TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
BROADCASTING APPLICATIONS AND LICENCES/
DEMANDES ET LICENCES EN RADIODIFFUSION
HELD AT: TENUE À:
Vancouver Trade Vancouver Trade
& Convention Centre & Convention Centre
Room 8-15 Salle 8-15
999 Canada Place 999, Canada Place
British Columbia (Colombie-Britannique)
February 24, 2000 Le 24 février 2000
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Public Hearing / Audience publique
Broadcasting Applications and Licences/
Demandes et licences en radiodiffusion
BEFORE / DEVANT:
Françoise Bertrand Présidente/Chairperson
Présidente du Conseil/
Chairperson of the Commission
Andrée Wylie Conseillère/Commissioner
Stuart Langford Commissioner/Conseiller
Cindy Grauer Commissioner/Conseillère
Barbara Cram Commissioner/Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Lori Assheton-Smith Legal Counsel/
Michael Burnside Hearing Manager/ Gérant de l'audience
Marguerite Vogel Secrétaire de l'audience/
HELD AT: TENUE À:
Vancouver Trade Vancouver Trade
& Convention Centre & Convention Centre
Room 8-15 Salle 8-15
999 Canada Place 999, Canada Place
British Columbia (Colombie-Britannique)
February 24, 2000 Le 24 février 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
PHASE III - INTERVENTION BY / PAR (cont'd)
Jonathan Blasberg 1028
Jake Warren 1032
Thoughtcrime Productions 1037
Garth Holden 1041
Ronald Ranger 1046
Canadac Services 1049
Chinese Consolidated Benevolent Association 1053
Ben Pires 1057
The Council of Canadians 1065
The Victoria Native Friendship Centre 1070
The B.C. Festival of the Arts, Senate Council
Member and Greater Victoria Film Commission 1075
Alberta Motion Picture Industries Association 1083
Yellow Kitchen Productions 1090
Intrepid Theatre Company Society 1093
The National Screen Institute of Canada 1100
Victoria Independent Film Producers Association 1106
Questions by Commission 1117
PHASE IV - REPLY BY / RÉPLIQUE PAR
CHUM Limited Victoria 1131
Trinity Television Inc. 1136
CHUM Limited Vancouver 1147
PHASE I - MDS APPLICATIONS
PRESENTATION BY / PRÉSENTATION PAR
SkyCable Pacific/Craig Broadcasting Systems Inc. 1158
LOOK Communications Inc. 1242
Vancouver, British Columbia / Vancouver (C.-B.)
--- Upon resuming on Thursday, February 24, 2000
at 0805 / l'audience reprend le jeudi 24 février
5654 CHAIRPERSON OF THE COMMISSION: Alors, good morning everyone. We want to put on the public record that Mr. Viner is getting older today.
--- Laughter / Rires
5655 CHAIRPERSON OF THE COMMISSION: Unfortunately, we cannot give him maybe the birthday gift he would like today. We haven't brought our licensing pad, as Commissioner Grauer often says.
5656 Good morning everyone. It is going to be a long day. We will be sitting longer hours today, because we will try to kind of look at the MDS applications today. But let's start by the first item on the agenda and to pursue with the applications for television stations.
5657 Madame la Secrétaire, vous voulez appeler notre prochain intervenant?
5658 MS VOGEL: Thank you, Madame Chairperson.
5659 I would like to begin by checking to see if some of the interveners who weren't here yesterday have joined us today.
5660 Vancouver Media Directors Council.
--- Pause / Pause
5661 MS VOGEL: Greater Nanaimo Chamber of Commerce.
--- Pause / Pause
5662 MS VOGEL: And, Mr. Ibrahim.
--- Pause / Pause
5663 MS VOGEL: Then, I would like to invite Jake Warren and Jonathan Blasberg to come forward please.
5664 CHAIRPERSON OF THE COMMISSION: Welcome.
5665 Don't be afraid. We look serious, but we are not hurting anyone. Don't be intimidated.
5666 I would like to remind everybody that although you come two or three at the same time, you are allowed 10 minutes for the intervention, and that also we are taking this period of the hearing really to be listening.
5667 We will be asking questions only if we need clarification or understanding, and we are really kind of devoting the time to the listening period of this hearing. So keep this in mind.
INTERVENTION / INTERVENTION
5669 MR. BLASBERG: Yesterday you heard strong support for CHUM from the voices of arts and culture on the Island. Today, many other Island voices in support of CHUM will be heard.
5670 My name is Jonathan Blasberg. I am 24 years of age and I have spent the last year and a half working with youth at risk in Victoria, with the Youth Employment Project. It is a program dedicated to helping youth facing employment barriers in today's economy.
5671 I was raised in Vancouver and I have lived in Victoria for almost five years now. I have seen it grown, and I have grown with it. We are the capital of British Columbia and, as such, I am proud to live where so many important decisions are made. Today I have come to Vancouver to help make another important decision.
5672 Does Victoria need another television station? The answer is obvious: Yes. Victoria currently has one television station, one eye to watch the goings-on at the capital city. But just as any person's vision is compromised with only one eye, so too is the city's vision compromised.
5673 Victoria needs two eyes to perceive depth, and in order that we see not only the events occurring in front of us but also the happenings that occur on the edges of our communities, in our peripheral vision.
5674 Right now Victoria has one eye, and for a long time it has been half closed. Only with the granting of another licence in Victoria will the television community here have real focus.
5675 Each person has a reason to come here today and make their opinions heard. I am here to speak in support of CHUM Limited in their application for a Victoria broadcasting licence. In actuality, though, my support for CHUM is a byproduct of my support for something greater -- youth.
5676 I spend my workdays at the Youth Employment Project encouraging other youths to grow and challenge themselves in the working world, but I have asked myself many times, and now I ask you: What truly defines youth? Do we constrict ourselves to the classic "age 16 to 24" definition, discarding those who are 15 and under, dismissing those over 25, simply for spending too much or too little time on the planet?
5677 As someone who is facing their 25th birthday in two months, I implore you to answer no. I still consider myself a youth, and will continue to do so, because youth is not and should not be a measure of age alone. Youth must also be a measure of vitality. It is the characteristics of youth that make us young, and these characteristics can belong to anyone, regardless of age.
5678 Curiosity, honesty and charity without forethought are all characteristics of youth. Youth does exist in everyone, regardless of age. It is simply that some of us choose to suppress it and others, like the people at CHUM, choose to express it.
5679 So why am I here for CHUM? Because CHUM and its people are youth -- perhaps not all of them by the classic definition, but in meeting with them I recognize the qualities of youth unbounded. They were genuine, sincere and truly interesting in working with Victorians to make our city a better place.
5680 If I didn't feel that way, I wouldn't be here. The people at CHUM are not afraid to change. They seek it out and embrace it. Otherwise they wouldn't be here. But most importantly, like you, me and the city of Victoria, CHUM wants to grow, which in the end is the ultimate characteristic of youth itself.
5681 I believe CHUM is looking to grow, and Victoria needs just that. Our media community has become stale, stagnant and unchanging. It has lost its youth within its organization and in its viewers. Victoria's media needs rejuvenation so in turn Victoria can be rejuvenated.
5682 I am tired of describing Victoria to the citizens of the world as a city in relationship to its distance from Vancouver. We are the capital of British Columbia and, as such, we need to be heard and we need to be seen.
5683 Great things are happening here, and we need open eyes to see it and to help others see it too. When politicians, bureaucrats and business people spend a cold winter night on the street to support Victoria's homeless, people need to know. When former street youth challenge award winning chefs that they can cook a tastier Kraft dinner, and prove it in the middle of downtown Victoria, people need to know.
5684 And lastly, when the graduates of our Youth Employment Program, where I work every day, pick up brooms and mops and help clean up the streets they once sat on, people need to know. Victoria is a city of growing youth and in order for Victoria and its youth to grow, we need new media to grow in.
5685 I hope that you realize, as I do, that CHUM is the broadcaster that can make that happen. By bringing youthfulness to Victoria, CHUM will make Victoria a better place and, because it is our province's capital, it will make British Columbia a better place for everyone and their youth.
5686 Thank you.
INTERVENTION / INTERVENTION
5688 MR. WARREN: Thanks, Jonathan.
5689 Good morning, Madam Chairperson, members of the CRTC.
5690 My name is Jake Warren. I am 28 years old and a resident of Victoria, British Columbia. I would like to thank you for the opportunity to speak here today in support of CHUM Limited's application for their proposed CIVI, your Island television.
5691 As I outlined in my letter to you, I have much experience in Victoria with the arts communities, music, film, video production and youth advocacy.
5692 I have been working with youth since I was 18 and have contributed to the City of Victoria as the Chair of the Victoria Youth Council, the Chair of the Victoria Street Surf Association, which was the society that represented skateboarders back in the late 80s in their quest to build a skateboard park, a city-funded skateboard park, and also a promoter of many live all-ages concerts, mostly alternative music.
5693 This is why I am not only passionate about the whole concept of a new television station on Vancouver Island, but I also feel I can offer an expert opinion on what the Island really needs from a new station, especially when it pertains to youth, and I most certainly believe it does.
5694 I recently produced the independent youth forum, the Future of Television in Victoria. The forum presented in part by CHUM Limited was designed to connect with Victoria's youth and to promote awareness and involvement in the application process, and in doing so answered three important questions: Does Victoria need another television station? What should a truly local station know about its youth audience? What ideas do the youth of the Island have about this new station?
5695 I invited approximately 50 young people to participate in the forum -- university students, young professionals, high school students, film and video producers, promoters, musicians, artists. In the end, we had 44 young motivated Victorians come together on a Friday evening, January 21, 2000. The 44 people were separated in three small groups, each participating in three different exercises that we called "stations". Each station dealt with a particular area of local television. We hoped that the forum would not only be informative and relevant, but incite communication and interaction amongst the youth in a stimulating manner.
5696 All in all the forum was a huge success. The results speak volumes about the incredible amount of motivation and creativity that young people possess, a resource that must be included in the development of a new station and continually nurtured if it is to properly represent an entire community.
5697 At the forum, the overall opinion of current local television was one of discontent and healthy scepticism, mixed with equal portions of excitement and true vision for the future.
5698 The youth embraced the concept of a new local television station and had countless reasons why one is not only needed but desperately hoped for, the most prominent one being the most obvious: The lack of significant representation and inclusion that they have endured for far too long.
5699 I encourage you to read the report that I am about to file and view the video that accompanies it. I will leave that with you this afternoon. This, I feel, is the only way to properly understand the individual voices that were so eloquently exhibited there.
5700 Personally, CHUM Limited I believe is the superior applicant. There is no question about this. It is the most capable and historically committed to the elements of television programming that I believe Islanders not only require but deserve. One that can promote our Island identity, one that unifies the north, south, east and western reaches of the Island and exists, or can exist, to represent all communities equally.
5701 I believe that the station believes all age groups are of priority and deserving of representation. A station that includes vital, original, creative individuals in the production of programs meant to entertain and inform them. I don't believe that it is safe to assume that shows that appeal to people in other parts of the country will necessarily do the same on the Island.
5702 They are also a station that can expose the absolutely unique and diverse arts and entertainment communities on the Island and promote them to the world -- I'll be very quick here. Most of all, a station, I believe, that doesn't just scratch the surface of the community, to simply relay information from a safe distance, but establishes roots in the community and honest and genuine investment in nurturing positive, unduplicated, original and distinct local television.
5703 In closing -- and I don't have to tell you this -- anyone with the right amount of money and a licence can own a television station and report news and explain details about upcoming events. But what I see in stations and channels owed by CHUM, like MuchMusic, Bravo and City Television, is an honest investment in the product and a natural creativity in the method in which it is delivered to the public.
5704 The future of their stations and channels depend on the people they broadcast to, and they know it, they care. Victoria and the Island deserve that kind of commitment to exist in their local station and I believe CIVI, your Island television, will achieve just that, and I can't wait to see what happens.
5705 Thank you very much.
5706 CHAIRPERSON OF THE COMMISSION: Thank you very much to the two of you. Thank you. We are really relieved that youth can be not only based on age. Thank you. And so is Mr. Viner.
--- Laughter / Rires
5707 MR. BLASBERG: Happy Birthday.
5708 MS VOGEL: Our next intervener this morning is Thoughtcrime Productions.
5709 CHAIRPERSON OF THE COMMISSION: Welcome. Good morning.
INTERVENTION / INTERVENTION
5710 MR. SPANGLER: Good morning, Madame Chair and Commission members.
5711 I am here to talk today about dramatic feature films. My name is Bruce Spangler and I am here today to speak on behalf of the CHUM application for CIVI in Victoria.
5712 I am a graduate with a BFA in film from Simon Fraser University, and the name of my company is Thoughtcrime Productions. I am currently in post-production on my first feature, entitled "Protection", which is a dramatic art film about the issue of child abuse.
5713 "Protection" is the first of many feature films I plan to make. I intend to make challenging Canadian films about real issues. I want my films to be accessible, but I am not simply seeking to satisfy the marketplace.
5714 I would normally never speak on behalf of any corporation or company, but I am compelled to do so in this case because there is a problem in the feature film community in B.C. and on the Island, and I believe CHUM and CIVI can help.
5715 When I think edgy Canadian feature, I think of Citytv in Toronto, owned by CHUM. Diane Baim from Citytv was the first broadcaster who saw the potential and expressed an interest in my feature.
5716 Even though it was shot in a low budget guerilla film style and in spite of the fact that it is a dark and perhaps difficult film, Diane Baim and Citytv were unafraid and have offered me a pre-licence.
5717 Indeed, most of the best B.C. features, the adventurous, sophisticated and award-winning features, tend to be licensed and broadcast by Citytv in Toronto.
5718 It is truly ironic that my film, a British Columbian independent feature, will be seen in Toronto but may never be seen on free television in my home province, because there are no broadcasters with enough courage to air the film.
5719 I believe that CHUM must come to B.C. if the Canadian feature film scene here is going to grow. I am Canadian, but have spent many years living in the U.S., from Michigan to Nebraska and Los Angeles. My years in the U.S. have taught me the impact that film and television has in shaping the cultural mindset of a nation.
5720 Getting pumped full of bad American television and film has an impact. If a nation does not have its own culture, how can it expect to maintain its political independence in a global economy? If Canada does not have an indigenous, unique and autonomous culture, how long can the geographical borders be maintained?
5721 Personally, as an independent West Coast filmmaker, I am tired of B.C. simply being used as a service industry for inferior generic American product. There was about a billion dollars spent on film and television in B.C. in 1999 and another billion spent in Toronto yet, the vast majority of money spent here in B.C. is American money. This makes it difficult to make an independent Canadian feature in this province. There are a number of extremely talented filmmakers here, and they will be making Canadian features in the future.
5722 It remains to be seen if they will make their films here. It may be necessary for these filmmakers to move to Toronto. That is because Toronto is where Canadian features get made and where they get shot. I must include myself in this category. My feature is set in British Columbia. It's about a social worker who works for the B.C. Ministry of Children and Families. The film deals with the issue of child abuse investigation, which is something I know from direct experience, having worked for the B.C. Ministry of Children and Families for over five years.
5723 I intended for my film to be viewed by the public in B.C. and by the politicians in Victoria and so become another voice in the debate about this serious social issue. If I can't get my film to air on free television in my home province, is it logical for me to continue to work here or should I too consider moving to Toronto?
5724 I believe that if CHUM and CIVI come to British Columbia, the pendulum will start to swing back. Their presence will create an atmosphere of possibility. Local filmmakers who want to make art, who want to challenge, who want to reflect what is happening in their community, will have an outlet, and I have no doubt that you will see a blossoming of high calibre Canadian feature films in B.C. and on the Island.
5725 If CHUM and CIVI come to this regional market, they will help to redress some of the serious regional imbalances that have emerged in the film and television scene in Canada.
5726 It is my urgent recommendation to the CRTC that you give the best of Canadian west coast feature filmmakers a chance. Grant CHUM and CIVI a licence and you will see the difference they will make.
5727 Thank you.
5728 CHAIRPERSON OF THE COMMISSION: Thank you very much, sir.
5729 MS VOGEL: I would like to call Ronald Ranger and Garth Holden please.
INTERVENTION / INTERVENTION
5730 CHAIRPERSON OF THE COMMISSION: Good morning, and welcome.
5731 MR. HOLDEN: Good morning.
5732 My name is Garth Holden. I will be speaking first.
5733 I am just an average member of my community. My only claim to any kind of expertise in the matters before the Commission is the fact that I am a home support worker. I care for the elderly and the infirm in the privacy of their own homes. Basically, those are the same homes that the signals that you are making determinations on today will be received in.
5734 I have spent more than 10,000 hours in private residences, from one end of Victoria to the other. Because of the nature of my work, I have been accepted as an extension of most of the families that I assist. Until I became involved in this process, I did not fully appreciate the unique perspective someone in my position has on his/her community.
5735 If I achieve nothing else today, I would like to express to the Commission just a brief case of the diverse flavour of the community that you are making decisions about.
5736 Victoria is a migrant city. Most of us come from somewhere else. In a multicultural country like Canada, Victoria is a wonderful cross-section of that greater diversity. Any new television station is going to have a format, and that is just the nature of the beast. My concern is the ability of that station to reflect the eclectic face of my home town.
5737 The business' usual formats established in the 1950s do not measure up to that task anymore. My television is inundated with stations from Vancouver, Seattle and Dakoma. In any given week, I have a better view of what is going on in those communities than in my own hometown.
5738 I was disappointed when we were passed over in the last licence hearings, and decided to take a more active role in this one. While informing myself about the groups involved in this hearing, I heard one question over and over, "What can you do for us?" It was generally paraphrased in terms like, "Who do you represent?", or "What is your affiliation?", but the underlying message came through loud and clear.
5739 When I admitted that I was simply a concerned citizen, I was handed some pamphlets and quickly shown the door. Then I met the people from CHUM. My experience with them has been the complete opposite. The first thing anyone from CHUM has asked me is, "What can we do for you?". They have gone to great lengths to ensure that they understand and can address my concerns, and have done a superb job of keeping me involved in this process.
5740 I have interceded on behalf of the CIDI licence application because of what I know they can do for my community. I come in contact with a large number of people, who can only be described as disfranchised -- the poor, the elderly, the disabled, natives and minorities, to name a few. I shudder to think of what kind of reception a person in one of these groups faces approaching a business-as-usual broadcaster.
5741 I would like each of you, for just a moment, to put yourselves in the shoes of a young mother stuck on welfare. By the middle of each month, there is no money to put food on the table, and you end up doing something degrading just to feed your children. This goes on every month for years, until some disaster forces you to seek media attention.
5742 You approach a business-as-usual broadcaster and have to fight your way through security guards, receptionists and secretaries to find anyone who can help you. And that person who can help is asking, "What can you do for me?".
5743 Compare that scenario with the Citytv model of an open television environment, and ask yourself which one you would want in your own community.
5744 I tugged at your heartstrings enough. It is time to get down to the nuts and bolts of what I want out of a new station in my community.
5745 It has to be truly focused on all of the community. A Victoria station is serving all of Vancouver Island and the Gulf Island communities, not Vancouver. It has to reflect the mix of people and organizations out here on the west coast. Most importantly, it has to build a format around the Island, not force one on us.
5746 On a personal note, I write romance novels. It is a hard enough business for a man to break into without the added handicap of living far from major publishers. Even a few minutes worth of national exposure can make the difference in getting out of the slushpile on an editor's desk.
5747 Our Island is close to robust communities and all the artistic fields, which find little or no exposure today. A new station must be able to support and promote these communities, not only locally but also on a national and international level. We have had business-as-usual broadcasting for far too many years. Our new station must be continually asking "What can we do for you?". It has to be putting resources back into our communities, such as educational programs, open forums and venues, for immediate feedback and criticism.
5748 The CHUM Group offers my community all of those resources and more. From letting a hip-hop fan record her own lyrics in the Speaker's Corner booth to providing a national venue for our festivals and events, CIVI is the station we need on the Islands.
5749 Thank you.
INTERVENTION / INTERVENTION
5750 MR. RANGER: Good morning, Madame Chairperson and other Board Members.
5751 It is my pleasure to be here this morning in support of CHUM Television. I am a wildlife artist, and I am also legally blind.
5752 Locally, I am associated with the CNIB in a number of other health and organizations. I cannot overstate the importance of local television and radio stations in keeping the tens of thousands of other people in similar circumstances informed of the resources and opportunities available to us.
5753 In many cases, radio and television are the primary link house-bound people have with their home town. All too often, broadcasters view the disabled community only in the light of human interest stories, focusing on disability rather than the countless skills, talents and opportunities that my segment of society has to offer in return to our community.
5754 I was greatly impressed by the attitude of everyone that I met at the recent gathering to promote the CIVI Application. No one focused on my blindness, other than to comment on the fact that it must have been an obstacle in re-establishing my artistic career. Instead, what I found was a real and obvious interest in the work that I am doing.
5755 For the first time in a long while, I was treated as an artist who happens to have visual problems, rather than a blind artist. It may not sound like a great distinction, but it is the difference between being treated as a working professional or as a token or freak talent.
5756 The years I have devoted to developing my talent and the good fortune I have had in regaining some of my sight are what have led me to relaunch my career. But my story is the wildlife art that I create, not the fact that there was an interruption in my productivity. The people I met through CIVI all seemed to understand this immediately, and I believe this speaks well for their individual and corporate attitudes.
5757 The CHUM organization, VI-CIVI, is one that I can wholeheartedly welcome and support in Victoria and the surrounding communities. As I am sure you can understand, a dark crowded room with glaring television lights at one end is not the most comfortable environment for a person with limited vision. When I went to the CIVI gathering, fully expecting to stand at the edge of the room, listen to what was said and perhaps pick up some promotional materials, instead, the CIVI people quickly introduced themselves, made sure that I was comfortable, and introduced me to the key people in the room, including Mr. Znaimer, with whom I had a very educational conversation.
5758 It was a distinct pleasure not to have to fight my way through a crowd to find out what was going on. I can only assume that other people of differing abilities will find dealing with the CIVI and assessing the resources they have to offer just as easy and rewarding as I have.
5759 I do believe that this area needs a second television station, not only to increase the opportunity for people of differing ability to interact with their community, but also to widen the scope of material available to all. The people involved at the CIVI Application have proven to me that they are the ones to do the job, both as individuals and as an organization.
5760 The Victoria area has had monovision far too long. We need to see an eye on ourselves that can see all of our community, without the stereotype of the past. Please make CIVI that other point of view on our Island.
5761 The other part I would quickly like to make is that CHUM Television -- I had a lot of feelings in trying to promote this art career of mine. With CHUM Television, they were the ones that came out seeking "What does the community want?" They came to us and asked us. That made me feel of great importance in that obstacles in the future, being legally blind as an artist, are now trivial. And I have CHUM TV to thank for that.
5762 Thank you very much, ladies and gentlemen.
5763 CHAIRPERSON OF THE COMMISSION: Thank you very much, gentlemen. Thank you for your participation.
5764 MS VOGEL: Our next interveners this morning are the Chinese Consolidated Benevolent Association and Canadac Services.
5765 Would you come forward please.
5766 CHAIRPERSON OF THE COMMISSION: Good morning. Welcome.
INTERVENTION / INTERVENTION
5767 MS HAMMOND: Ladies and gentlemen, I wish we were meeting today in our wonderful city of Victoria, where the sun is shining brightly. We delight in our diversity and our differences. We have a rich ethnic mixture. You should listen to the philosophical discussions, hear the music and savour the restaurants.
5768 Then there is our business community. What a change from being merely a government city. To community eco-forestry; what an outburst of energy and advanced technology and environmental industries; what a growth in highly specialized manufacturing, everything from solar cells to top quality fleecy winterwear, to the world's best kayaks.
5769 Then there is tourism, and the flock of foreign students who enrich our lives every year. There is art, there are crafts, there is design, there is drama.
5770 Why do I care and why do I want you to hear this? I have lived in 12 countries, I have worked in 46, and visited about 20 others. And for 20 years I owned and operated a Canadian company that sewed in a hundred countries, competing against the world. We are good. Canadians are good. And now, out of all the cities in the world, I have chosen to work in Victoria, to meet local socio-economic needs. But it is not just where I work. It is where I live, where I am deeply involved in many aspects of my community. And I want the best for Victoria, including the best media.
5771 I have seen the impact of media in many countries, and I recognize how important strong, competent, local media is in developing community awareness and self-confidence. We need a voice for the diverse components of our city. We need an effective forum for our wide range of views. And I want, for the capital city of our province, media that will reflect Victoria's rich variety and excitement back to itself and to the rest of Canada. I want CHUM. I want CIVI.
5772 I have lived in cities across Canada where CHUM operates, and even just thinking in general terms, I am confident that CHUM would bring significant benefits to Victoria, as a voice, as a mirror, as a means of retaining advertising dollars in Canada, and as a creator of excellent employment opportunities, especially for young people, like Jonathan and Jake. But I also have some very specific reasons for urging you to approve CHUM's application. What are they? Three types.
5773 There is CHUM's commitment to Victoria and to the Island; there are CHUM's actions to date in Victoria; and there is CHUM's corporate record.
5774 First, its commitment. Which applicant has made a strong commitment to local news, to showcasing local lifelong learning and the entrepreneurial aspects of our Island, and our local arts and culture? It's CHUM. Which applicant has committed to coverage of values-based issues, such as the environment, and to coverage of our diverse range of lifestyles from a local point of view? It's CHUM.
5775 And then there are CHUM's actions. Which applicant sought out input from knowledgeable local leaders? CHUM. Which applicant contacted not just the leaders, but the other sectors of the community, made a special effort to reach out to people who have to work very hard to solve their own economic challenges? CHUM. Which application sought out young people, not just at the university, but sought out those who have made that enormous leap from being on the streets to now being leaders in the community? Who said, "How can we work with you to reflect your reality back to Victoria and Canada?" CHUM asked this.
5776 Who contacted the wide range of ethnic and cultural communities and people at all socio-economic levels? CHUM. And who wants to keep our advertising dollars in Canada, and will do it by focusing on the local community?
5777 And then there is the corporate record. Which applicant is lively, forward-looking and diverse in its own management and performance, valuing the unique gifts of its staff? CHUM, a family of well managed stations with an enviable record as an employer. And which applicant has a track record right across Canada of respecting and reflecting diversity and local communities? Which has years, actually decades, of providing excellence in local perspectives and a truly national Canadian presence? It is CHUM.
5778 Ladies and gentlemen, I want CHUM in Victoria, because it will be good for the city. I know it will be good for the city. I have seen it being good for other cities.
5779 I hope you approve the CIVI application. And I want to thank you for this opportunity for me to express my opinion.
5780 Thank you.
INTERVENTION / INTERVENTION
5781 MR. YUEN: Good morning, ladies and gentlemen of the Commission.
5782 My name is Alan Yuen. I sit on the Board of the Chinese Consolidated Benevolence Association in Victoria for the last 15 years, holding many different positions on the Board, including the position of Vice-President. Currently, I am the Public Relations Chairman for the Association.
5783 The CCBA, for short, have a 115 year history in Victoria. We have 29 different associations and societies under us. So we are the chief spokesman for the Chinese community.
5784 We have well over 10,000 in population in Victoria, and of course we have the Chinatown in Canada -- the Chinese public school is still in operation. By the way, the Chinese public schools have been operated for the last one hundred years.
5785 We always feel that the local media in Victoria is not really covering the Chinese community well. The print media is sometimes okay, but the radio and television station that cover it for the multicultural societies, especially the Chinese community, are surely lacking. They only do a brief news once in a while. We thought that we do not really have a chance to showcase our heritage, our tradition and custom.
5786 I do a lot of Chinatown tours for different groups over the years. Every year I do from 20 to 30 volunteer Chinatown tours. I not only showcase Chinatown's sites and sounds, but very often we talk about discrimination towards Chinese people in the last 140-some-odd years, since Chinese came to Canada.
5787 Talking about how my father was born and raised in Victoria, he was not a citizen until 1947, and also did not have voting rights. There was no immigration allowed for Chinese people between 1923 to 1947. Subsequently, my father had to go back to China to get married. I was born and raised in Hong Kong, before I came to Canada.
5788 CHUM visited CIVI Victoria. They came to approach our Association for the last little while. They made a good presentation. They talked about how they covered the local views, especially for the multicultural society, and also programming. We really think that that is a good idea for us. That will give us a chance to showcase more about the Chinese community, so that people can understand our culture and tradition.
5789 We talk about the discrimination against Chinese, because people often do not understand us. So they always feel that we are a different class of people. Of course even though it is progressing, we still need more understanding from the large communities, so they will get rid of discrimination one of these days completely.
5790 I know CHUM will also bring in something good for the business community, because I am also the founding member and past president of the Victoria Chinese Commerce Association. Population-wise, we are only 67 per cent of the whole population, but we have a great impact in the business community in Victoria. We have many lawyers, accountants, architects, doctors. There are over 52 grocery stores and over 50 Chinese restaurants, so on and so forth. So when you talk about any business in Victoria, there are always Chinese people involved.
5791 I will give you an example of how we can make an impact. A couple of months ago, before Chinese New Year, the Times Colonist, a newspaper in Victoria, approached us to try to do a promotion for Chinese New Year. They were doing a 2-page spread for the Chinese New Year, so they asked us to help them to promote them so they can get more advertisers on so they can make two pages.
5792 We liked the idea, because they promised to write up some traditions and customs about Chinese New Year and something about the Chinese community. By the time we finished, they had a 6-page spread for this special section for the Chinese paper. I know we have a new television like CHUM in Victoria. Not only they can do good on the advertising front for the Chinese business, but we can also support CHUM Television because we have lots of resources and money to advertise.
5793 MS VOGEL: I am sorry to interrupt, but we are past the 10 minutes. Could you conclude, please.
5794 MR. YUEN: That concludes my presentation. I can say that the Chinese community and the business people are fully supporting CHUM's Application.
5795 Thank you very much.
5796 CHAIRPERSON OF THE COMMISSION: Thank you very much.
5797 MS VOGEL: Our next intervener this morning is Ben Pires.
INTERVENTION / INTERVENTION
5798 MR. PIRES: Good morning. My name is Ben Pires. I took the day off from work to travel from the Island to the mainland, because I have some important things to say to you.
5799 I am supporting CHUM's Application for a station in Victoria for many reasons. However, today I would like to focus on just two: First, CHUM's sensitivity to community; second, CHUM's sensitivity to inclusion.
5800 My appreciation of CHUM's sensitivity to community is based on my experience as President of a Community Ratepayers' Association, Vice-President of a high school parents' association, Member of the Provincial Capital Commission, and Director of the Capital Health Region's Governing Board.
5801 Through my involvement in these organizations, I have recognized the urgent and unquestionable need for more extensive, intensive, proactive and more sensitively produced community television programming in Victoria, our provincial capital. Only you, as the regulator, can make sure we get it.
5802 While I am impressed by CHUM's plan for a Victoria station, I was more aroused and more pleasantly surprised by its grassroots approach. It did not zoom in on the business establishment at the Union Club. It took a broader and more exhaustive approach. It looked at the needs and aspirations of the community at large. It recognized we have broad based grassroots organizations. It recognized that these organizations are open, inclusive, unpretentious, and their bottom line is caring for and nurturing their special communities.
5803 It recognized that these organizations go their way quietly, with little money nor power and, hence, little media attention. But they are the ones for making a great difference in our community.
5804 CHUM listened to the views, ideas and concerns of these organizations and their members. I had the opportunity to meet, not once but three times, with CHUM's representatives, and they listened. This speaks voluminously about the type of programming CHUM will offer us on Vancouver Island.
5805 This is why I have come here today. I have come here to urge you to look beyond promises made by the applicants, promises that are easy to make. Instead, please look deeper into their approaches and their attitude towards those they wish to serve. In brief, give the nod to the applicant that has been sensitive to the community at large on Vancouver Island.
5806 Now, I would like to speak on my second point: CHUM's sensitivity to inclusion.
5807 Here, it would help to understand my background and my experiences. I have a degree in journalism and mass communications. I was a television reporter with the Philippines' largest radio-television network when I left Manila in 1969 to emigrate to Canada.
5808 Though I tried very persistently, I failed to get a job in Vancouver's station after my arrival. I was told quite bluntly that while I had excellent credentials, the viewing public was not ready to hear or see me on television, to hear someone with a different accent or to see a coloured face -- "a coloured face", whatever that means, since I have yet to see a person with a colourless face or even someone with a so-called white face. Ah, the words we use to segregate and exclude people!
5809 What then? That was then, when the unwritten criteria for a job in Canadian television included the hue of the pigmentation of one's skin, the accent of one's English, and the origin of one's ethnic ancestry. So I had to settle for the soundless, faceless print media.
5810 However, while working as a reporter for a mid Vancouver Island newspaper, I did find a loophole to be indirectly involved in television. I became a founding director of an association that produced community cable TV programs in Port Alberni. This was brief, because two years later I moved to Victoria to be the legislative reporter, first for the Canadian Press, and then the Vancouver province.
