8     the overwhelming inequities in access across the
 9     country.  According to various socioeconomic frameworks
10     overall, the figures reveal that even though more
11     people are becoming connected to ICT services, it's a
12     fairly homogeneous group of higher income families and
13     our students who have access through universities.
14  12327                My concern is that we need to be
15     concerned with those citizens that are not connected,
16     those citizens in lower socioeconomic groups, disabled
17     peoples, natives and visible minority peoples, seniors,
18     single mothers.
19  12328                As well, these surveys don't get into
20     the uses and participation, as Dr. Karim mentioned. 
21     They mentioned who has access but they don't talk about
22     who is using and who is participating and how with
23     these services.
24  12329                Fortunately, there are some issues
25     that should be solved in terms of institutionalizing


 1     research into use and participation of ICTs.  The
 2     Social Science and Humanities Research Council has just
 3     set up a new research agenda to look at issues
 4     concerning the knowledge based economy society, issues
 5     of social cohesion, issues of uses and participation.
 6  12330                Hopefully some good research should
 7     flow from this research agenda that can help us find
 8     out what it is that citizens need and want.
 9  12331                Although Canada can brag that it is
10     one of the more technologically advanced countries in
11     the world, boasting major infrastructure advantages
12     including the world's highest penetration of
13     telephones, cable TV and home electronics like the VCR,
14     a schizophrenia exists between the race to implement
15     diverse communication technologies and the fact that
16     often these technologies carry more non-Canadian
17     cultural material than Canadian culture material.
18  12332                Two recurring viewpoints are, one,
19     that culture can colonize minds and, two, that cultural
20     sovereignty is a necessary condition for political
21     sovereignty.  This has surfaced again with respect to
22     new media.
23  12333                The twist now is that culture has
24     less to do with proximity and more to do with
25     technology, information and the diffusion of text. 


 1     Some Canadians fear that the global sweep of network
 2     technologies that admits an increasing climate of open
 3     competition could result in the Americanization of
 4     Canada.
 5  12334                Will Canadians have equal access to
 6     the channels of production and distribution as our
 7     southern neighbours?  It is here that the role of
 8     community networking and universal access for Canadian
 9     citizens comes into play.
10  12335                Communicating networking activists
11     have championed the idea of community networks as being
12     a distinctly Canadian communications facility
13     reflective of the goals of the Federal Information
14     Highway Advisory Council, issues of jobs, cultural
15     identity and universal access.
16  12336                In 1994 public interest intervenors
17     at the CRTC information highway hearings reminded the
18     Commission of the continued surge and enthusiasm for
19     community based networks and urged the CRTC to
20     recommend the creation of both social and economic
21     policies to sustain community networks.
22  12337                Given that national and global
23     information infrastructures are now being promoted and
24     legislated in a deregulative, competitive and
25     self-regulated environment where private industry at


 1     this point can have unbridled, albeit inoperable power,
 2     community networks which are indeed a social utility
 3     could find themselves in a vexatious position.
 4  12338                Community networks occupy the ground
 5     between government and the private sector or what is
 6     commonly referred to as civil society or civic space. 
 7     This civic space is voluntary, embraces co-operatism,
 8     consensus and the common ground.  It is vital that this
 9     public space be reinforced and sustainable.
10  12339                It is my hope that the CRTC will act
11     in some capacity to acknowledge the role of community
12     networks and other forms of electronic public space in
13     defence of citizen participation and the need to
14     institute some form of regulatory intervention for the
15     purposes of achieving universal access to new media and
16     ICTs for all Canadians.
17  12340                By access I include notions of the
18     social as well as the technical infrastructure.  A key
19     component of that sense of access is this notion of
20     digital or web literacy.  How we can achieve that?
21     However, as Dr. Karim said today and as I am sure that
22     you realize, it is really up to discussion.  It is just
23     to reinforce this notion that we need to have a sense
24     of a social public space that I want to reinforce this
25     afternoon.


