TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
APPLICATIONS FOR LICENCES TO OPERATE NEW PAY AND SPECIALTY
SERVICES FOR DIGITAL DISTRIBUTION / DEMANDES DE LICENCES
VISANT LA DISTRIBUTION NUMÉRIQUE DE NOUVEAUX SERVICES DE
TÉLÉVISION SPÉCIALISÉE ET PAYANTE
HELD AT: TENUE À:
Conference Centre Centre de Conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
August 28, 2000 le 28 août 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
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Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Applications for Licences to operate New Pay and Specialty
Services for Digital Distribution / Demandes de licences
visant la distribution numérique de nouveaux services de
télévision spécialisée et payante
BEFORE / DEVANT:
Françoise Bertrand Chairperson of the
Commission / Présidente
Andrée Wylie Chairperson / Présidente
Jean-Marc Demers Commissioner / Conseiller
Ronald Williams Commissioner / Conseiller
Martha Wilson Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Peter Cussons Hearing Manager and
Secretary / Gérant de
l'audience et secrétaire
Alastair Stewart Legal Counsel /
Peter McCallum Legal Counsel /
HELD AT: TENUE À:
Conference Centre Centre de Conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
August 28, 2000 le 28 août 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
PRESENTATION BY / PRÉSENTATION PAR
THE JUSTICE CHANNEL INC. (OBCI)/(SDEC) 3294
PRESENTATION BY / PRÉSENTATION PAR
THE SPORTS NETWORK INC. 3390
PRESENTATION BY / PRÉSENTATION PAR
KRG TELEVISION LIMITED 3475
Hull, Quebec / Hull (Québec)
--- Upon resuming on Monday, August 28, 2000
at 0830 / L'audience reprend le lundi
28 août à 0830
23953 THE CHAIRPERSON: Good morning. Welcome to the third week of our CRTC hearing.
23954 Today we will complete the hearing of the applicants and we may have a shorter hearing day than usual, which will suit us since we have other business to attend to.
23955 We will resume, then, at 8:30 tomorrow morning with Phase II, which we will complete tomorrow and we will see then how late a day we may have.
23956 We are expecting to have a long hearing day on Wednesday, with a longer lunch break than usual because, again, we have some other business to attend to.
23957 So we will keep you apprised of how the week develops.
23958 Bienvenue à notre audience. Nous allons compléter aujourd'hui l'audience des demandes et nous commencerons et terminerons la Phase II demain. Mercredi il est possible que nous ayons une longue journée et une pause pour le déjeuner un peu plus longue que d'habitude parce que nous avons des responsabilités ailleurs. Alors, nous vous tiendrons au courant du développement de la semaine.
23959 Monsieur le Secrétaire. Mr. Secretary, please.
23960 MR. CUSSONS: Thank you, Madam Chair.
23961 Our first application today is by the Justice Channel Inc. (OBCI) for one new Category 1 service to be called the Justice Channel. There is a maximum presentation time of 20 minutes and we have Mr. Jim Byrd and colleagues.
23962 Mr. Byrd.
PRESENTATION / PRÉSENTATION
23963 MR. BYRD: Thank you, Mr. Secretary.
23964 Good morning, Madam Chair and Commissioners. I am Jim Byrd. We are pleased today to have the opportunity to appear before the Commission to present the Justice Channel's Category 1 application.
23965 Before I begin, I would like to introduce our panel to you. We have a strong mix of broadcasting experience, creative new blood, expertise and entrepreneurial spirit to help us make this independent channel a huge success.
23966 In the front row, on my immediate left, is Patricia Rock, who will be responsible for co-operative production and will co-ordinate the National Youth Crime Prevention Co-ordinators' Program. Patricia is a womens' health care specialist and is involved also in international development.
23967 On my far left is Susan Woods, Executive Director of the Justice Channel Foundation for Victims of Crime and Injustice.
23968 To my immediate right is Hans Jansen, a director of the proposed channel. Hans has extensive experience in conducting broadcast market analyses. He is also actively involved in introducing new two-way broadcasting technologies into this country.
23969 To Hans' right is Tanya Tourangeau, who will be our liaison with Canada's native peoples and Co-Host of Aboriginal Forum Programs. Tanya is a former RCMP Officer.
23970 In the back row, Ralph Tillack, our Executive Vice-President would have occupied the chair on the far left, but he is ill this morning and could not join us. That happened suddenly and we apologize.
23971 To his right is Wayne Banks, the channel's Secretary-Treasurer. Wayne has 20 years of experience in business management and financial experience as well.
23972 On Wayne's right is Ian Stuart, Vice-President and Executive Producer for the channel. Ian has been involved in the production of over 150 films and television programs.
23973 To Ian's right is Marilyn Ridout, who will be our corporate Sponsorship Sales Executive.
23974 To Marilyn's right is Brian Cloney, a Chartered Accountant who has been actively involved in the preparation of our business plan.
23975 Also with us today, on our side panel, are:
23976 Robert von Friedl of TSW System Providers Inc., our technical specialist.
23977 Next to his is Jonathan Blakey, one our legal counsels from the firm of Stikeman Elliott.
23978 Next to Jonathan is William McCormack, one of our Directors and the former Chief of Police from Metropolitan Toronto and a Past-President of the Canadian Association of Chiefs of Police.
23979 I will be the CEO and President of the new channel. By way of my background, I was formerly the Vice-President of Television Networks for the Canadian Broadcasting Corporation.
23980 We will now begin this morning's presentation.
23981 Madam Chair, in my 30-plus years in broadcasting and my attendance at all sorts of program markets around the world, I have never seen anything that quite rivals this service. No other channel that I am aware of has as its entire focus the production and broadcast of programs dealing exclusively with fundamental justice, both social and criminal. This application also represents an opportunity for Canadians to lead the world in this unique programming niche.
23982 Just as an aside, reading The Globe And Mail this morning I notice our Chief Justice speaking about the same issue, about the leadership role that Canada is playing around the world in justice issues.
23983 Our channel is 100 per cent Canadian-owned. It is dedicated to examining issues relevant to social and criminal justice, the reduction and prevention of crime and criminal victimization, and the social problems that cause, underlie and are caused by crime.
23984 At this point I would like to ask Marilyn Ridout to continue.
23986 MS RIDOUT: Examples of the Justice Channel's programming and its strong contribution to the Canadian broadcasting system include the following:
23987 Womens' Forum: A program featuring leading Canadian women discussing Social and Criminal Justice issues from a woman's perspective. This series will be produced by women and will feature women both as host and producer.
23988 Women in Justice: A series of documentaries and biographical profiles about women who serve in all areas of the justice systems, including therapists, social workers, police officers, lawyers and judges.
23989 Security: An educational series providing viewers with tools and information on raising their awareness level of security issues.
23990 Children of the Street, a series about creating safer communities for children and about reducing crimes against children. This is but one of several examples of cooperative programming with existing organizations, like The Children of the Street, a B.C. based non-profit organization.
23992 MS ROCK: The central focus of the proposed channel, social and criminal justice, directly impacts the lives of all Canadians. Leading commentators and ordinary Canadians alike agree that preventive justice is far preferable to reactive justice. The twin thrusts of The Justice Channel are the promotion of social justice and education in order to prevent crime.
23993 In discussing programming, we should also mention our Board of Advisers. They will make extensive and wide-ranging professional experience available to our management team. Fil Fraser, Doctor Gail Erlik Robinson and Bill Belfontaine are among the members of this Board.
23994 Fil Fraser, as you know, is the President and CEO of Vision TV and a Chairman of the Board of the Specialty and Premium Television Association. Fil is also a member of the Order of Canada and a Director of the Canadian Film Centre and the North American National Broadcasters' Association.
23995 Gail Erlik Robinson, M.D., is Director of the Program in Women's Mental Health at the Toronto General Hospital, a Professor at the University of Toronto and a co-founder of the Toronto Rape Crisis Centre. Her extensive research and expertise on women's social justice issues will be an invaluable contribution to our programming focusing on these issues.
23996 Bill Belfontaine is the President of the Canadian Authors Association, an author and a publisher.
23997 I would like Tanya Tourangeau to comment on her role. Tanya.
23998 MS TOURANGEAU: I would like to make a statement in my native language, Cree.
--- Cree language spoken / Langue Cree parlée
23999 Translated from Cree, this means there is more than one approach to social justice. Native people can help build a better future and we need to try to work harder to build that better future together.
24000 I will be a Native Liaison and Producer of Native Social Justice Programming on the Justice Channel. The focus will be on providing tools to assist native communities in the reduction and prevention of crime and social victimization.
24001 This programming will highlight justice issues for Canada's native people. It will allow us to share the unique ways native people have developed and implemented for addressing specific justice, spiritual and societal issues. Native people currently lack avenues to address social justice issues. The Justice Channel will satisfy this need. It will empower our communities with education and support.
24002 I would also like to add that I have personally always searched for someone to take an empowering stand in the media. With this channel, the Justice Channel, I can be the empowering voice for many native people across Canada.
24004 MR. STUART: Contribution to Canadian programming is another of the key criteria for assessment. I will discuss exhibition first. Our schedule is driven by Canadian programming, reaching 65 per cent Canadian content by year seven of our licence term. In fact, we believe this to be a low figure. We expect to exceed this level.
24005 What about Canadian programming production? The Justice Channel represents new opportunities for Canadian independent producers and program makers. We will buy existing programs and commission many new initiatives. By year seven, we intend to spend 50 per cent of our total revenues on the production of Canadian content.
24006 In terms of facilities, we have a firm commitment with the Canadian Broadcasting Corporation for our on-air and master control operations. With regard to marketing and sales, we have discussed with other specialties the idea of a single entity representing several specialty channels. This will minimize overhead costs and maximize revenues which we can then reinvest in programming.