5811 My wife and I found Victoria's distinctive style very attractive to raising a family. So, rather than moving to Vancouver for a career in a jaundiced media, I joined the provincial government as a communications consultant. My long government employment was only briefly interrupted by a two-year secondment as Communications Director for the 15th Commonwealth Games in Victoria.
5812 Now, it so happened that during my university days in the Philippines I had a leadership role on campus in encouraging and understanding of cultures and in valuing cultural diversity.
5813 After settling in Victoria, I again became involved in this area. I served for many years as an officer of an ethno-cultural association, an ethno-culture different from my own. I served as President of the Intercultural Association of Greater Victoria, an umbrella organization of more than 40 ethnocultural associations, and a government funded immigrant and refugee settlement agency.
5814 I also served on B.C's Advisory Council on Multiculturalism, and chaired its Communication Committee.
5815 As a Council member, I travelled throughout the province and listened to the concerns of people belonging to various ethnocultural groups. More importantly, I heard repeatedly the concerns of those in Victoria. I learned quickly that they did not want to be merely tolerated by the media and others, they wanted to be included in every aspect of our Canadian society. In any TV programming relating to their ethnocultures, they did not want to be patronized. They wanted no part in tokenism and in stereotyping.
5816 They wanted their ethnocultures and the people from their ethnocultures reflected in regular, daily TV programming, in a natural, fair and sensitive way. They wanted a greater focus on the deep roots of their ethnocultures and the reasons for the differences among ethnocultures rather than an emphasis on accent, skin colour, song and dance.
5817 They did not want to be considered as partial Canadians or hyphenated Canadians; they wanted to be regarded as full fledged Canadians.
5818 The media, they said, does not call Canadians of British ancestry as "British Canadians" or "Anglo Canadians", so why are they referred to as "Chinese Canadians" or Indo Canadians"? They felt is there is a gross and often deliberate misrepresentation of the term "multiculturalism".
5819 Multiculturalism is not just about or for the ethnoculture groups that settled on this land after the people of British and French ancestry came here. Multiculturalism is about the reality of all Canadians -- all of us.
5820 Canada was a land of multicultures --more than 50 aboriginal cultures -- long before the Europeans came to this land. And the British and French ethnocultures became part of the multiculture fabric of this land.
5821 The so-called multicultural television stations today do little to correct the misrepresentation and myths of multiculturalism. They perpetuate it. These so-called multicultural stations are basically multilingual stations. They are not interested in reflecting and promoting an understanding of all cultures. Their focus is on the needs of the audiences for the languages and ethnocultures they serve, just like the French and English language stations have done over the years.
5822 Through stations with a mandate for multilingual TV programming, we are assisting new immigrants in adjusting to their new homes. This is particularly true for the larger ethnic groups, such as new Canadians whose mother tongue is Chinese and Punjabi. However, we do not need more TV stations to cater more Chinese and more Punjabi language programs. What we need more critically are our various ethnocultures reflected in a regular programming, and an organization that is ready to lead us down this road is CHUM.
5823 CHUM's Application for a station in Vancouver does just that. Its application is sensitive to the inclusion of all cultures in regular programming.
5824 Much has changed since my coming to Canada in 1969, thanks to the Charter of Rights, Human Rights, employment equity and multiculturalism policies and legislation. People like our former Lieutenant Governor David Lam, who did much to extinguish the concept of races of people, a construct of insecure people, with his advocacy that we all belong to one race, the human race --
5825 MS VOGEL: Mr. Pires, I am sorry to interrupt but we are past the 10 minutes. Could you wrap up please.
5826 MR. PIRES: Yes. I and about finished.
5827 And corporations like CHUM, that earlier on recognized that valuing cultural diversity is important to this great country, and took a lead in the east in moving the media towards being sensitive to the inclusion in all aspects of society. We still have a long way to go.
5828 Therefore I urge you to approve CHUM's Application, because of its sensitivity to community and sensitivity to inclusion of ethnocultural diversity in our common humanity.
5829 Thanks for listening.
5830 CHAIRPERSON OF THE COMMISSION: Thank you very much, sir.
5831 MS VOGEL: I would like to call the Council of Canadians, Victoria Chaper, Saul Arbess.
INTERVENTION / INTERVENTION
5832 CHAIRPERSON OF THE COMMISSION: Good morning.
5833 MR. ARBESS: Good morning, Madame Chair, Members of the Commission.
5834 The Council of Canadians is a non-partisan public interest and advocacy organization, with over a hundred thousand members in Canada and approximately 1,500 in Victoria region. There are a total of six chapters on Vancouver Island. In fact, it is the highest concentration of any region in the country.
5835 We have also had, among other campaigns, a very strong campaign concerned with media concentration. So we have a very definite interest in seeing a second television station in the capital city.
5836 We know that the state of local television coverage in Victoria and Vancouver Island is woeful, a particularly distressing state of affairs when you consider that Victoria is the capital, and Vancouver Island is home to approximately 700,000 people.
5837 We feel that not only do our residents need more and better television but, as the capital city, there is also interest in the rest of the province about what happens here.
5838 The Council sponsors public forums and events attracting anywhere from 250 to 1,200 people, and these deserve to be promoted and covered on television, which at the present time they very rarely are.
5839 We need local television that reflects the life, culture and issues important in our community, insightful, in-depth coverage of local events and serious investigative reporting on environmental, economic and social justice topics. Television must provide intelligent analysis of areas of controversy and interactive community-based discussion on devising solutions. We need television concerned with media literacy and development of responsible citizenship.
5840 It is our belief that, of the applicants, CHUM most clearly reflects these goals.
5841 Our chapter applied six screens in looking at the applications. The first of these was the promotion of democratic discussion and participation on issues of importance to the community, what we like to call the practice of citizenship.
5842 We know that CHUM polled the community on its interests. We know that it is involved in media education and literacy, that it has promised six and a half hours of non-news programming each week, that it is interested in hearing from the grassroots, and has done so in novel forms of television in Toronto and other cities where it has local stations, including the Speakers' Corner.
5843 In the second screen -- this is responsiveness to our own interest, that as the Council of Canadians -- we believe that CHUM will provide coverage of our events, both in terms of advertising and televising these activities, which are major events in the Victoria scene.
5844 Three: Environmental concerns. CHUM has indicated that it would engage a full time environmental or ecological specialist, as I think they are calling it, to deal with issues of growth, encroachment on green space, environmental and health issues, and recreation.
5845 Four: Economic concerns. The proposed channel of CHUM has spoken of encouragement of entrepreneurship, promotion of local business, community economic development, and so forth. And it will engage a full time specialist again in the area of business and politics.
5846 Five: Reflection of our cultural diversity. We feel that through -- we just heard from Mr. Pires, we will hear later from the Director of the Friendship Centre, that clearly they feel, and we feel, that this whole area will be enhanced by this Applicant.
5847 Finally, labour relations. We note that the CHUM Application and the CHUM employees will be all union and the interns that they will engage will be paid. Neither of these is generally true of the Craig television system. We feel that this is a very unfortunate state of affairs, because we have very strong support of unions within the Council, and we are in partnership with unions.
5848 Craig made only a perfunctory attempt to reach the Council, in fact, phoning me to ask me whether I had received the package they had sent, which I never did receive.
5849 For every one of these screens, CHUM comes up significantly ahead, in our view.
5850 It has long experience, indeed pioneering experience, in making a local channel work. It has promised coverage of the rest of the Island with a permanent Nanaimo bureau; it has promised local management and staff will be given considerable autonomy in local programming. Again, it commissioned the Polaris study to poll the interests of residents, and can provide national uplinks for items of national importance, whether they be news or cultural. They can do this through their system of national specialty channels.
5851 We have heard that CHEK may improve now, but we still remain very sceptical of that. We have seen a downgrade here for a number of years. It may come to an end, but that does not obviate the need for another channel.
5852 CHUM has committed itself to, quote, reflecting the community back to itself, end quote, and invited civil society organizations to, quote, hold their feet to the fire, end quote, if they don't deliver.
5853 The Council, with its activist orientation, will hold CHUM to these promises. We urge you to support this application because, in our considered view, it is the superior one of the two.
5854 Thank you very much.
5855 CHAIRPERSON OF THE COMMISSION: Thank you very much, sir.
5856 MS VOGEL: I would now like to invite the Victoria Native Friendship Centre, Bruce Parisian, to come forward.
INTERVENTION / INTERVENTION
5857 MR. PARISIAN: Good morning, Madame Chair and Panel Members.
5858 My name is Bruce Parisian. I am the Executive Director of the Victoria Native Friendship Centre in Victoria. I am here today to support the CHUM CIV-TV station in Victoria. You will have to bear with me. I am fighting a cold, and I barely made it today.
5859 The Victoria Native Friendship Centre represents, in an urban setting in Victoria, approximately 10,000 urban Aboriginal people. Of those people, there is also 9 First Nations bands locally in and around Victoria with about 5,000 First Nations. So we have a very large population of Aboriginal people throughout Victoria.
5860 Also, we are very interested in the concept of local programming for aboriginal issues. I believe that this is something that the media has really not dealt with fairly. As a matter of fact, I probably could use a couple of stories here in terms of some recent issues that happened in Victoria.
5861 There was a fire not too long ago on one of the reserves. Someone died in that house. When the news media arrived, they focused in on this burned house and the next thing they focused on was an empty alcohol bottle laying in the ditch. Now, this is basically stereotyping in the community and it is a really sad fact that that is the issue that has to be addressed. I wonder, if it was a non-aboriginal group's house that burned down, that it would focus in on the same thing. These are very negative things that happen in and around and particularly in our community.
5862 I also wanted to indicate that on Vancouver Island, which CHUM would serve, we have -- I am just wondering if you are aware that we have 15 Kwakwa Ka'wakw Nations, and we have 15 Nuu Chah Nulth tribal nations, that make up a number of tribal groups in and around Vancouver Island. There are also a number of Kosalish(ph) Nations in and around Victoria, approximately 10 of those. So there is a large population of Aboriginal people on Vancouver Island.
5863 Just to give you an idea of some of the things I think that people are not particularly aware of, and this is something I think that has to do with media coverage, is that Kwakwa Ka'wakw nation art and work is world renown, and those are things I think that that kind of information does not tend to get out. Also, that the Nuu Chah Nulth people on the West Coast were probably the first whalers in the world, and also they were the first people to welcome the Europeans a little over 200 years ago. I am not sure how many people in the room are aware that Captain Cook arrived in a place called Yuquot, which is an Indian name meaning "Where the Four Winds Blow".
5864 In that place -- I will give you a story that I kind of find very interesting -- when Captain Cook arrived, there was a fog and the people of that village heard a bell sounding. They went up to that boat, because of the strange sound they had never heard before. The first word they said to these people was "nuu chah". Of course what happened is the Europeans thought that this was what the name of those people were. They were called the Nuu Chah people, but what "nuu chah" means, the question was being asked by the aboriginal people, "Are you lost?".
--- Laughter / Rires
5865 MR. PARISIAN: That is sort one of the little known stories that have happened.
5866 Those are things that do not get out in the community, and this is why I feel strongly about CHUM's proposal. CHUM made a very concerted effort to approach the Aboriginal community, invited a number of the Chiefs locally, invited myself to a number of meetings to talk about the issues that we have.
5867 I think it is important that we get the message out that we are part of the community, and very much a part of the community, and we play a big role in that community. That kind of information does not tend to get out right now, and that tends to be more of a negative point of view that comes out in our communities.
5868 I firmly believe that if CHUM has the opportunity to actually have a TV station in Victoria that we will, particulary as an aboriginal community, have the ability to make our story known. And I think that is an important part of what has to happen in Victoria.
5869 I would like to reiterate what I have said earlier, that I strongly support CHUM's proposal and I think, like I said, it was very important to them and I think to us, as an aboriginal community, that they approached us and wanted our opinion, and I found that to be a very good thing. That does not happen very often, when the media comes to us and asks for our opinion.
5870 So I strongly support what CHUM is proposing to do, and I would like to see that station there. I just hope that you consider it and give it some thought, and support what we want in Victoria.
5871 Thank you.
5872 CHAIRPERSON OF THE COMMISSION: Thank you very much. Certainly we appreciate that, despite your cold, you took the time to make the trip to come and be with us today.
5873 Thank you very much for participating in our hearing. And I hope you are cured tomorrow!
--- Laughter / Rires
5874 MS VOGEL: I would now like to call Gabrielle Levin, from the B.C. Festival of the Arts, and Sheila Orr, Senate Council Member and Greater Victoria Film Commission.
INTERVENTION / INTERVENTION
5875 MS LEVIN: Good morning, Members, and thank you for the opportunity to speak. I have already been lobbied by my eminent colleague on the left here, but I must give up some of my time. As I defer to such a fine person, I am most willing to do that and will try to be brief.
5876 My name is Gabrielle Levin. I am the Executive Director of the province's leading multidisciplinary arts festival, the B.C. Festival of the Arts. I am also a Faculty Member instructor of two film schools in Victoria. I am on the board of five arts organizations in Victoria. I am a parent, a consultant, a practising artist, and a concerned professional.
5877 I am speaking, I hope, on behalf of certainly myself and the organization and community I represent but also hopefully on behalf of all of the artists in Victoria. There are over 127 arts organizations in our city. There are thousands of practising artists, and we are in great need of the exposure and support that a station such as CHUM can provide for us.
5878 I feel that CHUM, in their application and in their presence, will support arts and culture in Victoria the same way that they do in the rest of Canada.
5879 I am very aware and familiar and supportive of CHUM's literacy in the arts. I believe that in all of their work they are strong proponents of critical discourse in art work. I believe that they contribute to contemporary art practice in Canada, and will do so in B.C.
5880 I am extremely impressed with the high quality of artistic work produced by CHUM.
5881 In order for the arts to grow in Canada and in B.C., it is necessary that the work transform the artist and the audience, that it moves the artistic form forward, and that it contributes to culture in the long term. I feel very strongly that CHUM will do all of this. They have a high standard of production work. They will support local artists, from what I read in their Application. They will support local filmmakers. They will include all cultures, as is their policy in Toronto and the rest of Canada. They will represent and present all artistic forms. They have a savvy and an urbanism that I believe will be good for Victoria at this particular time. They will contribute to the cultural industries. They are committed to Canadian talent, and they support festivals, urban and rural art forms.
5882 I feel that CHUM is intelligent and informed in their Application, and support having the opportunity to have them and possibly work with them in the city of Victoria.
5883 CHUM has a long national history in Canada, a strong reputation. They support the youth, and they support the artists of tomorrow. And I urge you to support their Application, for the benefit of the arts in Victoria and on Vancouver Island.
5884 Thank you.
5885 MS ORR: Good morning. I too am sporting a cold. Bear with me if I have to break for a drink.
5886 I want to also thank you for letting me come and talk to you this morning.
5887 I am a re-elected councillor in a municipality called the Municipality of Sanich, which is in fact the largest municipality on Vancouver Island. We are actually 30 per cent larger than the City of Victoria, and we are the 9th largest in British Columbia.
5888 I presently sit on 13 boards and commissions, and I am also Vice-President of the Victoria Regional Film Commission. I just want to make it quite clear that I am not here representing these organizations, although my council and the Film Commission did write a letter in support on the principle of having a second television station on the Island.
5889 I am here, however, as a person who is involved -- I am very involved in the community -- and someone who likes to keep in tune and keep my hand on the pulse of the community.
5890 Approximately four years ago, I sat here in front of you -- I recognize some of you from before. I was amongst the many people at that time requesting that you please consider granting a licence for a second television station on Vancouver Island. For the Members who were at that hearing, you will perhaps remember we wheeled in a 60,000 name application, and we were very passionate in our plea for you to please give us a second television station. With that, I hope you will reconsider a second television station yet again.
5891 I guess I could say things have not changed much, except for my age and my grey hair, and my children are leaving home. But the Island is growing. In fact things are changing, and we are seeing a lot of people choosing to move to our Island.
5892 As a director at the Capital Regional District I have been involved in supporting the regional growth strategy, and we are now in the final phase of completing that strategy, and all the indicators show that we will be taking substantial growth in the next ten years.
5893 The Island affords a lifestyle that is attracting high tech industries and, with the onslaught of baby boomers, we will and have become the place to retire to. And like our old reputation of being a place for newlyweds and nearly deads, we have changed. We are attracting very active, young, fun people, and people who want to be informed, especially on local issues. Our Island is and has become a very exciting place to live.
5894 Why do I support the CHUM licence over the Craig licence? Firstly, I want to say that both applicants have good merits, I mean, that they have grown well in the community, but I was looking for the one that understood what we are looking for in a television station. CHUM did that. They came and they really listened to us. They did not impose their wants and needs on us. They came and said: What are you looking for?
5895 They included the whole community in their process, and I think they think a little like Island folks. They think a little outside the box. They probably think a lot outside the box, but they fit.
5896 I recognize that Craig is a western based company and do an exceptional job in the Prairies, but the wants and needs of people who live on the Island are far removed from the wants and needs of people that live on the Prairies. Island people are a different breed. We admit to that -- we are definitely a different breed. So it does not matter where the company comes from; it only matters that they truly understand what we are looking for in our community.
5897 CHUM's attitude right from the beginning has been very inclusive. For example, our Film Commission is always looking for funding, as most film commissions are. We never miss an opportunity to approach people to help us, and we have been very successful.
5898 Ted Smith, who recently retired as President and CEO of WIC Radio, is a new board member of our organization. So he went to CHUM and gave them our pitch for funding and asked them if they were really interested in our community and the fact that our Film Commission is so successful that they should become a corporate sponsor. Within 48 hours of the request, they came back and agreed to give us $50,000, with no strings attached. That really meant no strings, unconditional, even if they did not get the licence. And we said, "Would you mind if we went to Craig?" They said, "Sure. We don't care. We're just here to fund the arts and to really help with film."
5899 What CHUM understood immediately after listening to us was the huge economic impact that we are having in our community, all the jobs that our industry has created, and how achievable our future vision is, and how successful our film commission has become. And to support us was not only a good community smart thing to do, but it was really good business sense. If this is the way they are going to do business on the Island, we are very impressed.
5900 I also found the scenario rather heartwarming. Here you had a retired WIC Radio CEO in Ted Smith, here you had me, who had been sitting here before you four years ago with Global, there you had Mel Cooper, who was the owner of CFAX, and we were all talking to CHUM. Now, that is community spirit, and we really felt very good about that sort of encounter.
5901 I ask that you consider granting CHUM the licence for our community, because they truly talk to us. They listened to us, and they worked with us, and they became our friends. They understand us and we again, I reiterate, are a different breed on the Island, and we are proud of that. But we feel we will be very well served by them.
5902 Thank you for taking the time to listen to me.
5903 CHAIRPERSON OF THE COMMISSION: Thank you very much. We hope that you too will feel better tomorrow.
5904 Thank you for not only having taken the time, given that cold. Thank you.
5905 We will take a break of about ten minutes, then we will pursue with all the other interveners, then we will take a longer break, to allow us to go later into the hearing.
--- Recess at 0925 / Suspension à 0925
--- Upon resuming at 1040 / Reprise à 1040
5906 CHAIRPERSON OF THE COMMISSION: I apologize for having taken a long break. We had some things to deal with together back in Ottawa.
5907 Madame Vogel.
5908 MS VOGEL: Thank you, Madame Chairperson.
5909 Our next intervener today is High Road Productions Inc., David Ostriker.
--- Pause / Pause
5910 UNIDENTIFIED SPEAKER: I believe we heard him yesterday.
5911 MS VOGEL: No. We only heard from Tapestry Films yesterday, I believe.
5912 Seeing no movement in the room, then I would ask the Alberta Motion Picture Industries Association to come forward please. Gerri Cook will be representing the Association.
INTERVENTION / INTERVENTION
5913 CHAIRPERSON OF THE COMMISSION: Good morning, and welcome.
5914 MS COOK: Good morning, and thank you for inviting us, Madame Chair and Members of the Commission.
5915 I have 25 years experience in the western film industry -- writer, a fund administrator, and as an independent producer. I have lived across Canada, all across Canada, but I work by choice in the west, in Alberta. I want to hasten to add that some of my best friends live in Toronto.
--- Laughter / Rires
5916 CHAIRPERSON OF THE COMMISSION: And you have now some in Ottawa!
5917 MS COOK: That's right. Perhaps you will be my best friend by the time we finish, as I hope so.
5918 I am here representing the Alberta Motion Picture Association, which we will call "AMPIA" for short. We are supporting the Application by Craig Broadcast Systems for establishing A Channel on the Island.
5919 For 26 years, the Alberta Motion Pictures Industry Association has represented independent producers, but also members of the broader industry, and that includes actors and writers and crew and unions and all of the infrastructure that makes up an industry. That is because you really need strong independent producers, we feel, to go out and bring in the money and then do the productions, and it then goes out to the rest of the infrastructure. It is pretty well driven that way. That is how we see it.
5920 Our mandate is to ensure the growth and development of our indigenous industry. Central to this mandate is maintaining that environment, a healthy environment for Alberta producers.
5921 We want to initiate, we want to develop, and we want to produce films and programs over which we have creative control and financial control. We found, historically, that a strong western based broadcaster has really helped us in doing this objective.
5922 Since launching in September 1997 in Alberta A-Channel, A-Channel established itself in Calgary and Edmonton in record time as a truly local television station. Their programming really reflects those two cities, we would have to say. They also made a real special effort to support our industry. They made great promises of performance at the time, but they also have gone over and above the call of duty.
5923 I have to say that at the time that they applied to come into Alberta, we sort of heard about them in Manitoba and kind of envied some of the things that the Manitoba producers were getting. I really did not know them, but they had come forward with some great promises and we really took a look mainly at their promises versus the other guys.
5924 The rival applicants at that time told our industry that the Craigs would never be able to deliver on those promises. We just decided to take the chance, to support them. It was rare, to tell you the truth, than an association will actually pick one application over another because if we were wrong, that could be very bad for us, right?
5925 They were successful in that application, and they delivered everything they promised, and they had an amazingly fast start-up. They hit the ground running. And they also converted our historic Bay store that was about to be demolished and turned that into the A-Channel in Edmonton, so special fondness there at Edmonton.
5926 I think some key words that I would just throw out regarding our experience with the Craigs is: efficient, ethical, accessible, supportive, enthusiastic, and westerners.
5927 One of the things that was significant for us is their heavy promotion of local talent, through the Breakfast Club and other ways, but particularly through the Breakfast Club in both cities, of local talent and the unique diversity that is reflected in our province in both cities. Also behind-the-scenes talent. So our own industry benefits from that as well.
5928 In addition, A-Channel provided a provincial representative who lives there, who handled the fund that they set up. I cannot overemphasize the importance of having someone in your region running these kinds of things. She has been extremely accessible. She knows the industry. She knew us, or she got to know us.
5929 A-Channel has also been very supportive of our industry in other ways, through an initiative called the IDI, of which I am the Chair. That is the Industry Development Initiative, which is a corporate business development initiative that we have going, a professional development initiative, for our corporations, because a lot of us are just small companies in Alberta, small production companies.
5930 A-Channel was one of the first to come on-board from the private sector, and loaned us Joanne basically. She has been a tremendous support. As a result of the IDI, we are about to launch our first and very spiffy website, which you will have to check in on, which should be launched in March.
5931 Since their successful move to Alberta, they have met or exceeded all their promises. They are one of our only western Canadian broadcasters left, really, and they have a focus on western production. They made a special contribution to our industry through the Feature Film Fund, with critical development financing and licences, and a lot of Alberta-based and western-based movies. It is really quite amazing how much they have accomplished in the short time they have been there.
5932 To support what I am saying, I come bearing gifts from AMPIA for the Commission.
5933 Over the past year, we commissioned a report called "The Watchful Eye". The objective of it was to review Alberta based broadcaster support for Alberta independent production linked to CRTC licences. You have an extract, that I have brought, which covers how A-Channel has been doing.
5934 Also included in that report, which you will be receiving in about two weeks -- this is a final draft that you are taking a look at -- was our assessment of the Access CLT licence, that is also owned by Moses Znaimer, that also came in promising a number of things. I would say that you can take a look at the report to see how both are doing. I will just leave it at that, because I do not want to get into any kind of comparisons. I think you have some strong applications, and I think both applicants are very strong for Victoria.
5935 I would just like to table for you "The Watchful Eye" from Alberta.
5936 I also come here wearing another hat. I am a co-producing partner in Storytellers Productions. Storytellers Productions is a majority aboriginal owned co-production company between B.C. and Alberta. Storytellers produces children's programming that is distinctly and visually Canadian. It is western Canadian, in fact. So far, we have two shows that we have done, one of which has been winning awards around the world. It is animation and live action, and the animation company is the famous Bardel Animation, out of Vancouver.
5937 We have been animating Norvel Morso's(ph) art, telling aboriginal stories, one of which is a Pacific Coast story, "The Legend of Spirit Bear". So we were at first a little concerned -- I am talking under my storyteller's hat right now -- that there was a lack of specific support for New Children's Programming from all the applicants.
5938 We do not know, but we are afraid that in part that might have to do with the recent CRTC decision that there is plenty of Canadian Kids Programming available for broadcasters right now.
5939 What we would want to say is, you are probably right, but there is not a lot of distinctly and visibly Canadian children's programming available.
5940 That particular decision did harm Storytellers in doing three more shows. So we were very excited about A-Channel basically being the only one that seemed to agree that, if they got their licence in Victoria, this would expand their strength enough that they would open opportunities for the creation of kids programming.
5941 MS VOGEL: I am sorry to interrupt, but we are past the ten minutes. Could you wrap up, please?
5942 MS COOK: In conclusion, we would like to emphasize that A-Channel delivers on their promises. They have been a welcomed friend to our industry, and they help provide a healthy, independent production infrastructure.
5943 That's it. Thank you.
5944 CHAIRPERSON OF THE COMMISSION: Thank you very much for having participated in this hearing.
5945 MS VOGEL: Our next intervener is Yellow Kitchen Productions, with Kim Hogan. Yellow Kitchen will be presenting in place of Legacy Filmworks.
INTERVENTION / INTERVENTION
5946 CHAIRPERSON OF THE COMMISSION: That is an unusual name for a production company!
5948 MS HOGAN: My name is Kim Hogan, and I am a writer and producer of feature films, living here in Vancouver. I am vice-president of a production company called Yellow Kitchen Productions, and I am appearing in support of the Application for A Channel on the Island.
5949 In 1997, I finally saw cameras roll on a feature film that had taken seven years to produce. "Heart of the Son" was based on an award-winning Canadian play called "Jenny's Story", by Betty Lambert.
5950 Telefilm supported development, but turned us down for production. Although the A-Channel stations had not started broadcasting yet, the Drama Fund got behind our project. The Cable Production Fund had run out of money but, based on the Drama Fund letter, we managed to attract other investors and raised nearly 3 million dollars. That meant that 10 out of 10-point Canadian production got made.
5951 The film is shown at festivals from Victoria to Calcutta. It has won a number of awards for the actors, the directors, cinematographer and art director.
5952 Last month, I was honoured to attend the Genies as the nominee for Best Adapted Screenplay. All of this was triggered by A-Channel support. They were there for us from the beginning, they stuck with us through the middle. Their encouragement continued with promotional support for the theatrical release of "Heart of the Son" and sponsorship of its premiere at the Local Heros Film Festival in Edmonton.
5953 As a B.C. producer, I would like to talk about the proposal for A Channel on the Island, in particular the priority program fund of 13 million dollars.
5954 This fund has been part of the application for A-Channel from the beginning. I and other producers have had ample opportunity to examine the plan for the Fund, ask our questions, and get straight answers.
5955 It has been well thought out and designed to be responsive to our need to create more indigenous production in this region, as it is based on a model they have already proven works in Alberta. "Heart of the Son" was an Alberta story that needed to be told in Alberta. A-Channel made that possible. B.C. producers should be afforded the same opportunity to tell their own stories in their own province.
5956 When the Craigs say the Fund will be administered by a decision maker here in B.C., I think we can be sure that they will follow through on that. Based on my experience and my examination of the proposal for A Channel on the Island I believe that, as both a B.C. producer and a Canadian storyteller, this is the best option for this region.
5957 Thank you.
5958 CHAIRPERSON OF THE COMMISSION: Thank you very much.
5959 MS VOGEL: For the record, Madame Chair, I neglected to call Intrepid Theatre Company Society, with Joanne Wilson, previously, so I would like to invite her to come up now.
INTERVENTION / INTERVENTION
5960 CHAIRPERSON OF THE COMMISSION: Good morning.
5961 MS WILSON: Good morning. Thanks for having me here.
5962 My name is Joanne Wilson. I am on the board, a volunteer board. I have spent over 15 years in arts and broadcasting communications. I have been on the board for Canadian Actors Equity, ACTRA, writers societies, and I am now on the board of Intrepid Theatre. So it has kind of been my life, arts and broadcasting and communicating to people.
5963 Intrepid Theatre is a non-profit arts organization. It is very grassroots. We produce two festivals. One is the Uno Festival of Solo Performances. It is a juried festival of one-person performances. The other is the Fringe. I think everybody knows what the Fringe is. It is very popular in Canada.
5964 We are non-profit, and we are always struggling, and having great media support is just so, so important us. So when we found out that there could possibly be a new station coming to Victoria we were very, very excited, and we wanted to take very seriously both the applications and look at them seriously. We did just that.
5965 We met with both CHUM/City and we met with A Channel on the Island, discussed things with them, and looked at their applications as well.
5966 We decided that there are three areas that really needed to be looked at. The first area was support of the arts in terms of media coverage. The second area that was important was having a TV station that would promote cultural tourism. The final part that we wanted to look at was an independent film and TV production facilities and such in Canadam the support of that, because that supplies work to our actors.
5967 Looking at those three things, we talked to both groups and asked them about their local arts coverage -- a pretty simple question. When we talked to CHUM and City and asked them if they would be doing any kind of arts coverage, we could not get any kind of specific answer whatsoever. We asked them if there would possibly be a 30-minute program or a window of 15 minutes or something once a week, and we were told that that is ghettoizing the arts.
5968 When we asked about perhaps doing an artscast or something within the newscast, we are told that there could be no promises made toward that, because it all depends on what is on the news and what is being covered that day. So we did not get very satisfactory answers with CHUM and City for Intrepid Theatre.
5969 We did go and speak with A-Channel. Basically, the answers they gave us were the same ones that are in their Application, that they have a 30-minute program five times a week, Monday through Friday, that follows the 10 o'clock News, called "250", and that is strictly an arts and entertainment program. They are also doing a program called "Entertainment West", which runs 30 minutes once a week. That will be produced right in Victoria.
5970 We were also really impressed with the fact that they were going to be giving us quite a good fund for producing those programs. I think they are promising 13 million dollars over seven years. So they are high quality programs. So that was pretty impressive.
5971 Then we moved on and actually took some time to phone the Fringe Festival in Edmonton, just to see what kind of coverage A-Channel has indeed given them, because we wanted to find out if this is just all talk or if this is true. We were told basically that they cannot beat A-Channel off with a stick when they are doing the Fringe Festival, that they are extremely supportive, and that they are there basically all around the clock, supporting the Fringe Festival. So that was very exciting information for us.
5972 Equally as important is the fact that they are Victoria and Vancouver Island based, and supporting our communities, the fact that their transmitter is up Island as opposed to in Vancouver. I just think that if you have your second transmitter being based in Vancouver it is because you want to reach the Vancouver audience, and if you are trying to reach the Vancouver audience, your stories are going to be about the Vancouver people. We have had that a lot in Victoria. We do not need any more of it.
5973 A good example is right now there is a new radio station in town that calls themselves "Vancouver's newest alternative radio station". Because they are calling themselves "Vancouver's" newest alternative radio station and they are Victoria based, they will not be able to cover stuff that is in Victoria. This is the kind of stuff that we see a lot in Victoria, and we do not need any more of it.
5974 In terms of cultural tourism, Victoria is a really exciting place, particularly in the summer months. There are jazz festivals and blues festivals and the harbour fest and the fringe festivals, and that names but a few. Our surveys show that the majority of the people who come to the Fringe do come from the Island, and that is followed by the lower mainland and then into western Canada. If you love the Fringe and you can hop in a car and want to go, you can. Beyond that, it does not have a big impact.
5975 The fact that Entertainment West will be broadcast on all of their stations in western Canada was important to us, because it could have an impact on cultural tourism.
5976 I know that CHUM City owns "Bravo!". They did bring in the head of "Bravo!". We met with him. This is not an application for "Bravo!". "Bravo!" is a national specialty arts channel. They have done very little to support Victoria festivals anyhow as it is, but they did say that if they do get award of the licence, that they will maybe rebroadcast some of those news stories on "Bravo!". However, that is a far cry, we felt, from the actual 30 minutes once a week Entertainment West program that would cover the arts, and would be produced in Victoria, which is really nice for Victoria.