 1  12341                Thank you.
 2  12342                THE CHAIRPERSON:  Thank you, Ms
 3     Shade, for your presentation.
 4  12343                I will turn the questions to
 5     Commissioner McKendry.
 6  12344                COMMISSIONER McKENDRY:  Thank you,
 7     Mr. Chair.
 8  12345                Good afternoon and thank you for
 9     patiently waiting until late in the afternoon.
10  12346                MS SHADE:  It's okay.  I wrote a few
11     research proposals.
12  12347                COMMISSIONER McKENDRY:  Perhaps I
13     could ask you a question that relates to paragraph 8 in
14     your written submission.  I will just give you a moment
15     to find that.
16  12348                MS SHADE:  Yes.  What did I write? 
17     Okay.
18  12349                COMMISSIONER McKENDRY:  I will just
19     read a bit of that.  You indicate that programs such as
20     CAP, SchoolNet and VolNet, and I quote:
21                            "-- can boast what their actual
22                            and potential access figures
23                            are, i.e. how many communities
24                            and schools are connected, but
25                            what is more important than


 1                            mirror access figures is
 2                            ascertaining how ICTs are being
 3                            used by the various communities. 
 4                            What is the use and
 5                            participation of new media and
 6                            ICTs?"
 7  12350                Then you add in the quote:
 8                            "In the near future, a research
 9                            agenda will need to be designed
10                            and implemented to look at use
11                            and participation rates."
12  12351                I'm just wondering if you could
13     elaborate a bit on what that research agenda should
14     include and who in your view should undertake that
15     research.
16  12352                MS SHADE:  Well, fortunately, SHIRK
17     did announce their research proposals and being in an
18     academic context, I am pleased to note that I can try
19     to secure funds along with other like-minded suspects
20     in the academic realm across the country, and community
21     groups as well, to look at this.
22  12353                Research agendas need to look at how
23     people, how communities, how citizen groups are using
24     information and Internet services, what sorts of
25     resources they need access to, what source of content


 1     they need access to, what source of content they need
 2     to develop, how sustainable it is for them in terms of
 3     economics.
 4  12354                We are there accessing this content
 5     whether it be domestically at community access points
 6     such as public libraries or community centres or other
 7     sorts of institutions and how they can contribute to
 8     this content.
 9  12355                In terms of use and participation, as
10     well I'm interested in how sustainable is it.  When I
11     did research into looking into how woman's groups were
12     using the Internet, one of the big issues was why
13     should we go on the Internet?  What is in it for us?
14  12356                What sort of content do community
15     groups need and want?  That's one of the questions. 
16     One of my concerns is that the information
17     infrastructure is becoming increasingly commodified and
18     there's a lot of corporate information and community
19     based information isn't getting out that needs to be
20     put out there.
21  12357                Does that sort of answer your
22     question?
23  12358                COMMISSIONER McKENDRY:  That's very
24     helpful.  Just following on that, what are some of the
25     elements that we should consider in evaluating whether


 1     or not we have achieved a successful access strategy. 
 2     How would we know when we are there?
 3  12359                MS SHADE:  It's going to take time. 
 4     I think it's a long research strategy.  It's going to
 5     take a long time.  As I was waiting to give my talk, I
 6     was sketching the outline for a research proposal I
 7     need to submit to the university next week.
 8  12360                I want to look at how the public
 9     library is being used as a public access site for the
10     Internet.  What sorts of information or resources are
11     citizens using at the public libraries.
12  12361                Who is not using these resources? 
13     What sorts of resources do they need, and why?  It is
14     an ongoing process in that sense.
15  12362                It is not a matter just of serving
16     the participants but of asking them questions about how
17     they might design systems that might better accommodate
18     their needs and usages; and considering it as well, and
19     not just information that is digital, but how it fits
20     into other information in their everyday lives.
21  12363                So digital information is a component
22     of information and needs that we have in our everyday
23     lives.  There is a balance between that sort of
24     information and other information we use on a
25     day-to-day basis.