24008 MR. BANKS: One of the key criteria in your licensing decision is demand. We believe there is strong evidence of demand for a service like The Justice Channel. We commissioned an independent research firm to test our concept. A national survey of 1,000 Canadians asked if they are interested in a Justice Channel whose programming addresses social justice and law enforcement issues.
24009 Fifty-seven per cent said they would be interested in subscribing. Even more significant, 73 per cent ranked programming protecting children and youth from crime as a high priority. Sixty-eight per cent said protecting women, seniors and other adults is important. Sixty-three per cent told us that educational documentaries about crime and crime prevention are a high priority.
24010 In terms of programming about safety and security in the home and community, the figure is 60 per cent. We agree with these views. Consistent with the requirements of the Broadcasting Act, if successful, we will reflect these views to Canadians.
24012 MS WOODS: Our application received strong support coast to coast. Support was expressed by numerous wide-ranging groups concerned with social justice issues, like the Suicide Information and Education Centre, the Ontario Metis Aboriginal Association, Crime Prevention Yukon, the Community Safety and Crime Prevention Council, the Ontario Association of Social Workers, the B.C. Civil Liberties Association, Addiction Foundations of Manitoba, Child and Family Services of Prince Edward Island and the Child Welfare League of Canada.
24013 Individuals also expressed strong support, Canadians like Mrs. Christine Munro of Toronto who wrote to us and said:
"In my mind, the Justice Channel stands out as the most important channel applying for a licence."
24014 Richard Jodhan of Mississauga, Ontario, said:
"It is very refreshing and heartening to know that a Canadian Cable Channel is ambitious enough to facilitate ways and means for the reduction and prevention of crime as well as Criminal and Social Justice issues."
24015 Theodore Smilis of Scarborough, Ontario, said:
"Due to my concern for the safety and security of my community, especially that of children, women and the elderly, I can tell you that this is one of the few new proposed channels I would watch. Of all the applications you have received, this Channel would be the most appropriate one to approve due to its social relevance and the fact that it has the potential to make a positive impact on Canadian society."
24017 MR. BANKS: We also commissioned an independent researcher to determine the level of interest in a service like The Justice Channel among national advertisers. Advertisers in the following four industries were surveyed: Finance, security, packaged foods and pharmaceuticals. The companies included blue chip companies like Royal Bank, ScotiaBank, the Bank of Montreal, CIBC, AllState Insurance, Chubb Security, CAA, Voxcom, Kraft, Nabisco, Weston, Bristol Myers Squibb, Procter & Gamble and Pfizer.
24018 Here are some of what these advertisers said:
"We are all about protection. If this channel aids in promoting protection you will be targeting our market and we will be interested."
24019 Another said:
"I like this concept. As soon as you have your launch date determined, call me back and we can discuss an advertising plan."
24020 Still another:
"You can include us as a potential advertiser if the Channel has shows with high levels of quality since they will coincide with our clients and potential clients who are interested in improving their level of security and have the means to do something about it."
24022 MR. JANSEN: Interactivity is a further criterion identified by the Commission. The Justice Channel is committed to taking two way capabilities to an entirely new level. For instance, through a partnership with a team from the University of Waterloo's Computer Sciences Department, we have access to revolutionary new technology which sets our use of the digital and Internet media apart from the others in this proceeding.
24023 First, it allows members of the public and justice organizations to upload vetted multimedia content to our Web site. This means that our Web site will not only be a source of in-depth educational and resource material, but also an effective facilitator.
24024 A second unique feature is its ability to enable viewers to search our Web site on a local basis. Users can search a specific geographic area and in fact they can define the geographic area themselves and look for the information that they are seeking. For example, somebody assisting a woman seeking a shelter could target the search to, for instance, an entire city, the wider neighbourhood or even a few city blocks.
24026 MR. CLONEY: In terms of our business plan and our projections, we recognize that the business model for the distribution of Class 1 services licensed in this hearing is still evolving.
24027 The scenario that we have presented in our application is based on an assumption of a high subscriber count. We have analyzed other scenarios based on lower subscriber counts. The actual scenario won't be known until the industry committee reports and the packaging policy is finalized.
24028 Regardless of which of our scenarios is adopted, we can assure the Commission that The Justice Channel concept is viable from an economic and marketing point of view.
24030 MS WOODS: One further aspect of our application that I would like to highlight is the proposed Justice Channel Charitable Foundation. This entity will serve as a vehicle for public and private donors to provide relief to victims of crime.
24031 If I could depart from the prepared text, I would like to add that presently I manage $1.5 million for a national charity in Canada. I am also the previous founder and executive director of a resource and advocacy group for adult survivors of childhood sexual abuse. I am also a survivor myself.
24032 I can assure you that The Justice Channel will have a significant impact in the following capacities. The Web site will allow viewers to access a wealth of information. The program content will provide suggestions and contact names and will serve as a resource.
24033 Victimization knows no social or ethnic boundaries. The Justice Channel will be available for all Canadians. I wish it had been there for me. Thank you.
24034 MR. BYRD: Thank you, Susan.
24035 Madam Chair and Commissioners, in summary, we believe that The Justice Channel represents an entirely novel programming genre, one which will make a strong contribution to the Canadian broadcasting system.
24036 Unlike all of the other applicants, with the possible exception of the medical health channel, The Justice Channel has the ability to actually change and save lives, reduce human suffering and empower people.
24037 We believe that The Justice Channel fills a significant programming void. We also believe -- and our marketing study and intervention letters confirm this -- that substantial numbers of Canadians, including children, youth, adults and seniors, will view our programming, informing them about their criminal and social justice systems.
24038 Our application is entirely consistent with the Broadcasting Act policy objectives. It provides a service essential to the enhancement of our national identity. Nothing can be more relevant to our vibrant political culture than to inform Canadians about the Canadian social and criminal justice systems.
24039 The Justice Channel represents a change in our humanity. It utilizes revolutionary technology to marry broadcasting to the Internet as it has never been done before.
24040 Madam Chair and Commissioners, that concludes our presentation and we look forward to answering your questions.
24041 THE CHAIRPERSON: Thank you, Mr. Byrd and your colleagues. Welcome to the hearing.
24042 MR. BYRD: Thank you.
24043 THE CHAIRPERSON: Commissioner Williams, please...
24044 COMMISSIONER WILLIAMS: Good morning, Mr. Byrd and Justice Channel panel members. Welcome to the digital pay and specialty hearing.
24045 As is the custom of this hearing, I will begin with general and corporate questions, and then finish up with some service-specific questions.
24046 In that my job is to help you present your application in its best light, I will try to create and maintain a relaxed atmosphere as we work our way through the questions.
24047 As I said the other day, I am not a lawyer, but there are several lawyers here. They will help ensure that all areas of your application are covered to ensure that your application receives a fair and complete hearing.
24048 Let me begin.
24049 In general terms, could you please describe the ownership and control of The Justice Channel?
24050 MR. BYRD: Commissioner, I would ask Hans to take the lead on that question.
24051 MR. JANSEN: Actually, Ian Stuart was going to answer this question.
24052 Ian, do you have the response?
24053 MR. STUART: The ownership is 100 per cent Canadian. In our application we, of course, listed the shareholders, one of whom has provided $5 million in capitalization, and the other four are working partners who are directly involved in putting the application together and making the channel a reality.
24054 Three of us are here today.
24055 COMMISSIONER WILLIAMS: Thank you, Mr. Stuart.
24056 Mr. Byrd, how important is diversity of ownership to the new digital environment?
24057 MR. BYRD: I will start, Commissioner, and perhaps Hans will add to what I say.
24058 I think it is important. I think it is critical that we get different voices on the air.
24059 I think, as important as the diversity of ownership, is the diversity of what the Commission and the various channels that are licensed are going to try to accomplish in the broadcasting environment. I think, in the case of The Justice Channel, it reflects a departure into a programming genre that I think doesn't exist anywhere else. It is unique. It does bring to the screen, bring to Canadian homes, via television or the Internet, a whole new range of voices, a whole new range of programs that focus on an area that we feel is not being adequately treated today.
24060 MR. JANSEN: Commissioner, if I may add, in a sense broadcasting is no different from other industries. If you look at other industries and broadcasting, you see that the incumbent operators innovate and add to the health of their industries, but it is often the newcomers who fundamentally change the rules of the industry and provide the real innovation.
24061 We believe that in Canada the broadcasting industry certainly has been concentrating, and it is time, we believe, for new blood to enter the industry to enable these new voices to be heard and to ensure that the innovations that are required in the industry actually take place.
24062 COMMISSIONER WILLIAMS: Thank you, Mr. Jansen.
24063 How many services should the Commission license?
24064 I imagine, if you have been following the hearing, that you have heard us say 10, or 10 or more. Other applicants have said that perhaps we should consider 22.
24065 How many services do you think the Commission should license?
24066 MR. JANSEN: Commissioner, one of the issues is: How do you promote the broader introduction of digital services to the homes. We strongly believe that the concept of a digital basic tier, the concept that, for instance, Linda Rankin briefly referred to on Friday during the WETV application, does make sense.
24067 We also realize the political difficulties of introducing 10 channels and mandating those channels. But if we look at the success of the cable industry, we must say that we believe part of that success can be traced to the fact that there is a basic tier. In other words, a tier that goes into every home.
24068 We realize that the industry committee will report to you sometime this fall, but our strong belief is that a basic digital tier does make a lot of sense because it is the one solution that maximizes the introduction of digital to Canadian homes.
24069 COMMISSIONER WILLIAMS: Thank you, Mr. Jansen.
24070 In the area of selection criteria, the Commission has indicated certain selection criteria that will use licensed Category 1 services. What criteria do you think are most important in licensing a Category 1 service?