5977 The final point that we wanted to cover was independent production. We thought it was really important to look at that, because you kind of have to pity the poor actor living in Victoria or on Vancouver Island. If they are called in for an audition over in Vancouver, they are actors, they cannot afford to fly, and they are not taking Alojet(ph), they are getting on the ferry. They are often taking public transportation to get to the ferry, to get from the ferry into town to the auditions. It is a full day for one 5-minute audition. It is horrendous for them, and it is extremely expensive.
5978 What is happening to Vancouver Island is that the actors and the writers and the young producers and filmmakers are leaving. They just do not see any point in staying here. I think that is really sad, and I think it is sad for the youth of today, and I think it is sad for the arts community. I think we need to see them stay here.
5979 So I am hoping that their very impressive fund of 13 million, the fact that they are going to have their production office right here in Victoria, or right over there in Victoria, is fantastic. It says that they are committed to the community. I see that kind of commitment in that, and I hope that will keep some of the actors living and working on Vancouver Island.
5980 Finally, I just wanted to say that the track record from A-Channel appears really really great. What I heard from AMPIA sounds good. What I understand that they have done for the film industry in Alberta has been good, the kind of support they have shown the Fringe and arts in general. I have a friend who works in Arts Administration at Grant McEwen College in Edmonton. She said they are just simply amazing with the kind of support they show for the arts.
5981 So when we came down to it, how could one support anybody but the A-Channel? They show great support for the arts community. It is in black and white. So we are fully supporting them. We think that they have everything to offer for Victoria and Vancouver Island.
5982 Thank you very much.
5983 CHAIRPERSON OF THE COMMISSION: Thank you.
5984 MS VOGEL: I would like to invite the National Screen Institute of Canada, with Cheryl Ashton, to come forward please.
INTERVENTION / INTERVENTION
5985 CHAIRPERSON OF THE COMMISSION: Good morning.
5986 MR. HARDY: Good morning. I am obviously not Cheryl Ashton.
--- Laughter / Rires
5987 MR. HARDY: I am Rob Hardy. I am the Director of Marketing and Communications for the National Screen Institute, and I am here today to represent Cheryl Ashton, who is our Executive Director. Cheryl really wishes that she could be here, but unfortunately we are just days away from launching Winnipeg's Local Heros Canadian Film Festival, and she just could not get away.
5988 On behalf of Cheryl and the NSI, I would like to thank you for this opportunity to take a few moments to lend our support to A Channel on the Island.
5989 For those of you who are not familiar with the National Screen Institute, we are the oldest of Canada's four national film and television training organizations. With offices in both Edmonton and Winnipeg, we are the only one that is based in western Canada.
5990 Since our inception, NSI has been committed to developing regional writers, producers and directors, in order to promote and develop an indigenous film and television industry that truly reflects the Canadian perspective.
5991 Because we are both western based and because we have both grown up around the same time, there is a real parallel between NSI and A-Channel which has, in many ways, made us natural partners. The strongest parallel in my mind is that NSI is committed to developing local voices and giving them the opportunity to tell local stories, and so is A-Channel.
5992 In Alberta, A-Channel has worked in partnership with NSI since their launch, most notably through our Features First Program and through Edmonton's Local Heros International Film Festival. By investing in NSI's Features First Program, A-Channel has helped us develop new regional scripts by first-time feature filmmakers and, more importantly, they have helped us develop their skills and their abilities.
5993 They have gone far beyond developing those scripts, to licensing them. Recently, A-Channel licensed Shepherd's Park, a script developed in Alberta through the last round of Features First, and this year their support has helped trigger a second round of the Features First Program, which is developing the film "Polaroids of Dawn", written by Edmonton's Marty Chan, as well as four other new scripts. But that support is just one way in which A-Channel has helped develop and promote Alberta talents since their arrival.
5994 Through the A-Channel drama fund, the Craig family has devoted millions of dollars towards developing and broadcasting indigenous programming made by Albertans, reflecting Alberta perspectives. This fund has triggered 11 movies that have been made, and another four that are ready to go. That has employed hundreds of Albertans, keeping them at work at home, giving people across the province and across the country a window into their community, that never existed before.
5995 In Victoria, A Channel on the Island has committed over 56 million dollars towards made-in-B.C. programming. Through its priority program fund, nearly 13 million dollars will be invested by the Craigs in developing and broadcasting drama and long form documentaries in British Columbia and across the country. That is an incredible commitment, one that will trigger a far greater investment by others and will provide ongoing employment for local talent on local productions.
5996 NSI strongly supports anyone prepared to invest in and promote regional programming, and we applaud the Priority Program Fund and what it will mean for B.C.
5997 In Manitoba, where NSI are the newcomers, A-Channel has given us their support from the moment we opened our doors. They literally came to us on their own, unbidden, and asked what they could do, how they could help us. Since then, A-Channel has gone out of their way for us. They have created commercials and promotional opportunities for our movie camps, which teach filmmaking to 13 to 19 year olds. They have demonstrated an incredible commitment to Winnipeg's Local Heros Canadian Film Festival, having donated not only dollars but countless hours of commercial production, promotion and support to the Festival.
5998 A-Channel's support of our local exposure amateur movie contest has helped inspire the production of 175 new short films on video by amateur Manitoba movie makers in the past 14 months, and has motivated many of those amateurs to consider filmmaking as a career. And on March 4th we will award the A-Channel Audience Choice Award, the first national prize given to a Canadian short film, at Local Heros Canadian Film Festival, a festival dedicated to Canadian works.
5999 The fact is that they are able to give us so much promotional support because they built these opportunities not only into their schedule but into their character. From the beginning, A-Channel has dedicated itself to creating opportunities for the community to see its reflection in the station in every aspect of its programming, which allows people to learn about their region, appreciate it, and take part. Some of these opportunities include "The Big Breakfast" and the proposed "250" in Entertainment West.
6000 I have gotten up quite early to be on "The Big Breakfast" more times than I care to remember, because I know people watch it, and it is a place that I want my stories seen. Whether I am in Edmonton or Winnipeg -- and I spend a lot of time in both cities --"The Big Breakfast" is the one place that I can turn to to find out what is going on in the community that day, and really what the community cares about.
6001 "Entertainment West", which will be dedicated to profiling Canadian talent, particularly western Canadian talent, is a program that NSI strongly supports, because developing and broadcasting regional Canadian works are only part of the formula. Promoting them is key as well.
6002 If the Alberta and Manitoba experience serve as examples, and they do, A-Channel's commitment to Victoria and British Columbia, both monetary and in spirit, will be incredible. They will help the regions' film and television industry thrive and grow.
6003 So once again, on behalf of the National Screen Institute, I strongly urge you to accept A Channel on the Island's Application.
6004 Thank you.
6005 CHAIRPERSON OF THE COMMISSION: Thank you very much, and give our best to Cheryl.
6006 MS VOGEL: I would like to call Victoria Independent Film Producers Association, Greg Mason.
INTERVENTION / INTERVENTION
6007 CHAIRPERSON OF THE COMMISSION: Good morning, and welcome.
6008 MR. MASON: Thank you.
6009 I welcome the opportunity to speak in regards to the two applications for the Victoria television licence.
6010 I come here representing the Victoria Independent Film Producers Association, which was formed a couple of years ago, to strengthen and promote the business of independent production on southern Vancouver Island.
6011 The Association represents approximately 25 independent producers and production companies who create documentaries, children's programs, animation, TV series, dramatic productions, and educational programming. Our members have worked with every broadcaster in Canada, as well as with many American and international broadcasters and agencies.
6012 Our programs have brought home Geminis, Emmy nominations, the George Foster Peabody Award, many International Film Festival prizes, and awards for various humanitarian, education and environmental organizations.
6013 VIFPA members' projects now in production or in development represent millions of dollars to Vancouver Island economy. As a case in point, in the last year there have been several 13-week television series produced by our members. We have produced many 1-hour specials, documentaries. We have also completed, just recently, two feature films with independent private money, both, coincidentally, with 1.5 million dollar budgets.
6014 I think we do represent a growing regional production centre, and we thought that when the application for a new TV licence came to our knowledge, that we should spend some time with it, in particular review the application details to see just what it means to us as independent film producers, and TV producers.
6015 After very careful consideration of the Victoria Television licence application, VIFPA feels the application for A Channel on the Island is superior in many ways. I think it is important to note that our decision was based on a thorough review of the applications in their entirety, and with meetings with senior representatives of both broadcasters.
6016 Our members were provided with the executive summaries from both broadcasters, and I was volunteered into the position to review the applications in their entirety, page by page, to make sure that there weren't things that we were missing within the executive summaries.
6017 We set up formal meetings with the broadcaster representatives, and from there we questioned them on our opinions, or just to check our facts, to make sure that we did indeed have things correctly proportioned in our assessment of both applications.
6018 In our assessment, we believe it is time we had a local television station that truly supports broadcast and invests in high quality local productions. Our members provided unanimous approval of the A-Channel application, and we publicly announced our support.
6019 It is a very important and significant event for us to side with one broadcaster, as you can well imagine. As independent producers, broadcasters are our clients. The beginning point of any marketplace in the broadcast industry here in Canada is with the broadcaster, and from there we have to assess, I suppose, our exposure to the situation of siding with one broadcaster or the other.
6020 When we did look at the two applications, in very concrete and very specific fashion, there was one that was so obviously much better for us as independent film producers that we decided to endorse this application. It was not a decision that was taken very lightly, and we did do it publicly early in the game so that we could hopefully influence others in the community to do likewise, because it was a significantly better application, in our minds.
6021 The four points that I would like to quickly go through that we found particularly of benefit to us in regards to the application by Craig Broadcast Systems for their A Channel in the Island were I think obviously the production fund.
6022 Their production fund of 13 million to be used in the production of made-in-B.C. drama and long foreign documentaries, including theatrical releases, television movies, mini series and other dramatic productions, is a very significant fund in regards to how we do our business. It is an expensive project, doing any TV or film work, and if we can find new funds for this type of work, then it is very important for us to pay attention to those opportunities.
6023 We feel these funds will create stability and provide numerous opportunities to our local production industry. These funds will develop the local talent pool and create work for hundreds of actors and writers and artists on Vancouver Island.
6024 These funds will lead to the development of a successful regional production centre and I think in looking at how the production fund and how the application was structured, we came to realize that there was not just simply a production fund in place with the application from A-Channel, Craig Broadcast, it was part of a system or a process that they envisioned, as a broadcaster, to be part of.
6025 So what they were saying to us, or through the application saying to the Commission and to anyone who is involved with the process, is that we are supporting this industry, this independent film TV production industry, in a way that we will, yes, provide funds, but also provide services that will help us in regards to our applications in their initial stages, so that our proposals make sense to broadcasters, they will provide us with assistance in a fashion such that we will get past the very important first stage with our business.
6026 As evidence of this I think is their point, in my list, the important point no. 2, that they will establish a local Victoria development office. This office is incredibly important to us, for the fact that we will have something close at hand for us to test our product and to see if we can find its successful conclusion.
6027 A-Channel, as part of their 13 million, has budgeted 1.1 million for the management and operation of this Victoria development office. This development office will provide assistance to local and other B.C. producers, access to the A-Channel independent production fund.
6028 A Victoria based production development office is of real benefit to our local industry. The long ferry commute to Vancouver or the expensive flights to Toronto are serious obstacles for local producers. Having the ears of a significant major broadcaster in Victoria to assist us by evaluating our proposals and providing assistance to help move a project forward is extremely beneficial.
6029 Another important part of the A-Channel plan -- and that is how I would like to look at it -- is that they will help us secure second windows, third windows, for the additional funds that we need to produce our product. It is one thing for a broadcaster to support a production with a fund, but then to carry it forward with servicing of that project such that you will secure second and third window funding and distribution arrangements for start up producers or producers of a smaller nature, this is very important.
6030 Another part of this production fund that made sense to us was the $630,000 that they plan to spend for program and script development. This is a real benefit for many of our local producers.
6031 Point no. 3 was, as residents of Victoria I think more than anything in the initial concept was that we wanted to look at the program schedule itself. We found that the A Channel on the Island provides a diverse program schedule, which will benefit the local independent production community, but will also, I think, serve well the community that they are broadcasting to, in Victoria and across Vancouver Island.
6032 The A-Channel schedule provides a wide range of programs, to serve a broad audience -- daily news and information programs, children's programming, daily arts and culture show, a regional entertainment program, regional talk show, a weekly magazine program of various natures, there are three of them, I believe, in their Application, and importantly, a Canadian movie night. This program schedule will provide many programming opportunities for our community's independent producers.
6033 This varied schedule also will help build a skilled talent pool within A-Channel, which we will eventually benefit from as people migrate from the A-Channel to our own production offices. I think it is important that if you have staff at A-Channel working with a variety of programs, to know that these people will be skilled in many styles of program production. And then we, as producers, on the outside will benefit from those people coming from A-Channel to us.
6034 The Canadian Movie Night was also very important for us, for the fact that there is automatically or certainly a window, an opportunity for us to have our products aired. As you know, a lot of funding is triggered by the broadcast of your product. By having a Canadian Movie Night each week, we feel that this window of opportunity is something that will be quite significant in our production and our work towards making our projects come together.
6035 I guess in comparison to the CHUM City Victoria licence, in regards to the production fund, we feel the vague inferences of funding coming through a separate Vancouver licence was neither relevant nor reassuring to the local community. We need to -- I heard, as I came in yesterday, that there is something new before the Commission, a late add to the production fund to the Victoria licence if Victoria is granted and Vancouver is not. I could respond to that later, if you wish. I certainly have comments that way.
6036 MS VOGEL: Mr. Mason, we are past the ten minutes. I am wondering if you could wrap up.
6037 MR. MASON: I would like to wrap with a very brief mention that the track record that A- Channel has shown in the past, and you have heard this already so I won't belabour the point, has also given us the assurance that we are backing the right group, that they do back what they do say, and will provide the opportunities that we seek from a broadcast applicant in our area.
6038 Clearly our recommendation is for the A Channel in the Island Application. Their commitments are specific and in writing, and they have shown that they are true to their word.
6039 We believe the A Channel on the Island Application is the only application which will help develop a successful regional production industry.
6040 I would like to thank you for the opportunity to participate in these important public hearings.
6041 CHAIRPERSON OF THE COMMISSION: Thank you.
6042 Commissioner Cram has a question for you.
6043 COMMISSIONER CRAM: Given what you have heard about the purported amendment by CHUM of the Victoria station, has that changed your position in any way?
6044 MR. MASON: No, it has not. I'll tell you why.
6045 It was quite a surprise to me to hear that the process of an application for broadcasters could be changed at the last minute, or that amendments could be added. I was not aware of this process being a dynamic or fluid process, that indeed things could come together at the last minute.
6046 It would be impossible for me to poll our members to find their opinion in this regard to how this proposal is now to be viewed.
6047 The other part of it is, if I would hear our members speaking, I am sure I would hear: Why was this oversight so blatantly avoided in the -- or why was it missed before?
6048 There might be a few of us who would say that perhaps it is not as sincere an effort as what we would hope from a broadcaster.
6049 I think what it plays to is the fact that we can spend money as broadcasters to get licences, but I think what I have hopefully expressed to you is that if you have a broadcaster who is putting a plan together, has a vision for the industry itself, that is of utmost importance to us. So, spending money is good but I think if we have a plan, have a vision before us, as the A-Channel Application seems to have, and has a track record in proving, then it is important for us to maintain our allegiance and our endorsement for the A-Channel Application.
6050 CHAIRPERSON OF THE COMMISSION: Thank you very much.
6051 MS VOGEL: If there are any persons in the room who were scheduled to speak so far in this agenda and have not yet had the opportunity, could you please identify yourselves.
--- Pause / Pause
6052 MS VOGEL: Seeing no movement, those are the end of our interventions for this part of the hearing.
6053 CHAIRPERSON OF THE COMMISSION: Thank you.
6054 We will now break, and we will come back for the next portion of the hearing .
--- Recess at 1120 / Suspension à 1120
--- Upon resuming at 1200 / Reprise à 1200
6055 CHAIRPERSON OF THE COMMISSION: Before we go into the next phase, we have an additional question that Commissioner Wylie will address the applicants.
6056 COMMISSIONER WYLIE: Thank you, Madame Chair.
6057 The least that can be said about his market is that it is in a state of flux, from a corporate perspective and from a market perspective.
6058 Not surprisingly, the incumbents, old and new, have argued for a standstill and no licensing after this long process, while the applicants argue that the market can easily support one or even more new television stations.
6059 In light of the uncertain landscape, the Commission may consider issuing a licence for a term shorter than the maximum the Broadcasting Act allows. Therefore, we invite your comments on whether you would accept a licence for four years or even three.
6060 I will now ask legal counsel to tell you the procedure that we intend to follow to receive those comments.
6061 Thank you, Madame Chair.
6062 MS ASSHETON-SMITH: Thank you.
6063 The way we will be proceeding on this phase is that we will be taking a short 10-minute break for the applicants to prepare their answers to the question that was just posed by the Vice-Chair.
6064 Then, the applicants will appear in the same order they appeared in Phase I, with the exception that CHUM will appear only once, on behalf of both the Vancouver and the Victoria station, and we would like you to answer the question for each on a stand-alone basis as well, please.
6065 The order of the applicants appearing in this phase will be CHUM, Rogers, Trinity, and Craig. We are not expecting that there will be any follow-up questions on this particular question that was just posed, so please just come forward, provide your answer, and we will move on to the next applicant.
6066 Then there will be another short break, and we will move on to Phase IV, which is rebuttals, and it will be in the regular order, the reverse order, that is set out in the agenda.
6067 Thank you.
6068 CHAIRPERSON OF THE COMMISSION: So we are moving for a short 10-minute break.
--- Recess at 1205 / Suspension à 1205
--- Upon resuming at 1215 / Reprise à 1215
6069 CHAIRPERSON OF THE COMMISSION: We will be pursuing with this phase, and many have said that they are ready to go immediately with Phase IV, that we would not take another break. We are in your hands.
6070 Madame la Secrétaire.
6071 MS VOGEL: I would invite CHUM to come forward with its response to the question.
6072 MR. SHERRATT: Madame Chair, Members of the Commission, CHUM would be prepared to accept whatever licence term you deemed necessary or advisable for service in Vancouver, Victoria, or both.
6073 CHAIRPERSON OF THE COMMISSION: Thank you.
6074 MS VOGEL: Would CFMT, Rogers, come forward please.
6075 MR. SOLE: Madame la Présidente, Rogers also would be prepared to accept the licence term as prescribed by the Commission.
6076 CHAIRPERSON OF THE COMMISSION: Thank you.
6077 MS VOGEL: Trinity Television, please.
6078 MR. WILLARD THIESSEN: I had too much time. I was able to write a little bit more.
--- Laughter / Rires
6079 MR. WILLARD THIESSEN: Madame Chairperson, our short answer, "Will we accept a licence in a period of four or even three years?" the answer is yes.
6080 However, in view of the verbal interventions of the applicants, all of them, and the incumbents, that licensing the Trinity Application would not appreciably impact the market and the impact of the market conditions because of changes in corporate structure, we would affect that at the very least we have no intention or ability to purchase CKVU or VTV in the near future. So it just does not --
6081 CHAIRPERSON OF THE COMMISSION: Miracles!
--- Laughter / Rires
6082 MR. WILLARD THIESSEN: We trust that a positive decision by the CRTC towards the Trinity Application, should that be the case, that it would result in a 7-year term.
6083 Thank you very much.
6084 CHAIRPERSON OF THE COMMISSION: Thank you. And let's pray!
--- Laughter / Rires
6085 MS VOGEL: And finally, Craig Broadcast Systems Inc.
6086 MR. CRAIG: Madame Chair, Members of the Commission, the answer to the question is yes. And that is our final answer!
--- Laughter / Rires
6087 CHAIRPERSON OF THE COMMISSION: Thank you.
6088 MS VOGEL: We are ready to move on to Phase IV at this point.
6089 Mr. Craig, it looks like you are in exactly the right position. Would you like to call some of your friends?
6090 A reminder that there is a 10 minute limit for the rebuttal statements.
REPLY / RÉPLIQUE
6091 MR. CRAIG: Madame Chair, Members of the Commission, my name is Drew Craig, President, Craig Broadcast Systems Inc. To my right is Peter Grant, our legal counsel; on my left is Jim Nicholl and Cam Cowie.
6092 First of all, I want to thank all of the interveners who wrote or appeared before you to support our application for A Channel on the Island. We received more than 1,000 positive letters of intervention, far more than any other applicant before you this week.
6093 I particularly want to thank the many people from the Island who took the trouble to come over and appear before you to support our application.
6094 We will address two matters in our reply. The first is the claim by the incumbent stations that there is no room for a new station. The second is the intervention from CHUM.
6095 I will start with the issues raised by the incumbent stations. There are two points to be made. First, Mr. Reitmayer kept saying that the CRTC should not licence new stations in a declining market. But this market is not on the decline. After a one-year correction, it is back on a growth path. The final TVB numbers for calendar 1999 for the Vancouver Extended Market were released just yesterday, and are attached to our reply.
6096 The TVB numbers are actuals, not estimates, and they demonstrate that Mr. Goldstein's estimates for calendar 1999 understate what actually happened by almost $14 million.
6097 We have attached our own view of the overall advertising market in the Vancouver Extended Market Area for the next six years, compared with Mr. Goldstein's estimates. For the first four months of the current broadcast year, the TVB figures show growth in excess of 2 per cent over the comparable period last year. Over the next six years, we project that the market will continue to grow at a modest rate of 2 per cent a year, based on retail sales estimates and other factors, not the 1 per cent increase projected by Mr. Goldstein. We think it is abundantly clear that this market can easily support one more mainstream station.
6098 The second point to be made is that the PBIT levels of the existing stations other than VTV continue to be in the mid 20s, despite the introduction of VTV into the market in 1997. And VTV is outperforming its projections by a large margin. Taken together, this is a spectacular performance. If you take out the VTV numbers, the PBIT levels of the existing stations continue to be over double the average PBIT for TV stations across Canada.
6099 The Vancouver market continues to be incredibly hot, and the protestations of the existing stations need to be taken with a large grain of salt.
6100 That brings me to the CHUM intervention.
6101 To start with a small point, CHUM complained that of the 11 films shot in Alberta with the help of the Drama Fund, only one of them received Telefilm Canada funding. That is true, but this can hardly be seen as a criticism. What that means is that in ten of our films, our Alberta producers, starting with our national licence fees, were able to put their whole financing package together without having to rely on scarce government funding. That is a cause for celebration, not for complaint.
6102 A second point raised by CHUM was a suggestion that our business plan was too optimistic. All I want to say on that point is that unlike CHUM, we have actually had the experience of launching new urban stations in the last few years. They have not. In Alberta, we are exactly on track with the projections we originally filed with the Commission. After five decades and three generations in Canadian television, we are not neophytes in this business. We know what we are doing.
6103 The third point is more substantial. CHUM has asserted that we will be dependent on them for programs, but they base this on a review of our current Alberta schedule, not on our Island schedule, because we purposely did not commit to any particular supplier for our acquired programs on the Island.
6104 Let me make our relationship with CHUM very clear. When we applied for the Alberta TV licences, we were also non-specific as to our program suppliers for acquired programming. After we got the licence, we were approached by Mr. Asper to move all the Global-owned programs to our station. We could have made that deal, but we elected to deal with other suppliers, including CHUM. As an independent station, we can buy from anyone.
6105 Currently in Alberta, CHUM is a major supplier to us, but less than 25 per cent of our current schedule there is sublicensed from CHUM. We buy foreign and Canadian programs from every supplier in the business, and we pay market value for all of those programs.
6106 With the addition of a Vancouver Island outlet, we would match CHUM's buying power. We would be out there buying programs not because of a dependent relationship, but because we think those programs will be successful in western Canada. So we would continue to buy programs from CHUM at market rates if they choose to sell them, and from other suppliers if they choose not to.
6107 We were well aware, going into this application, that CHUM might end up buying a local station in Vancouver. That is why we were not specific about our program suppliers. If you look at our acquisition budget, both for foreign and Canadian, you will see that is purposely high, much higher than CHUM Victoria's budget, so we will have the flexibility to buy quality programming, regardless of whether CHUM is a supplier to us.
6108 Let me underline this point: The notion that A-Channel is somehow dependent on CHUM is demonstrably false.
6109 Now CHUM has also made some disturbing statements as to their future behaviour if we won the licence and they did not. I will ask Mr. Grant to answer to this issue.
6110 MR. GRANT: Madame Chair, I wish to address the statement made by CHUM that if A-Channel is licensed in the Vancouver Extended Market and CHUM is not, they will refuse to sell any of their product to A-Channel.
6111 In making that kind of threat, CHUM not only contradicts itself but it also demeans itself.
6112 Here is a company that says it desperately needs to have an outlet in Vancouver that will run its programs, and if it doesn't get it, it may abandon the national rights marketplace entirely. Here is a company that says it has the rights to some 18 films made in B.C., including Hard Core Logo, that no station in the B.C. market will agree to run and, for that reason, they must have the licence, because these films deserve to be seen in B.C.
6113 And what happens if the Commission awards the licence to the Craigs instead of to CHUM? In that case, they say, forget about our desperate need to place our programs and films in the B.C. market. Forget about everything we said about Hard Core Logo. If the Craigs get the licence, they say, we'll withhold all our programs from them.
6114 As Mr. Waters so eloquently said, we're going to "lay down the law". For the offence of winning a licence that they thought they deserved, they'll refuse to do business with the Craigs. Presumably they will continue to place their programs on KVOS, as they have done for so many years, undermining the Canadian broadcasting system. In other words, they propose that their own private interest will take precedence over the decision of the Commission to award this licence not to them, but to an applicant the Commission thought more deserving.
6115 I was particularly struck that this statement came from a Toronto-based company whose senior executives seem to think that God's earth revolves around them. Is there any wonder why Toronto has a bad name out in the west? I am also from Toronto, and I have to say it is a display like this that makes me understand why people in western Canada want to challenge the notion that all decisions in broadcasting should be made in Toronto.
6116 As Drew Craig has indicated, his business plan is not dependent on CHUM's inventory in any event. If CHUM does not get a licence in Vancouver, I am sure a few CHUM shareholders will shed a tear, and then, as a public company, they will move on. CHUM will need to decide: Do they want to stay in the national rights business or not? And if they do, do they want to deal with other players in other regions, or don't they?
6117 I don't know whether the threat by CHUM was malicious or was simply an outburst of hurt pride. Either way, it did them no honour and it has no place in a hearing of this kind.
6118 MR. CRAIG: Thank you, Peter.
6119 Madame Chair, this is my last opportunity to speak about our application. We will be followed by the other applicants, each with their own point of view.
6120 Despite the points we have made, I want to emphasize that we bear no ill will to anyone. We are here today for the long haul. We are prepared to work with everyone to make our Canadian broadcasting system better. We have no doubt that others in this room will work with us towards that same goal.
6121 That completes our formal reply. Thank you.
6122 There were a couple of issues I think that came up yesterday, that we said we would also respond to in the reply phase. There were two matters, actually, raised yesterday.
6123 The first question was whether we would accept our licence if either the Rogers or the CHUM applications for Vancouver were approved. The answer to that question is no.
6124 Our application for A Channel on the Island assumed only one additional station was licensed in the Vancouver Extended Market, namely, our own. We do not believe the market can absorb two stations with mainstream programming at this time, particularly so soon after the launch of VTV, and we would be unable to deliver our commitments in that case.
6125 The second matter related to our priority program commitment. We indicated in our initial presentation that if the program "250" qualified as a priority programming, we could meet an eight-hour requirement at Year 1 of the licence.
6126 We have now confirmed that "250" would be a priority program. Accordingly, we would be prepared to accept a condition of licence requiring A Channel on the Island to broadcast eight hours of priority programs between the hours of 7 and 11 p.m. each broadcast week, following the Commission's rules and definitions of priority programming.
6127 Thank you, Madame Chair and Members of the Commission.
6128 CHAIRPERSON OF THE COMMISSION: Thank you very much.
6129 MS ASSHETON-SMITH: I just have one very quick question.
6130 I noted in your response to written interventions and again in your oral rebuttal today there was no response to the concerns of NBRS with respect to descriptive video services on A Channel on the Island.
6131 Are you in a position to respond to their concerns?
6132 MR. CRAIG: We are prepared to file a written response to that next week to the Commission.
6133 MS ASSHETON-SMITH: When do you think you would be able to next week?
6134 MR. CRAIG: On Monday.
6135 MS ASSHETON-SMITH: Thank you.
6136 CHAIRPERSON OF THE COMMISSION: Thank you very much, gentlemen.
6137 MS VOGEL: Our next applicant in the rebuttal phase is CHUM Limited for Victoria.
REPLY BY / RÉPLIQUE PAR
6138 MR. MILLER: Madam Chair, Members of the Commission, I will not introduce our panel, as you have met us all before.
6139 We have structured our reply intervention to address why our application for a station in Victoria, and in Vancouver, combined or individually, best meet the local and national public interest, as articulated in the Commission's TV Policy and in particular to key elements set out by the Chair at the start of this proceeding, including the production and local of regional programs, the development and promotion of local Canadian talent, and contribution to priority programming nationally.
6140 Each of the applicants has made promises in these areas and had interveners appear in support of those promises, but fundamental to the Commission's examination of these promises are such matters as track record, viability, and national and international platforms. In CHUM's view, each of the other applicants is deficient in one or more of these respects.
6141 In the area of local and regional programs, Craig has claimed it will offer more locally produced programs than CIVI Victoria, 30, they say, versus our 26. In fact, each of CHUM's applications offer more original local programming than any other applicant. Distinctive local service is the cornerstone of each of our applications. CIVI proposes 26 full hours of original local programming. The Craig application, 23 hours, plus one hour of news flashes. Rogers, 18.
6142 Moreover, contrary to assertions by interveners in support of Craig, CHUM's applications combined offer more substantial support for B.C. based independent production than any other applicant. In financial terms, a minimum of $19 million to B.C. based feature film and long form documentary, of which a full $2.5 million is for script and concept development, with a local development officer.
6143 Moreover, to be clear, Craig's commitment is also to B.C. based production, not Island production.
6144 As discussed in questioning, in the event the Commission licensed only CIVI Victoria, a minimum of $12 million would be spent on B.C. independent production, of which at least 50 per cent would be regional priority programming produced outside of Vancouver.
6145 Interventions in support of Craig by the DGC and the Victoria Independent Film Producers Association must be considered in context. It is the natural tendency of associations to support the broadest possible interest of their members. So it is no surprise that the Craigs' funding held early appeal for non-feature film producers, while our support reflected the commitment to the under-represented area of feature film.
6146 It is also important to note that neither DGC nor the Victoria Producers Association took into account the clear fact that our two applications, while independent, contained projected revenues and commitments based on both stations being licensed, nor that they base their review on the scenario discussed Tuesday, of Victoria alone being licensed.
6147 In the area of development and promotion of local Canadian talent, B.C. musicians, promoters, bar and theatre owners, directors, producers and actors, have all attested in intervention, orally or in writing, to the unequalled track record of CHUM in its promotion of B.C. talent without a station here, and clearly stated the importance they place on CHUM's capacity and commitment to build on this locally, nationally, and internationally.
6148 In the area of contribution to priority programming nationally, while the Craigs have now attempted to match CHUM's Victoria commitments, we are still the only applicant committed from the outset to eight hours of priority programming on launch across all of our stations.
6149 Key producers associations, CFTPA, and B.C. Film, plus major producers, such as James Chavik(ph) and Larry Sugar(ph), who you heard from yesterday, have stressed the importance of national exposure for priority entertainment programming, and only CHUM can ensure this.
6150 In addition to the all important B.C. and Ontario markets, comprising 50 per cent of English Canada, CHUM is able to guarantee full national exposure, promotion and exhibition, in peak viewing hours through, in particular, "Bravo!" and "Space". Moreover, CHUM will continue to make its priority programming available to stations in markets not served by CHUM, such as Craig stations in Alberta and Manitoba.
6151 Failure to get a licence in this market will not jeopardize the Craigs' ability to maintain their existing services, because programming will remain available to them in Manitoba and Alberta. However, because of the dynamics and economics of the industry, the Commission has learned that neither Global nor CHUM can realistically be prepared to sub-licence to Craigs in B.C. in the event that they receive a licence.
6152 In closing I want to say, particularly on behalf of Clint and Laura and I, what a privilege it has been to work with local community leaders and activists and the many residents on the Island that work with us, and the privilege of appearing before you in this our first competitive licensing hearing for the three of us.
6153 But most important, we want to thank the hundreds of people who took the time to consult with us, meet with us, and write letters of support, and in particular those who took the time and the trip to be here today and yesterday. We thought they were wonderful.
6154 I would be happy to answer your question on NBRS, if that is appropriate.
6155 MS ASSHETON-SMITH: You had put some information already on the record, so I was not going to ask it, but if you have something to add to what you have already stated on the record --
6156 MR. MILLER: Fine.
6157 CHAIRPERSON OF THE COMMISSION: Thank you very much.
6158 MS VOGEL: I would like to invite Trinity Television Inc. to come forward now please.
REPLY BY / RÉPLIQUE PAR
6159 COMMISSIONER LANGFORD: You bought a lottery ticket on the break, didn't you? You're smiling -- I can tell!
6160 MR. WILLARD THIESSEN: It's going to happen!
--- Laughter / Rires
6161 MR. WILLARD THIESSEN: Madame Chairperson, thank you for the opportunity to respond to the intervenors in respect to our application.