 1  12364                COMMISSIONER McKENDRY:  Thinking of
 2     the CRTC, what role do you see for us in encouraging
 3     communities to use and participate in new media and
 4     ICTs?
 5  12365                MS SHADE:  Reinforcing the need for
 6     communities to participate.  Reinforcing the need for
 7     citizen participation.  Reinforcing the need for
 8     citizens to participate as Canadian citizens and to
 9     reinforce and promote their own content that can be
10     Canadian content, whether it be Canadian cultural
11     content or just content produced by Canadians
12     themselves I think is very, very important.
13  12366                COMMISSIONER McKENDRY:  Let me take
14     you back to paragraph 3 in your written submission. 
15     You have a quote there from a communications theorist
16     Denis McQuale, and I am going to read one sentence in
17     that quote, and the sentence is quote:
18                            "The new communication networks
19                            which are developing often
20                            cross-cut the older boundaries
21                            of place, culture, class and
22                            political organization and tend
23                            to undermine rather than sustain
24                            traditional political ties."
25  12367                I take it you -- correct me if I am


 1     wrong -- but I take it either he or you or both of you
 2     look at that as a negative development.
 3  12368                MS SHADE:  Yes, I would say it is a
 4     negative.  I guess I can speak for him because that is
 5     the interpretation of what I got from Denis McQuale and
 6     why I quoted him.
 7  12369                Political ties, I think this whole
 8     notion of communication amongst and between government
 9     entities should be sustained and encouraged rather than
10     curtailed using electronic media; likewise its
11     communication between citizens, whether or not they
12     live across the country or down the street.
13  12370                So, yes, there should be some
14     enhancement of democratic possibilities, this sort of
15     whole notion of electronic democracy that has been
16     globally referred to in many senses.
17  12371                COMMISSIONER McKENDRY:  For the sake
18     of discussion, I would have thought that the ability of
19     new communication networks to cross-cut the older
20     boundaries of place, culture, class, in particular,
21     would be a positive attribute of the new networks.
22  12372                MS SHADE:  Yes, it is positive, but
23     my sense as well is that it has to include everybody,
24     okay?  It is not just an elite at this point of which
25     mostly who has access to it.


 1  12373                COMMISSIONER McKENDRY:  Just keeping
 2     in mind the quote we talked about, I want to just move
 3     ahead to a comment you made in your oral comments, and
 4     it is made in paragraph 13 of your written comments,
 5     the statement that culture can colonize minds.
 6  12374                Wouldn't the fact that the new
 7     communication networks cross-cut the things that we
 8     have talked about work against the colonization of
 9     minds that you are concerned about in paragraph 13?
10  12375                MS SHADE:  Perhaps.  Part of where I
11     am coming from is as an American.
12  12376                COMMISSIONER McKENDRY:  I didn't hear
13     you.
14  12377                MS SHADE:  Coming as an American.  I
15     have lived here for 12 years, and I am absolutely
16     fascinated by this notion of cultural sovereignty,
17     particularly in the Canadian sense.  I am constantly
18     asking my students what they think -- name Canadian
19     musical products, name Canadian films, and I am always
20     discouraged because very often they don't pick up on
21     it.  They say, "Well, what is it?  What is so special
22     about being Canadian?  I don't get it.  It is all the
23     same.  We are all one culture," but we are not.  There
24     is uniquenesses, definite uniquenesses.
25  12378                I think it is very important that


 1     those in the race to implement new media technology
 2     that a lot of Canadian content get reinforced and
 3     sustained very much so.
 4  12379                COMMISSIONER McKENDRY:  Let me ask
 5     you a question about paragraph 16 in your written
 6     submission.  In there you warn that, and I will quote
 7     again:
 8                            "Given that national and global
 9                            information infrastructures are
10                            now being promoted and
11                            legislated in a deregulated
12                            competitive and self-regulated
13                            environment where private
14                            industry can have unbridled
15                            power, community networks which
16                            are indeed a social utility
17                            could find themselves in a
18                            vexatious position."
19  12380                Many parties in the proceeding that
20     we are currently conducting have emphasized the
21     positive impact that ICTs could have upon individuals
22     and communities giving them powers and opportunities
23     that they lacked under traditional communication
24     models, such as broadcasting.
25  12381                Some of them have even gone further