24071 MR. BYRD: I will start again, Commissioner, and perhaps Hans will add to what I say.
24072 I think the key criterion is: What does it bring to the system. What does it bring to the people who we ultimately serve, who are the viewers. I think the key criterion is: Will any given channel bring to the broadcast spectrum a new, innovative kind of programming, approach to programming, a new way of connecting with the viewer, a new way of providing for our advertising support, our clients, a new opportunity to get their message to air, and in our case, we believe, the hundreds of associations across this country who, frankly, do not have a sufficient voice today to get their story on the air. I think that should be the key criterion.
24074 MR. JANSEN: Commissioner, the second most important criterion, we believe, should be the promotion of interactivity. Whether we like the 500 channel universe or not, it is going to be inevitable and it is important, we believe, that Canada maintain a lead.
24075 In some ways Canada had a lead in wireless, for instance. It lost some of the lead. But there is an opportunity to regain that lead in the area of broadcasting. We believe that the applicants who can show they are at the leading edge of the two-way technology should be considered most seriously.
24076 COMMISSIONER WILLIAMS: Okay. So the two most important are the contribution to program diversity and the demand of your audience, I guess, and interactivity.
24077 MR. JANSEN: That's correct.
24078 COMMISSIONER WILLIAMS: In the area of implementation of service, should the Commission impose a minimum amount of time by which a Category 1 licensee must implement its service?
24079 MR. JANSEN: Commissioner, do you mean in terms of elapsed time? In other words, say, September 2001?
24080 COMMISSIONER WILLIAMS: Yes. I guess that would be the minimum amount of time.
24081 Many of the other applicants are kind of moving toward a September 1, 2001 national launch date. Is that important to your channel?
24082 MR. JANSEN: It is important to us, but we also believe that it makes sense in the wider policy context. We believe that if all of the channels were to launch at the same time, that would have numerous marketing advantages and advantages in the area of creating awareness of this new tier.
24083 COMMISSIONER WILLIAMS: Should your channel be licensed, would you be in a position to launch on September 1, 2001?
24084 MR. JANSEN: Yes, we would be, Commissioner.
24085 COMMISSIONER WILLIAMS: What about Category 2 services? Should the timeframe be the same as for Category 1?
24086 MR. JANSEN: We believe that creating awareness is a major issue, and given the different circumstances under which the Category 2 services operate, we think it makes sense to allow them to launch at the same time.
24087 COMMISSIONER WILLIAMS: Okay. I am now going to move into the area of nature of service.
24088 Your narrative description of the service as well as your program description and opening remarks include programs from categories that you have not included in your nature of service definition.
24089 For example, on Schedule 1 you state that you propose to include a high percentage of educational programming, yet you have not requested either Category 5(a), which is formal education preschool, or 5(b), informal education, recreational and leisure.
24090 Could you please confirm the categories that you propose for The Justice Channel? Would you like us to add these in, or...?
24091 MR. BYRD: I will ask Ian Stuart to take that question, Commissioner.
24092 MR. STUART: There might be some programming in those two categories, but we specified, because we were asked to describe that type of programming that we would accept as part of our requirements for our licence, that we would be predominately in the areas that we have already indicated.
24093 But, yes, there might be and if you would care to add them that would be fine. There might be one or two programs in that area, but we would be strongest in the areas that we indicated we would specialize in.
24094 COMMISSIONER WILLIAMS: In your narrative description you propose The Justice Channel provide programming consisting mainly of Categories 2(a), 2(b), 7, 10 and 11, concentrating on criminal justice and social issues, the reduction and prevention of crime, and criminal victimization and the social programs that cause, underlie or are caused by crime. If the Commission believed it was necessary, would you be prepared to accept the replacement of the word "mainly" with the word "exclusively", so it would be concentrating exclusively?
24095 MR. STUART: If I may take that one. We would accept that, yes.
24096 COMMISSIONER WILLIAMS: You have included a sample programming schedule which consists of a single day. What would the programming on other week days look like? Would you repeat programs right from the first day?
24097 MR. STUART: If you want to stay with me here. We would repeat -- say, we did a series of programs in prime time and then the following day we could do it in the morning, the early morning section, the following day in an afternoon section. Then we would retire those programs for a month, just so that we would, say, be able to repeat them 12 times a year, but they would only appear once in that sequence.
24098 Using the PBS model where a program block moves through a series of several days and then reappears later, yes, we would repeat programs, so that they are seen by the viewer in any possible time frame that the viewer might choose to watch television.
24099 COMMISSIONER WILLIAMS: Your service appears to be largely informative and educational. However, you have also requested all subcategories in Category 7. Could you please comment on how comedy, drama and films fit within the type of service that you are proposing?
24100 MR. STUART: We feel that you must balance the programming. Some of our educational, informational and documentary-type programming would be, in the vernacular, heavy. We are dealing with subjects, crimes, sometimes very serious subjects and we feel that we have to have a certain amount of balance, a bit of levity and a bit of entertainment always relating to our subject matter, of course, but we can't constantly have just one type of programming that is very heavy handed.
24101 So we need some flexibility to have appropriate entertainment programming.
24102 COMMISSIONER WILLIAMS: What percentage of your schedule would be made up of this sort of programming?
24103 MR. STUART: Percentage-wise, I don't know if we have calculated it exactly that way. We could certainly find out and get back to you on that.
24104 I would say approximately 20 per cent. We would be at least 80 per cent informational documentary and informative programming.
24105 COMMISSIONER WILLIAMS: Subject to check and assuming that it's 20 per cent, would you accept this as a limit on your programming by a condition of licence?
24106 MR. STUART: I think it would be nice to have an opportunity to negotiate a bit on that and come up with a figure we could agree with and the Commission could agree with, but certainly we would, yes.
24107 If I have just picked 20 per cent off the top of my head here, I don't know whether we would like to be stuck with that.
24108 COMMISSIONER WILLIAMS: Subject to check, and like I said, if it's 25 --
24109 MR. STUART: It might be 18, it might be 24, something like that, yes, certainly.
24110 MR. BYRD: Commissioner, I think the important point is this is a channel that is focused on very serious issues that affect this country and the world. That is going to be our primary focus.
24111 As Ian said, there may be diversions throughout the broadcast day for reasons of just breaking up the continuity of the schedule, but that would not a major focus of this channel. We could certainly come back to the Commission with a number that I think you would be happy with that we could live and that would work for the best purposes at hand.
24112 COMMISSIONER WILLIAMS: All right.
24113 I will now move into an area of programming, aboriginal languages. Ms Tourangeau, you have indicated that you would be providing third-language programming in Cree. Why do you select this over other aboriginal languages?
24114 MS TOURANGEAU: Since we have been in discussion about native languages and the programming, we have decided that mainly our programs that are geared towards native programs would be in English, but with our Internet site we would have kind of like voice overs in various native languages. So the Cree in Quebec would be able to punch in and hear their language and at the same time Cree in the prairies would be able to hook on the Internet and hear their dialect in Cree.
24115 So many native languages can be represented, but at the same time there would be universal English. So the younger people who do not speak a native language could also understand, and at the same time use it as a learning tool with the Internet.
24116 COMMISSIONER WILLIAMS: Thank you.
24117 In your sample program schedule one of the programs you have described or entitled was "Aboriginal Forum on Crime". Can I get you to describe the nature of that program.
24118 MS TOURANGEAU: What we were envisioning is that we would have representation of native communities across Canada, where we would have an elder in the west, an elder in the east and chiefs of many different tribal communities and women and children all discussing how crime is affecting their community and what the underlying problems are, so that it can be addressed properly with our programming.
24119 MR. STUART: Could I add, Mr. Commissioner, that that's a program that is planned on a quarterly basis. It's part of a forum series -- in other words, a youth forum on crime, or aboriginal forum on crime, seniors, a women's forum on crime, et cetera. It would be a series that is quarterly, so that throughout the year they can deal with all kinds of issues that relate to crime and injustice.
24120 COMMISSIONER WILLIAMS: Thank you.
24121 In reviewing your program description, Schedule 10, we note that you have not included any programming in French or Cree. When do you anticipate making this programming available?
24122 MR. STUART: I will take that also.
24123 We are planning to make an arrangement with a French-speaking producer in Quebec who would be responsible for the French-language section of it. We would not like to determine that precisely now without consultation with that particular producer.
24124 We have not gone ahead with appointing that producer and getting into a complex relationship at this early stage because as yet, of course, we do not have a licence, nor do want to dictate to the French francophone community in Canada exactly how the programming should be handled to be most effective in reaching the French community.
24125 COMMISSIONER WILLIAMS: Could you please comment on the availability of French and Cree programming in this genre?
24126 MR. STUART: Yes. If you were to produce only for Quebec programs such as this the cost factor would not make as much sense, as producing for a national audience and making some of the programs again in French. In other words, we can set up and shoot a program and then we can repeat that same program in French, much more economically than it could be produced here in English in Ontario -- I'm sorry, I'm not in Ontario any more. I have lived there most of my life and I guess I still imagine I'm there.
24127 When we are in a situation where in Quebec they produce a program, in Ontario we produce a program, there is a cost factor there doubling cost. However, if you shoot that program once and then you bring in the French cast and you shoot the program a second time, it much reduces the cost.
24128 So we would have original programs produced in French. We would have some programs where the French producer would bring people into his studio, for instance, and we would use sections or excerpts from the program which might have been originally produced in English, dramatizations of crime, for instance. So that you would have one that was sort of half produced French and English, Ontario-Quebec. And then you would have some that would, of course, be dubbed or subtitled, depending on the nature of the programming, all this to be worked out with a Quebec producer.
24129 COMMISSIONER WILLIAMS: So where are you going to get your Cree programming? Is it available?
24130 MR. STUART: This is something that Tanya should address. That's why we have selected her, so that she would be our liaison with the native people. I will ask her to respond to that.
24131 MS TOURANGEAU: We are going to be producing the native programs and there are also many different native production companies across Canada that we will be linking up with.