6162 Over the past week, we have been very pleased to note that there have been no oral objections presented regarding our application by any of the interveners, including the incumbent broadcasters, the other applicants, various interested organizations in the television industry, and members of the public at large.
6163 We note with interest that in the course of their appearance, each of the incumbents agreed with our assessment that our proposed service will have no measurable impact on other players in the industry. As a religious service, we are, to quote Global, "in a different category from the other applicants".
6164 Since some of the interveners' position seem to have morphed somewhat since the written intervention stage, I would like to point out for the record that we have replied fully in writing to all the original concerns expressed by the parties.
6165 We are very encouraged and grateful for the support and goodwill that various faith groups have extended towards us in our efforts.
6166 In addition, we are pleased to receive the interventions and letters of support in favour of Trinity's application, including Mr. Ibrahim on behalf of the B.C. Muslim Association, Mr. Gill on behalf of their 35 recognized Sikh societies of British Columbia, and the most reverend Adam Exner(ph), Archbishop of Vancouver, among others.
6167 We spoke to Mr. Ibrahim last night and he asked me to extend his apologies to the Commission for not having been able to attend his scheduled oral intervention. He had come several times throughout the day, but unfortunately had other commitments at the point when he was called upon to speak.
6168 Mr. Ibrahim, Mr. Gill and Archbishop Exner(ph) represent and speak on behalf of many hundreds of thousands of religious adherents in this region, and we are humbled and honoured by their support for our proposal. We very much look forward to working with their organizations -- and others, I might add -- to ensure that CFVT is truly effective in serving its community.
6169 The concept expressed by the Commission in the religious broadcasting policy has unfolded slowly indeed since 1993, but we are convinced that its time has come for this region. In light of the consensus that Trinity Service will not harm the industry, and given the significant benefit to viewers of increased diversity within the Canadian broadcasting system, it appears to us that the path is completely clear for the Commission to grant our application.
6170 We look forward to the privilege of serving the community in the Fraser Valley, and we say thank you very very much.
6171 CHAIRPERSON OF THE COMMISSION: Thank you.
6172 MS VOGEL: Would CFMT-TV come forward now please.
REPLY BY / RÉPLIQUE PAR
6173 MR. SOLE: Good afternoon.
6174 I will not reintroduce our panel either. It's Tony Viner(ph), Mason Lo, Madeleine Seniak(ph).
6175 CHAIRPERSON OF THE COMMISSION: He looks older!
--- Laughter / Rires
6176 MR. SOLE: It's the length of the breaks!
--- Laughter / Rires
6177 MR. SOLE: Madame la Présidente, Members of the Commission, both Vancouver applications and most of the interveners focused on one over-riding theme: How best to respond to the needs of the 900,000 people of ethnic origin who currently reside in the Lower Mainland and Victoria?
6178 In that regard, the interveners raised three principal questions with respect to our application.
6179 First: Would the approval of our application result in concentration in the ethnic media market?
6180 For many years, Rogers Cable has operated a special programming channel that offers non-commercial, multicultural programming provided by the community. If you approve our application, LM-TV will significantly increase programming choice and diversity by providing a wide variety of professionally produced, third language television programming in a digital broadcasting operation.
6181 There are many voices in the ethnic media in the Lower Mainland and Victoria. Local audiences have access to many ethnic broadcasting services in which Rogers companies hold no ownership interests, including: Five ethnic specialty services; at least five radio stations that provide multilingual programming; and English-language television stations that offer some programming in third languages. In addition, there are over 35 third language newspapers.
6182 Therefore, we do not believe that our application should raise concerns with respect to concentration in ethnic media.
6183 Second: Is the LM-TV model the right model for this market?
6184 The other applicant has proposed an English-language television station, with some ethnocultural on-air personalities speaking English and a few hours of brokered third language programming. We submit that the evidence in this proceeding does not support that model.
6185 We filed comprehensive research with our application that clearly shows that there is intense demand in this market for increased access to third language programming. The Commission itself reached a similar conclusion following its national consultation on the ethnic broadcasting policy.
6186 Our research found that demand is strong across all demographic segments of the ethnic audience, including younger people who speak English. We undertook a special study to examine the interest of younger people in LM-TV. It is filed as Appendix F.
6187 The findings in our research are confirmed by the 745 positive interventions that you received in support of LM-TV.
6188 Yesterday, you heard a number of those interveners set out the many reasons why they believe that there is strong public demand and an urgent need for LM-TV and the Canadian third language programming we would provide.
6189 Even the interveners that did not support us indicated that third language television programming is important to them.
6190 Interveners also noted the growing use of satellite dishes to receive foreign third language programming and the threat posed to the Canadian broadcasting system by KBCB, a new predominantly multilingual U.S. border television station.
6191 For all of these reasons, we believe that LM-TV is the right model for this market.
6192 Third: Have we proposed the right amount of local and ethnic programming, and demonstrated our commitment to Canadian creative talent?
6193 Some interveners have suggested that LM-TV will not provide enough local programming.
6194 LM-TV will provide ethnic audiences in this market with 38.5 hours of new local Canadian ethnic programming each week. It will also offer five new hours of national Chinese news programming. If you approve our application, local viewers will benefit from a significant increase in the choice and diversity of high quality local Canadian ethnic programming.
6195 BCTV and Fairchild implied in their interventions that similar programming on CFMTV had small audiences. We know that. It is our mandate. We do serve many small ethnocultural groups, some with populations of less than 20,000.
6196 As you have heard in this proceeding, there are few opportunities for independent producers to become involved in commercial ethnic television broadcasting in this market. LM-TV will change that, through the Independent British Columbia Ethnic Initiative. In this regard, we are pleased that 11 independent ethnic producers who currently provide programming for the cable Multicultural Channel intervened in favour of our application.
6197 Well over 60 independent documentary producers intervened in support of our commitment to spend $4.5 million to support documentary filmmaking in British Columbia. The Directors Guild re-affirm their support also to this application.
6198 Some interveners suggested that LM-TV will provide too little ethnic programming.
6199 In fact, LM-TV will be a full multilingual television service. It will provide a minimum of 63 hours of programming in third languages each week.
6200 In addition, LM-TV will provide local and national South Asian news programming in English, to ensure that it is accessible to all members of those ethnocultural groups. LM-TV will also provide a variety of cross-cultural programs, that are inclusive of all ethnocultural groups.
6201 There will be synergies from the operation of a multilingual television station in Vancouver and one Toronto. Those synergies will be reflected on the television screen in both cities in the national, Chinese, and South Asian news programming that we will be able to produce. As I stated during our appearance, we would be pleased to discuss any additional expectations that the Commission may have as a result of those synergies.
6202 MR. LO: Fairchild suggested that LM-TV will provide too much Chinese programming, and will harm its specialty services.
6203 Fairchild currently provides 120 hours weekly of programming in Cantonese; we are proposing only 16. Fairchild's other station, Talentvision, currently provides almost 100 hours of programming in Mandarin; we are proposing only 4. But, as a free, over-the-air service, LM-TV will reach those audiences that the Fairchild services do not, and grow the Chinese language advertising market accordingly.
6204 Fairchild also suggested that Chinese viewers are already well served and have no need for LM-TV. I do not agree, nor do other members of the Chinese community who intervened in this proceeding.
6205 Chinese and other ethnic Canadians in Vancouver, like their counterparts in Toronto and Montreal, want to see their languages and their culture reflected in the mainstream of the Canadian broadcasting system on an over-the-air multilingual television station.
6206 Why should we be left out?
6207 MS JAFFER: I would like to conclude our remarks by asking you to recall the chart that was presented with the large blank spot in the middle, for a multilingual television station.
6208 Think of that blank spot as a curtain. If you approve our application for LM-TV, you will lift that curtain from the lives of newcomers and other Canadians who speak third languages.
6209 When I speak to people in the ethnic community, they tell me that they do not know their neighbour. Integration begins when people learn about their neighbour, when they can have access to information about Canadian society in a language that they can understand.
6210 Third language programming does not ghettoize -- it integrates. Without it, the curtain stays shut and the integration process cannot begin.
6211 One of the applicants has suggested that the Commission need only look around to see the changing face of this province. Yes, you should look; but you should also listen. You may hear many different languages.
6212 To meet the needs of the ethnic communities here in British Columbia, we need both the picture and the sound. We need television programming that speaks the languages of the people who live here. We need LM-TV.
6213 MR. SOLE: That concludes our remarks this afternoon, and we would be pleased to answer any questions.
6214 CHAIRPERSON OF THE COMMISSION: Thank you.
6215 We have no questions. Thank you very much.
6216 MS VOGEL: I would invite CHUM Limited, for its application in Vancouver, to come forward now.
REPLY BY / RÉPLIQUE PAR
6217 MR. WATERS: This is the reply of CHUM Television Vancouver to the interventions with respect to our Application.
6218 We would like first to respond to the interventions filed by WIC, Global and CTV.
6219 We respectfully submit that these interveners have not put forward a credible case. It is important that the following facts be carefully considered in assessing the impact of new television services in the market.
6220 After careful questioning, they all eventually confirmed that Vancouver EM television advertising revenues in 1999 were $295 million. The total market grew, on average, by 6.5 per cent annually from 1993-1994 to 1998-1999, and that this financial information, compiled by TVB, was correct.
6221 Contrary to the impression left by WIC, all local Vancouver conventional broadcasters, as well as KVOS, report their revenues to TVB.
6222 As Drew just talked about before, we now have the current TVB data, from September to December 1999 for Vancouver, which shows, as compared to the same period one year ago, an increase of 2.06 per cent as compared to 1.48 per cent nationally.
6223 Any assessment of future growth must be based on this starting point: While the 1998-1999 year did represent a reasonable correction to a very overheated market, we project annual growth of over 2 per cent annually from 2000-2001 to 2004-2005.
6224 The claim by these interveners that 85 per cent of our revenues would be generated from their existing revenue base is contrary to any reasonable analysis of the Vancouver television market. Such an analysis confirms viewership to foreign services in Vancouver remains substantially higher than in all but one Canadian city. Fall 1999 BBM data shows a 27.7 per cent share of viewership in Vancouver to U.S. stations. This compares to Toronto at 19.8 per cent, Edmonton at 20 per cent, and Calgary at 22.4 per cent. This anomaly exists in part due to the lack of sufficient alternative local Vancouver television services. The best solution to American signals are even more attractive Canadian ones.
6225 Prior to the introduction of CIVT in 1997, viewership to U.S. services represented a 33.6 share. By the fall 1999, viewership to U.S. signals declined, to a 27.7 per cent share.
6226 It is evident, then, that a new entrant with a distinct and alternative programming schedule and style will be able to still further repatriate tuning at the expense of foreign services.
6227 Consistent with our audience share projections, our Vancouver station will be able to repatriate 35 per cent of our projected revenues directly from KVOS and other U.S. signals.
6228 On Tuesday, we heard from CTV that their program schedule for CIVT does not really target KVOS. This bolsters our view that there remains room in the Vancouver market for a new television service that can directly impact foreign station audiences and revenues.
6229 Since CHUM controls the rights to many of the programs airing on KVOS, we are uniquely positioned to repatriate KVOS' Vancouver audience and revenue stream. None of the other applicants can claim this unique advantage.
6230 Commissioners, the intervention filed by the Vancouver Media Directors Council affirms that the introduction of CIVT in the fall of 1997 had no effect on the inventory, supply/demand or cost situation in the market. This situation remains today, after advertiser demand cannot be reasonably accommodated by the existing local stations.
6231 The unusually tight advertising inventory available on Vancouver stations has in part forced advertisers to direct an increased portion of their advertising dollars to network, a situation that would be addressed with the introduction of new television services.
6232 MR. ZNAIMER: We would like now to turn to the intervention of the Directors Guild.
6233 The Guild also suggested that approval of our Vancouver Application would unduly impact existing stations. The analysis just provided by Mr. Waters demonstrates that the market remains healthy and can reasonably accommodate our proposal.
6234 The Guild's misunderstanding of the market was further demonstrated when they implied that a Rogers application would not compete with existing Vancouver stations. This is obviously incorrect, since 85 per cent of LM-TV's proposed revenues would be generated from U.S. programming, and LM-TV's proposed Year 1 revenues are comparable to those projected for our Vancouver station.
6235 Lastly, the Guild suggested that CHUM has failed to address why we believe an exception to the Commission's policy on ownership of two stations in a single market is warranted. This also is not correct.
6236 In our written reply to interventions, we demonstrated that the licensing of our proposals best meets both the local and the national interest. Moreover, approval of these applications will not result in any loss of diversity in the broadcasting system. To the contrary. It will assure that CHUM and its alternative model of original Canadian television remains robust.
6237 If our applications are approved, Vancouver and Island residents will still receive an abundant diversity of information and entertainment from numerous television, radio, print, Internet and other sources from a diverse group of owners.
6238 On the plus side, approval of both our applications would maximize benefits, in the form of a combined 56.5 hours of local programming weekly, 8 hours per week of priority programming in peak time across the entire CHUM terrestrial television group, 15 hours per week of ethnic programming within an atmosphere of cultural diversity, which is the guiding theme for everything that we do, over 30 million per year in support of Canadian feature film, and Canada's first prime time serial soap opera.
6239 All this can be reasonably accommodated in the still dynamic and growing Vancouver market without unduly impacting on incumbents, who are all large multi-station groups.
6240 While we believe that approval of our applications warrants an exception to the current dual ownership policy, we have been clear that each application stands on its own merits, and that approval of one is not conditional upon approval of the other.
6241 MR. SHERRATT: Madame Chair, Members of the Commission, your television policy will be your legacy to the Canadian system. It sets out clearly and succinctly a positive direction for Canadian television as we begin the new century.
6242 We sincerely believe our proposal to you responds best to that policy, by providing meaningful, responsive, culturally diverse, and meaningful programming for the two communities that are Vancouver, by making a major contribution to the production and delivery of priority programming, and by addressing the urgent need for support and development of feature film.
6243 We want to thank you, your colleagues and your staff, for you commitment to this process, for your patience, and the fair, the very fair way in which you have carried out the examination of all applicants. It is proof that the Canadian system is alive, and well, and it works in the public interest.
6244 Thank you.
6245 CHAIRPERSON OF THE COMMISSION: Thank you very much.
6246 Commissioner Cram has a question.
6247 COMMISSIONER CRAM: It's the TVB data.
6248 Mr. Waters, you said 295 million in year ending December 1999. The argumentation given us by Craig refers to 302.
6249 When you use the 295, do you net out the gross-up for KVOS? I took tax law, and if I recollect what Mr. Goldstein said, the TVB data includes a gross-up, the equivalent of a tax gross-up, for KVOS. So if what they said -- and I cannot remember, it's either 18 or 16 million they said KVOS earned, you would then add either 9 million or 8 million to the TVB numbers.
6250 Given that, do you then take off 9 or 8 million from that 295 to get a real number?
6251 MR. SHERRATT: That is not where our numbers came from. Our numbers came from the gross-up of everything.
6252 The one thing Mr. Goldstein failed to mention is that it does not really matter whether the money goes to the station in Bellingham or to the federal government. It costs the advertiser the same amount of money. So those are the dollars that have been directed against advertising in this community.
6253 So whether you gross them up -- the only fair to do it is gross them up, because that is what it costs the advertiser to do business.
6254 COMMISSIONER CRAM: But that is what I understood they did.
6255 MR. SHERRATT: Well, that's what they do. He was trying to demean the figure by saying it really is not that much. Well, it really is. But the figure that we get is 295, and I think our people here, they are better at it than I am.
6256 COMMISSIONER CRAM: Is that TVB data? That is what I want to know.
6257 MR. HAMILTON: It is TVB data, and TVB do -- actually TVB don't, but the people that submit do gross up the figure. So the figure is a grossed up figure, which was --
6258 COMMISSIONER CRAM: So it includes the hypothetical gross-up for -- and it would have been the gross-up for that it is non tax payable.
6259 MR. HAMILTON: Correct.
6260 COMMISSIONER CRAM: Okay.
6261 So I would be correct, then, in taking the numbers down about another 8 million or 9 million, depending on KVOS' revenues. Correct?
6262 MR. JANSEN: Commissioner, maybe I can add a point.
6263 There is a reason why TVB grosses the numbers up, because TVB correctly believes that these grossed up amounts should be included. These are dollars that are spent against the market.
6264 One other point, Commissioner. The 295 million figure applies to broadcast year 1999. The figure of slightly above 300 million applies to broadcast year 2000.
6265 COMMISSIONER CRAM: I always get the years mixed up. Thank you.
6266 So it does include the gross-up, and therefore the percentage should really be down in increase.
6267 MR. SHERRATT: No. I think it is important, and we have not really explained this as well as we might, that gross-up figure is the real dollars that have been allocated for advertising in this market, and that Canadian advertisers have paid the hundred cent dollar, not the fifty cent dollar that you would take if you did not gross it up.
6268 COMMISSIONER CRAM: Correct. I understand. Thank you.
6269 CHAIRPERSON OF THE COMMISSION: Thank you.
6270 MS VOGEL: That concludes the fourth phase.
6271 CHAIRPERSON OF THE COMMISSION: So, to all the applicants and interveners, I thank you all, and sorry for the longer breaks we took this morning. That was really to support the proceeding.
6272 We will now break for lunch, and come back with the second part of our hearing, which deals with the MDS applications.
6273 We will come back at 2:30.
--- Luncheon recess at 1305 / Suspension à 1305
--- Upon resuming at 1430 / Reprise à 1430
6274 CHAIRPERSON OF THE COMMISSION: Madam Secretary, please.
6275 MS VOGEL: Thank you, Madam Chairperson.
6276 Phase I, which we are about to embark on, is where the applicants make their presentation to the Commission. Phase II is where the applicants intervene against each other. In Phase III we will hear the other intervenors. Phase IV would be where the applicants come back in reverse order from Phase I to rebut other interventions.
6277 For Phase I there is a maximum of 20 minutes to make your presentation. I hate gonging people, okay --
6278 CHAIRPERSON OF THE COMMISSION: She is good at this.
--- Laughter / Rires
6279 MS VOGEL: Right.
6280 CHAIRPERSON OF THE COMMISSION: And courteous doing it.
6281 MS VOGEL: So, with your leave, Madam Chairperson, I will read in the first item for the record.
6282 CHAIRPERSON OF THE COMMISSION: Sure.
6283 MS VOGEL: This application is by Craig Broadcasting Systems Inc. Craig is applying for a broadcasting licence for a radio communication distribution undertaking to serve Victoria, Vancouver, Abbotsford, Chilliwack, Penticton, Kelowna and Vernon, British Columbia.
6284 The applicant proposes to transmit services using a digital multipoint distribution system, or MDS.
6285 Please proceed whenever you are ready.
PRESENTATION / PRÉSENTATION
6286 MR. CRAIG: Good afternoon, Madam Chair and Members of the Commission. I am Boyd Craig, President and CEO of SkyCable.
6287 Before we start our presentation, let me introduce our team.
6288 Starting on my left, in the first row, we have: Elan Gillespie, Principal Consultant, PricewaterhouseCoopers; beside me is Tim Kist, VP and General Manager of SkyCable; on my right is Sandi McDonald, Executive VP Business Development, Craig Broadcast Systems and Paul East, VP Technology, SkyCable.
6289 In the second row are: Debra McLaughlin, Senior Associate, PwC; Glenn Stuart, Principal Consultant, PwC; Hank Intven, our legal counsel from McCarthy Tétrault; and, Gord Henke, our technical consultant from DEM Allen & Associates.
6290 In the audience we have Kevin Hooke of Wellington West Capital who represents our minority investors.
6291 We also have some of the members of the SkyCable Pacific Community Advisory Board here today. They include: John Donnolly, President of Smooth Productions, who is a well-known local producer and content creator; Maria Antidormi, with BCIT, is responsible for distance education; Dr. Ronald Burnett, President of the Emily Carr Institute of Art & Design; and, Bohdan Zajcew, General Manager of the Knowledge Network.
6292 Sandi McDonald will describe the role of our Community Advisory Board a little later.
6293 Now let me begin our presentation.
6294 Earlier this week, you heard from my brother Drew Craig and his team about their aspirations for conventional television. As he noted, our family has been involved in radio and television in western Canada for three generations.
6295 But I am here to present a different team, a different technology, and a different company, SkyCable Pacific.
6296 We are applying today for a digital MDS licence to serve communities in British Columbia with multichannel television that will provide an attractive alternative to cable and direct-to-home satellite systems.
6297 We come to this application with a unique background. Unique because we were the pioneers in introducing digital MDS technology to the world, and unique because our roots are in western Canada and that is where we want to expand.
6298 We were licensed to offer digital MDS in Manitoba only four years ago. Since then, you have licensed MDS systems to serve communities in Saskatchewan, Ontario and Quebec.
6299 We at SkyCable strongly believe in MDS. We believe it is a technology that should be made available to consumers in other markets, and we initiated the call for licences in British Columbia with an application filed over a year ago.
6300 Our proposal is well financed. The equity in SkyCable Pacific will be owned by investors from western canada. 80 per cent of the equity will be held by our family holding company, and 20 per cent by other western investors.
6301 Now, before we get into the details of our application, let me turn to a brief audiovisual introduction of Craig and SkyCable's role in introducing new technologies to western Canadians for three generations.
--- Audiovisual clip / Clip audiovisuel
6302 MR. CRAIG: I hope that presentation gave you a sense that we are certainly not standing still. We have always led in the introduction of new technologies, and our MDS service continues that tradition.
6303 I will be honest with you and tell you that it was tough being the pioneer in MDS. We faced the inevitable challenges of the first provider of a new service. We were out there offering the service while the technology was still in development, and before a supply industry had matured.
6304 But the good news is we met all the challenges and came out the better for it. We solved the technical problems one at a time, and, in the process, became one of the most experienced digital MDS operators in the world. Today, our system runs like a charm and we have learned how to market and provide it effectively. Our customers are very satisfied with the service and we are looking forward to rolling it into new markets.
6305 To say a little more about our technology, I would like to turn to Paul East, SkyCable's Vice President for Technology.
6306 MR. EAST: Thank you, Boyd.
6307 Good afternoon, Madam Chair and Members of the Commission.
6308 I realize that some of you may not be that familiar with digital MDS, so I will start with a brief technical introduction.
6309 Wireless technology is hot around the world today, but there is not a lot that is really new about radio waves. Digital MDS is simply an adaptation of radio technology that allows us to broadcast high quality digital signlas across a wide area on a very cost-effective basis.
6310 As digital compression technology evolved, we have seen compression ratios increase from 4:1 to 8:1 and soon on to 10:1 video channels per carrier. We have introduced two-way transmission capability for Internet access. This high capacity and interactive capability, combined with the absence of any requirement to build extensive cable networks to every home, makes MDS a low cost and effective technical alternative to cable delivery systems.
6311 We are very excited about the newer MDS technology, and I thought you might be interested in seeing what some of it looks like. Arranged here on our table are some of the items we use to offer MDS service in Manitoba.
6312 This is a third generation Sagem DVB set top box. It is a leading contender for the system we will deploy in B.C. It supports an enhanced interactive program guide, parental lockout, universal remote control and a host of other consumer-friendly features.
6313 I have two of the antennas that we mount on customer premises. This round one right here is for locations that are close to a transmission tower. It is a lower gain antenna. This is called a planar array antenna. It is a higher gain antenna. This is also the one we use for bidirectional wireless Internet service.
6314 Finally, this is one of our Phasecomm SpeedDemon brand two-way wireless high speed Internet modems. Faster than DSL and at least as fast as the best cable modems, it is a great product which will allow us to bring high speed access to both rural areas, and to compete toe-to-toe with the telco and cable companies in urban areas.
6315 As a digital MDS pioneer, SkyCable had the unenviable task of debugging the first generation MDS technology. On the positive side, that experience made us very familiar with the practicalities of MDS band microwave technology.
6316 We will bring that experience to British Columbia. We are looking forward to building a state-of-the-art system that is a true alternative in technology, in infrastructure, in service, and low cost to consumers.
6317 We plan to roll out our B.C. system in two stages:
6318 Stage one, within 12 months of receiving the licence we will serve: the lower mainland, including Abbotsford and Chilliwack; Victoria and the Saanich Peninsula; and, the Okanagan, including Vernon, Kelowna and Penticton.
6319 Stage two, within 24 to 30 months of the licence we will add Kamloops and Hope.
6320 I would now like to turn to Elan Gillespie who will discuss the consumer research on our B.C. MDS service.
6321 MS GILLESPIE: Thank you, Paul.
6322 Madam Chair, a great deal of consumer research was done in preparation for this hearing. I will briefly review the key conclusions of the research with the Commission by both applicants.
6323 First, there is strong overall demand for MDS service offerings. PwC conducted two research surveys for SkyCable in April 1998 and in the fall of 1999. Over 60 per cent of respondents in both surveys indicated that they were interested in the MDS service.
6324 Second, there are consistent levels of dissatisfaction with current service providers. The two PwC surveys report that 43 to 44 per cent of respondents were dissatisfied. This indicates a real opportunity for conversion of existing subscribers to MDS.
6325 Third, there is no doubt that price is a key factor in making MDS an attractive alternative to consumers. The willingness to switch to MDS from current providers is clearly related to consumer savings.
6326 For example, in the 1999 PwC survey, 41 per cent indicated a willingness to switch service providers with a cost savings of 10 per cent.
6327 The consumer research identified a particularly high-price sensitivity to installation fees. For example, when consumers were asked if they would switch to MDS at an installation fee of $125, only 12 per cent would consider it. At that level of installation fee, only 3 per cent said they would definitely switch.
6328 This evidence strongly suggests that customers will switch to MDS service, but only if the price is right.
6329 Based on these results of the market research, it is clear that a competitively priced MDS service that offers choice for a reasonable price will provide a strong value proposition for customers. The opportunity to convert existing cable and DTH subscribers to MDS can be improved tremendously by removing barriers such as high installation charges.
6330 This market research was taken to heart in developing the SkyCable service offering.
6331 SkyCable's proposed service will clearly be price competitive with other offerings in the B.C. market.
6332 The SkyCable service provides customers with a wide choice of TV and audio channels, with both basic and discretionary packages priced below those of cable offerings.
6333 Finally, unlike the competition, SkyCable service will have no installation fees. This eliminates what consumers have clearly told us is a major barrier to switching from cable.
6334 I will now turn to Tim Kist who will talk about marketing the SkyCable service.
6335 MR. KIST: Thank you, Elan.
6336 I would like to talk with you about the advantages of the SkyCable consumer model in a competitive market.
6337 Our experience in Manitoba, both rural and urban, can be characterized as a learning experience to build future success.
6338 When MDS was first launched, there was a DTH in rural areas and SkyCable enjoyed good success in providing an alternative to off-air TV channels.
6339 Once DTH launched, however, it provided strong competition, offering high capacity and a lower price. At that point, we really started to compete. We increased the focus on our local presence, local channels and customer service to remain competitive.
6340 More important, we learned that we had to compete on price. We eliminated all installation charges and refunded over a million dollars in customer equipment deposits.
6341 In Winnipeg, we learned how to compete in urban markets. When we first launched, our service was more expensive than cable, both in installation fees and monthly fees. Although people were intrigued and were looking for an alternative to cable, we were losing the battle based on price.
6342 So we had to reinvent the way we packaged our service and how we priced it. We went back to the basics.
6343 We recognized that our 100 per cent digital product that featured all local broadcasters, coupled with the best picture quality available, gave us the right product for the market.
6344 But, we had to improve our packaging and, most important, our price to meet the challenges of a very competitive market. We realized that since most of the services offered were the same as cable or DTH, we had to differentiate on price and customer service.
6345 Next, we learned how to package our services to make them more attractive to customers. Our experience told us that customers want theme packages of channels, not necessarily pick and pay. In Manitoba today, 96 per cent of our customers buy at least one of our theme packs, only 4 per cent take basic service alone.
6346 We also developed and introduced our interactive Internet access service, providing a very attractive addition to our service line-up.
6347 Finally, we learned that we had to provide better service to attract and retain our customers. We really focused on this area, and I am pleased to report that our efforts have been highly successful.
6348 Just this week, we received the results of our first Customer Satisfaction Survey, which was developed using the same methodology as that employed by the cable industry. The results were outstanding.
6349 Let me give you a few highlights.
6350 First, we received an overall customer quality of service satisfaction rating of 81 per cent.
6351 Our quality of TV reception rating was 84 per cent, providing solid evidence that we have met all the technical challenges of introducing MDS, and developed a high quality alternative to cable and DTH.
6352 Finally, and we are particularly proud of this number, our customer satisfaction rating for the attitude of our company staff was 90 per cent.
6353 All in all, these results show us that we are now positioned to be a very formidable competitor for cable and DTH customers.
6354 The lessons we learned in Manitoba have shaped the pricing and packaging of our B.C. application. As Elan indicated, the research clearly told us that price, coupled with quality and service, are the key success factors for a new entrant.
6355 We have taken a straightforward marketing approach -- we have identified what customers are looking for -- a high quality lineup of TV services. Just as important, we have made it very attractive to customers to switch to MDS, saving them money and charging them no high switching costs.
6356 I will now turn to Sandi McDonald.
6357 MS MCDONALD: Thanks, Tim.
6358 I would like to take a few minutes to describe our Community Access program. We referred to it in our application as our Open Access Network for Community-based Development and Learning. We will probably just call it SkyChannel.
6359 Let me describe some of its key features.
6360 First, you may have noticed the split-screen design of the channel in our video presentation. It's part of a hybrid design which combines the reach of a broadcast channel with the interactivity of the Internet. As an example, students enrolled in a distance education program will be able to watch classes on our broadcast channel and use the Internet to submit assignments and carry out group work without having to leave their home or community.
6361 Second, we understand that if we enable communities to express themselves effectively we will have a competitive edge. We plan to distinguish ourselves as an access and content provider for New Media and lifelong learning. B.C. has the highest percentage of educated people of any province in Canada. There is a large demand for lifelong learning experiences. B.C. also has globally recognized distance education programs. We will provide a new medium for that demand, talent and energy.
6362 Third, and most important, our delivery plan is based on partnerships, with educators and school boards, with content developers and new media creators, with ethnic and community associations and libraries.
6363 We have prepared a SkyChannel Concept Paper, in consultation with B.C. community groups, aimed at developing new kinds of interactive new media programming, combining the strengths of TV and the Internet.
6364 Madam Chair, you will recall that Boyd Craig introduced some of the members of the SkyCable Community Advisory Board at the beginning of our presentation. We are pleased that they are here to support us. The board will also include representatives of local building associations who, for example, will help us develop a customized community channel for in-building residents, as well as representatives from municipal libraries, and other community-based organizations.
6365 The Sky Channel Advisory Board will have several roles and responsibilities:
6366 It will work with us and the communities we serve to develop a governance framework that reinforces the principles of the Cable Television Community Channel Standards.
6367 It will determine, and in some cases develop, the programming content that will be carried on the Access Network.
6368 It will provide resources, training, and in some cases facilities.
6369 It will direct and support the efforts of our program coordinator and volunteers.
6370 And it will promote and champion the objectives of the access network and its services.
6371 MR. CRAIG: Thank you, Sandi.
6372 Madam Chair, we believe that our experience as pioneers in the introduction of MDS service in Western Canada has enabled us to develop a very attractive and competitive service alternative for B.C. consumers.
6373 We are convinced we have the right formula for success. Several features of our service will clinch this:
6374 First, we will provide a very competitive package of channels, at digital quality, and, most importantly, at rates lower than cable.
6375 Second, unlike our competitors, we will charge no installation fees or raise other barriers to switching from cable.
6376 Third, we recognize the strength of consumer concerns in B.C. We will maintain our high customer satisfaction ratings to attract, and keep, customers now served by cable.
6377 Thank you, Madam Chair.
6378 We would be pleased to answer your questions.
6379 CHAIRPERSON OF THE COMMISSION: Thank you very much.
6380 It really seems that you had a copy of my questions because already in your presentation you started to answer some of the questions that I had for you. But, if you will allow me, I will go back.
6381 What I would like to do with you is understand better what you have learned from your experience and kind of dig a bit into what you are presenting here on page 8 on the lessons learned, in a sense, how you have learned it and how it is directing your approach here in B.C.
6382 Secondly, I will kind of go, in some detail, into your business plan to understand the feasibility of it and also your ambition about really reaching subscribers and really making competition a reality here in B.C.
6383 Thirdly, definitely the open-access network. I will want to better understand the initiatives you have there and where you are at and how you see it. And, frankly, the split screen. I really didn't capture it to the point that I know what it is.
--- Laughter / Rires
6384 CHAIRPERSON OF THE COMMISSION: I apologize. I will not question the technological matters. I really trust your expertise there and the people who staff -- what we are really interested in is much more the interface with the subscriber and the prices and the advertising and the marketing tools. So I apologize.