 1     to argue that such power has to some extent created a
 2     levelling effect between corporate interests and
 3     individual or community interests.
 4  12382                Can you comment on that observation
 5     by those parties?
 6  12383                MS SHADE:  The vexatious position
 7     that community networks and electronic public space
 8     could find themselves in deals more in issues of
 9     sustainability, peer economics, non-profit.  How can --
10     given the sort of climate right now of electronic
11     commerce, and commercialization of the Internet in
12     great big media giants and, you know, AOL and Sun
13     Microsystems and so on, merging and what not, the fear
14     is that a lot of the community groups and community
15     networks in particular and non-profit spaces and
16     educational resources and spaces that can be there for
17     a variety of different citizens in Canada will be
18     side-swiped.  They won't be able to afford entry.  That
19     is what I mean there in that sense.
20  12384                Indeed, can electronic networks be a
21     great leveller?  To a certain extent, but let's look at
22     who has access, and that is my concern.  It is -- there
23     are more people that are not -- that don't have access.
24  12385                It is my concern that if this is of
25     paramount importance in terms of lifelong learning, and


 1     in terms of electronic commerce, and in terms of
 2     education and so on, that there be some sort of
 3     provisions to make sure that all citizens can have
 4     access in some way.
 5  12386                COMMISSIONER McKENDRY:  Do you have
 6     any specific recommendations for us, thinking of the
 7     CRTC and its mandate, that we could put in place to
 8     develop or sustain community networks?
 9  12387                MS SHADE:  I think one is the
10     recognition, as you did in 1994 in the hearings here,
11     of the recognition of the viability and the
12     vitalness -- the vital sense that community networks
13     have achieved, and networks -- new media is also not
14     just being delivery of content but as being interactive
15     and a communication mechanism.  Public social utility,
16     I think is very important.
17  12388                So I think there is that recognition
18     from the Commission that you could make.
19  12389                In terms of regulating access, I mean
20     this is a huge hornet's nest.  How do you do this?  How
21     do you set up universal access funds?  Do you set up
22     little taxation methods and take away some of those
23     taxes and put it in a universal access fund?
24  12390                Those are issues I think that need to
25     be discussed in wide spread consultations involving,


 1     industry, public interest groups, citizens, unions,
 2     educators, various federal entities, and so on and so
 3     forth.
 4  12391                COMMISSIONER McKENDRY:  Thank you
 5     very much for answering my questions.  I appreciated
 6     reading your very interesting comments.
 7  12392                Those are my questions, Mr. Chairman.
 8  12393                THE CHAIRPERSON:  Thank you,
 9     Commissioner McKendry.
10  12394                Thank you, Ms Shade.  We appreciate
11     your presentation here today.  It looks like there is a
12     lot of potential for research with all this new media,
13     and I wish you well in terms of your application.
14  12395                MS SHADE:  As people were saying, it
15     is -- we are in an infancy.  In a sense, we are in an
16     infancy; and, in a sense, not.  I can remember being on
17     line in 1990, and things have changed dramatically. 
18     But, at the same time, things haven't changed that
19     much.
20  12396                But I think in terms of -- I would
21     say probably in the next five years we will know more
22     and we can answer some more questions and you might
23     have to do this all over again, who knows?
24  12397                THE CHAIRPERSON:  What we have
25     learned this week represents 35 years in real time, I


 1     guess, in terms of development of the Internet.  Thanks
 2     again.
 3  12398                MS SHADE:  Thank you.
 4  12399                THE CHAIRPERSON:  That concludes our
 5     work for today and for the week.  We will reconvene
 6     here on Monday morning at 9:00 o'clock.
 7     --- Whereupon the hearing adjourned at 1715, to resume
 8         on Monday, December 7, 1998, at 0900 / L'audience
 9         est ajournée à 1715, pour reprendre le mardi
10         7 décembre 1998 à 0900
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