24132 COMMISSIONER WILLIAMS: Have you established a relationship with APTN, for example?
24133 MR. STUART: We haven't, no, but we are considering creating relationships between ourselves and other specialty channels which direct to certain ethnic groups. For instance, can our programming originally done in English be done for the Polish community, as the aboriginal community, the Chinese-speaking community, and to achieve that actually working with the channels that target those ethnic groups. We would do exactly the same thing with the aboriginal community.
24134 COMMISSIONER WILLIAMS: So when you have programming in French or Cree, will you be providing English subtitles along with that programming?
24135 MR. STUART: Yes. In other words, suddenly we don't turn off our national audience while a certain ethnic group watches our programming, so it excludes all the English language. No, they would be still a part of it, absolutely.
24136 COMMISSIONER WILLIAMS: So French and Cree would be ethnic groups in your description?
24137 MR. STUART: Oh no, I am wrong when I say ethnic groups referring to French. I meant Polish, German. There's quite a number of ethnic groups in Canada that speak in languages other than English or French.
24138 COMMISSIONER WILLIAMS: Okay. Mr. Byrd, there are several discrepancies in your application regarding Canadian content production and programming levels. In its call for applications for a new digital service, the Commission's digital licensing framework stated that Category 1 services should include a commitment of not less than 50 per cent Canadian content exhibition by the end of the licence term.
24139 You have indicated that all your programming will be original and Canadian and this is reflected in your program descriptions in Schedule 10. On the other hand, you have only committed minimum Canadian content exhibition levels of 15 to 35 per cent over seven years. Which commitment are you proposing to honour?
24140 MR. BYRD: Commissioner, our goal is to be as Canadian as possible. Our commitment is by year seven to have 65 per cent Canadian. We feel that is a low number. We feel we can do much better than that. The minimum is by year seven we will have 65 per cent Canadian content.
24141 COMMISSIONER WILLIAMS: Okay. Thank you. Schedule 10 lists many original Canadian productions. How have you defined "original Canadian"? Based on the costs associated with this, many original Canadian productions, please comment on whether you have the funds available for the Canadian productions outlined in Schedules 9 and 10?
24142 MR. BYRD: Yes, Commissioner. Our business plan encompasses the production of these programs. I should say that in terms of definition, our definition of "Canadian" is what's the subject matter, whose producing it for us, what's the audience that we are targeting for that program, are the issues Canadian, are the people producing the program Canadian, are the people appearing in the program Canadian.
24143 That will be our guideline for how we define it. We have the funds in our business plan to do it. The programs in Schedule 10, the dollars indicated there are the dollars that we would commit to it. Obviously those programs would probably cost more than that. That's where our partnerships will come in. That's where our co-productions will come in.
24144 We fully believe with this base business plan, yes, we can produce the 65 per cent Canadian content minimum that we are aiming at for year seven.
24145 COMMISSIONER WILLIAMS: Okay. We note that in Schedule 1 you state you will be drawing on international sources of programming. In fact, your financial projections show an increase in spending on non-Canadian telecasts over the licence term. Could you please clarify whether you intend to air foreign programming, and if yes, what types and sources? Finally, how would this alter your proposed programming schedule?
24146 MR. BYRD: I will ask Ian to take the lead on this one, Commissioner, but just off the top, I would say our use of foreign programming will be as a jumping-off point for the issue that we are covering. It is not our primary focus in our schedule. Our primary focus is on Canadian issues, reflecting those issues to Canadians. To do that, at times we will draw on programming from around the world.
24147 I will ask Ian just to lead on that question.
24148 MR. STUART: Because of the central nature of the reduction in prevention of crime and the need by the Canadian community to see the best from elsewhere, we will be bringing programs from, say, Australia, New Zealand, South Africa, the United Kingdom, the United States, The Netherlands, Denmark, et cetera, where they have similar problems, similar sources of law, basically English common law, as the base of their legal system.
24149 They can be brought to Canada and we can show Canadians, therefore, what the best of being done elsewhere is. We would expect them to be able to export our programs, demonstrating what is the best we have to offer in Australia, New Zealand, South Africa, the United Kingdom and other countries like that.
24150 These would be programs specific to criminal and social justice, the prevention and reduction of crime and social problems. We are not bringing in entertainment programming in any way. These would all be educational, informational documentaries.
24151 We would also put them within a framework. In other words, we would start a show with Canadians discussing a particular problem, then go to that material of, say, how they handle that in The Netherlands, then come back to our own format, so always within a framework of Canadian produced material.
24152 COMMISSIONER WILLIAMS: So how would this alter your proposed programming schedule then if we don't have any of that type of --
24153 MR. STUART: Well, when we established that list of programs, we were trying to suggest a given day, a theoretical day quite frankly, that was Canadian oriented.
24154 Within the context of any of those shows, we could bring in and utilize material from other jurisdictions that are doing something worth being seen in Canada.
24155 If you talk to the experts in the field, they always want to know how does somebody living in Left Eyebrow, Saskatchewan, get to know about somebody living in some small community in Prince Edward Island who are both trying to do exactly the same thing. One has done it successfully. How do you communicate that to the people in the other part of Canada who are maybe reinventing the wheel?
24156 The same thing is true when somebody is trying to do something here or create a new program, social justice program, in Canada when, my goodness, they have had one that has been running very successfully in Denmark for ten years. Why not bring that over and show that to the people here so they can -- and the reverse, things we do over there.
24157 It would affect our programming only that this would be content that would be used in some of the existing programs we have described. They would not replace the programs we have described. They would become content for the programs we have described.
24158 COMMISSIONER WILLIAMS: Thank you, Mr. Stuart. Mr. Byrd, in the area of contribution to independent producers, you state that the majority of your productions will be commissioned from independent producers. How do you define an independent producer?
24159 MR. BYRD: In our terms, Commissioner, the basic approach of this channel is not to spend a lot of money on infrastructure. For that reason, we have gone to the CBC and completed a deal with -- not completed a deal, but we have an understanding of a deal with the CBC that would allow them to provide our infrastructure in terms of getting our programs on the air.
24160 We don't have to worry about that piece of the business at all. It's at a price that we think is very workable within our business plan. It's state of the art facilities. In fact, when I was the Vice-President of the CBC, we did a similar deal with Vision Television and that's working out very well for both parties. We are doing the same thing for this channel.
24161 In terms of marketing and sales, we are working with other specialty channels to see if there is some kind of joint arrangements we can make there so that we handle that side of the business without having to add infrastructure to our channel.
24162 In the area of programming, we don't intend to purchase elaborate equipment or studios or anything of that nature. The bulk of our programming will be produced by people who will work for us on contract, producing series. The way we define it is the bulk of our production, up to 70 per cent by year seven, will be what we will call independent production in the sense that it will be owned by others. It will be done in co-production relative to our channel for broadcast.
24163 The balance, which we consider in-house programming, would still be produced by other producers. Ian would direct that production and have it organized and produced by other parties, but we would own that 30 per cent.
24164 Independent, in our terms we mean somebody else owns versus owning it, but in terms of actually having facilities, we are not going to spend money setting up elaborate production facilities for this channel. We want our money to go directly into content.
24165 MR. STUART: Could I add to that, Commissioner. The key issue is that we will also be doing this regionally. For instance, we will have a regional producer in B.C., all at arm's length from our company. There will be no, you know, left hand in the right pocket type of deals between ourselves and any other companies. They will be arm's length relationships.
24166 We will have that producer in B.C. He will be responsible for what happens in B.C. Events out there, he will arrange locally with independent contractors to get that kind of material on to film to produce those shows. Some of those shows will originate from B.C. The ideas will come from there. The people who are participating will come from there. The talent will come from there, just as Tanya comes from the west and I come from central Canada and somebody else here comes from the maritimes. We will do it regionally, not just independent, but independent and regionally.
24167 COMMISSIONER WILLIAMS: Did you want to add something to that?
24168 MR. BYRD: Jonathan?
24169 MR. BLAKEY: No. Ian made the point that I think needed to be emphasized, which was that the independent producers would truly be at arm's length and there would be no relationship whatsoever between The Justice Channel and its ownership structure and the independent producers.
24170 COMMISSIONER WILLIAMS: Okay, so totally arm's length. No financial or other interest other than a working relationship. Thank you.
24171 MR. BYRD: It would be at arm's length, Commissioner.
24172 COMMISSIONER WILLIAMS: In the area of fiance, you have provided no formal demand research with your application. Could you please explain how you arrived at your projected subscriber levels and how you came up with the proposed wholesale theme?
24173 MR. BYRD: I will ask Brian to take the lead on that question.
24175 MR. CLONEY: The revenues we projected were based on a very high penetration rate in cable with an adjusted rate on the other areas since we have revised those in terms of the size of the marketplace based on the latest information available to us and that adjustment basically would allow us to have subscription revenues similar to those originally projected with our latest information at a much higher discount rate.
24176 MR. JANSEN: Commissioner, if I may add. Basically, we looked at a number of scenarios. We picked one with a high count. We have also looked at a number of other scenarios. We find that, for instance, even if the actual counts are lower, the business model is still viable. In other words, the scenarios all lead to a viable business model, even if there is some flexibility as a result of the negotiations between the BDUs and the programmers.
24177 Of course, at this moment it is not possible to predict the outcome of those negotiations. No matter what the licensing regime will be ultimately, we can make this channel work.
24178 COMMISSIONER WILLIAMS: What do you think your penetration estimates would be for each year?
24179 MR. BYRD: Brian, could you take that?
24180 MR. CLONEY: Based on the research that was done -- perhaps I can throw this over to Wayne -- we feel that our penetration rate should be 60 per cent, plus or minus, based on the interest that we have had.