6385 But thank you. I really see that it is interesting.
--- Laughter / Rires
6386 CHAIRPERSON OF THE COMMISSION: Does it come in other colours?
--- Laughter / Rires
6387 CHAIRPERSON OF THE COMMISSION: Okay.
6388 More seriously, let's go back to the lessons learned. Although we know that you were a pioneer in the domain so it was technological mastering to be done, there were some marketing ones. Can you go back with us, kind of slowly, step by step, to the lessons learned and what you are really bringing into the B.C. market as expertise about that?
6389 MR. CRAIG: In a lot of ways to go back and describe the technology as we rolled it out three and a half years ago is painful, because at times it wasn't a pleasant experience and there were many, many sleepless nights and many, many hours spent by many members of our staff and management rolling out what, at the time, was the first digital wireless network in the world. There had been other digital systems planned but ours was a very expansive system that covered an area and today covers an area from the Saskatchewan border all the way east of Winnipeg about 20 miles. I think that the coverage area is somewhere in the order of 70,000 square miles, so it is a very large area to manage.
6390 We started with a company -- if you recall, I think we may have talked about this at another hearing -- based out of Winnipeg actually. It ended up that Nortel came in and bought the company for a large amount of money. Perhaps we should have been buying shares instead of equipment from that company.
--- Laughter / Rires
6391 MR. CRAIG: But part of the problem was they were great engineers and they had some really, really good ideas but some really poor manufacturing processes. The quality control of some of the product that we were taking delivery of was certainly substandard. But really, at that point in time, and I know it doesn't seem that long ago, believe it or not, there was not a large supply community out there. In fact, we didn't run into anybody else that promised us that they could build and deliver the equipment that BNI built and delivered to us.
6392 It was a turnkey operation. I guess the other lesson we learned was that it was also proprietary and then when parts of it didn't work we were kind of locked into the whole system.
6393 We started in the late summer and turned the system on. I must admit that the picture quality was fantastic. At that point there had been a lot of media coverage about the fact that we had finally received the licence, and people actually in the rural areas had been waiting for cable for 30 years. The demand was certainly there and we rose to the occasion and signed up a lot of homes very quickly. Perhaps in retrospect we shouldn't have done that because you remember the day that we signed on and how excited everybody was, and about a week later the thing went off the air.
6394 The problem was that the design at that point had the transmitters up on top of our towers. Our towers are relatively high towers. Some of them are as high as 1,400 feet. The transmitters were mounted at the very top of these towers and they were susceptible to all kinds of heat and fluctuations in temperature. Plus a television tower shakes constantly. I suppose that the engineers that designed this didn't fully understand that. For whatever reason, the transmitters failed and we never really did get a good explanation as to what was happening.
6395 But I can tell you that over the course of about a year and a half we replaced over 50 transmitters on these towers and spent over a million on tower rigging crews. They actually had to come from Winnipeg when we had a failure, rig the tower, climb the tower -- and climbing a 1,400 foot tower takes about two and a half to three hours -- and then haul these transmitters down and haul the new ones up. Part of the problem is now you are relying on a tower rigger to do a transmitter installation. They are maybe great at what they do, but they are certainly not engineers. So you have a transmitter on top of a tower 1,400 feet in the air that your engineers can never really touch.
6396 There was a reason for why they had chose to put these transmitters at the top of the towers. Their reason was that it was believed at that time that if you had put the transmitter on the ground where we ultimately put them, that by the time the signal from the transmitter got to the top of the tower there was too much line loss and there would be no signal actually coming out of the antenna on top of the tower and your contours would be very small. Of course we were trying to achieve maximum coverage.
6397 At any rate, we solved the problem eventually by finding some transmitters that we were able to put on the ground and run some very large wave guide up our towers. We didn't do that until -- about January of 1998, was when we ordered our first ground-mounted transmitter. The reason for that is that even at that time it was questionable whether or not anybody could deliver a digital transmitter that would actually work on the ground. They are very high-powered transmitters, but they have worked.
6398 We made the decision at that point in time to change the entire transmission system at our own expense, and we decided that if we didn't do that we weren't going to have a business left. We also thought that we would save disagreements with BNI over some of their invoicing until another day.
6399 The second problem that we encountered was the set top box itself. Again, there was at the time very few suppliers of digital set top boxes. These boxes were manufactured in Winnipeg and we went through about four generations of digital set top boxes in about a period of 18 months. The problem was that we would order approximately 1,000 boxes at a time and the truck would be driving down from Winnipeg to Brandon where SkyCable was based at that point in time, and we would be sending another truck with about 500 broken down boxes going the other way for repair.
6400 All this was very frustrating. It was at a time when the phone was ringing off the hook. People were wanting the service. We were trying to set up a business, a brand new business and engineer it at the same time. So it was a very, very trying time.
6401 We had some problems early on with the compression equipment, but for the most part the compression equipment was manufactured by Motorola and it was actually -- the head ends actually turned out to be quite a good product but they were not part of the BNI design.
6402 What we have done is we have replaced all the transmitters and we are now using a DVB set top box. It is an open standard and we are able to buy boxes now from any number of manufacturers that will work on our Manitoba system. They work and they work consistently. They have various features like parental lockout and electronic program guide.
6403 It was a very frustrating period but we certainly learned a lot during that time.
6404 I think that the other issue at the time was our ability to trunk and bag, using the same frequencies, reusing the 2.5 frequencies that we have and trunking the signal actually from one tower to the next. That technology works very, very well. It took a while for us to understand it, but without it we wouldn't have been able to build the network that we built. We believe now that we are the experts in installing this in-van trunking technique and we believe that it is a very efficient effective way to haul signal around.
6405 That was really some of the stuff we were going through on the technical front.
6406 There were other operational challenges that we were facing at the time as well. Remember that we were inventing a new business. This is somewhat different from the cable business and it is also somewhat different from the satellite business, so we really had no model from which to copy. Of course there was not a pool of seasoned managers around that knew how to do this because nobody had done it before.
6407 Part of the difference, and I think a major difference in how you operate a wireless cable plan as compared to a wireline cable plan, is the fact that we would -- the instant you turn on a transmitter you get huge coverage. Obviously, we had phone calls coming in from all over a certain coverage area. In fact, they were coming in from all over the province. We were delighted to get the calls and were delighted to take the orders, but found that it took us sometimes three hours to drive from our office in Brandon to the customer's premise. If you actually drive across our entire coverage area at 60 miles an hour it takes you three and a half hours to get from one end of it to the other.
6408 We had to learn how to manage this and we had to learn how to hire installers and train installers and give installers the proper safety training because it is a line-of-sight technology; it is not a simple installation at the house. Sometimes we can do an install in an hour, sometimes it takes us half a day, and sometimes we can't do it all, which is another problem. It is a frustrating problem for a lot of people.
6409 Because it is line-of-sight, we can't really tell for sure on the telephone whether or not we can actually receive signal at that household. We now have developed techniques where our CSR is going to actually query the customers to find out where they are located and whether or not there are tall trees around their house or if they are in a valley. We can qualify it somewhat, but you don't really know until you get there.
6410 I think too that there was a tendency for us to want to tell the world -- I really mean the people in Manitoba -- what a great service we had and we found that mass marketing has its drawbacks. For that very reason, we have run an ad and our CSRs could tell when the ad ran on either television or radio because the phone would ring off the hook but the calls would come in from all over the place. We find that if we can't get to a house almost within 24 hours that people get frustrated.
6411 I think also the biggest lesson we learned was that when you advertise you better deliver your service and it better be there 24 hours a day, and it wasn't.
6412 So they weren't easy lessons. We have fixed our network. I believe now that we run one of the most sophisticated wireless networks in the world. As I mentioned several times, it is a very expansive area. It is fully digital, it is fully addressable, and I think it is affordable to the end consumer. As we mentioned it is cheaper than the lowest priced cable operator in Winnipeg and we offer the same price right across the province whereas in some cases we are 30 per cent lower than some of the wireline cable providers for the same product. We have no installation fees.
6413 Also we have worked very, very hard on customer care, and that is really where Tim Kist comes in. We hired Tim from the cable industry and that is his forté was customer care.
6414 But I think also what has happened in the last six months is really one of the most exciting advancements so far. Our network is now bidirectional. In Winnipeg we are now able to offer a two-way high-speed wireless Internet connection and we are pricing this very competitive to cable. Paul showed you one of the modems there and also the transceiver, it is called, which is capable of receiving a signal and shooting it back to our head end, to our data head end, and it is connected directly into the Internet backbone.
6415 So I think that certainly the capability of two-way has been recognized by major telcos in the U.S. There has been a real resurgence in people's optimism about operating a network at 2.5, and I think we are really now just beginning to be very, very competitive to cable. I think now that we are two-way that gives us a very strong leg up on satellite as well.
6416 CHAIRPERSON OF THE COMMISSION: Those certainly are lessons you have learned because I see that you shared that without even going back to notes, so they are definitely learned.
6417 What is your assessment of all those reasons in comparison to what you had as a business plan back at the time you were licensed? You don't have the same number of subscribers that you were then targeting given that now you are four years into your business plan with the projections you had. Do you think you will be catching up or there will always be a discrepancy between what you had projected and what you will be able to really attain at the end of your licence term? Are the lessons such that you have caught up now?
6418 MR. CRAIG: I would like to think so and I believe they are. I think that it is somewhat embarrassing for us to make certain projections and not be able to meet those projections. I think when we make a commitment we want to keep a commitment and that is why we didn't exit the business. You find that in the U.S. some of the major telephone companies down there actually built MDS digital networks and actually walked away from the business. They couldn't be bothered, I suppose, to put up with the headaches.
6419 I believe that we will catch up --
6420 CHAIRPERSON OF THE COMMISSION: That is where you lost your hair, due to those headaches?
6421 MR. CRAIG: I lost it actually before.
--- Laughter / Rires
6422 MR. CRAIG: That's probably part of the reason.
--- Laughter / Rires
6423 MR. CRAIG: I think that we will catch up on the penetration rates that we talk about in our application and that we talked about in our original application that was approved. I think that really one of the drivers for this is going to be people's desire to hook up to high-speed Internet. We are going to be in other businesses in the future as well. But we will catch up and we are determined we are going to do that and we are committed to do that.
6424 CHAIRPERSON OF THE COMMISSION: Given those lessons that you have learned and catching up, do you think for you -- you are saying that you have triggered that hearing in a sense because you were the one applying for getting the licence. Do you really think, given that catching up, that the timing is good for you, that you are not kind of establishing a better stability out of your existing territory before you go into a new venture at this point?
6425 What is the level of comfort you can give to the Commission that if you were to be licensed, although you have some catching up to do in the Manitoba territory, that will not hamper your capacity of really being a strong competitor? It is no secret that the Commission is seeking players in MDS and DTH. What we are looking for is to offer consumers, Canadian consumers, a choice for their distributor of broadcasting signals. So for us it is very important to assess that you will be there competing every day with the existing DTH and cable.
6426 MR. CRAIG: First of all, I do believe that MDS has come of age. I think that earlier on when we were licensed, actually MDS was almost a bad word amongst the financial community. We discovered at that point in time that we had to finance this thing basically by ourselves. I do believe that finally people are starting to believe in the technology. They have seen the pictures that we have been able to produce, they have seen the potential of the network and all the advancements that are happening. We have been working very diligently at learning the technical side, but also enhancing our management team, enhancing our abilities to deliver a good service to our customer.
6427 I think too that is what is really critical for us is to create a larger critical mass so that we can compete with the bigger providers. I think that we don't want to be marginalizing this business in Manitoba. Our fear is that, if we stay there, at some point we may be too small to really attract the attention and the capital that we are going to need to build this thing out and to offer all the enhanced services that we are going to do further down the road.
6428 We have expanded into other markets other than Manitoba. We own an MDS system in the Coachella Valley in California, and we also have some MDS spectrum that we bought in New Zealand. We believe in the technology, we believe in our abilities to deliver it, and we believe that we are ready to provide the service in British Columbia, not only from a technical standpoint but from a managerial standpoint and from a financial standpoint.
6429 CHAIRPERSON OF THE COMMISSION: So what you are saying is contrary to what could be perceived as overextending. You need that extension in order to be stronger within the territories you have.
6430 MR. CRAIG: That is our belief.
6431 CHAIRPERSON OF THE COMMISSION: That means that you are counting on some synergies between the existing territory and the one you are applying for. What are they?
6432 MR. CRAIG: I think that, first of all, it is important for an MDS operator to maintain a strong local presence, so I think that the synergies for us will come from the more senior management, people that we are able to attract and keep in our company. I also think that there are synergies in the upper echelons of our technical staff as well.
6433 We have filed an application. It is fully a standalone application, but these upper levels of management, I think that is really where the synergies lie.
6434 MDS is really a regional business and I don't think that there is a need to certainly own a system right across Canada. I think that that is not certainly our desire, and obviously that is not possible any more.
6435 CHAIRPERSON OF THE COMMISSION: It's too late.
6436 MR. CRAIG: Yes, it's too late.
6437 We do believe in the business. There is no question about that. We were there before other people believed in it. We continue to believe in it in spite of some of the challenges that we have faced and solved. We don't want to be a small MDS provider. We want to be out there with the bigger MDS providers, able to provide a service as good as the big players can, and I think that we need British Columbia to do that.
6438 CHAIRPERSON OF THE COMMISSION: Thank you.
6439 I will move now to your business plan, per se. I have a few questions.
6440 You go on saying in the lessons learned that you will not -- and your business plan is on that assumption -- that there will be no charge for installation although it is a big charge to you as a company. What is the alternative for you in terms of still getting to a bottom line at one point and eventually a profit line? How can you support such an approach?
6441 Your competitor is not proposing that. Why are you and how do you compensate, in a sense, for that lack of revenues in your bottom line?
6442 MR. CRAIG: There was a time when people believed that you had to charge an upfront fee, and obviously we believed that. When we started in this business we had a $200 hook-up fee. You may have noticed in our presentation we also asked the consumer to put down a $200 deposit on the equipment, which we refunded. We actually mailed all our subscribers their $200 back, which was well over a million dollars.
6443 We realized that the service is great, the picture is great, but there is just not enough -- you need a compelling reason to make people switch. The compelling reason that we have discovered is you need a reliable service, you need it to be priced cheaper than the incumbent cable companies, and you also cannot charge hook-up fees. It is not sustainable in the long run in order to attract the market share that we are going after.
6444 I think also if you look at our PBIT numbers in our business plan -- and of course our business plan that we filed, there is no hook-up charge in there -- the PBIT numbers are fairly healthy. I think that the business plan is robust enough certainly to support the fact that we do not have a hook-up charge. We believe very strongly if we had a hook-up charge those PBIT numbers would be much less.
6445 I think also the prices of the set top boxes is dropping. When we started in this business the price of set top boxes was much, much higher than it is today. The equipment generally is dropping in price. I think the business model that we have filed is a true reflection of what is going to happen in terms of an expense allocation that we are going to incur, and I think that with that installation charge there we could not achieve the levels of penetration that we are projecting.
6446 CHAIRPERSON OF THE COMMISSION: Okay. In other words, what you are saying is the money that you are not getting there you are getting by having a higher penetration?
6447 MR. CRAIG: Yes.
6448 I maybe would ask Tim Kist to make some comments at this point.
6449 MR. KIST: Certainly.
6450 I think, Madam Chair, with respect to the installation fee -- prior to joining SkyCable just about a year ago the cable company that I worked for of course was reacting to an entrant in the marketplace called SkyCable in Winnipeg that was starting to not offer installation fees. We had to react as a cable company to say no more installation fee if that customer said, "I'm going to go over to SkyCable. I have a choice into this apartment building" or "I have got a choice in this house. I can get SkyCable or I can get my cable service. What should I do? SkyCable is not offering an installation fee." We had to react, and many times it was a decision right on the floor where the customer service rep had the opportunity to say we will wave the installation fee.
6451 It hurt, certainly on a financial perspective because we had budgeted nice installation fees as a cable company. There was no competition. Since that time, with SkyCable reducing the overall price of the service, now we have taken care of both of the price barriers: both the initial fee to get into the service and subsequently the ongoing monthly fee to enjoy the service that you receive.
6452 CHAIRPERSON OF THE COMMISSION: Thank you.
6453 MR. STUART: Just an added answer to that question.
6454 The $100 installation fee that SkyCable is proposing over four years is equivalent to about $2 per sub per month. In reality over that time we are averaging about -- or SkyCable is averaging about $46 per month. So it is equivalent to about a 4 per cent cost and it is just a cost of doing business in a sense to get the revenue up.
6455 CHAIRPERSON OF THE COMMISSION: Yes. Thank you.
6456 What about the equipment itself? You are saying the set top boxes are also coming down and you are going the rent approach rather than sell the equipment. If a subscriber would like to buy the equipment, is it possible?
6457 MR. CRAIG: We would love it if our subscribers would buy our equipment. They won't. We have never in the time that we have been in business had anybody phone up and say, "Could I buy the set top box?" I don't know why they would want to do that.
6458 I think that the one thing that we take upon ourselves, or the satellite industry does, is we take the risk on any technology shifts. In the satellite business, when you buy your dish, when you buy your set top box, if things change, which they have changed in the satellite business over the years, the consumer is stuck with a bunch of broken down hardware that is not good to anybody.
6459 If we were ever to do that, that would be our expense. There is just no compelling reason for the consumer to buy a set top box.
6460 CHAIRPERSON OF THE COMMISSION: In the studies you have done in the market here, you don't see a different pattern?
6461 MR. CRAIG: No. The other thing, Winnipeg has one of the historically lowest cable rates in Canada. There is a reason for that and that has to do with the fact that at one point in time the cable plant there was owned by the telephone system, and the cable companies I think were not able to pass on perhaps the increases they would have liked as the plant was upgraded.
6462 So we compete in probably one of the most competitive markets in terms of price in Canada. What we did, we took the Videon service, which was the lowest price service in Manitoba, we established our prices about somewhere between 10 and 20 per cent lower than them. It depends on what package you take, that is why there is a discrepancy between 10 and 20 per cent. We have applied that right across the province so that in some cases in Manitoba -- in Brandon, for instance, where the cable company there is higher priced than in Winnipeg, I had a customer that phoned me the other day and he said, "I just wanted to tell you that I took most of the services that SkyCable offers and I had the identical packages from Westman Cable in Brandon" and he is saving $18 a month and it cost him nothing to switch.
6463 We had toyed at one point with having a two-tiered pricing system, one for Winnipeg and one for rural Manitoba and for Brandon and for the smaller communities throughout the province. We decided that the consumer backlash would probably be too great because even if you changed the name and market the service differently, people eventually find out it is the same service provider. So we decided to take the hit, and we are sure that due to the fact that we have these low prices we will sign up more people.
6464 CHAIRPERSON OF THE COMMISSION: Signing people. Your projections talk about reaching out to cable subscribers, existing cable subscribers as well as non-cable. Your strategy in the past was much more in non-cabled areas, wasn't it? You seem to have switched a bit or shifted your way about it.
6465 Can you explain to me why that is? That must be among the lessons learned.
6466 In your projection, could you break down for us what you expect will be coming from cable subscribers and what would be the proportion from non-cabled subscribers?
6467 MR. CRAIG: Sure. I think to answer the majority of that question I would like to ask Tim to do that. But just before he does, we did start out actually thinking that our service would be most attractive to rural users. We have switched our focus. Our customer base is now about 60 per cent from cabled areas and 40 per cent from non-cabled areas. I will let Tim explain.
6468 MR. KIST: Sure. Thanks, Boyd.
6469 The first forays into the Winnipeg market, as I indicated in my opening remarks, were higher installation fee and a higher monthly rate. Although people in the cable industry or customers of the cable industry were saying, "Gosh, I would like to have an alternative", it just wasn't compelling. They would look at the line-up and say, "Not much difference and I'm paying more. Yeah, okay, there is a better picture, but that's just not good enough, thank you very much."
6470 When you look at our market, we pass about 289,000 homes in Manitoba and about 220,000 of those are cable customers in Winnipeg. That is where our market is, in and around the City of Winnipeg. We believe now that our focus has to be on generating an alternative to cable companies, because there hasn't been significant competition there before. We have started to focus on area-by-area marketing within the City of Winnipeg, which is creating an excitement, certainly.
6471 Also, because we were granted our MCS licence initially in Winnipeg on a test basis, and fully granted that, it is the perfect springboard in a competitive market to initially launch our high-speed Internet service bundled with our cable television offering.
6472 To take those lessons and look at British Columbia, we have estimated that over time about three-quarters of our customers by year seven will be from cable, about 20 per cent will likely be from current non-cabled areas and about 5 per cent will be switchers from DTH. Now, that breakdown is a particular challenge for us because B.C. has a very high penetration of current cable customers. I may ask Elan to elaborate a little bit more on some of the research supporting it. We have found a very high percentage, I believe it was 41 per cent, that indicated a willingness to switch when there was a 10 per cent difference in the price.
6473 We also know from research and from reading the newspapers that there is a dissatisfaction with cable customers out here in British Columbia. We believe with our focus on price, quality and customer service that that is going to be some real good drivers for us to make the inroads into the cable market that we have to make to make our business plan successful.
6475 MS GILLESPIE: Thanks, Tim.
6476 Clearly, price was a factor that came out in the market research.
--- Technical difficulties / Problèmes techniques
6477 MS GILLESPIE: When consumers were asked to state their interest in theme packs, as the price increased obviously the level of interest also decreased. But, to address the question that Tim had, 41 per cent of customers said that they would be prepared to switch with a savings of 10 per cent, and that went up to 47 per cent when a savings of 20 per cent was indicated.
6478 So price is a key factor in being able to offer a competitive service offering.
6479 Thank you.
6480 CHAIRPERSON OF THE COMMISSION: Thank you.
6481 In your approach you were saying earlier on that you had thought at first that the mass market type of approach would do it but you realized that it was too much, too spread out and not enough resources to serve everybody within 24 hours. How do you intend to go about it here in B.C.? You know, taking the lessons learned, what would be a good promotion mix to kind of address what you have found in the market surveys?
6482 MR. KIST: Perhaps I will start, Madam Chair.
6483 Initially, when we looked at it, definitely you need some form of mass marketing to initially raise awareness. That is the purpose of the mass marketing approach. We want to let people know we are here in British Columbia, give them a sense of what we have to offer. However, to make the subscriber growth numbers that we require, we really need to target a market. Based on our experience in Manitoba, principally on efforts where you combine addressed direct mail followed up within a week with telemarketing to support the piece that you have sent out, we are getting pretty decent response rates, in the 5 to 7 per cent range, which are outstanding. It speaks to the value of the package that we have as well as the fact that people are looking for an alternative.
6484 It is going to be very interesting now as in our current campaign we now are including our bundled Internet service into that. So I'm quite anxious to see the results when I get back home.
6485 But the balance of our marketing dollar expenditure is also in rural areas where we may get involved in special events, either radio or community newspaper that will allow us to reach some of the other areas initially to grant them an opportunity to see the SkyCable service as well.
6486 Debra, you may want to elaborate just a little more on the marketing mix and some of the numbers that we had talked about.
6487 MS McLAUGHLIN: As well as SkyCable coming of age, so has the advertising business. One of the most lucrative areas these days in terms of advertising is in DTH and services like MDS, so there has been a great deal of research in terms of the media usage of this particular category of consumers.
6488 As Tim has said, you need television to develop the brand and to create awareness, but we can look at television and even within that mass media identify particular shows that are better able to reach the early adopters of this type of technology and really narrow in.
6489 We learned lessons from the research, like newspaper isn't as effective as we might have thought, and we have where they read and what magazines --
6490 CHAIRPERSON OF THE COMMISSION: Don't say that too loud. There is a journalist from the print here. He will be sad.
--- Laughter/ Rires
6491 MS McLAUGHLIN: They really like newspaper --
6492 CHAIRPERSON OF THE COMMISSION: They are important. They are still --
--- Laughter / Rires
6493 MS McLAUGHLIN: Very, very important but used in a very specified way.
6494 So we have those type of details which will guide the promotional campaign and essentially make it more effective and really using mass media in a very targeted manner.
6495 CHAIRPERSON OF THE COMMISSION: Where is the MUD business in your plan? Are you targeting them? Are you targeting them now in Manitoba? Is it particularly interesting here or not? What are your views on that and what is your approach for the MUDs?
6496 MR. CRAIG: Our approach to MUDs is really to be aggressive but not to be antagonistic. We do not believe that people should have a forced cable provider down their throats. We do not necessarily run out and ask building owners for exclusivity. We want the consumer to have the choice. We don't want you to get involved in our ability to either be in or get kicked out of a building. We are not going to rely on the courts to do that. We are going to rely on good old fashioned marketing, good service and low price.
6497 We have talked to a number of building owners here in Vancouver, large ones. We were surprised I think because they told us up front they do not want access fees. What they want is their tenants to have the service that they want so that they are happy and they stay in their buildings. That has been our experience in Winnipeg.
6498 About three years ago when we started calling on building owners, I think that a lot of property owners, property managers had been to various conventions and I think it was suggested to them at these conventions that this is going to be a huge source of revenue for building owners. We said, "No. Our margins are tight enough. We cannot afford to pay you $1 a month per sub or $2 a month per sub", and we walked away from the building.
6499 Their attitude has changed considerably over that time. It think we have softened them up considerably. We just signed a contract with a property manager in Winnipeg that manages 12,500 suites and they gave us access to all their buildings. They said, "You can come in, you can put your antenna on our building", we can run our wires into their distribution units or put our own there, I suppose, right beside the cable companies.
6500 We have another one that we are expecting to sign within weeks that would allow us into another 3,000 units, buildings that have 3,000 units. We understand here in Vancouver that Rogers does not pay access fees and our policy is going to be and is today not to pay access fees.
6501 MR. KIST: If I can just add to that, Boyd, and just clarify.
6502 It is not one property manager with 12,500; it is a few property managers totalling 12,500. Nonetheless the number is the same. We are adding another 3,000 units.
6503 We have access now into most of the Manitoba housing buildings across southern Manitoba, both single-unit dwellings and multi-unit dwellings. Our next meeting is next week where we are trying to finalize complete access to the rest of their buildings.
6504 We have an MUD strategy. We have a commercial accounts manager in Manitoba, and in our business plan we have also indicated that there is a senior commercial accounts manager to work with the property managers to sign up access, to get the agreements in place to allow us to get in there. Then we will use our other direct sales techniques to target directly to the consumer. That is really the most important thing in this whole piece.
6505 Building owners and managers sometimes like to think they would like to make decisions on behalf of their tenants, and in many cases they are well-meaning decisions, however, at the end of the day customer choice and that customer, the end user, is the one that really wants to decide what they can and cannot watch or do with their interactive television.
6506 We support that and we also support the property manager's right to make certain decisions. That is why for us it is very open. Like the rest of our plan, it is simple, it is straightforward. There are no caveats, there are no little asterisks in mouse type on our advertising. What you see is what you get. It has been successful for us in Manitoba in an urban MUD market. Based on Boyd's contacts so far out in British Columbia we are very confident that it will be successful out there as well.
6507 CHAIRPERSON OF THE COMMISSION: Tell me, I was referring earlier to the fact that we are seeking to offer the choice to Canadian consumers so that there is competition out there. What is your view and your experience of the competition now? For example, cable is more involved in digital than they were even six months ago. There has been more development in the digital universe of cable. DTH has been more aggressive. So what is your experience and how would you assess your competitiveness vis-à-vis DTH and cable rolling out digital?
6508 MR. CRAIG: First of all, I think there is a lot of competition out there, and that is good for the consumer. I think it is a policy that you have been pursing now for a while. I think people have a tendency often to ask us what our subscriber base is and somehow relate that back to how competitive we are. I believe in Winnipeg now that we have a very stable network, that we have a great service at a low price. I think cable has already reacted to our prices there.
6509 I get mail all the time -- because of course I'm not hooked up to the cable system -- I get mail all the time offering free hook-up for video and cable TV, second month free service. That didn't happen 12 months ago. I think that because we have a digital service now and all our customers have digital service, all our customers have a digital set top box, I think that how we are going to compete is by providing a very reliable, low-cost service. It is to that end that we run our business.
6510 MR. KIST: Again, just to add, Boyd, Madam Chair, the digital universe for the cable industry was just around the corner six years ago before I started into that industry on the cable side. They are just slowly starting to roll out that digital domain. 100 per cent of our customers are digital. The cable industry can't say that. It is only the DTH and MDS providers in Canada that can make that statement.
6511 The quality is significantly different between a digital service and a regular analog cable system. We don't have that infrastructure between point A to head end and point B to the customer premise to maintain and worry about expansion and contraction of connectors, and things like that. Tower, customer, home -- that's it. We can pinpoint, troubleshoot, make sure the service is reliable right off the hop.
6512 I think that that sort of network stability coupled with 21st century technology are things that customers are looking for. Again, you can't underline enough that if you didn't have a compelling price to go with that people would not select an alternative.
6513 MS McDONALD: If I could just add to that for one moment.
6514 We laid out our competitive strategy very carefully in the application, but just to give just a couple of key points.
6515 We have been harping on price, but we also plan to differentiate ourselves, particularly against DTH, for example, in terms of buy through, access to discretionary tiers without having to pay through, customer care, and a more affordable Internet service.
6516 CHAIRPERSON OF THE COMMISSION: But isn't it a choice that is offered also by DTH? What would be your competitive advantage? Okay, cable I get your point. What about DTH, which is digital as much as you are?
6517 MR. KIST: Right. One of them still is price. We are lower priced than the DTH providers.
6518 The second one is our local presence. People in Manitoba -- and certainly when you talk to folks here in British Columbia -- having a local presence. People that work in your market. People that understand when you say you are at the corner of such and such a street know where that is. If it is 1-800 Toronto that you are phoning to the call centre, you don't necessarily get that kind of support.
6519 We have identified in Manitoba in particular that having that local presence has endeared us to communities, has endeared us to new providers, multi-unit dwelling building owners, managers, et cetera. They like dealing with someone who is from that area, not with an agent, et cetera.
6520 CHAIRPERSON OF THE COMMISSION: When you were talking earlier of the direct mail and telemarketing, does that mean that you will have installations here to do it, or will you do it from Winnipeg? Where are you going to be located to do --
6521 MR. KIST: We will have a customer care centre here in British Columbia. That will be primarily an inbound customer service operation. It would be capable of doing some outbound, but we have found in the past that we have a great partner in Manitoba that helps us, a Winnipeg-based company that has offices across Canada and partnerships with other local telemarketers. They had helped us out by determining that there is a local business partner that they would use. So we would be using a British Columbia based telemarketing firm to physically make those follow-up phone calls.
6522 CHAIRPERSON OF THE COMMISSION: So you would use the same sales network you have in Manitoba but that has like ramifications here in B.C.?
6523 MR. KIST: Yes.
6524 CHAIRPERSON OF THE COMMISSION: Okay. Where am I?
6525 Talking about your sales and marketing, you are projecting about $3 million a year in terms of sales and marketing costs. What is your view on that? That will be mainly advertising and promotion and the rest will be on the sales network, the forces?
6526 MR. KIST: No. The split for that $3 million is approximately $900,000 in salaries for our customer care operation. It includes about $1 million of television marketing, half a million dollars for our direct mail and telemarketing follow up and another a half a million dollars that we will use for specific marketing activities including newspaper and perhaps some radio.
6527 CHAIRPERSON OF THE COMMISSION: Life being what it is, I suppose you will be learning other lessons if you were to be granted a licence here.
6528 Let's suppose that, learning lessons, you have a slower penetration than the one you had anticipated or projected. What would be your reaction? Would you be kind of going for more expenditures on the sales and marketing front?
6529 MR. CRAIG: I think that as part of our sales and marketing strategy you have to factor in the fact that we do not charge an upfront fee. I think that that is $125 a month that some other people are proposing and I think that that really should be counted as part of our sales and marketing budget. If you do that it is a substantial amount of money.
6530 I believe that the budgets that we have filed for our sales and marketing in this province are adequate to do the job that we say we are going to do.
6531 CHAIRPERSON OF THE COMMISSION: Thank you.
6532 So you see that as a -- there would be a portion being equivalent to that money as a cost to advertising, in a sense.
6533 MR. CRAIG: Yes, and I think that had --
6534 CHAIRPERSON OF THE COMMISSION: That should be added to the --
6535 MR. CRAIG: And maybe, actually, if you have $125 hook-up charge, you may actually in fact have to spend more than $125 to compensate for the fact that you are charging $125. It is going to take a tonne of advertising to convince people to spend $125, and I suggest it is going to be more than $125.
6536 CHAIRPERSON OF THE COMMISSION: Okay. Thank you.
6537 You are saying that you will be targeting a high level of premium services. What is your experience in Manitobs? Commissioner Grauer is always reminding us that it is different here, too. How do you see, in your projections, the portion that will be high premium? Because what I hear you say too is, given that there is no installation, basic is lower than what is cable and eventually you do -- I understand you are saying they are not coming for pick and choose, they take packages, but then at the end of the day it is a lower price, so how do you reconcile the high premium notion here?
6538 Secondly, what is the proportion of real high premium with the one that is really looking for strictly what he is viewing and likes to view with a low price in getting the service?
6539 I'm not sure I was clear in asking my question.
6540 MR. KIST: Madam Chair, let me give it a shot on the first shot and then I will ask Debra to back it up with some of the specific research characteristics on the demographic side.
6541 In Manitoba, our experience is that because we have a lower price on our basic and discretionary, it affords people an opportunity to try out pay-per-view, for example, which is something in most cases they have never tried before. In addition, our premium penetration is over 45 per cent and climbing, which tells us a couple of things. Number one, it is the same point as with the pay-per-view, people are having an opportunity to try out a premium movie service such as Superchannel and/or Moviemax where they never had that opportunity before because the rates to the cable company were so much higher.
6542 Once they get into it, once you get used to watching movies like that you tend to be a longer term customer. I know that in comments from our affiliate representatives at WIC, any time they do research they tell us the same thing. Typically, once you get a person watching those commercial-free movies, they tend to hold onto them for a longer period of time.
6543 Debra, I will ask you to follow up on the specific demographics of the people that we are looking at.
6544 MS McLAUGHLIN: The people that will be attracted to the service are between the ages of 25 and 49. I have to qualify this before I go on because this is a guideline. This isn't absolute and they will fall outside of it.
6545 CHAIRPERSON OF THE COMMISSION: She is happy she is going to make it.
--- Laughter / Rires
6546 COMMISSIONER GRAUER: Just under the wire, but hurry up.
--- Laughter / Rires
6547 MS McLAUGHLIN: And for anyone who doesn't meet that qualification, we are very interested in hearing from you anyway, and households that have incomes better than $50,000, they have average education. We noticed when we were doing this research that there was a fair representation across all sorts of lifestyles and skill sets. We had, proportionate to population, representation for owners, managers and professionals. We had skilled and non-skilled labour. So we felt that it more or less follows the viewing trends.
6548 If you are a specialized viewer, if you are a heavy viewer, if there are special genres that you are looking at that aren't well covered by a conventional cable, then this type of service would appeal to you.
6549 MR. KIST: If I can just add one more comment.
6550 Last year at the CCTA convention here in Vancouver the general manager of a large cable company talked about customer research and indicated that they were finding half of the customers they were losing to competitors were in fact their premium subscribers, the people taking most of the services. Well, I'm real happy to take the people who would rather spend a lot of money on a monthly basis rather than the folks that are just basic only. It doesn't mean we are discriminating against either one; it just helps support that we are in fact gaining significant premium television penetration.
6551 CHAIRPERSON OF THE COMMISSION: But in a different way. I understand. It is not the high premium like the one that will take everything and whatever the price is, you know, like the early adopters type of technology.
6552 MR. KIST: They are not the early technology adopters, but they are people that are saying, "This is what I'm paying on my cable bill today. If I look over at SkyCable and I make the switch, first there is no installation, so that is okay, I'm comparing apples-to-apples. My goodness, if I was to add the cost of a decoder onto my current cable bill and compare it, I might as well just subscribe to take some extra movie services if I so choose." So that is where they are, and in many cases they are still saving money over their existing cable bill.
6553 CHAIRPERSON OF THE COMMISSION: But you are qualifying the high premiums as the ones who take pay-per-view, in a sense?
6554 MR. KIST: They would be included in that as well.
6555 CHAIRPERSON OF THE COMMISSION: They wouldn't necessarily on cable take pay-per-view, but because of the other factors you are presenting in your offer they can afford pay-per-view that they might not afford on cable, is what I understand --
6556 MR. KIST: Yes. That's correct. In addition, it is simply because every customer has that addressable set top decoder they can order the pay-per-view at any particular time. With cable they still have to go out and get it or return it, et cetera.
6557 CHAIRPERSON OF THE COMMISSION: I will ask the question. Vis-à-vis cable I understand. Vis-à-vis DTH, why that targeting is successful is for the same reason -- the price again.
6558 MS GILLESPIE: Price is clearly a factor in targeting against DTH because of the high equipment costs and also installation charges. Though DTH operators are starting to offer promotions, as in Vancouver where they are waiving installation charges for a period of time, the equipment is still a barrier.
6559 But beyond price, MDS services will have more local channels than DTH for the Vancouver market, which will still be a factor in attracting consumers. So I think MDS in many ways is a hybrid, if you like, between DTH and cable because it still retains that local capability and that ability to serve the local consumer and give them the information and news and other programming that relates to the community.
6560 Thank you.
6561 CHAIRPERSON OF THE COMMISSION: A few questions.
6562 The Internet. You referred to it. I had a question: Do you have offer Internet now? You have broadly told us yes. I understand that it is an interactive hook-up. You don't need the telephone to do it.
6563 MR. CRAIG: That's right. For us that was critical to establish the link from the house back to the tower, from the apartment back to the tower, and the reason for that is it doesn't tie up the phone line. If people didn't want to tie up a phone line and had to actually get another phone line, I think the average cost of a local extension in Canada now is about $28. So if you add $28 to the price that we would charge, we basically would have priced ourselves out of the market if we weren't two-way.
6564 We are the first MDS/MCS operator in Canada. In Manitoba we have secured access to the MCS band on a permanent basis and also we are returning from the home back to the tower at 2.1, and that spectrum was assigned to us on a permanent basis as well. Manitoba was excluded from the recent MCS call. The reason for that was that there is a provincial learning agency that is actually the MCS spectrum. I'm probably not telling you anything you don't know. And we have also applied for the MCS spectrum here in British Columbia.
6565 CHAIRPERSON OF THE COMMISSION: You are really anticipating all my questions here.
--- Laughter / Rires
6566 CHAIRPERSON OF THE COMMISSION: Let's stay on the Internet for just a second.
6567 What is the price of your Internet connection in Manitoba?
6568 MR. CRAIG: It is $39.95 and there is a price that we have established for small business. Maybe Tim could answer that.
6569 MR. KIST: The commercial prices vary from $99 to $199 a month depending on the service that the customer requires. The one other differentiating Internet price we have for residential is $49.95 for current non-video subscribers. So, in other words, if somebody just wants the SkyWeb service -- that is our brand name, SkyWeb -- if they just want that it would be $49.95. There is no differentiation when we roll out across rural Manitoba between prices in Winnipeg and in Brandon and in the rural areas. We keep that price consistent.
6570 CHAIRPERSON OF THE COMMISSION: Are you approaching the territory you are applying for with the same type of strategy in terms of pricing?
6571 MS McLAUGHLIN: Our pricing strategy for B.C. is based on the bundle. We think it is critical to have both. Therefore, we do offer a global discount on the bundle for B.C. So it is similar to Manitoba because in total, in the Manitoba pricing, if you add up the two services the cost of the bundle is less. But the way we are marketing it in B.C. is if you take the two services you get a discount on the totality.
6572 CHAIRPERSON OF THE COMMISSION: Okay.
6573 You touch upon the LMCS applications --
6574 MS McLAUGHLIN: MCS.
6575 CHAIRPERSON OF THE COMMISSION: MCS. But you have an MCS. You have had it for Manitoba. You have received confirmation.
6576 MR. CRAIG: We have received approval, yes, not for as much MCS spectrum as we are hoping to get over time, but we do have a channel assigned to us -- I shouldn't say province-wide. We have a channel assigned to us for a high-speed download in Winnipeg. We have received approval for our Ely(ph) site and we have filed with Industry Canada an application for every single one of our MDS sites for an MCS channel, and also 2.1 for a return path.
6577 CHAIRPERSON OF THE COMMISSION: Those applications you haven't heard from --
6578 MR. CRAIG: Industry Canada has basically reserved the channel -- the one channel across Manitoba is clear for SkyCable. We have not heard on the B.C. licence approvals yet.
6579 CHAIRPERSON OF THE COMMISSION: What would happen if you didn't get it? What is the alternative for you?
6580 MR. CRAIG: If we don't get it, obviously we would be very disappointed, but I don't think that it would necessarily knock us out of the wireless game. We don't have the ability to actually look at all the applications that were filed here in British Columbia.
6581 When we filed our application, we filed for an open access network, meaning that any ISP could have access to our wireless cable, which is an MCS spectrum or data network. I would expect that if we get the MDS licence here and not the MCS licence, we would then be in a position where we could go to the winning MCS applicant and wholesale a spectrum back from them for our MCS operation.
6582 CHAIRPERSON OF THE COMMISSION: Okay. Then what does it mean to the subscriber? You are still thinking about the bundling. In terms of price, would that be much higher than what you are capable of offering in Manitoba were you in the situation where you would have to go through a third party to get the access?
6583 MS McLAUGHLIN: Simply put, our strategy is based on a bundle, therefore we will have an Internet service. We will acquire it either through resale or through purchase or through some other means. That means we will have a bundled service. You never know, the cost, the wholesale price, might be actually lower than us acquiring the MCS licence.
6584 CHAIRPERSON OF THE COMMISSION: So you haven't given any difference in price whether you were successful or you would have to go through a bundled price?
6585 MS McLAUGHLIN: We know what we would price it at in our application. We cannot know what the wholesale price will be set by another competitor should we not acquire that spectrum. However, that is not the only spectrum that may be available. Our strategy is to acquire an Internet spectrum either in the 2.5 or the ISM or the 3.4 or the 5.5.
6586 CHAIRPERSON OF THE COMMISSION: I guess my question is the relationship or the interface with the subscriber. You know, you are identifying being capable of offering Internet as very important in your strategy, so that means also the price at which it will be offered to the subscriber is important.
6587 Have you established for yourself a certain range over which you won't go and that you would absorb the difference if the price that would be charged to you would be too high, is I guess the question I'm asking.
6588 Do you know what I mean?
6589 MR. CRAIG: I think for us to be successful, as successful as we want to be, we are going to have to price obviously our Internet service at or below the present offering that cable has. In Manitoba we are charging $39.95 a month, as we said. We would expect to charge a similar fee here. Who knows what is going to happen to it in the future, but we would certainly start with a competitive price.
6590 MS McLAUGHLIN: But in terms of acquisition, we have done evaluation obviously on the MCS. We have also done valuations on other bands. So we think we understand the range that we need to be in is within the spectrum area that I mentioned because we think that is the only area that is price efficient for us, especially if you look at the prices that the recent auction went for. We know that we belong in the 2.5 to whatever range, and we think we have pretty good valuations of what that would cost us.
6591 CHAIRPERSON OF THE COMMISSION: Okay. So your business plan can support being competitive with that price of offering Internet services, competitive with the offer of cable?
6592 MS McLAUGHLIN: In those frequency ranges.
6593 CHAIRPERSON OF THE COMMISSION: Okay.
6594 Now the open-access network, the local expression, we would like to have some details about that.
6595 Let's first go back to what you were saying that we have seen -- and I haven't seen the split screen and --
6596 MS McLAUGHLIN: It flew by.
6597 CHAIRPERSON OF THE COMMISSION: One thing that we are interested in knowing is would that be alphanumeric? What is going to be there? What is your approach to it? Will it be broadcasting or not broadcasting, whether it is exempted or not?
6598 MS McLAUGHLIN: Our community channel, really, we didn't elaborate in our application. We are happy to elaborate now.
6599 It is quite similar to the community channel that you see on cable, but it has one additional dimension. Our SkyChannel Access Program was conceptualized around our service bundle, and by that I mean in terms of technology we are going to have a broadcast channel showing broadcast programming like everyone else. We will also have an Internet access service, and that is really just going to be a second window. So instead of offering one window which is a broadcast window, we will offer two windows.
6600 So really we just had a discussion about the importance of the bundle and we talked about how important Internet is to our strategy. We just thought it made sense to carry that through to our community channel concept.
6601 Basically we will have a broadcast window just like the cable companies. On the broadcast window, of course you really couldn't see it, but it is really what you will see on your standard cable channel. It is a split screen so there will be a broadcast part. Along the bottom you will have wire feeds which are alphanumeric just along the bottom which has your weather, news, whatever. Perhaps along the side you will have some alphanumeric text, our programming wheel, as we will have one, and other announcements about our Web site and so on.
6602 Our Internet site will be primarily alphanumeric. It will carry multimedia content and it will have a minor amount of streaming video.
6603 CHAIRPERSON OF THE COMMISSION: Okay.
6604 You are talking about a third party somehow that will manage the -- you were talking about an advisory committee here. What is the update on this?
6605 MS McLAUGHLIN: We have spent a lot of time out in B.C. setting up our advisory committee. It is the key part of our strategy; it's based on partnerships, because in terms of our community programming dollars, which is 2 per cent of our revenues, it's not a whole lot of money. So we developed a partnership strategy and we really mean partnership strategy. We had to create a value proposition to our board, so we do have board partners. I outlined their roles in our delivering our program with us.
6606 It is a community access advisory board, and I gave you, I think, the points earlier, but they will help us establish a governance framework, and in some ways they are going to contribute content, their knowledge, their skills. They are going to be our emissaries in the community and so on.
6607 Perhaps I could just sort of give one or two examples to explain how it could work.
6608 We have had discussions, and some of our intervenors will explain to you further their role, perhaps tomorrow or whenever, on our panel. So, for example, one of our partners is Knowledge Network. They have many shows that they may give us access to on a second or third-window basis. For example, they give us a show on fishing in B.C. and we may work with school groups to create some new media content around that, what fish are indigenous to B.C. and so on, and we will put that on our Web site. Then we will create a chatroom event, co-ordinate the timing of our broadcast channel with our Web site program. That is how the two would work together as an example.
6609 I could give you a couple of other examples, if you like.
6610 CHAIRPERSON OF THE COMMISSION: Maybe another example -- not all.
--- Laughter / Rires
6611 MS McLAUGHLIN: We did spend quite a bit of time, and we had to of course explain it to our proposed partners as well so we had sort of a long deck and I will try to keep it short.
6612 Another example would be something that was important this week, the topic of widening the causeway. So either our program co-ordinator or someone in our community might give us a video clip which we would run by our board to make sure that it fits with our guidelines and that might air on our broadcast channel, people sitting in trees, whatever, and we might run that. Then we would work with our volunteers to again co-ordinate a chatroom discussion on our Internet site, about what they think about the topic, maybe provide some history on the issues, regular updates on the Web site in terms of alphanumeric text and so on.
6613 So that would be kind of another example.
6614 CHAIRPERSON OF THE COMMISSION: Thank you.
6615 I understand somewhat, not perfectly, because definitely we haven't spent the time you have spent on developing your project, but I think we get the general idea.
6616 What about the idea of subscribers getting access to -- I understand having partners, they have a privilege or direct access, let's say. What about the subscribers? That is the idea of the community channel, too, to be accessible to your subscribers. What is your approach to that and how do you facilitate that and ensure that?
6617 MS McLAUGHLIN: We are a network operator. We are not in the content business. We want our community to develop their own content. There are four ways that we propose to get content and one of the ways is for our subscribers to do it by themselves and for themselves. The role of the Board is to make sure that it meets the goals of the cable framework and also is acceptable to the community, so we want them to deliver that content for us.
6618 We will also sponsor content creation. Two per cent of our broadcast revenues will be allocated directly to support that kind of content.
6619 Other content will be contributed by our advisory board members, and there will also be lots of content in multimedia and broadcast forms that may be sent in via the Web. We are really confident and excited. By spending time out here we really think that there is a lot of multimedia content that is being developed now for Internet purposes. But let's face it, it is becoming broadcast in nature and we think that it is really ready for a broadcast window.
6620 CHAIRPERSON OF THE COMMISSION: What kind of multimedia?
6621 MS McLAUGHLIN: Multimedia when it becomes a full motion video.
6622 For example, another example -- this one is a music example -- so if we have a local musician who we have a performance on our broadcast channel, and perhaps a talent show or something, they would be able to distribute, if they give us the rights to distribute, their works via our Internet site, for example. However, when there is content, they would create their own little Web site. We would actually just provide a flag to their Web site and they would have some kind of promotion about their video and so on.
6623 CHAIRPERSON OF THE COMMISSION: What is the added value of the -- how do you call it -- SkyWeb, because the musician, you know, they can do it on their own on the multimedia scene?
6624 MS McLAUGHLIN: We have given them a broadcast window to display their talents, and then we --
6625 CHAIRPERSON OF THE COMMISSION: Okay. So they would have access first there.
6626 MS McLAUGHLIN: There. That's correct.
6627 CHAIRPERSON OF THE COMMISSION: And then you can do the second window.
6628 MS McLAUGHLIN: And as we stated, there is funding available to multimedia content, so they may actually have access to some of our funding.
6629 CHAIRPERSON OF THE COMMISSION: You are talking in your project of a senior level resource to manage the open access network. Has there been work that has started in terms of identifying volunteers or local producers that can help, you know, so that the partners are not a gatekeeper to the channel, you know, kind of spreading the input that can be eventually there on the community channel?
6630 MS McLAUGHLIN: I think that is a really good point. We have spent a lot of time with lots of community groups, meeting and developing a framework since we have been here. One of the first things that the group has to do is establish a governance framework. So we have actually got the outlines of a governance framework and that will help us determine how it is going to actually work.
6631 CHAIRPERSON OF THE COMMISSION: What about the senior level resource? Will you have somebody here --
6632 MS McLAUGHLIN: We will have someone here.
6633 CHAIRPERSON OF THE COMMISSION: You will?
6634 MS McLAUGHLIN: We will.
6635 CHAIRPERSON OF THE COMMISSION: Okay.
6636 MS McLAUGHLIN: And you may have noticed, there was a budget for a person and on top of that the 2 per cent of the revenue.
6637 CHAIRPERSON OF THE COMMISSION: My last question, maybe some of my colleagues and legal counsel may have additional ones, but it is relevant to the free-of-charge service to schools. Is that a strong commitment you are making and how much investment does that represent? Does that include colleges and universities, and how many connections and institutions? So could we have some details about that idea?
6638 MS McLAUGHLIN: We had taken a commitment to provide our service free to schools. When I said "schools", I was thinking schools.
6639 CHAIRPERSON OF THE COMMISSION: Okay. I'm not forcing anything on you. I'm just trying to clarify what you meant.
--- Laughter / Rires
6640 CHAIRPERSON OF THE COMMISSION: So you meant schools. Okay, schools. Schools is schools. It's good for me. I'm not that bilingual, you see.
--- Laughter / Rires
6641 CHAIRPERSON OF THE COMMISSION: How many connections per school were you thinking about?
6642 MS McLAUGHLIN: In our seven-year program we have undertaken to put community access kiosks in various public locations including schools. So it may be one in a community or two or whatever. I haven't got an exact number.
6643 CHAIRPERSON OF THE COMMISSION: Okay. So it is not necessarily one per school?
6644 MS McLAUGHLIN: Not necessarily one per school, depending on how many Internet access points exist in a school.
6645 CHAIRPERSON OF THE COMMISSION: So the access would be through Internet, then?
6646 MS McLAUGHLIN: Well, if we are talking about the broadcast channel, we will be able to hook up the schools to the broadcast service.
6647 CHAIRPERSON OF THE COMMISSION: If we were to deny the funding of your local expression project, would you still do it? Yes, you would cry first, but after that.
--- Laughter / Rires
6648 CHAIRPERSON OF THE COMMISSION: Is that a commitment that is linked to having the open access or the SkyWeb --
6649 MS McLAUGHLIN: No. We would make the broadcast service available.
6650 CHAIRPERSON OF THE COMMISSION: Pardon me?
6651 MS McLAUGHLIN: We would make the broadcast service available, so it would be a commitment.
6652 CHAIRPERSON OF THE COMMISSION: Okay. Okay.
6653 That takes care of my questions. I turn to my colleagues if they have additional questions. They don't. Oh, there is one.
6654 Yes, Commissioner Langford.
6655 COMMISSIONER LANGFORD: I don't want to emphasize the negative but I so enjoyed your horror story at the beginning. I just wanted to get that in.
--- Laughter / Rires
6656 COMMISSIONER LANGFORD: And on a low note, it was very candid I have to say.
6657 But, no. I'm just wondering, on page 10 of your handout you say that overall customers' quality of service satisfaction is 81 per cent, which means -- I'm not trying to emphasize the negative -- there is 19 that aren't. Is it one problem you still have or is it just a big variety of problems?
6658 MR. KIST: No, I don't think it is a problem. I think had we done this survey rating a year ago, Commissioner Langford, I would suspect the number would have been a bit lower, substantially lower likely.
6659 This is a baseline measurement that we will continue to do on a quarterly basis. The Cable Television Standards Foundation has developed these quality of service customer satisfaction indicators. There are not many cable operators that do this.
6660 I can tell you from my experience at Videon that the three surveys that I was responsible for overseeing, we did not achieve a significant higher rating than this one, and we were quite proud of that at that time. When you consider a 1997 National Quality Institute Survey that was done, out of Ontario the cable industry rated I think it was seventeenth out of 20 industries.
6661 COMMISSIONER LANGFORD: I think I can save you a lot of effort. So it is just a kind of general quality of service situation? There isn't a major problem you are still wrestling with --
6662 MR. KIST: No.
6663 COMMISSIONER LANGFORD: -- something like transmitters 1,400 feet up in the air that nobody can get to?
6664 MR. KIST: No. The lowest one we had was a 77 per cent rating. So everything was 77 per cent or higher, which we were very pleased with. I know that when I tell my staff what the numbers are, they are going to be ecstatic.
6665 COMMISSIONER LANGFORD: Thank you very much.
6666 MR. KIST: Your welcome.
6667 CHAIRPERSON OF THE COMMISSION: Madam Assheton-Smith has a few questions.
6668 MS ASSHETON-SMITH: Thank you, Madam Chairperson.
6669 The first thing I want to do is just clarify the proposed coverage area. You have stated today that in the second stage, which is within 24 to 30 months, you plan to roll out to Kamloops and Hope. In your application you indicated that you would be prepared to accept as a condition of licence the expanded coverage area as per Annex D if required, and Annex D included Hope and Kamloops.
6670 Is it your intention now, are you seeking a coverage area that includes Kamloops and Hope?
6671 MR. CRAIG: Yes, we are.
6672 MS ASSHETON-SMITH: I want to come back to your open-access network. Unfortunately, I also don't have a real clear picture of what this is going to be.
6673 First of all, does the Manitoba system have a similar type of channel, or any community channel at this point?
6674 MR. CRAIG: No, it does not.
6675 MS ASSHETON-SMITH: It doesn't.
6676 When I read over the application, you talk about educational broadcasting and you talk about it as an open-access network or community-based development and learning. It sounds like there will be a fairly high proportion of educational programming on the channel. Is that the intention or do you have sort of an idea of what proportion would be educational broadcasting?
6677 MS McLAUGHLIN: That is not the intention.
6678 MS ASSHETON-SMITH: It's not. Thank you.
6679 MS McLAUGHLIN: The community bulletin board, is this the sort of thing where someone can get onto their Internet connection and type in something they would like to post and it will go straight onto the channel or is there some sort of monitoring or screening of what is going to be posted?
6680 MS McLAUGHLIN: It will go into our media centre for review by our program manager and possibly by our board.
6681 MS ASSHETON-SMITH: That actually comes to my next question.
6682 The advisory board. You have indicated here:
"It will determine, and in some cases develop, the programming content that will be carried on the Access Network."
6683 Does this mean that they monitor the content on both the broadcast channel and the Internet site as well? Is this what they do?
6684 MS McLAUGHLIN: These are the guidelines for the kind of content that the channel and the company wants to be associated with in recognition of the cable guidelines. So it is the two functions: to make sure that the content is appropriate to the community, to the company; and then also reflects the community channel.
6685 MS ASSHETON-SMITH: How do you determine who sits on the board? How are they selected, the board members?
6686 MS McLAUGHLIN: How do we determine --
6687 MS ASSHETON-SMITH: Yes. How do you select your board members to sit on the SkyChannel advisory --
6688 MS McLAUGHLIN: Our goal is to get broad representation from the community with a focus area on two particular aspects: one is lifelong learning, and the other is new media content.
6689 MS ASSHETON-SMITH: Okay.
6690 How many members do you anticipate? Are there plans for a set number of board members or would this fluctuate depending on the interest?
6691 MS McLAUGHLIN: We anticipate between five and ten members.
6692 MS ASSHETON-SMITH: You indicated there will be guidelines. Have you prepared any of these guidelines for the advisory board to date?
6693 MS McLAUGHLIN: The guidelines will be determined -- it's a governance framework, and that will probably be the first task of the board and our program co-ordinator. We have pulled together some material which we are now reviewing with our proposed members in draft form.
6694 MS ASSHETON-SMITH: Okay. But you don't have the framework finalized at this point?
6695 MS McLAUGHLIN: No, we don't have it finalized at this time.
6696 MS ASSHETON-SMITH: Okay. A couple of more questions along these lines as well.
6697 You indicated that 2 per cent of the revenues would go to developing content and that there would be a person that would be involved with the channel on top of that. Does that mean that you won't be counting any administrative expenses towards the 2 per cent, that it will be purely allocated to the production of programming. Is that correct?
6698 MR. CRAIG: That's correct.
6699 MS ASSHETON-SMITH: Finally, just to confirm, if the Commission determined that the proposal for local expression was not appropriate, can you confirm that the full 5 per cent, then, would go to the Canadian Television Fund?
6700 MR. CRAIG: Yes, it would.
6701 MS ASSHETON-SMITH: And you would accept that as a condition of licence?
6702 MR. CRAIG: Yes, we would.
6703 MS ASSHETON-SMITH: Thank you very much. Those are all my questions.
6704 CHAIRPERSON OF THE COMMISSION: Thank you very much. Do you wish to say something in conclusion?
6705 MR. CRAIG: First of all, I would like to thank you for your time.
6706 We would love to be here. We know this business very well. I think that we know and could set up a network faster than anybody else. We hope we can get the licence.
6707 Thank you.
6708 CHAIRPERSON OF THE COMMISSION: Thank you very much for your patience. I'm sorry I didn't go into the details of what you brought as equipment.
--- Laughter / Rires
6709 CHAIRPERSON OF THE COMMISSION: We will take a 15-minute break and we will be back. Thank you.
--- Recess at 1630 / Suspension à 1630
--- Upon resuming at 1645 / Reprise à 1645
6710 CHAIRPERSON OF THE COMMISSION: Madam Secretary, would you please introduce our next applicant.
6711 MS VOGEL: Thank you, Madam Chairperson.
6712 This application is by LOOK Communications Inc. The applicant is requesting a broadcasting licence for a radiocommunication distribution undertaking to serve Victoria, Vancouver and the lower mainland, Abbotsford, Chilliwack, Kamloops, Vernon, Kelowna and Penticton, British Columbia.
6713 The applicant proposes to transmit services using a digital multipoint distribution system.
6714 Please go ahead whenever you are ready.
PRESENTATION / PRÉSENTATION
6715 MR. COLBRAN: Madame la Présidente, Commissioners, ladies and gentlemen.
6716 LOOK Communications is delighted to have this opportunity to present its application for an MDS distribution undertaking licence for British Columbia.
6717 My name is Scott Colbran and I am a Director and Chairman of the Programming Committee of LOOK Communications.
6718 I would like to introduce one of my fellow directors present with us today in the front row of the audience, Mr. Michael Cytrynbaum, who is Chairman of LOOK Communications and a Vancouver entrepreneur.
6719 It is my pleasure to also introduce the LOOK Communications panel to you today.
6720 Beside me to my right are: David Parkes, President and Chief Executive Officer; Tracey Pearce, legal counsel; and, Mansell Nelson, Vice President for British Columbia.
6721 Seated in the second row from your left are: Paul Lamontagne, Senior Vice President, Television Services and Regulatory Affairs; Carolyn Christodoulou, Vice President, Customer Care; Gary Kawaguchi, Senior Vice President, Sales, Marketing and Customer Care; Martin Abel, Vice President, Finance; and, Ralph von Eppinghoven, Vice President, Network.
6722 At this time, we are ready to start our presentation and I would like to hand it over to our President, David Parkes.
6724 MR. PARKES: Thank you, Scott.
6725 Madame la Présidente,
6726 We appear before you today with the firm conviction that LOOK Communications is the best applicant to provide consumers in British Columbia with a superior alternative to cable and DTH services.
6727 I have been involved in the telecommunications industry for over 15 years, and I have never been so excited about the future -- a future where all Canadians benefit from greater productivity and the better quality of life which will result from the growth of broadband services to the home.
6728 Our company, born from the merger last fall of LOOK TV, Canada's leading MDS operator, and I.D. Internet Direct, Canada's number one independent Internet service provide, is uniquely positioned to become this country's leading wireless broadband carrier to the home and ensure that Canadians enjoy the true benefits of competition.
6729 There are three critical components to realizing these objectives:
6730 Number one, creating a sustainable third force to compete against national cable, DTH and telephone companies.
6731 Number two, providing a powerful service offering that can compete head-to-head for customers
6732 And, number three, having unrivalled experience in providing MDS services in highly competitive Canadian markets.
6733 Let me elaborate on these three components.
6734 First, LOOK Communications must pursue its growth strategy across Canada. B.C. is and will remain an integral part of LOOK's plans. In fact, we recently acquired another Internet company in B.C. with over 18,000 customers bringing our current client base in the province to well over 50,000.
6735 As recent events have shown, cable companies are getting bigger, more powerful, more national. They are involved in all areas of the communications industry: broadcast services, high-speed Internet and telephony. Likewise, Canadian DTH companies are national in scope and have powerful owners with deep pockets.
6736 To be a viable competitor in this arena, strong bundled packages are necessary. LOOK intends to offer highly responsive customer services that include: digital television, high-speed and dial-up Internet access, IP telephony, and a family of web-based and other interactive services.
6737 To compete against such powerful national competitors, a strong level of financial backing is also required. LOOK possesses such committed shareholder support.
6738 Number two, we have designed a service offering that will compete head-to-head for customers against our powerful and entrenched competitors.
6739 Our LOOK model of choice, where a customer may design their own discretionary specialty packages, is based on significant market research and experience. It is the first of its kind in Canada and a major competitive tool.
6740 Our expansive channel capacity will ensure a dynamic programming offering both now and in the future.
6741 LOOK's coverage area in B.C. is extensive and our network design ensures a quality digital signal throughout our proposed service area.
6742 Finally, our unparalleled commitment to customer care will ensure a level of service available nowhere else.
6743 Number three, LOOK has unrivalled experience in providing MDS services.
6744 Our current systems operate in some of Canada's largest markets. We have constructed a highly reliable system architecture in some of the most difficult MDS terrain in Canada.
6745 Our management team has years of experience in this industry.
6746 We built and rapidly deployed MDS service in both our existing systems. Our commitment to launch service in British Columbia within six months of receiving a licence is based on this experience.
6747 Very simply, we understand what it takes to build and operate this kind of network, and provide strong and sustainable competition in this environment.
6748 Today, with a national network of 60 transmission sites and points-of-presence in British Columbia, Alberta, Manitoba, Ontario and Quebec, and over 175,000 Internet and digital television customers, LOOK is already providing Canadians with a high-quality entertainment and information offering. However, our application for B.C. is a vital component for LOOK to become this country's leading wireless broadband carrier to the home and ensure that Canadians enjoy the true benefits of competition.
6749 My colleagues will now provide you with an overview of our application in their respective fields.
6750 To begin, Ralph von Eppinghoven will discuss LOOK's coverage plan.
6751 MR. von EPPINGHOVEN: Thanks, David.
6752 LOOK's objective is not only to provide vast coverage in B.C., but also to ensure rapid deployment and an infrastructure that will allow LOOK to provide the highest quality of service and to compete effectively with cable and DTH operators.
6753 First, LOOK will build a single network programming centre for B.C. and construct nine broadcast sites in the lower mainland, Vancouver Island, B.C. interior and Okanagan Valley, all linked by highly reliable fibre optic connections.
6754 Second, our network will reach over 1.2 million households with a robust digital signal. This represents 84 per cent of total B.C. households and encompasses over 110,000 homes not passed by cable.
6755 Third, we will use existing towers and infrastructure wherever possible. This allows rapid deployment and is friendly to the environment and the aesthetics of the landscape.
6756 Fourth, our network programming centre is designed for over 200 TV and audio channel capacity. We maximize our capacity using advanced digital compression equipment and statistical multiplexing technology.
6757 And, finally, our insertion sites for local signals in the B.C. interior and Okanagan Valley will allow LOOK to carry all priority channels and a wide selection of Canadian and foreign services.
6758 Gary Kawaguchi will now provide some details of LOOK's marketing and sales strategy.
6759 MR. KAWAGUCHI: Thank you, Ralph.
6760 LOOK is confident in our ability to hit the ground running in British Columbia with a comprehensive marketing and sales strategy. Our objective is to have over 153,000 customers by the end of our licence term.
6761 The study we commissioned from the Angus Reid group last fall provided extremely encouraging feedback from customers in British Columbia to our core brand positioning. We believe the LOOK brand will become a national communications force.