24181 Perhaps Wayne could comment about the size of that marketplace and other pluses.
24182 MR. BANKS: We feel that we have been aggressive in our penetration, because the channel is going to be so unique and be so socially relevant that people will want the channel. Our marketing survey said that, that they wanted the channel.
24183 Even though we have been aggressive we did those other scenarios to ensure that in the worst case scenario: If 50 per cent of the people bought the channel could we still be profitable? Those scenarios proved that we could be.
24184 We under estimated other revenue streams. We were very conservative in those areas. New data that has come forward from these hearings state that those revenue streams are a lot higher than we had originally projected and estimated when we put this together.
24185 So based on that, we are viable. We could make this work at 50 per cent of cable subscribers.
24186 MR. JANSEN: Commissioner, if I may, add one point.
24187 If we look at the industry projections we believe that the DTH industry has somewhat over estimated its penetration in the years 4 through 7, but we also believe that in terms of digital as a whole the projections don't reflect new technologies at all.
24188 We have been privy to some new technologies which have been demonstrated to us which we believe could fundamentally change the outlook at the projections and which will make it possible that the penetration rates of digital and the uptake rates are much higher in years 4 through 7 than the numbers that we have seen so far from other applicants and from the BDU's.
24189 COMMISSIONER WILLIAMS: Thank you, Mr. Jansen.
24190 Mr. Byrd, your application notes that you have an agreement with the CBC to provide your technical services. Could you, one, confirm the existence of such an agreement; and has CBC confirmed the price and service quote that you have included with your application?
24191 MR. BYRD: Commissioner, yes. We have a letter of understanding with the CBC. It is based, as I said earlier, on a similar model that the CBC did with Vision Television, which is currently housed in the broadcasting centre in Toronto.
24192 Yes, they have given us a price based on the needs that we have conveyed to them so far. Obviously, each side retains the right to adjust that depending on what our needs are, as they might change, and depending on what the CBC can provide to us.
24193 But there is an umbrella letter of understanding in place and we have high hopes that that will solve our problems in that whole area.
24194 Ian, is there anything you wanted to add to that?
24195 MR. STUART: No. When we originally went and talked to them, they expressed not the feeling but the policy that the CBC, the public broadcaster, should work with the private broadcasters as much as possible. So they were in fact eager to strike this kind of arrangement with us and feel that they are following that policy in doing so, and I think it works for us as well.
24196 COMMISSIONER WILLIAMS: Thank you.
24197 In the area of interactivity, we note that you have described several interactive components within your proposal. However, given that no dedicated interactive programming appears in your programming descriptions the actual format of these services isn't clear. Could you please confirm the nature of your interactive programming?
24198 MR. BYRD: Yes, Commissioner. I will start the question and then I will turn it to Robert for more of the specifics.
24199 Basically all of our programming is intended to have another opportunity for people to use it through the Internet. That is our basic philosophy underlying the channel.
24200 But we also have some special uses and functions that we intend and a special approach to how we intend to use our Internet side.
24201 Robert, perhaps you can comment on some of that.
24202 MR. VON FRIEDL: Yes, Commissioner.
24203 The interactivity is basically a concept which we want to apply to all the programming.
24204 In terms of providing a true interactive system today one has to converge the computer technology with the television technology. In our case, the Web site of the channel would constantly echo the television channel and provide the interactive means and vehicle until we have the two-way streams available to us, which are not available yet.
24205 I hope I answered that.
24206 COMMISSIONER WILLIAMS: From your application it appears that you are proposing a truly interactive service with a complementary Web site attached to the service. What is not clear is whether these services would be accessed by the set-top box or another device such as a computer.
24207 MR. VON FRIEDL: If I may address it also.
24208 The set-top boxes which are available today are really not economically feasible for a majority of the people who watch the channels. They are rather expensive, cumbersome, and they are still adopting a technology which is based on the MPEG 2 or rather slow technology for the compressions that we need.
24209 We have opened up discussions with a number of manufacturers of the TV sets, for example Sony and Toshiba believe that within the next year to two they will be on the market with the basic TV set component which will have the set-top box right in it which will provide for the interactivity. Until then you are talking about one-way stream communications.
24210 But the prices which we currently see, around $400-$450 per box will come down to about $100 or $105. That is the real feeling from the industry.
24211 MR. JANSEN: Commissioner, if I may add.
24212 The Justice Channel is also the only channel that was recently invited to look on a preview basis at the new technology that a Canadian-U.S. team is developing now which would allow high-speed streaming on a wireless two-way basis at per second byte rates of up to 35 megabytes per second.
24213 That is, in fact, adequate to stream high-quality video on a two-way basis. That does away with the furry, blurry, shocking difficult image that you receive now. For instance, on the Internet when this proceeding is streamed it is really hard to watch. This new technology would allow viewers to see our programming at the level of quality that you receive at home on your television set.
24214 COMMISSIONER WILLIAMS: Mr. Byrd, one example of your programming, say the Children's Interactive Neighbourhood, I guess the format is a little unclear. Would this be an interactive television program or more of a Web-based game?
24215 MR. BYRD: I will ask Ian to comment, Commissioner, but it will be programming-based, first and foremost, and dealing with issues as well.
24216 Ian, you might talk about the mechanics of it.
24217 MR. STUART: Yes. If we are doing a program on safety, for instance, a community safety for a child and we are trying to reach the child and we -- the program refers the child basically to the Web site. The child can then expand on the experience they had watching the television show by becoming involved in various things on the Web site. In fact, we plan to have a separate Web site for children.
24218 We do have a problem there because, for instance, if I want to tell you about child abuse as an adult and you have children, I want you to understand it at a certain level. Then I want to reach your child and tell them, but it is certainly at a different level.
24219 So there is age appropriate information so we want to separate that probably into a separate Web site for children. We intend to have several children's programs.
24220 COMMISSIONER WILLIAMS: Will these Web sites all be operational at the time of launch?
24221 MR. STUART: Absolutely. Probably long before that actually.
24222 COMMISSIONER WILLIAMS: Okay.
24223 Could you please confirm the nature and extent of your relationship with TSW System Providers Inc.?
24224 MR. VON FRIEDL: If I may address that.
24225 TSW System Providers is a small, unique company out of Kitchener which works very closely with the University of Waterloo on a number of projects. We are the crime prevention Web site in Canada. We are providing currently screening of a number of unwanted channels through your streams and we are already doing it.
24226 TSW is also committed to the Justice Channel to provide them with all the Web intelligence which is necessary to build this, and also providing the technology of communications of building the merger of television and computers.
24227 MR. JANSEN: Commissioner, if I may add, TOW would be one of our suppliers. We also have a strong relationship with a Waterloo company called Mapconnects which has different technology which is state-of-the-art as well. So we are looking for the suppliers to provide us with a combination of the best technology that is available now.
24228 COMMISSIONER WILSON: What is Mapcheck? Could you please maybe describe Mapcheck and then explain the nature of your relationship with the service and then what you hope it would add to your programming?
24229 MR. JANSEN: Commissioner, Mapcheck consists of a team which has essentially solved a big problem in the Internet world and we would be the first service that would be launched using this technology.
24230 The problem that exists is that it is very difficult for Web site operators to keep the information on their Web site broad enough and deep enough to be truly useful. The technology of Mapcheck would allow fettered organizations to post their information directly on the Justice Channel and Mapcheck site.
24231 That is a big advantage because it would allow us to develop content at a much faster rate, it would allow us to keep the content up-to-date much better, and it gives the social justice organization an incentive to improve -- to constantly improve the quality of their content.
24232 For the users, the big advantage is that if they need a service, they can specify the geographic area in which they wish to serve and they only get the hits that are relevant. For instance, if you do a surge on rape, you get 20,000 hits from all around the word. That is not particularly useful to a resident of Kitchener-Waterloo who just needs information that is available locally. And as you know, most economic and social transactions are done on the local basis; in fact, it's over 90 per cent.
24233 So, to have a tool that would limit the searches and would allow the user to zoom in on the map and specify the area to which the searches should be limited is indeed very powerful. It doesn't exist anywhere now. And that is one of the reasons why there were so many complaints about the Internet, people say, "The Internet is a mile wide and inch deep" -- and, to an extent, it's true.
24234 So our tools would allow us to get rid of that cliche and to provide depth of information that is needed for the Internet and for two-way -- an interactive television to be truly useful.
24235 COMMISSIONER WILLIAMS: Thank you, Mr. Byrd.
24236 I have enjoyed this time questioning you and learning more about your application and I would just like to thank you for your presentation prior to returning you to the care of Chair Wylie who will see if my colleagues and counsel have questions.
24237 MR. BYRD: Thank you, Commissioner.
24238 COMMISSIONER WILLIAMS: Thank you.
24239 THE CHAIRPERSON: Mr. Byrd, there are some serious discrepancies between the application you have applied for and what you have presented to us, this morning.
24240 Before getting into them, in the level of Canadian content and expenditures, the nature of service, as well, I think I heard you say you could negotiate what categories with the Commission.
24241 The exercise is for you to identify, or reflect to us through the categories you choose, what the service will look like and how you will be held to the format that you propose or the genre that you propose.
24242 So, with regard to educational programming, why do you not have any formal education and informal education in Number 5(a) and (b) -- Category 5(a) and Category 5(b)?
24243 Why, since you indicate that your programming will have a high percentage of educational programming, wouldn't that be one of the ways that the Commission would check what your real intentions are and what the service is likely to look like if there is no indication that you will do programming from that category?
24244 MR. BYRD: Thank you, Madam Chair.
24245 I think, you know, in responding to the questions, this morning, what we have tried to outline to the Commission is where our primary focus would be. If that led to some discrepancies, we didn't mean that.