6762 The repositioning of Internet Direct's services to the LOOK brand here in British Columbia will enable us to get a quick start in this market. We are all familiar with the historical cable practices that have upset many consumers here in British Columbia. Our research shows that a large percentage are very interested in switching.
6763 To really flourish in the B.C. marketplace, LOOK's programming and packaging strategy will be absolutely critical. In response to our consumer research, LOOK intends to introduce to British Columbia our signature true discretionary choice. We offer more flexibility in channel selection than any other digital operator in Canada. British Columbians will no longer have to pay for what they don't watch, they will only pay for what they do, subject of course to distribution and linkage rules. This, we believe, is true customized TV.
6764 In order to maximize marketing dollars and maintain reasonable customer acquisition costs, LOOK will use a variety of distribution strategies, many of which are already in use in our television and Internet services.
6765 LOOK's most powerful sales tool is our 30-minute infomercial. Frankly, television is the ideal medium to sell a new digital TV offering. Let me show you why our infomercials are so effective at lighting up our phones and at the same time building greater awareness for the LOOK brand.
--- Audiovisual clip / Clip audiovisuel
6766 MR. KAWAGUCHI: The multiple dwelling unit or MDU marketplace is also critical. MDU's represent over 30 per cent of the customers in our proposed B.C. service area, and we are confident that our marketing initiatives can win over a significant share of these households. This will require substantial capital to gain access, wire the buildings and finance our sales and marketing efforts. This is a key core competency of the LOOK team.
6767 As the Commission knows, LOOK has been very active in advocating change and reshaping the competitive practices of cable companies, particularly in the MDU marketplace. We believe that consumers in MDU's should enjoy the same overall benefits of competition.
6768 In order to compete effectively in all markets, it is increasingly important for service providers to bundle different products together. Today, consumers demand that digital television and high-speed Internet access be bundled, and soon they will expect other value-added services as well. Our recent marketing study suggests that the appeal of a bundled service offering is now as high as 85 per cent. We are ready for a fight with cable and are well positioned to pursue a bundling strategy.
6769 I would now turn it over to Carolyn Christodoulou to talk a bit about our commitment to customer care.
6770 MS CHRISTODOULOU: Thank you, Gary.
6771 LOOK prides itself on providing superior customer care. In our plan, customer satisfaction is a key differentiating factor in a sector notorious for a poor customer service record.
6772 Our approach in British Columbia will be to work locally but think globally. The staffing and training of qualified customer care representatives and certified technicians will ensure that the customer experience from installation to inquiry is enjoyable. We intend to provide British Columbians with an unparalleled customer approach.
6773 While our technology will get us there, our customer focus will keep us there. In fact, if a customer is not fully satisfied within the first 60 days of subscribing to the LOOK service, we will refund their installation fee.
6774 Let me show you what our customers have to say.
--- Audiovisual clip / Clip audiovisuel
6775 MS CHRISTODOULOU: Mansell Nelson will now outline our programming strategy, community expression initiative and Canadian programming contribution.
6776 MR. NELSON: Thanks, Carolyn.
6777 LOOK proposes an extensive programming line-up that will allow us to differentiate ourselves from the competition. As a Vancouverite, I have seen the significant changes to the community over the past dozen years and I believe our proposal reflects the constantly evolving demographics of the province.
6778 As Gary outlined, LOOK is a company that prides itself on offering true end-user choice. A company that fails to offer a large channel line-up essentially limits customer choice. That is why LOOK will launch with 169 television/audio channels including a wide selection of local, specialty, pay, pay-per-view, and digital pay audio services.
6779 All our customers will have access to our unique NaviLOOK multilingual interactive programming guide that includes parental control functions, search by genre, seven-day listing, impulse pay-per-view, one-touch recording and self-diagnostics.
6780 We ensure that our channels reflect the tremendous cultural diversity of British Columbia. For this reason, LOOK chose to carry seven multicultural services.
6781 Finally, LOOK seeks to develop a partnership relationship with all local broadcasters in B.C. and we are committed to meeting all our obligations with respect to substitution and deletion.
6782 LOOK is committed to the continued health and development of the Canadian broadcast system and eager to create value in the communities we serve. We intend to contribute over $16 million to local expression and the development of Canadian programming.
6783 LOOK wants to play an active role in social and economic change in the community. For this reason, we are very excited to introduce our innovative InfoLOOK community expression channel to British Columbia. This channel is designed to allow and encourage open access to a channel received by all LOOK customers. Simply, this is the ultimate in community access encompassing: community-created video segments; community Internet messaging; community newspaper story input; and, public service announcements.
6784 LOOK plans to grow the amount of acquired and produced video programming on InfoLOOK as our service becomes established, and this is only the beginning. In the future, users will be able to send us their own video content directly over the net.
6785 Let me show you the enthusiastic and innovative approach we will bring to our InfoLOOK channel in B.C.
--- Audiovisual clip / Clip audiovisuel
6786 MR. NELSON: Already, InfoLOOK has found supporters in the province such as the Surrey Public Library, the Technical University of B.C. and the Vancouver Community Network. These organizations have expressed great interest in working with LOOK to further enrich this service.
6787 My colleague Martin Abel will now discuss our financial projections.
6788 MR. ABEL: Thank you, Mansell.
6789 In preparing the financial projections for our plan, we have drawn upon our knowledge of the local market, the results of the Angus Reid survey and our own operating experience. The results reflect a realistic and achievable business plan.
6790 Let me assure the Commission that we are an entrepreneurial company with shareholders that expect a return on their investment. As an experienced MDS operator, we know what it takes to: first, build a digital MDS network in B.C. that will provide high-quality and reliable services; and, second, to compete effectively with incumbent cable operators and DTH providers.
6791 We are committed to building out our network in B.C. and funding operations in order to meet our business plan. Moreover, LOOK has put in place the required financing to do so and we are extremely focused on achieving our objectives.
6792 I would like to ask Paul Lamontagne to say a few words about LOOK's success in our other regions and our future development plans.
6794 MR. LAMONTAGNE: Merci, Martin.
6795 LOOK's vision has always been to provide innovative and competitively priced MDS services across the country. Currently, our network covers 4.2 million households.
6796 We promised the Commission in similar hearings that we were committed to introducing competition in the field of television distribution and I am pleased to report that we have.
6797 While only in our second full-year of operation we now have over 40,000 television customers and penetration rates exceeding 7 per cent in some of our markets.
6798 We have over 1,000 apartment buildings under contract, representing over 100,000 suites.
6799 We have launched our service in major markets including Toronto, Montreal, London, Ottawa-Hull, Trois-Riviéres, Hamilton and Quebec City; and we offer a high-speed Internet service in Ontario and will shortly launch a similar one in Quebec.
6800 1999 was a start-up year for LOOK in Ontario and Quebec. We anticipate that the year 2000 will be a breakout year.
6801 As the Commission knows, we recently applied for the MCS licence here in B.C. and in all other regions of Canada in partnership with Microcell Telecom. Our vision is to leverage our own network to provide Canadians with more broadcasting services, quicker Internet access and a suite of IP services, all through a state-of-the-art wireless network.
6802 Moreover, we launched late last year technical trials Milton, Ontario using a developmental licence from Industry Canada to demonstrate enhanced MCS technology to deliver bandwidth intensive applications.
6804 MR. PARKES: Thank you, Paul.
6805 Madame la Présidente and Commissioners, I would like to summarize once again the three critical components to our plan.
6806 First, create a sustainable third force to compete against national cable/DTH and telephone companies. B.C. is a necessary part of this strategy.
6807 Second, provide a powerful service offering that can compete head on for customers.
6808 And, third, LOOK has unrivalled experience in providing MDS services in the most highly competitive markets in Canada.
6809 To conclude, I would like to thank the more than 2,800 organizations, individuals and associations in B.C. that supported our application. Perhaps these supporters see LOOK as a company of the future, as I do. Frankly, I am proud to be associated with a team of Canadians who are undertaking this vision; I am proud to a member of such a dynamic organization dedicated to bringing Canadians true competition in broadcast distribution; and, I am proud to lead a company devoted above all to serving the needs of its customers.
6810 LOOK Communications stands before you today as a company of the future. Powered by our people, enabled by our technology and embraced by our customers. Our vision is shared by our shareholders as well as the 2,800 British Columbians who endorsed our proposal.
6811 Madame la Présidente, Commissioners, thank you again for this opportunity to present LOOK's application. We would be happy to answer your questions.
6812 CHAIRPERSON OF THE COMMISSION: Thank you very much.
6813 I would ask Commissioner Grauer to be addressing the questions of the Commission.
6814 COMMISSIONER GRAUER: Thank you. Welcome. I think I need space.
6815 CHAIRPERSON OF THE COMMISSION: Okay. Sorry.
6816 COMMISSIONER GRAUER: Spread out everybody. Apparently I need a lot of room.
--- Laughter / Rires
6817 COMMISSIONER LANGFORD: I'm doing my best for you, Cindy, but --
6818 COMMISSIONER GRAUER: We don't want to lose you, Stuart.
6819 COMMISSIONER LANGFORD: That's not what you said earlier.
--- Laughter / Rires
6820 COMMISSIONER GRAUER: My questions will be much along the lines of the Chair to the earlier applicant.
6821 I wonder if we could start with -- perhaps you could give us your feedback and perspective on the experience of the last 18 months of operating in Ontario and Quebec, in particular, how you are doing with respect to your original projections, what percentage have you met, what have the challenges been, things maybe you didn't expect, and how you have addressed them?
6822 MR. PARKES: Thank you.
6823 Let me first say that we are pleased to be asked about our experience because that is one of the three things that we think is -- one of the great strengths that we bring to this application. We have learned many lessons during that time, and they fall in two or three key categories. Probably the most important of those is the category of building the business and marketing and sales.
6824 Many of us have a lot of deep experience in other very competitive industries prior to the MDS experience. It is that experience combined with what we have learned since starting our business in the fall of 1998 in Ontario that we bring to this situation today.
6825 For example, we did find that customer sign-ups and subscriber growth were indeed slower than was originally forecasted. It took a number of months of experimentation and trial and error to determine what we have now come forward with as our strategy to attack this marketplace. Really it is a multifaceted strategy.
6826 You see, we believe very strongly that, like most other competitive marketplaces, a strategy that was based on a single attribute would be weak. What I mean by that is that you can't depend simply on price nor can you depend simply on the quality of your product, nor can you depend simply on having superior customer service.
6827 In fact, you have to bundle all of these attributes together, a lesson that many of us have learned for many, many years to be successful. This marketplace is a prime example of that.
6828 In the area of selling, for example, by the fall of 1999, this company had developed a multichannel sales organization. In its earlier months it was dependent upon a single source of sales, that being direct marketing generating leads to an incoming call centre. That was working but not generating the volumes needed.
6829 Today we have a number of other channels. We have, for example, a relationship with a direct marketing firm, Excel, that is selling for us on a direct sales basis. We have retail distribution, and we have learned also to focus and develop a specific selling program for the MDU marketplace.
6830 So this is not a simple undertaking whatsoever, but one of complexity of number of different sales channels being active all at the same time.
6831 I'm happy to tell you that if we look at our current sales rates and the current growth in those rates we anticipate being able to recover in our existing licensed areas the initial shortfall that we have experienced. We anticipate those licensed areas as being very successful. That is based on how we are doing today and how we are expanding that particular activity.
6832 I will say again, it is a matter first of all of having a superior product. We have built a network that delivers the best digital television quality that is available anywhere. It is a very reliable network and it has been constructed to the highest standards.
6833 Having accomplished a superior product, we then have taken the value proposition to our customers through many sales channels. I emphasize the word "value" because value is much more than price. Value is the combination of all the other things that we have discussed: the quality, the choice, the customer support, et cetera.
6834 If I hesitate and talk about choice for a moment, we are very proud of the fact that we have packaged our service in a way that gives Canadians the opportunity to make their own personal choices. In that way, we have found that we have very happy customers at the end of the day. So we know that we have the winning combination whenever you are marketing a product that has happy customers, has a reliable service offering, and is well accepted in the marketplace. Now, it is just a matter of your company being well financed and executing a carefully planned marketing program to be successful.
6835 COMMISSIONER GRAUER: So I take it the lessons you have learned were that it is a complex number of factors and you feel you have addressed them adequately and you are recovering your projected market shares. Do I understand you correctly?
6836 MR. PARKES: We feel that we have a sales and marketing plan today under way. We won't rest on our laurels. We will continue to try and prove it, but we think that we have found the right formula to penetrate the markets much more quickly than was the case up until the fall of 1999, and we are today experiencing numbers to back that up.
6837 We have learned other lessons. We have learned the lessons of operating in major cities. The complexity of providing service to a city like Vancouver which has got the challenges of terrain probably more than any other place in Canada. We have undergone those and those have not been severe problems for our company and its start-up. Our network was very carefully planned, very carefully engineered. We used the top quality components to that network, as I stated, and have delivered the service quality from the beginning.
6838 Those are not lessons easily learned, but the result of a lot of hard work and some very expert engineering.
6839 COMMISSIONER GRAUER: I take it if I was to ask you what your greatest challenge was, it is a number of different things. It sounds like there is not one thing that -- or is there?
6840 MR. PARKES: I think if you were to stand back and look at the company's performance to date, the greatest challenge would simply be the growth in the customer base. I would say that we have fallen behind our projections in that area, but as I have said clearly, now we are on the right track to meeting those projections, which allows us to confidently project how we can go forward here in British Columbia.
6841 COMMISSIONER GRAUER: I was very interested in your approach with respect to "green fields", as you call them, non-cabled households. What has your success been with this in Ontario and why would they be prime targets -- meaning that I would think that people who didn't have cable maybe aren't interested in television, but maybe that is not --
6842 MR. PARKES: The point here is that there are cable-ready neighbourhoods and there are other neighbourhoods that are not cable-ready, and we can service both of those. But I think what I would like to do is ask our marketing expert, Gary Kawaguchi, to talk more about that subject.
6844 MR. KAWAGUCHI: Thanks, David.
6845 When we first started we started generating about 25 per cent of our customers from non-cabled areas --
6846 COMMISSIONER GRAUER: You know what? Maybe I didn't understand.
6847 I thought these referred to cabled areas but households that didn't take cable, not non-cabled. Is green fields non-cabled?
6848 MR. KAWAGUCHI: We categorize "green fields" a couple of ways. One, areas that we already know are a perfect line of sight for us. So we say this new subdivision going up here is for us a marketplace that is just ripe for a line-of-sight technology. We categorize that as "green field".
6849 There are also markets that are uncabled that we do have in our coverage area and we feel very comfortable going after that.
6850 I'm not sure if that is --
6851 COMMISSIONER GRAUER: I think I misunderstood when I read it. I thought it was non-cabled households in areas that were cabled. Right? In other words -- do you know what I'm saying -- people who didn't subscribe when they were passed.
6852 MR. PARKES: I might say that that is a natural conclusion to draw when you observe the market research we did that indicates --
6853 COMMISSIONER GRAUER: I'm really glad you said --
6854 MR. PARKES: -- the number of people and families that are indeed cable subscribers today but are unhappy with that situation and anxious to make a change. So I think your conclusion is a natural one. But we do build our market projections from different sources.
6855 But it is very important to note that in this marketplace our research indicates that there is a very large proportion of people who will welcome LOOK's service and who are prepared to buy our service, and who have made that decision understanding the pricing package that we would be offering.
6856 Perhaps, Gary, you would like to expand on that.
6857 MR. KAWAGUCHI: In the marketplace we started off by looking at it and saying 41 per cent and greater of the Vancouver lower mainland marketplace is currently dissatisfied with the value that they get from cable. With that as a start point, we had almost a 40 per cent interest level in our wireless concept. So we think that is a tremendous number for a company that has no brand awareness here in this marketplace. So that is a very encouraging start point for us.
6859 MR. PARKES: I hope that covers your question.
6860 COMMISSIONER GRAUER: Yes. Thanks.
6861 One of the other areas that we were interested in is now that cable is rolling out digital are you finding this -- do you still feel you have an advantage? How much tougher is the competition with the cable rollout of digital?
6862 MR. PARKES: Again, I will refer to our expert team. But let me say first of all that we are true believers in the power of the concept of true choice for our customers. The fact that we are offering and we are amongst the first to offer the high quality digital services is really only one of our competitive advantages. You add to that the other things that we have discussed, but most notably the chance to build your own selection of specialty channels, the fact that you are pay-per-view ready as a basic subscriber without buying any additional hardware, and the fact that we include in the basic package 30 audio channels as well. We think that we have a very, very competitive package. Again, the feedback from our customers is very much that way.
6863 So, Gary, perhaps you could add to that.
6864 MR. KAWAGUCHI: Sure, David.
6865 There is an emerging revolution happening in digital. I think the awareness is starting to grow now. When digital is offered by cable, it is only going to help increase that awareness level and it is simply going to make it easier for us to go and continue to market.
6866 I think, that being the case, for us to compete, really what we have to be able to do is say: What is the overall value equation for a customer? How do they pick and choose a service provider? There are five key measures for that.
6867 It is not just price, although price is a key component. It is the quality of the service that we provide; it is the quantity of the channels that we offer; and it is satisfying a basic human need, the ability to choose, the ability to choose what you really want to pay for; finally, the reputational value of the company that is providing this, the brand value of that company. As David said, we think we have the experience here, the management team that has the experience building brands in other categories, and we can build this LOOK brand to provide that kind of reputational value to give customers the confidence in coming to look.
6868 COMMISSIONER GRAUER: So I take it that you see the digital revolution or the rolling out of digital by cable as really being an advantage, that it will just bring the whole world to digital, and you, with your unique strategy, will get your piece?
6869 MR. KAWAGUCHI: David, if I could?
6870 When Rogers or the cable companies roll out their digital offering and they charge $10.95 for a set top box on top of the price of the basic analog cable package, that gives us a 43 per cent price advantage. Now, I don't want to dwell on pricing alone, because as I said before, pricing is not the only way in which we are going to compete, but clearly they are giving us an opportunity to position ourselves in the marketplace, again, satisfying one of those key components to value, price.
6871 COMMISSIONER GRAUER: Thank you.
6872 I'm interested in your MUDs or MDUs or whatever the terminology might be.
6873 COMMISSIONER CRAM: It's MUDs, MUDs.
6874 COMMISSIONER GRAUER: MUDs, whatever. Your strategy with respect to MDUs, MUDs, and your success rates and just how important they are to you. I think, particularly, does it bring down the price that an MDU -- per subscriber? How does the technology work?
6875 MR. PARKES: It is a very important part of our market and it is certainly worth some conversation. In fact, our forecasts for British Columbia over the course of the licence term, half, fully half of the customers would be located in MDUs.
6876 The strategy overall is complex, but if we start with how we are selling today, we have identified in our existing markets a team of professional salespeople who do nothing but call on landlords and building owners and try and negotiate competitive contracts for LOOK. In other words, what we are trying to do is become one of at least two players allowed to sell to the occupants of the building.
6877 We know that many of these buildings have been "tied up" by the cable companies prior to this activity and we assume that those contracts will only become available to us gradually over time as they expire. But to give you some numbers, just as a measure of how successful we have been so far, at the present time we have contracts with over a thousand buildings in our existing markets, and that represents more than 100,000 units.
6878 The really interesting part of this is back to the part of our strategy that I was explaining before that is working so much better in just the recent months. In the first two months of this year fully 30 per cent of that number of units have come under contract. So it took us more than a year to get the first 70,000 and less than two months to get the next 30,000. And we see even more of that activity coming along. I believe it is a result of many factors, part of which is becoming more known in the marketplace, but mostly the fact that we have a team that is concentrating on just that market.
6879 We then have a strategy, once the contract is signed and the building is equipped, of going in with a different team that specializes in actually selling our service to the tenants in the building. I will emphasize we are not trying to sign exclusive contracts as has been the case in the past with our competitors. We are trying to bring choice to customers and MDUs. I think any of us that have personal experience of knowing people that are in those situations, they really want choice and it is a very, very prime market for us.
6880 Perhaps to speak to the details of the revenue and pricing side, again if I could ask Gary to follow up on that.
6881 MR. KAWAGUCHI: Thanks, David.
6882 As David commented on earlier, this is a marketplace that we knew very little about when we started. It was actually Scott Colbran that hired our first MDU salesperson very early in our licensed term. But it wasn't until the summer of this past year that we really realized what we were sitting on and we expanded the team. Now it is 20 strong.
6883 At the end of September, we had 48,000 units under contract. Most of that came during the summer months, because we really started to go after this marketplace in the second half of last year. So our success right now is just ramping this way. We think we have finally figured out how to go after that marketplace.
6884 Now, the marketplace is getting extremely competitive right now because we have the DTH players who previously had technical reasons why they couldn't go after that business and they are now starting to come after it. So what we found, we found ourselves in competition with now three players -- now there are three different sources. The DTH guys have taken the price of entry quickly very close to what the competitive floor would be. So the cost of entry to the building owner has been driven by competition.
6885 I would say another true driver in this whole MDU marketplace is, in the last little while we are finding marginally large building owners with consolidation happening, first in the regions and then expanding across the country, and we are now starting to compete with DTH and cable for building contracts that expand beyond our current licence geography. That is a phenomenon that is going to continue as there is consolidation in the MDU marketplace.
6886 The detail of the business. It is very, very competitive to gain access. Once you gain access there is a cost to go and wire the building, so we have to go and construct the building. Once we have constructed the building, now we have an investment there. The only way we can get the investment back is to say -- that local community, that building, we have to be better than anybody else at marketing to that building. We have to make it so exciting for the residents of that building that they are going to want to come to LOOK.
6887 So one of the key things that we have done is we have said -- I have heard comments about installation fees before. We have said in a building that we have put such an investment into there is no installation charge for an MDU customer. So we have gone after that and said we have that investment. We have to have a penetration in that building as quick as possible.
6888 The other thing that we have built as a key core competency is, again, if we have to build that level of excitement from a marketing standpoint, we have said we better be able to build a marketing team that can go into a building and do everything from lobby displays, direct mail, door to door, contests. We have to be in a position to excite the people in the building to come to our service, and all of that takes money.
6889 COMMISSIONER GRAUER: Thank you.
6890 I actually had a lot of questions on this, but I think --
6891 One thing I would appreciate hearing a bit about is we talked about -- you, rather, in your application, 32 per cent of all households -- households and MDUs represent 32 per cent of all households. Is it your understanding of this market that up to 40 per cent of the buildings are not under long-term cable agreements as the owners contemplate competition that is here? I'm wondering how you came to this conclusion or determined this.
6892 Perhaps, put another way, is this a more fertile market for you than you have found in Ontario?
6893 MR. PARKES: Gary.
6894 MR. KAWAGUCHI: The 40 per cent number comes from the experience that we have had in our marketplace. Let me explain it.
6895 Typically building contracts were signed for five years, so that meant 20 per cent were coming up for renewal every year. There was generally a lag because there was no real reason for a building owner to want to sign, so there was always this sort of bigger than 20 per cent marketplace to sign on any given year.
6896 We have hired some key people from the cable business who have validated that. We have gone to the marketplace and we have found, by audit, which buildings did not have a contract. So we felt 40 per cent of the marketplace by experience in Ontario was uncontracted and we feel that about 40 per cent of the marketplace here in Vancouver is also currently uncontracted.
6897 COMMISSIONER GRAUER: One other question with respect to an MDU subscriber. Are your capital costs any less when you do the wiring of the building and install the equipment than they would be with a single family home?
6898 MR. PARKES: When we install an MDU building, we put a single antenna on the roof, run cable to a junction point with the already installed cable in the building. So what that means is that our cost to equip each unit in that building is substantially lower than it would be to equip a single family unit.
6899 To give you an example, to be specific, if we talked about a building that had, say, 100 units, the total cost to equip per door would probably be about $75. So that is substantially lower than the cost to equip a single family unit and that is why, as Gary said, in that particular case, we don't charge an installation fee to those customers.
6900 COMMISSIONER GRAUER: I see.
6901 In non-cabled areas where your only competition is DTH, what is your success rate there?
6902 MR. PARKES: Gary, again, has those statistics.
6903 MR. KAWAGUCHI: Again, where we are competing with DTH we think longer term in this marketplace we are going to be about a 5 to 7 per cent share in the non-cabled markets. Currently, when we found ourselves going into the marketplace, I said 25 per cent of our customers would come in from the non-cabled areas. We are finding great success actually competing against DTH primarily because of our packaging and pricing model. At the end of the day the customer doesn't have to buy the equipment and have -- there is the equipment cost and a higher installation cost versus what we have. So we were out selling DTH in our retail channels, for example, two to one.
6904 Longer term, I think as the marketplace matures and as the DTH guys continue to spend what they are spending going after the marketplace, the projections from the analysts are they will scoop anywhere to about 80 to 85 per cent of the non-cabled subscriptions.
6905 COMMISSIONER GRAUER: Is this partly because of the dish? If you talk non-subscriber, non-cabled areas overall, you know, you require a line of sight and a sort of closer geographic location of the subscriber to your transmitter. Is that why?
6906 You don't understand what I'm saying, do you?
6907 MR. KAWAGUCHI: I think I do. I think the question is: Is our success rate there lower because we have a technical gap, a technical barrier to go over?
6908 COMMISSIONER GRAUER: Well put.
6909 MR. KAWAGUCHI: The answer is yes.
6910 COMMISSIONER GRAUER: Thank you. It is getting late.
6911 MR. KAWAGUCHI: Yes.
6912 DTH can penetrate markets that we cannot, particularly in cottage country.
6913 COMMISSIONER GRAUER: Right.
6914 What I would now like to talk about is product bundling on the Internet and your relationship or your merger with Internet Direct. I know they were, I think, a B.C.-based company, if I'm correct, were they or not?
6915 MR. PARKES: That's correct. Actually, Internet Direct at the time of the merger with the former LOOK communications was a company that had grown based on a Vancouver-based Internet company called Internet Direct that acquired a Toronto-based company that was called I.D. Internet Direct. But the common name was a pure coincidence. When I asked the principals how they got together, they said they met through a trademark dispute and decided to not fight but get together.
6916 So the roots of Internet Direct -- which has grown through what we call an aggregation policy where we look for other Internet companies that we can purchase and add to the package -- up until October 31st of last year when the merger took place were indeed right here in British Columbia.
6917 COMMISSIONER GRAUER: Can you just talk to me a bit about the scope of their business?
6918 MR. PARKES: LOOK Communications is a company that was formed by merging these two companies to create a scope on a combined basis which is really what forms the basis of our vision. Let me explain that.
6919 We started out with two organizations that were operating in particular separate marketplaces. The television business everyone here understands very well. Looking forward to its world of competition with cable companies, et cetera, they realized they would not be able to be successful in the long term unless they could offer bundled packages to their customers. The cable guys were coming at us with bundles from every direction.
6920 On the other hand you had Internet Direct, which was a very successful, Canada's largest, independent -- meaning we are not owned by a cable company or telephone company -- Internet service provider providing approximately 150,000 businesses and homes in Canada with dial-up Internet access.
6921 The Internet Direct reason to join this merger and the vision was that a high-speed access capability was necessary for them to continue to grow in the future. So it was very much like a marriage made in heaven. These two companies needed each other, and having put them together into what is now LOOK Communications, we are positioned, we believe, better than anybody else in Canada to become the leading broadband wireless distributor of information, of entertainment and virtually anything that in the future will come over a digital bitstream into the home or into small businesses.
6922 That is our vision. That is how we will become the third force. That is how we will compete with the Teluses and the Bell Canadas and the Rogers and the Shaws and the rest, by being able to go to our customers with very good bundles of service, not just Internet service and not just television service but telephony service and other home services in the future, be they security monitoring services, or, as we look forward to the huge development of home management services that are being put together, all of that access technology can now be provided on a wireless base. As the world wakes up to the capabilities of broadband in the Internet world, we will be positioned better than anybody else to take advantage of that huge shift in the way we all live.
6923 COMMISSIONER GRAUER: Where do they market their services now? I mean, they are still operating, aren't they, as Internet Direct?
6924 MR. PARKES: We are operating as Internet Direct while we --
6925 COMMISSIONER GRAUER: I'm sorry. You.
6926 MR. PARKES: -- consolidate the two companies together.
6927 COMMISSIONER GRAUER: I still think of them as "them".
6928 MR. PARKES: And we are in the process right now of doing things like physically moving the teams into the same building and starting to take advantage of these ways that we can work together more effectively. There are many, many examples of that.
6929 Internet Direct operates Internet access services in British Columbia, Alberta, both Prairie provinces, Ontario and Quebec. We have plans to expand to the rest of the country over the next year or so as opportunities come up. We will do that either through our aggregation strategy, if we can find a company in a new market that wants to join us, or through establishing points of presence in those new markets and starting to sell directly.
6930 That is a very important part of this company's strategy. We see this company's need to compete. On a country-wide basis we have to create the scale in order to compete with these big companies with such deep pockets that we have talked about already. So we have to be there. It is important for us to be here in British Columbia to be able to keep our company successful so in turn we can keep offering the competition to Canadians everywhere.
6931 COMMISSIONER GRAUER: Can you tell me about the service you are offering now, your Internet service, and how it works? Does it require a telephone hook-up? What is your timetable for wireless?
6932 MR. PARKES: Beyond Internet Direct, as it used to be known, LOOK Communications, as it used to be, introduced a wireless Internet service last year in southern Ontario. Essentially, what it is is a high-speed down link with a telephone connection for the uplink. It was marketed in a very restricted way, more or less to put it out and to establish a beachhead for our company in the wireless Internet market and at the same time learn about the customer's appreciation and acceptance of the product.
6933 The interesting thing, despite the fact this hybrid product is dependent upon a telephone uplink, is that the customers who are paying for it love it. If you think about using the Internet when you are browsing the Web, not all of us want to send large files away, outbound. Some of us in business do that, but many users of the Internet simply want to access their e-mail and click on a Web site. When they click on the Web site, then they wait for the graphics and all the fancy material from the company they are visiting to come downstream to them. That is where you need the speed, and that is where we are able to provide the high speed.
6934 So that is the product that we have available today. We literally stopped selling it last year at somewhere between five and 600 customers and the learning experience has been very worthwhile. We are just now, just this week, actually, starting to market that product again in southern Ontario, and we will start to market it in Montreal and the Quebec region and Ottawa in April.
6935 Now, as to actual two-way wireless, we have, on a properly licensed test basis from Industry Canada in our headquarters in Milton, operated very successfully a two-way Internet access service but only amongst our own family of users. We were allowed that licence again to learn and to prove the viability of the hardware and the software. Very recently we have now been given in Ontario, and we expect very soon to receive in Quebec, the right to use the 2.1 gigahertz uplink band, so we will be able to start offering a two-way wireless service in the same marketplaces that we are offering the MDS services.
6936 COMMISSIONER GRAUER: How is that service priced, the service you are going to start offering again? You are bundling it and what is --
6937 MR. PARKES: The service price is $34.95 a month. Any of our products bundled with others will receive a discount on the total price of the two.
6938 COMMISSIONER GRAUER: Can you tell me about your telephony plans? You mentioned that earlier.
6939 MR. PARKES: Perhaps one of the things that I should say to help complete this story as it relates to telephony and other things is that the important part of our strategy is that we can offer these various services to our customers in a bundled way. We will have certain situations we are sure in the future where we will need more than one alternative way of providing that service. So when we talk about providing Internet services to our television customers in a bundle, our chosen technology is wireless. That is our preferred methodology. I have described to you how we will do it, and we are also of course very hopeful that we will receive some MCS licences to complete that strategy.
6940 However, at the same time, we will also be able to provide high-speed access through reselling ADSL services from the telephone companies and through reselling the cable plant, as has been mandated by the Commission. So we have alternative strategies in order to provide those services to our customers.
6941 As it relates to telephony, assuming that we have some MCS spectrum and that we can deliver two-way Internet access to the home on that spectrum, we will then be delivering that on a state-of-the-art wireless IP infrastructure. It will be a relatively simple matter to superimpose voice, both local and long-distance voice, on that same infrastructure. That would be our chosen method of providing telephony services.
6942 However, to get to the point of my long answer, I'm sorry, should that not take place we do have other strategies again where we could make strategic alliances with other competitive local exchange carriers or indeed become one ourselves and provide telephony to our customers through that channel. So, again, a multi-alternative approach to the marketplace, not assuming anything until it becomes real but with a fallback positions should they be needed.
6943 COMMISSIONER GRAUER: So do you have any timetable for that or not at this stage?
6944 MR. PARKES: LOOK's commitment, assuming a broad licensing again, if I may, is to deploy the major cities within the first year. I would expect that after that first year we would be in the position to start physically using that network for other services beyond Internet access, specifically telephony. I would not expect that we would do both at the same time.
6945 COMMISSIONER GRAUER: Now I have some questions on your business plan.
6946 In entering this market before reaching maturity in your other two markets, is there any risk of overextending yourself?