24246 Perhaps I can ask Hans if he will just comment on some of the specifics of what you just raised --
24247 THE CHAIRPERSON: Well, let me add that when you look at the categories chosen, which is all of 7, which are all various forms of drama, 7(a) to (g), are all ticked off and you didn't indicate, this morning, what limitation you would put on that and, yet, you say it's going to be an educational type of program and there's no indication that you even intend to do Category 5, "Programming".
24248 So that's what we would like you to speak to, both why you have to discuss or negotiate whether there's (5); and, secondly, why you haven't thought of how much drama there will be on, in at least some percentage, which need not be to the decimal point but at least to give us some idea of what the channel will look like.
24249 MR. BYRD: I think responding to the Commissioner's questions, we did indicate that it would be no more than 20 per cent, and I think we indicated that that was probably high. We can get back to the Commission with a specific answer on that.
24250 As to Category 5, I will let Hans to comment on that particular area.
24251 THE CHAIRPERSON: So that drama, then, it would be a limit of 20 per cent of any of the Categories 7?
24252 MR. BYRD: Yes. And we think that's high, Madam --
24253 THE CHAIRPERSON: Twenty per cent would be acceptable?
24254 MR. BYRD: Yes.
24255 THE CHAIRPERSON: Okay.
24256 MR. JANSEN: Commissioner, the Web site would be very heavily educationally-oriented. There is always a problem with definitions. For instance, members of our team were responsible for the development of the curriculum, the science curriculum, in Ontario, and some of the experience gained there will be reflected in what you will see in the interactive component of The Justice Channel. For instance, we found that even science has a major justice component. If we talk about Walkerton and the disaster there, it has a justice -- it's becoming a justice issue.
24257 We find the technology that we are proposing is giving community members an opportunity to post their concerns, but, also, for instance, science classes to measure quality themselves and to publish this information.
24258 We have tested this in a community in southwestern Ontario and we are finding that science students are coming up with exactly the same results as the professionals.
24259 The tools which we provide, in an educational sense, is to cross the silos that exist between the various disciplines and to give educators the support and the backup that they require to show how justice issues are related to other areas. You really need interactive technology to do that well.
24260 And all our programming will have a large education component on the Web site.
24261 Jim, maybe -- Ian, you have something to add?
24262 MR. STUART: Well, I could.
24263 In that one category about education, while all of our programs will be education and informational, we are, in fact, directing them to the mass audience. There is little opportunity for formal education, in that sense.
24264 And the other category suggests very little education, like very lighthearted education about leisure activities, et cetera.
24265 So we felt that we were correct in saying the informational and documentary and educational area, we would be heavily concentrating in. But, as I said before, not to exclude others of education, more formal or more casual. But we just put down those categories in which we were going to concentrate the majority of programming.
24266 MR. BLAKEY: Madam Chair, if I could just jump in.
24267 I think -- my impression is that perhaps there's been a little bit of confusion, in terms of the categories, I think.
24268 What the panel is telling you here, this morning, is that there's going to be considerable overlap between the informational and the analytical and both the educational, and perhaps the characterization may not have included sufficient, in terms of the educational.
24269 I think, again, the primary focus is analytical interpretative, but there is an educational component. And I think in categorizing it in terms of the Commission's categorizations, they may have erred in terms of classifying it, in terms of 2(a) rather than 5.
24270 THE CHAIRPERSON: In relation to the Canadian content exhibition percentage, we have, in the written application, 15 per cent, in the first year, rising to 25 and, eventually, to 35, in the third year, and remaining there until Year 7.
24271 But, this morning, we were told you would reach 65 per cent by Year 7 -- this is at page 4 of your application -- and the lack of -- it's not reflecting what your application has told us, in any way. I mean it rises to 65, in the seventh year. You haven't told us what it is from Year 1 to 6. And what we have in writing is 15 per cent, as I said, rising to 35, in Year 3, and remaining there until Year 7, in your written application.
24272 MR. BYRD: I will ask Ian to comment further, Madam Chair, but I will start and say that, you know, the 65 per cent is what we are committed to. We will get to 65 per cent in Year 7. And I think we have said, for the record, we think that's a low number. But that's the minimum we are prepared to commit to.
24273 THE CHAIRPERSON: By why is that your application says 15 to 35? And how will you get to 65? What will it be in Year 1?
24274 MR. BYRD: Well, I think it's on a sliding scale. As our business plan kicks in, we will add more and more and more, and this kind of programming does not exist in big numbers, today. We have to start from scratch. It starts low but it will grow faster than, I think, we have put on paper, that we are obligated to -- we are prepared to say we are obligated to that. But we think we can do far better than that.
24275 Ian, perhaps you can comment further.
24276 THE CHAIRPERSON: Are you saying, Mr. Byrd, that what you feel you are obligated to is what is in the written application, and what you hope to reach is what you said in your presentation?
24277 MR. BYRD: No, Madam Commissioner. We are prepared to accept an obligation of reaching 65 per cent. We are committed to that. But the sliding scale, in the years in between, is -- we feel we have to feel our way along, depending on our business and depending on the programming that's available out there.
24278 Ian, can you comment further on that?
24279 MR. STUART: Yes. If there is a discrepancy, we would like to look at that discrepancy and perhaps report back to the Commission.
24280 THE CHAIRPERSON: Well, it's pretty difficult. I think we indicated in our public notice that the application can't be changed altogether at the hearing.
24281 What, for example, would be your first-year commitment if you are now committing to, Year 7, 65 per cent.
24282 MR. STUART: I understand it's 35 per cent, followed by 40, followed by 45, 50, 55, 60, 65.
24283 THE CHAIRPERSON: As opposed to what we have, which is 15, 25, 35?
24284 MR. STUART: Yes. I find it difficult to explain the discrepancy, quite frankly, but we will certainly look at it and report back to the Commission.
24285 If we have made an error, we apologize. But our intention is clear. We may have made an inaccurate statement in writing, but --
24286 THE CHAIRPERSON: The next thing that we look at, of course, is Canadian content expenditures. If you have followed the hearing, you will have heard all of these discussions about how it is calculated. Of course, one looks at the extent to which the forecast expenditures on Canadian content match the number of hours of Canadian content exhibited.
24287 This morning you say that in year 7, at the same page, you would spend 50 per cent of your total revenues on Canadian content.
24288 Now, if I look at your forecast, whether I look at your forecast expenditures on Canadian content in year 7, it is not at all 50 per cent of your revenues of that year, and neither the year before. In fact, to get 50 per cent of your forecast revenues in year 7 one would have to spend half of $43 million, when in fact your expenditures are forecast to be $13.1 million. If I say, well, maybe it is half of the revenues of the previous year, that doesn't work either, because your revenues are $35.5 million, approximately, and the expenditures, as I said, are $13 million.
24289 So I don't really understand how you get to spending 50 per cent of your total revenues on the production of Canadian content based on your written application.
24290 Do you have the numbers with you?
24291 MR. BYRD: Yes, Madam Chair. And I will ask Wayne to take us a little further.
24292 We actually have a paper that clarifies exactly the spending on Canadian, non-Canadian, by year, summarized over the seven year period, and over the seven year period we end up over 50 per cent, at about 57 per cent spending on Canadian.
24293 We have that paper, that we could table with the Commission, if that helps in any --
24294 THE CHAIRPERSON: But you have already filed an application, and in no year can I find that 50 per cent of your revenue is spent on Canadian expenditures.
24295 In fact, the staff, I think, has indicated to you that if we use the formula, which surely by now you understand, of finding a percentage to be applied to the previous year's revenues, it is 29 per cent overall. Even if you take the first year, there is not one unit that has 50 per cent in the forecast you have filed.
24296 It is very difficult to reconcile these financial forecasts with what you say this morning, so perhaps you can address this.
24297 MR. CLONEY: Yes, if I might address that...
24298 Based on calculating our total Canadian production by the revenue of the previous year, in the first year -- in the second year our expenditure, based on that calculation, comes out at close to 32 per cent. In year 4 it is approximately 40 per cent. At all times it is over 29 per cent. It varies between -- I would say that an average would be 35 per cent of the revenues of the previous year is being put into specifically Canadian programming in each of those years, with an overall average of approximately 37 per cent.
24299 The calculations are based on the submission originally filed with the document -- 8.2.
24300 THE CHAIRPERSON: You are using the figures in 8.2 and 8.1 to calculate the revenue forecast and the expenditures forecast.
24301 MR. CLONEY: That's correct.
24302 THE CHAIRPERSON: So now it is not 50 per cent; it is 37 rather than our 39.
24303 MR. CLONEY: That's correct.
24304 THE CHAIRPERSON: By taking the total revenues forecast for seven years and the total expenditures on Canadian content -- what is your total for expenditures on Canadian content in the calculation you are using?
24305 MR. CLONEY: The total over seven years is $41.8 million.
24306 THE CHAIRPERSON: I even have higher than that. I have $43.2 million.
24307 What are your total revenues, then, so that we know whether we are dealing with the same figures? Over seven years.
24308 MR. CLONEY: The reason I have $41.8 million and you have $43.2 million is, in the calculation I have excluded a small amount of revenue which is termed "production and other".
24309 THE CHAIRPERSON: But I thought perhaps it was because you had excluded script and concept development commitments, which I have included.
24310 But, anyway, that is fairly close -- $41 million and $43 million.
24311 What is your total revenue forecast in arriving at your 37 per cent using 8.1?
24312 MR. CLONEY: Madam Chairperson --
24313 THE CHAIRPERSON: I have $153.7 million.
24314 MR. CLONEY: That would be consistent.
24315 THE CHAIRPERSON: So if I divide one by the other, I get 29 per cent. You get 37.
24316 Well, there is a discrepancy with the 41.
24317 Do you, as a group, Mr. Byrd, feel that there is a need for the Commission to take the numbers that are there and apply a similar mechanism to monitor performance in Canadian content expenditures?
24318 MR. BYRD: I'm sorry. Could you explain that, Commissioner?
24319 THE CHAIRPERSON: Whether or not in a competitive process, do you see any significance or importance in the Commission having a formula that is applied to what applicants have filed in a consistent fashion to monitor performance in Canadian content in the licence term?
24320 MR. BYRD: Yes, Commissioner, we agree with that.
24321 And we do have a paper that we can table that at least clarifies how we arrived at those numbers, Madam Chair. If we are apart, we can settle that, I think, fairly quickly.
24322 THE CHAIRPERSON: And if we are apart, and we calculated in the same manner as we do everyone else, would you be prepared to accept a condition of licence to that effect?
24323 MR. BYRD: Yes, ma'am.
24324 THE CHAIRPERSON: Those are my questions.
24325 Commissioner Wilson...
24326 COMMISSIONER WILSON: Good morning. I just wanted to pursue a bit some of the assumptions underlying your business plan.
24327 You talked in your application and in your opening remarks this morning about studies that you did that support demand for your service, but you didn't actually file those studies. I believe you included summaries of those studies in your applications. Is that correct?
24328 MR. BYRD: Yes, we did include summaries, but we would be prepared to file the entire thing.
24329 COMMISSIONER WILSON: I am wondering why you didn't include the entire studies.
24330 MR. STUART: I really can't answer that.
24331 We felt that the summary was sufficient, on the Commission's understanding that we had the entire document. It would have raised the size of our application from 110 pages to, maybe, 130-some-odd pages.
24332 COMMISSIONER WILSON: We have had some that are much bigger than that, I can assure you.
24333 MR. STUART: We do have it. You can see it anytime. But we assure you, those are the figures that were arrived at.
24334 COMMISSIONER WILSON: I guess the reason I am asking that is that when I looked through your subscriber numbers -- you said two things this morning. You said that you were projecting -- I think it was Mr. Cloney who said that you were projecting 60 per cent penetration of the total universe, although I notice that in the numbers you have filed you didn't include the numbers for the total universe of subscribers, including DTH, cable and other; you included only what you projected would be your subscribers.
24335 The other thing was that you said there would be higher penetration in cable, and I was curious about that because, in fact, according to the projections that were put on the public file by both the DTH providers and the CCTA, DTH is projected to remain the dominant digital supplier throughout the seven years of the business plan.
24336 Just as an example, the cable universe -- and what I am looking at is if you combine both the English and French markets, total numbers.
The total number of subscribers that you are projecting over seven years is 6.6 million to the channel. That exceeds the total number of subscribers that we are projecting in the entire universe of subscribers in digital.
24337 You have said, for example, that 6.6 million would be approximately 60 per cent penetration, and that is in fact about 110 per cent or 115 per cent penetration based on what we project to be the total number of subscribers. I am just wondering --
24338 The reason I asked about the demand study -- I guess what I also want to know is what you based your subscriber projections on specifically.
24339 I know that you talked about being more optimistic than the BDUs have been, but as you are probably aware, the infamous set-top box has been talked about for years and the roll out of digital has been talked about for years, and it is just now that it is really starting to happen. So I am very curious to understand how you arrived at 6.6 million subscribers to your service by the seventh year, when we aren't even projecting that many to exist.
24340 MR. JANSEN: Commissioner, I am sure Mr. Cloney could add to what I have to say, but earlier we talked about the new technology that we had seen and for licensing we would be very pleased to show the Commissioners this technology.
24341 I think upon seeing this technology you would realize that new technologies really are such a dramatic improvement over what the incumbents have been able to show you to date that the forecasts of especially the cabling incumbents would be fairly low.
24342 In other words, we think that it's a typical hockey stick syndrome, where a new technology is being introduced, there are problems that take years longer than expected and suddenly there is an innovation which changes everything and which allows the exponential growth of the penetration, but it is all driven by new technology.
24343 We had to make some assumptions as well, but we are the only team that has seen the new technology and it's in the nature of the technology that rapid roll-out is possible.
24344 COMMISSIONER WILSON: You say you are the only team that has seen this technology?
24345 MR. JANSEN: Yes, because we have been shown by a U.S./Canadian research team that that has achieved certain breakthroughs. We would be happy to share the knowledge of that technology. We would be happy to show you, in other words, what that technology is.
24346 COMMISSIONER WILSON: Were you aware of this before you filed your application?
24347 MR. JANSEN: No. Sorry, we were aware that it was coming. We were aware of the parameters. We were aware of the speeds that were possible, but we hadn't seen the business plan of that particular team.
24348 What we have seen in the last couple of weeks simply confirms our original expectations of the possible growth in subscriber counts.
24349 As we said earlier, we realized that several scenarios are possible, but certainly for years five, six and seven we believe that the projections from the incumbents would have to be considered too low.
24350 COMMISSIONER WILSON: So, based on -- you said that you hadn't actually seen the technology, nor had you seen the business plan, but you had heard about it and based on that you filed your application with the projections that you would have 6.6 million in year seven?
24351 MR. JANSEN: Yes. We had sufficient confidence in the reports that we were shown to be able to reflect those findings in our universe and base forecasting.
24352 COMMISSIONER WILSON: Thank you.
24353 THE CHAIRPERSON: Madam Bertrand.
24354 CHAIRPERSON OF THE COMMISSION: Good morning.
24355 It is very much along the same line as the previous colleagues and it's the business plan estimates. When we compare your revenues and your subscribers you are really -- in your application, not only higher or on the optimistic side of the moon, but like many, many times.
24356 I am sure the distributors themselves would be happy to see that the universe could be as large by year seven, but it's pretty difficult to -- mind you, no one has a crystal ball to really make sure what the -- and certainly the Commission will make an excellent choice in choose Category 1's channels and then the DBUs will package it in partnering with the services in a very attractive way for the subscriber.
24357 But still what you are presenting here, despite the element or on top of the element that the Chair was pointing out, which is the discrepancy between what you have filed and what you are saying this morning, there is also, as Commissioner Williams and Wilson are pointing out, the fact that there is no penetration, no studies that are filed, the figures you present here are really very, very high. It's almost like the existing cable universe more than the digital universe.
24358 So, I don't know, is it that you know things that we don't know, or because -- of course, it reflects itself into the total revenue you are capable of projecting. When Commissioner -- no, I think it's the Chair discussing with you what could be the percentage, I heard Mr. Byrd saying that, of course, the capacity of ramping up will be in line with the revenues that you will be able to realize in order to really be able to meet that commitment, but that you would really be committed to the seventh year, 65 per cent.
24359 If the figures you need are the ones filed, it's very difficult for us to assess the feasibility of what you are proposing.
24360 MR. BYRD: Commissioner, if indeed it proves out that our revenue estimates are more optimistic than the market allows, I think what we can reiterate for the Commission is the percentages of spending on Canadian programming that we have discussed this morning, and which we are prepared to table here, we are prepared to stick to those percentages.
24361 We are prepared to be dealt with by the Commission in the same way as any other licensee is.
24362 As Hans has said, and he might want to comment further on this point, but our understanding of the latest technology that we have had some insight into is that we can count on better than anticipated revenues, better than anticipated by the industry.
24363 If we are optimistic about that, if that technology does not deliver, we can adjust the business plan to that reality, but our commitments to the percentage of Canadian content, to the percentage of Canadian expenditures on Canadian programming, we are prepared to stick to that no matter what the revenue picture is. We feel we can adjust our business plan either way to ensure that we do commit and do live up to those percentages.
24364 CHAIRPERSON OF THE COMMISSION: But, Mr. Byrd, you will remember that in the call for application in the Public Notice we talked, yes, about Canadian programming and the commitment to Canadian programming and it goes with the percentage, but it has to be supported by a business plan that is feasible.
24365 I will give you an example where it creates questions for the Commission is, for example, when we calculate based on your application the percentage of your cost in terms of technical expenditures, given the figures you presented in your application which I repeat are very high in comparison to other applicants, it comes to 6 per cent in terms of percentage, which is even the low part of what could be the comparison with other applicants.
24366 But if it's a fixed amount, for example, that you have to pay with the CBC in order to use facilities there and you don't realize the kind of revenues you are projecting here, then the 6 per cent can turn into 20, 30, 40 per cent and that's where we need to -- you know, and then your 65 per cent Canadian content can be threatened.
24367 So this is the kind of concerns we have and why the clarity, you know, is necessary to understand between your commitment and your application. If there is any element you can give us to kind of give us some comfort into the feasibility of your business plan.
24368 MR. BYRD: I will start and I will ask Ian and Brian to step in.
24369 In terms of the CBC deal, obviously, the understanding that we have with them is for a certain level of facilities, a certain quality of facilities, a certain range of facilities, a certain volume of editing time and production time, master control time, et cetera.
24370 But if indeed our business plan does not play out, if the revenues do not come in to the degree that we have projected in here, we can adapt that, we can massage that number down considerably. We know ways and means to do that.
24371 Similarly, that is true of our production estimates that are in here. We know there are ways that we don't have to live up to that quality of production to deliver the Canadian content that we have to deliver. That's what we would like to do. That's what we have based our business plan on, in the hopes that we will achieve that kind of revenue based on our understanding of the new technology that's coming down the stream.
24372 But if that's wrong, we can adjust any of those elements in terms of actual dollars expended. But again, I reiterate to the Commission that our commitment to the percentage of Canadian content, to the percentage that we will spend on Canadian programs, that percentage we are prepared to commit to.
24373 Ian or Brian, do you want to add to that?
24374 MR. CLONEY: Yes, if I might address the point of your comfort level with the business plan.
24375 Our projections of the total universe by year seven, it would appear that we did our own research, which was based in part on a much faster incremental rate of take up of cable TV on the digital network, based on new technology being introduced. I believe RCA has already got a TV with the box in that television that allows -- that does away with the table-top box. Certainly, those could be said to be optimistic.