6947 MR. PARKES: Our company is very well financed. We have prepared in great detail a business plan that spans the next eight years. We have presented that to our Board of Directors and they have bought into it 100 per cent. We are in need of very large amounts of capital to implement that plan over the years, but we are very confident that we will be able to raise the funds through development of new equity partners, additional debt, the way that traditionally companies such as ours create their war chest, if you will, to go forward and implement these plans.
6948 We are very confident. I have spent a great deal of my time in the investment banking community and I can assure that there is a tremendous amount of interest in supporting our company.
6949 COMMISSIONER GRAUER: So if you were to sustain higher than expected cash shortfalls, your investors and bankers are --
6950 MR. PARKES: It is interesting because in our business, like any of the other sort of perpetual revenue businesses that I have been involved with in the wireless business, Cantel or Microcel or Clearnet, all of these companies the faster they grow the more cash they need. We are no exception to that because of the high cost of acquiring new customers.
6951 So, actually, our cash needs in the event of a slowdown would actually be lower with the exception of our initial network buildouts. But a good deal of the cost of building this company is the cost of being successful, so being the optimist that I am, I'm hopeful that we will need even more cash than we have projected.
6952 COMMISSIONER GRAUER: But I wonder, if your penetration was lower than expected, would you not need to take a look at your sales and marketing plans and maybe make more investments in that area? Is that something you have considered? Was that part of your experience in Ontario?
6953 MR. PARKES: I think we have a very good idea now of the costs that we will most likely incur in this marketplace. When you are dealing with projections, these things always have an error factor built into them, but we do sensitivity analyses on our business plans. Basically what I mean by that is we say, what if? What if our sales penetration was 20 per cent less than we think? What if it was 20 per cent more? How can we finance that? What would we do?
6954 We are pretty confident in the plan that we have put forward that we will be able to reach it, execute it and finance it.
6955 COMMISSIONER GRAUER: One of the things, both in your application and your video, you talked about how successful your infomercials have been and that you plan to do them here. I must say, I did wonder where you would do them here, because, you know, we don't have -- I think you do it on the Toronto Star channel in Toronto and I just wondered where -- I'm curious about where they might go.
6956 MR. PARKES: We are counting on the Commission to licence a channel where we can run them. No, I'm just kidding.
--- Laughter / Rires
6957 MR. PARKES: Television advertising will be an important part of our future. Infomercials themselves are one methodology of getting there. From experience, basically, what an infomercial is is generally a very low cost to produce and a low cost to run entry into the television market. Other ways to go at it are to go the more traditional route of using TV support in the paid market rather than in the DRTV scheme of things.
6958 As we emerge, as LOOK Communications emerges as a national force, you will see us using more traditional television advertising to tell our story and to start to build brand awareness for LOOK all across Canada and particularly here in British Columbia. So we won't be as dependent upon infomercials as we would otherwise.
6959 As to the specific deployment of that, I'm going to defer to our local programming expert. Mansell, can you help us with that.
6960 MR. NELSON: As far as, I guess, when we get to the point of wanting to market the service, we would look at -- if we were going to use an infomercial, for example, we could use conventional television, and at that point in time there could be access on cable systems as well. So I don't think when we think of infomercials it necessarily has to be considered exclusively on a traditional cable channel such as it has been in the eastern operation.
6961 COMMISSIONER GRAUER: Thank you.
6962 If you are successful here you would have three regional licences. We would be interested in hearing you quantify what if any synergies you have been able to implement between Ontario and Quebec and what you might expect to achieve with the B.C. operations?
6963 MR. PARKES: I really need to address the subject of synergies from the standpoint of LOOK Communications as a whole, so the company would have, in your scenario, three regional MDS licences and Internet-based operations in the rest of the country. As such, that would give us certain advantages that you wouldn't otherwise have.
6964 For example, on the customer care side, we have talked about an unparalleled commitment. How do you do that? It would be our plan to create a virtual nationwide call centre approach where we would have people who would take calls and make calls here in British Columbia but also in other parts of the country. We would network those call centres together in a way that you can much more efficiently and effectively provide that level of service. You can take advantage of the nationwide time differences for scheduling peaks of activity, for example. That is one example of how we can take advantage of being larger, if you will, and being active in more areas than one.
6965 Marketing programs are another. The ability to use the mass media and offer our products on a nationwide basis will give us the opportunity to build the LOOK brand. Now, it is true when we run ads in Alberta we can't advertise local television service, but the build-up of the awareness of the LOOK brand will be very important to the success of all of our other sales and marketing campaigns.
6966 No one sales technique works by itself. They all work because the others exist and that really is all supported with the foundation of the marketing plan. The foundation of that marketing plan, for example, might be a national advertising campaign that helped us create equity in the LOOK brand which would then strengthen the local ad campaign and sales campaign for LOOK-TV wherever we were.
6967 COMMISSIONER GRAUER: So you would anticipate, for example, with your call centre operations, it would -- when you talk about having them in different regions but networked together, is it essentially one call centre, in other words, that would take calls from everywhere, working longer hours from east to west? I'm not quite sure.
6968 MR. PARKES: There are many different aspects to it. The advantages are that we can have --
let me start over again.
6969 The hard part of managing a call centre is managing the peaks of traffic. If you look at the times of day when people call or have inquiries, they are organized around certain events, typically if they are general business office type calls they come in mid afternoon and mid morning. If they are calls related to pay-per-view activity, many of them come in late at night. So by being able to use our call centres in different time zones, we can literally smooth those peaks out.
6970 So rather than have to try and schedule your people to manage peaks, which means one hour you need a lot of people, the next hour you don't, which is very inefficient, you can take advantage of the fact that you have the other centres. Imagine, then, the Vancouver centre being the place where the first Vancouver calls would go and whatever the size would be. If it had, let's say, 100 stations in it, the first hundred telephone calls from western Canada would go there. If there were more, because it is a peak here, they could automatically be routed to a call centre some other place to handle that peak, and in reverse.
6971 So that gives us a lot of flexibility and the ability to offer that really high level of service at a very efficient rate and very effectively.
6972 COMMISSIONER GRAUER: I understand your principle. I guess what I am really interested in knowing, because it certainly is an issue here, has always been an issue here in all kinds of businesses, is whether, for the most part, understanding there will be times of overflow, you will be dealing with your local customers here, locally, primarily, or will they be talking to someone in Toronto who may not understand where they live or what's happening? Do you know what I'm saying?
6973 MR. PARKES: Absolutely. Now I understand your question.
6974 COMMISSIONER GRAUER: I'm sorry. I perhaps could have been more direct.
6975 MR. PARKES: The answer to your question is absolutely. Yes, we will have an office and a call centre in Vancouver to support our British Columbia operations. It will support our British Columbia customers in the Internet business and hopefully in the television business. That office will also have people that will work on local marketing campaigns. There will be technicians who will manage our networks. There will be technicians who plan.
6976 The people on Ralph's team, for example, that build the network are then here to monitor it. The head-end facility that we are talking about will be manned by people here in British Columbia who monitor every channel every minute of every day and in that way ensure the level of our service.
6977 So we will have all those people on site here in British Columbia.
6978 The synergies come into play when you think that there is another team like that in Montreal and another team like that in Toronto, and so on, and they can work together to support each other. But we will not abandon one market and try to supply all the services from another.
6979 COMMISSIONER GRAUER: Yes. It wasn't so much abandon. I think that there are a lot of businesses who find that to be a good strategy. I mean, I'm not sure it is, but it is a business decision. I was just interested in knowing how you would approach it.
6980 MR. PARKES: Well, I have experience with trying to do it both ways and I'm absolutely certain that the right way to do it is provide local service, do the best that you can maintaining an economic balance.
6981 COMMISSIONER GRAUER: Now, if we could talk a bit about the programming and your community channel. I know we saw a bit here today. I wonder if you could explain how it differentiates from the conventional community channel. One of my questions was what would it look like, but it appears to me it is going to look like a traditional community channel. I wonder if you could talk about that.
6982 MR. PARKES: Let me start by introducing Mansell Nelson, our Vice President for British Columbia, who, by the way, is a resident of Vancouver. Mansell has worked very hard in preparation for this discussion.
6984 MR. NELSON: Thank you, David.
6985 Maybe what I could do is give an overview of I guess our concept of where we see our community expression channel going.
6986 I think, as a new entrant, we recognize there are certain challenges in doing this obviously in the formative years. You know, 2 per cent of not a lot of revenue is not a lot of money, but it certainly does grow over time. Over the seven years we propose to put $6.6 million into our local community expression channel.
6987 We don't intend to try and attempt to copy Rogers. Rogers has become a very sophisticated channel. They probably spend almost as much on it annually as we are going to over our seven years at this point.
6988 But I guess our proposal is really two elements. One would be community created video segments and the other would be alphanumeric programming. I think in the early years it is the combination of these two elements that are going to create "the channel". I think the reason our channel, we see it as being successful is because it is going to be very open, it is going to be very grassroots- oriented. We use names to describe it or descriptions such as "to innovate". You know, it is always going to be changing.
6989 Educate. We are going to work within the community both to explain what a community channel is really meant to be, how you can use it, how you can actually put productions on it, as well as, I think, working within the community you become recognized as an avenue for being able to express yourself within it.
6990 I think, importantly, one of the most important elements, is this access to it, where people who develop something, as long as it falls within the established standards and meets those requirements that we propose, can air that video programming.
6991 COMMISSIONER GRAUER: How will your subscribers know about it. How will that be, if it is a subscriber access channel?
6992 MR. NELSON: We are trying to see if Nino has a brother out here actually, and we are hoping to hire him, the fellow from the video.
6993 But we propose to hire a video co-ordinator whose responsibility, among other things, will be to, you know, as I say, get out into the public, all throughout the areas we intend to serve, which is a fairly formidable task in the early days, and to get out there and work with individual community groups.
6994 I have had discussions, for example, with BCIT, the TV school there, and they are very interested. What we found throughout this is there is a lot of production out there that is being made by students and things that basically it doesn't have a home right now. We think there is a great opportunity working with those groups to give it an opportunity to be seen.
6995 COMMISSIONER GRAUER: What about equipment. Will you have facilities and equipment or will people be --
6996 MR. NELSON: Basically, what we have proposed is that we have some software and some hardware that "drives" -- you know it's the stuff you put in the head end that makes the community channel work, as well as two digital handicams and an editing suite to basically get us started. So I think our principle is -- I mean, we are going to have equipment that we will take around with us to work with groups or groups can use it to do these things, but we are also counting on other groups within the community who have these production facilities already there to use that.
6997 Frankly, where the future of this is really coming, I think, is that digital handicams are becoming very inexpensive and you can buy editing software for your PC these days. You know, there is a Sony ad on TV recently where the father does a little movie of his son. I think those days are coming. It is becoming more cost effective.
6998 We see also the Internet playing a significant role in delivering that type of content across these broad, broad regions there.
6999 The one thing I neglected to say originally was, as a British Columbian and a Vancouverite, I guess it really hit home when I toured the province, you know, went through the communities and met with locals and whatnot, how I really don't know much about what goes on in Vernon or in Victoria. I mean I get very focused on Vancouver; that is where I live with my family. But because we are building this large network that is going throughout the province, connecting it, we are also creating an opportunity here where people will be able to better understand what the community life is in Vernon or Victoria while we sit in the lower mainland. I don't think there is another avenue to do that that I am aware of in British Columbia today.
7000 COMMISSIONER GRAUER: So the community channel then will be covering the whole area?
7001 MR. NELSON: That's correct.
7002 COMMISSIONER GRAUER: What about interactivity?
7003 MR. NELSON: Our interactive element I guess at this point would be we have developed some I think it is very unique software and we have been very successful with it in our eastern operation. I think maybe after we have covered our proposal here I am going to ask Paul to comment on what we have done in the east, because we are really I think are taking the east one step further immediately here.
7004 COMMISSIONER GRAUER: That's a good thing.
7005 MR. NELSON: Pardon me?
7006 COMMISSIONER GRAUER: That's a good thing.
7007 MR. NELSON: We need it out here.
7008 But basically, from an alphanumeric perspective, customers can go to our Web site. We have certain categories where they can put messages in for us and they can send it in via e-mail to us.
7009 We also propose to have a community access Web master who is similar to our video co-ordinator who will understand the standards and whatnot. He will vet these and then they will be posted onto the channel.
7010 So that's the degree of interactivity.
7011 This channel is, in our view, primarily community access programming. Alphanumeric will play, I guess, a role in the formative years when it is going to -- you know, it is hard to find all the video to fill it up. But we see the evolution towards, as I mentioned earlier, this interactivity coming more from people using things like Internet to get things to us, their own little productions and things like that. I'm a firm believer, after being in this industry, that digitization appears to almost be the great -- you know, it is almost a democratic movement. Anybody can, you know, get these things going and get on with it.
7012 But for those that haven't embraced the online world, you can still mail it in, you can fax us your messages, you can do those kinds of things and it will be aired.
7013 We think it is the combination of these two elements that really we call "our channel", and we tend not to distinguish between the two. So I think what is going to happen over time is that as we get out there and work within the community our job is going to be easier, hopefully, because we will inspire people to do these things. It will be easier to do it.
7014 Frankly, one of my concerns is that we could be inundated by people e-mailing us their videos and whatnot and how are we going to decide.
7015 COMMISSIONER GRAUER: You might wish for those kinds of problems.
7016 MR. NELSON: Well, it's the good and the bad news. We will just have to get a very big hard disk on the computer I guess. But that is down the road.
7017 You know, there are a lot of challenges, obviously, bringing a service like this to B.C., but we think this is an integral part of bringing LOOK to the Province of British Columbia and an important element -- becoming part of the community -- and working within that element to say, "Even if you don't subscribe to our service, we are here, we have an open network. If it is suitable we will be happy to find a home for it."
7018 COMMISSIONER GRAUER: Thank you.
7020 MR. LAMONTAGNE: As Mansell said, Commissioner Grauer, I will just quickly run through what we are doing with the InfoLOOK channel, and I can tell you we are very excited about the results we have had in both our other systems.
7021 Just for a clarification, we have two InfoLOOK channels, one for our southern Ontario system and one for Quebec and eastern Ontario. They are staffed with separate people: Nino obviously in southern Ontario, and Daniel Rockette(ph) for the Quebec and eastern Ontario system.
7022 The use of the Internet is an interesting -- I can't think of a more interactive way for us to really reach out and make it easily accessible to the community. If you go to our Web site, www.look.ca, very quickly you will be able to see the InfoLOOK button to be able to go into that page and leave a message if that is the way you want to leave us a message and eventually be able to leave a videoclip so that we can broadcast it out. It is exciting because people have the opportunity very quickly, instant gratification, to send a message out of importance to them, whether they be an individual, an association or a group, and immediately afterwards, very quickly actually, have that broadcast out to all our customers on the network.
7023 The channel placement is very key. It is number 100 on both systems that we operate currently.
7024 Just to give you an example, we went out to drive some traffic to generate some excitement. In southern Ontario shortly after we launched we sent a mailing out to over 1,000 organizations and we got a great response immediately afterwards. I was trying to look at some of the traffic numbers just to give you an idea as to who is using it. Is it a lot; is it a couple? There were well over 200 messages or videos that were sent to us, some by the Internet, some directly, in March of 1999. So very shortly after we launched in southern Ontario we got a great response and it was from the Girl Guides of Canada, the Red Cross to a variety of individuals sending out greetings and announcing meetings and such.
7025 Nino is going to be a real driver, and I think it is very key for us to staff properly and have the right local individual that can get out in the community and generate that type of excitement and help the community develop that type of video content. As Mansell said, with high-speed access becoming more and more ubiquitous, and we hope that we will be an engine of that, it will be possible for people to send us videos over the Internet. Today it is possible and it will be more and more possible.
7026 So the commitment on content is to try and drive and generate it and we think that the community itself will respond well to providing us that type of video content as well in the future.
7027 COMMISSIONER GRAUER: Sounds good.
7028 Tell me a bit about this person and also your plans to provide -- with the schools, your relationship with the schools. You know, I think you are providing services free of charge.
7029 MR. NELSON: First of all, as far as an individual -- I mean, we intend to hire somebody who is skilled in video production that can work with groups through basically scripting, through shooting, all the way through post-production. We think there will be people attracted to work on the -- you know, want to get involved with the InfoLOOK service that either have never done anything before or -- you know, and through different extremes. One extreme may be, for example, the BCIT school where they have all the equipment there and all those kinds of things, where they are really just looking for more of a distribution model or a role to get the wares to market, so to speak.
7030 But we currently believe that hiring the right individual who is enthusiastic will make a difference in this thing and will be able to generate, you know, the levels of production that will turn this into a channel that people will want to tune to for community events -- community information, I should say, specific to their community or the greater community of British Columbia, as I mentioned earlier.
7031 COMMISSIONER GRAUER: What about your plans with the schools?
7032 MR. NELSON: We have had preliminary discussions with schools and libraries. I guess we are open to mini-roles with them. I mean, one obviously is in in-video productions. Some would like to have our video co-ordinator come in and do the work. Then there is the opposite extreme. I don't want to keep going back to BCIT, but they are fully functional.
7033 So I think it is like anything. I think everybody is going to have unique requirements. We are going to do our best to try and work with those groups.
7034 The Surrey library system, one of our intervenors, you will hear where they think it fits into the library, how they perceive the future of the library system, how things like the Internet and the community channel are affecting the use of the library, and where they see us fitting into things like that. It was something that I personally wouldn't have even thought of myself.
7035 So once you get out and start working with these different groups, I think it kind of starts to happen. I think that it obviously is going to be one of the first functions of this video co-ordinator is to get out there. It is probably like Paul said in the eastern situation, you send out 1,000 letters and you get 1,000 back with everybody's own idea and vetting through all those to say: What is the best way to get this thing started? What are the ideas that are most responsive to the Commission's definition of what is a community channel supposed to be?
7036 I think it is one of these things that it is going to settle down. It is going to find its own home. We think that is the best way for it to mature.
7037 COMMISSIONER GRAUER: Develop organically with the schools?
7038 MR. NELSON: We would say that in B.C.
7039 COMMISSIONER GRAUER: So you say.
7040 I think that's it actually. Just let me --
--- Pause / Pause
7041 COMMISSIONER GRAUER: Yes. Thank you very much.
7042 CHAIRPERSON OF THE COMMISSION: Thank you.
7043 Commissioner Wylie has a question for you.
7044 COMMISSIONER WYLIE: Thank you, Madam Chairperson.
7045 Since you filed your application, changes in the ownership of Teleglobe have been made public. What is the effect on the ownership chart? Would that affect LOOK directly as well, that if the ownership of Teleglobe changes indirectly there is a change in the ownership of LOOK?
7046 MR. PARKES: Teleglobe is a shareholder in a numbered company which is the shareholder in turn in LOOK Communications. The direct control of LOOK Communications is in the hands of Telesystem and that situation has not changed -- perhaps I would be better to say would not change should the Teleglobe-BCE deal be consummated later in the year.
7047 COMMISSIONER WYLIE: So there are no other related changes on the Telesystem side that would be contemplated as the result of a change of the ownership of Teleglobe. But, at a minimum, there would be a direct relationship between BCE -- Bell Canada-Teleglobe, at a minimum there will be an increase in the ownership of the Bell group --
7048 MR. PARKES: I think there are two questions there.
7049 COMMISSIONER WYLIE: But it will still be an indirect ownership. It will increase, but it will still be well below anything approaching control, especially if there is nothing changing on the other side, because Telesystem also has an indirect -- will the ownership of Telesystem and Teleglobe also disappear?
7050 MR. PARKES: Yes, that would be the case.
7051 COMMISSIONER WYLIE: Okay. So that will be increasing the indirect ownership, but that's all?
7052 MR. PARKES: That's right.
7053 To go back to the first part of your question, nothing changes with respect to the relationship between LOOK Communications and Telesystem.
7054 COMMISSIONER WYLIE: Not even the ownership of Telesystem and Teleglobe?
7055 MR. PARKES: The ownership of Telesystem and Teleglobe isn't directly related to the Telesystem ownership in LOOK.
7056 COMMISSIONER WYLIE: That won't change.
7057 Perhaps we can ask you to file -- you can discuss it with counsel -- what is the contemplated -- I know this may not all be consummated, but what is the contemplated result on the ownership chart of the -- do you know what I mean by an ownership chart? You know, what happens indirectly as a result of the change in ownership of Teleglobe and --
7058 MR. PARKES: We would be happy to do that. We will file that.
7059 COMMISSIONER WYLIE: Okay. Because it is not clear to me, it may be to some other people, whether the Telesystem ownership and Teleglobe also disappears, which would then increase, if it goes into the hands of the BCE group, the indirect ownership of BCE. Of course we have some interest because of the B.C. relationship with -- I want to say the B.C. group because I'm not so sure where I should say Bell Canada and where I should say BCE is also involved in another distribution system. So it is of some importance to us --
7060 MR. PARKES: That's clear.
7061 COMMISSIONER WYLIE: -- to have at least a draft of what is proposed.
7062 Thank you.
7063 MS PEARCE: We would be pleased to provide a draft based on what we understand to be the situation.
7064 But, Commissioner Wylie, as you described it was exactly correct. You are talking about, again if the deal is consummated, a potential increase in the interest of the BCE group. In Teleglobe, there would be no change in the structure of the numbered company, which is the controlling shareholder of LOOK, or on the Teleglobe-Telesystem side of the control chain, which is the ultimate controlling interest in LOOK.
7065 CHAIRPERSON OF THE COMMISSION: Commissioner Cram.
7066 COMMISSIONER CRAM: I'm sorry, I didn't understand one of your answers. It was the Internet cost. You were saying thirty-four dollars and something. Is that for the half and half Internet? You know, I'm not an engineer, I don't have one of those wrecked bridge rings, so I got mixed up. Is it the wireless Internet or is it the half and half?
7067 MR. PARKES: The $34.95 is the price we are currently charging in Ontario for the wireless Internet with the telephone uplink connection.
7068 COMMISSIONER CRAM: Okay.
7069 MR. PARKES: We call it Ultrafast.
7070 COMMISSIONER CRAM: Okay. Yes, Ultrafast.
7071 And with the Ultrafast, does one then have to get a phone or can you interrupt your own line, your first line?
7072 MR. PARKES: No. You just simply use the telephone that is already in your home.
7073 By the way, with the software packages that we have available today, you can overcome what was probably the largest objection to that, which was I would miss an incoming call while I'm on my Internet service. We have introduced a service called Internet Call Manager which allows you to do a couple of things. One is, as you are having your Internet session, the fact that a call and who it is from comes up on your screen and you have the immediate choice to interrupt your session and answer the call or to send it to a voice messaging system that is part of Internet Call Manager, which also, by the way, means you no longer need your telco messaging service.
7074 Sorry for the ad.
--- Laughter / Rires
7075 COMMISSIONER CRAM: Have you ascertained a pricing for the full wireless, because you say you are going to introduce that in the near future?
7076 MR. PARKES: It would be our expectation that our full two-way wireless Internet product would be competitive with the other high-speed Internet products available today, which is essentially $40 a month or $39.95.
7077 COMMISSIONER CRAM: Okay. Thank you.
7078 CHAIRPERSON OF THE COMMISSION: Legal counsel has some.
7079 MS ASSHETON-SMITH: Thank you.
7080 First of all, the ownership information that Commissioner Wylie requested, when do you think that you would be able to provide that to the Commission?
7081 MS PEARCE: I would think we will need to speak to the principals involved in the transaction, but I would think that early next week would be doable, if that is acceptable to the Commission.
7082 MS ASSHETON-SMITH: Is Monday early next week?
7083 MS PEARCE: How about Tuesday?
7084 MS ASSHETON-SMITH: Tuesday. Okay. Thanks.
7085 I want to just come back to the community channel. The proposed InfoLOOK channel, this is the same model that is operating on the other systems right now. Is that correct?
7086 MR. NELSON: I think the significant difference would be that in this situation we propose to distribute video or community programming from day one, where in Ontario it is just being introduced after 18 months as per their licence.
7087 MS ASSHETON-SMITH: Okay. So it is still alphanumeric in Ontario. Is that what you are saying?
7088 MR. NELSON: Well, Paul is best to explain maybe what the progression has been out there I guess.
7089 MR. LAMONTAGNE: It has been generally alphanumeric up to recently. We are now moving in the southern Ontario system to introducing video and in Quebec we will do the same. You will recall that the licences were about six or eight months apart, so we are about six or eight months --
7090 MS ASSHETON-SMITH: Okay.
7091 MR. LAMONTAGNE: The benefit of having rollout video quicker in Ontario will allow us to do it very quickly afterwards in the Province of Quebec.
7092 MS ASSHETON-SMITH: Presumably, though, it won't be 100 per cent video on day one. There will be a portion that is alphanumeric and a portion that is video, I take it?
7093 MR. NELSON: That's correct.
7094 MS ASSHETON-SMITH: What would be the proportion that would be alphanumeric on day one?
7095 MR. NELSON: We have committed to generate a minimum of 20 minutes a week of original -- or I guess programming.
7096 MS ASSHETON-SMITH: And the rest would be predominantly alphanumeric?
7097 MR. NELSON: Right.
7098 But we also don't know, for example, what the community groups and the individuals will give us. What we are saying is that we will generate the 20. We think there will be more and the balance, I guess, we will use to -- you know, we will have alphanumeric programming and we will have to decide on our wheel and those kinds of things once we understand better the balance of information we have to work with.
7099 MS ASSHETON-SMITH: Okay.
7100 Along the same lines. When you talked about your contribution to local expression, you say the vast majority of the contribution that you will be claiming will be a direct expense as associated with the creation, acquisition and digitization of community video programming. What do you mean by the "vast majority"? What will the rest consist of?
7101 MR. NELSON: Well, the current cost to digitize the programming weekly is about $2,000, so if we multiply that or annualize that we are over $100,000 alone just to make that analog video suitable for broadcast on a digital service. You know, that cost may reduce over time because of the people delivering us digital video, but we also have, you know other costs of running the service, including the individuals that we propose to employ to work and promote the service.
7102 MS ASSHETON-SMITH: Okay. Just to clarify, then. There will be a portion of the 2 per cent contribution that will go to administrative expenses and not programming?
7103 MR. NELSON: Yes. I should point out, though, in the early years we believe the costs of running the total service will most likely exceed what our 2 per cent contribution would cover.
7104 MS ASSHETON-SMITH: It was intriguing when you were discussing the notion of having a local community -- the local expression would actually be almost a regional expression. I'm just wondering what percentage of the overall channel would be devoted to what you might call regional expression as opposed to strictly local expression?
7105 MR. NELSON: I think it is one of these things, as you say, it is a very open type of network. We don't know at this point if Vernon is going to be the hotbed of activity or what may be. So I think it is one of these things.
7106 It would be nice to have unique representation. I can't comment on if that is the way the world will work. As I said, I don't believe anybody has set up a network like this. As Commissioner Grauer recognized, we have a lot of mountains and water separating us here and whatnot. I think it will be a unique opportunity to bring this new sense of communication I guess or awareness together of these often separated areas.
7107 MS ASSHETON-SMITH: Is it possible that someone in Vernon, their community channel might contain, depending on what comes in, programming that all comes from Vancouver or Victoria, then, the way the system shares --
7108 MR. NELSON: Well, if no one in Vernon elects to put something on and if there is nothing worthy of being generated there -- I mean, that may be the case that week, you know. So I think, you know, we can't be everywhere at all times. I think we clearly are going to have to develop a more regional model and is it this week it is Vernon, next week it is Penticton or is it going to just be a mix. Those are the kinds of things that will be decided when we understand the community interest, and the volume, I think is going to play a key role in how we make those decisions.
7109 MS ASSHETON-SMITH: Okay.
7110 If the proposal for local expression is not approved by the Commission, would you accept a condition of licence requiring you to contribute the full 5 per cent of revenues to the Canadian Television Fund?
7111 MR. NELSON: I think the answer is yes.
7112 MR. PARKES: Excuse me. Yes.
--- Laughter / Rires
7113 MS ASSHETON-SMITH: Just two more questions.
7114 Your proposed service areas include Victoria, the lower mainland, Fraser Valley, Okanagan Valley and Kamloops. Are any of these sites severable from the others or do you require the operation in all areas in order to meet the financial liability of the overall system?
7115 MR. PARKES: We look at it as a complete package.
7116 MS ASSHETON-SMITH: So they are not severable?
7117 MR. PARKES: That's correct.
7118 MS ASSHETON-SMITH: Okay. Just one more -- actually, two more questions.
7119 You have asked to be relieved of the obligation to distribute all local radio stations, which is a requirement under section 22 of the Broadcasting Distributions Regulations. In 1997, at the public hearing then, LOOK indicated that it was upgrading its capacity and would carry these local stations when the capacity was upgraded.
7120 Is LOOK carrying any local stations on its other systems now, local radio stations?
7121 MR. PARKES: Paul, would you take this question, please.
7122 MR. LAMONTAGNE: We are not at this point. We carry digital audio services only.
7123 MS ASSHETON-SMITH: Is there any anticipation that you would be in a position to carry local radio stations in this area in the course of the seven-year licence term?
7124 MR. LAMONTAGNE: If I may answer this, David.
7125 I think what we are requesting is to be relieved of that obligation. Now, there are a number of issues that, if I could just touch on in 60 seconds, are important for the Commission to understand.
7126 One is the nature of the network that we have renders it extremely costly for us to pick up local radio stations from around the province, bringing them back to our central point of collection and digitizing and sending them out.
7127 There is also an issue of capacity which we raised the first time, which is the reason that the Commission understood the initial situation when we launched, that we are trying to carry as many specialty services as possible. We know the Commission is in a mode of licensing more and more specialty services. In fact, they were excited about it, because as a digital operator we want to be able to distribute all the new channels. We see it as a factor of differentiation and, frankly, our choice models are very compatible with that.
7128 There has been, up to now, no demand from our customer base for local stations. There also has been no demand from the local stations for carriage. For these reasons we have concentrated on the digital audio services. We feel that it is a strong factor of differentiation and we would like to request that we be granted an exemption as part of this licence.
7129 MS ASSHETON-SMITH: Thank you.
7130 My last question. You have asked for authorization to distribute the signals of the Vancouver local stations in the B.C. interior. We have had several intervenors who have opposed the carriage of those signals in the interior. Your rationale is that you need to carry the signals in order to compete with the DTH providers, but on the other hand some might argue that the DTH providers aren't carrying the local interior signals which you would be carrying if you were licensed.
7131 Can you comment on this?
7132 MR. NELSON: Thank you.
7133 I guess it is always tough being the third one in because I guess what we are suggesting is bringing the last two in that aren't available as a point of differentiation. I think, you know, when we put together our programming line-up, not only were we very cognizant of what the local cable operator has, also the DTH providers, and the unique characteristics of what our digital platform allows us to do. So, clearly, it was just a point of differentiation.
7134 I think part of the reason why those channels aren't available is because I think what the satellite DTH does is pick the most attractive ones and they have left some more limited ones. Historically, for the cable operators there has been a microwave network so they couldn't get them up there. So we are the first, I guess, to have built this network that has the capacity to bring full choice to the customers.
7135 MS ASSHETON-SMITH: Thank you for that explanation.
7136 Thank you. Those are all my questions.
7137 CHAIRPERSON OF THE COMMISSION: Merci.
7138 Commissioner Wylie.
7139 COMMISSIONER WYLIE: Remind me, is it the cost of collecting the radio services rather than the satellite space -- not satellite space in your case, but the gigahertz or whatever, the band, part of the band that it requires to bring it to the antenna? Which is it that is costly and difficult? Is it gathering them or is it because it takes bandwidth, so to speak?
7140 You explained it to us no doubt when you first applied, but I don't remember. I just want a 30-second answer.
7141 MR. LAMONTAGNE: I think you are quite right in your intuition that radio obviously requires less bandwidth than television services, so when we talk about audio services the bandwidth is limited. Nonetheless, whether it is an audio or video service, it still gets into bandwidth.
7142 The costly part though is really the collection of the signals. It is getting them from the regions, getting the dedicated capacity to bring them back. It is a very costly venture to do that.
7143 COMMISSIONER WYLIE: Thank you.
7144 CHAIRPERSON OF THE COMMISSION: LOOK's head office is in Montreal or in Toronto?
7145 MR. PARKES: Our head office is in Toronto.
7146 CHAIRPERSON OF THE COMMISSION: Okay. That explains it probably because there is one francophone service less than your competitor in terms of offering in B.C. TV-5 is not there.
7147 MR. PARKES: I think in terms of multicultural offerings, we are the leaders, if I may suggest that.
7148 CHAIRPERSON OF THE COMMISSION: I'm talking about the francophone offering.
7149 Thank you.
7150 That will complete our work for today. We will come back tomorrow morning and we will have an extra hour of sleep. We will be starting at nine tomorrow morning. We expect to be completing the process for the MDS part of our hearing by lunchtime so that we can start early in the afternoon and complete our work by end of afternoon.
7151 To everyone, have a good evening and see you tomorrow morning.
--- Whereupon the hearing adjourned at 1900,
to resume on Friday, February 25, 2000
at 0900 / L'audience est ajournée à 1900,
pour reprendre le vendredi 25 février 2000