24376 On the other hand, and I might have Wayne address this, based on the response we have had to date, in our business plan we have taken very conservative figures for national advertising revenue and we have not considered any national sponsorship revenue. To date the response we have had would be very encouraging in that regard. You might want to add something, Wayne.
24377 MR. BANKS: I am going to get Ian to address the national sponsorship because he has been involved directly with that.
24378 MR. STUART: Yes. Right from the beginning we realized we have a type of programming that major corporate citizens tend to sponsor. More than just buying advertising time, they will actually put dollars into it.
24379 I refer to one national bank that has already given us a tentative commitment of $2 million based on our creating some kind of an opportunity for them to have a major corporate image presentation on certain types of programming having to do with protecting homes and communities.
24380 There is a form of revenue that we have not included because at the time and date of the application, we could not estimate what that was proper. We may have incorrectly or overestimated the number of subscribers, but we thought that was correct based on what we understood about new technology.
24381 If these errors, if you want to call them errors, maybe overestimates or underestimates, cannot be corrected because somehow they are set in concrete at this stage in the process, then I guess we are stuck with them, but we would certainly like the opportunity to work on them and then come back to the Commission if something changed based on your requests and your demands that we alter these figures.
24382 MS WOODS: Can I interject? Just based on my background in fundraising, I also feel with the setup of a foundation, it naturally leads itself to self-perpetuating and growing as a fund. Also, through my experience with the corporate world, corporate sponsorships, I think once something gets going, it's very easy to develop a partnership. I can see this happening quite logistically.
24383 I also have to excuse myself. I have to catch a plane back to Toronto. Thank you.
24384 CHAIRPERSON OF THE COMMISSION: Thank you, Madam Chair.
24385 THE CHAIRPERSON: Commissioner Demers has a question, but Mr. Stuart, I want to indicate to you that the exercise today is to try to understand your application. We don't request changes. The application is filed and our questions are to try to understand both what is going to be on the screen and the feasibility of your business plan.
24386 I thought I would clarify that at this stage.
24387 MR. STUART: Well, some of us are quite new to the process. I know you have seen a lot of people that are very experienced, but some of us are new to the process and may not entirely grasp each stage of the process as clearly as you do, of course.
24388 MR. JANSEN: Commissioner, if I may add. If we look at the projections, it's clear that statistically the total is more correct than the breakdown. If you were to ask us "Are you confident that you can achieve revenues of $6.0 million in zero one, $8.8 million in year two and $13.1 million in year three", we would have to answer "Yes, that is viable, even at much lower update levels than the scenario that we have presented would suggest".
24389 In other words, we have confidence in the total revenue numbers. We know we can achieve those, even if there are uncertainties around the items that are making up that total because, for instance, and certainly by the outcome of the committee negotiations, but we are confident that we can reach $6 million in year one. As you know, with a national specialty channel, that is a reasonable number.
24390 THE CHAIRPERSON: Commissioner Demers.
24391 COMMISSIONER DEMERS: Thank you, Madam Chair.
24392 Good morning. A general question. Maybe a general question, I would like to say. My understanding of your application is that it would be a channel that would focus on crime-related situations rather than other types of justice. Is that fair to say?
24393 MR. JANSEN: Commissioner, I would say that the emphasis would be on justice rather than crime.
24394 COMMISSIONER DEMERS: Yes.
24395 MR. JANSEN: In other words, if you are asking us where is --
24396 COMMISSIONER DEMERS: Criminal justice.
24397 MR. JANSEN: Yes.
24398 COMMISSIONER DEMERS: But from the lists of your programs and your sample of programs schedule, it is related to criminal justice. Is that fair to say?
24399 MR. JANSEN: Again, if you ask us where the emphasis would be, we would suggest the emphasis on the prevention of crime.
24400 MR. STUART: Could I add there that we started this concept, as perhaps you may be aware, to originally call it The Police Channel, that the reduction in the prevention of crime would be the sole function of this channel.
24401 As time went by, however, we realized that justice is like a coin with two sides. It cannot exist with only one side. One side is social justice, the other side is criminal justice.
24402 If you took a map of the city of, say, Hull, and you put a red dot on it for every crime and then you put a blue dot on it for every social problem, gee, the red and blue dots would all be in the same place.
24403 With left and right hand, like a set of scales, on one side you have social justice, the other side criminal. If you deal with the social justice problem sufficiently, you would have a lot fewer criminal problems to deal with.
24404 That's why we changed the name and the concept from The Police Channel concentrating on just crime prevention to The Justice Channel, concentrating on both criminal and social justice.
24405 COMMISSIONER DEMERS: Thank you. My question was in the sense that you could have, and I understand it is not, but you could have had other judicial problems like problems between citizens rather than the criminal aspect of justice.
24406 MR. STUART: If you are speaking --
24407 COMMISSIONER DEMERS: That does not seem to be here.
24408 MR. STUART: If you are speaking of civil justice --
24409 COMMISSIONER DEMERS: Yes.
24410 MR. STUART: -- we understand that also to be an aspect of justice. All Canadians, all people in the modern developed countries, wish to live in a just society in which everyone is somehow basically treated with fundamental justice.
24411 Yes, there are various forms of the criminal and social justice systems that do come into play, including civil justice.
24412 COMMISSIONER DEMERS: In the sample program schedule that I have, I understand that most of it relates to criminal justice.
24413 MR. STUART: That would be true because we, again, began this to concentrate as a police channel on criminal justice and then we changed the concept as time went by to become social and criminal justice. However, most of the programs are suggested for the criminal justice side. That doesn't mean there won't be an equal group of equally created programs on the social justice side.
24414 We were only giving a theoretical day in presenting those programs in that fashion.
24415 COMMISSIONER DEMERS: But then the program titles that I have here would be adapted if you were to have -- if you were to lean towards civil justice rather than justice.
24416 MR. STUART: What we would do is use those programs and create other programs of similar creative concepts to deal with those issues.
24417 COMMISSIONER DEMERS: Thank you. I believe, Mr. Byrd, you indicated in one of your answers or a statement that these criminal justice related matters were in a sense the same around the world. At least you made reference to the fact that either your channel would cover world problems related to criminal justice or that you would see it otherwise, but from a world point of view. Could you expand on that?
24418 MR. BYRD: I think what I said, Commissioner, was -- I hope I said this anyhow -- there are obviously commonalities, areas of commonality, around the world. There are obviously aspects of social justice around the world that we can learn from. There are aspects of our social justice and criminal justice that other places in the world can learn from.
24419 I think we see this channel as a forum for bringing those different viewpoints together and analysing them fairly thoroughly. When we refer to our programming drawn from around the world, I think what I said was we would use that as a leaping off point to move into the debate about why is it different, how does it work, those kinds of things.
24420 COMMISSIONER DEMERS: Thank you. I believe, Mr. Jansen, you referred at one point to Walkerton. Could you put it in the context of your application what you meant by referring to problems in Walkerton, being part of the social justice that you would cover on this channel.
24421 MR. JANSEN: Commissioner, all I intended to do was to suggest that there may be issues that do not even appear to be justice issues that are changing the character and certainly are changing the character in the eyes of the citizens.
24422 Where it used to be simply a scientific problem of e-coli counts, now people feel about it differently. The emotions associated with it are not emotions that one would consider scientific. They are justice issues, justice emotions.
24423 All I was trying to say is that the way we look at justice issues now may change as the public perceptions of problems that suddenly pop up when society changes.
24424 The other thing that I wanted to suggest is that there is often a relationship between justice, between the environment and between other disciplines that a Web site that is multidisciplinary can explain.
24425 Such a Web site could be a tool for educational purposes as well, and indeed a very powerful tool. I'm not suggesting that Walkerton is a priori justice problem or justice issue, but it is taking on that perception in the minds of the citizens. People feel that they are treated unjustly by the local municipalities if the local municipality cannot guarantee that the water that they drink out of the tap is safe.
24426 COMMISSIONER DEMERS: Thank you.
24427 The last point is on your Web or your interactivity. You have explained to one of my colleagues part of it and maybe I didn't understand exactly. At least I have two questions on that point.
24428 It relates to your oral presentation when you spoke about the University of Waterloo and your relationship with the Computer Science Department. It is where you say "First" -- what I would like here is maybe more explanation.
24429 First is digital and Internet media, et cetera, relation.
"First, it allows members of the public and justice organizations to upload vetted multimedia content to our Web site. This means that our Web site will not only be a source of in-depth educational and resource material, but also an effective facilitator."
24430 Please give me a little more on that.
24431 MR. JANSEN: Maybe I can explain it best on the basis of an example. What communities will find useful in the future, we believe, is a total information utility, sometimes it's called infrastructure for Wall Street purposes and Bay Street purposes, but what we are really talking about is a utility.
24432 Essentially, you could think of it as hundreds of layers of information about the utility that can be searched on the basis of a polygon that is defined by the user. It could be a circle, if the user specifies that he or she would like to walk two miles, it could be a square if the user wants to consider city blocks, but the essential feature of the technology is that the user only gets that information which he or she finds useful.
24433 So see it as a mechanism that filters non-useful information and brings to the user the data, the backgrounds, even the video clips that the user is interested in.
24434 So because so many transactions take place on the local basis and because so many justice organization services are accessed on the local basis, it is very important to have that geographical component in the technology.
24435 It is a much more difficult technological problem than it appears. Microsoft, Oracle, all the big firms have not been able to crack the software problem, but the team that we are working with has developed a platform that actually works. It is very exciting.
24436 COMMISSIONER DEMERS: Thank you.
24437 Then the other point, you say:
"A second unique feature is its ability to enable viewers to search our Web site on a local basis."
24438 It is more on the example here, because you say:
"Users can search a specific geographic..."
24439 And I think you referred to -- one of my colleagues discussed that with you.
"Users can search a specific geographic area and in fact they can define ... themselves and look for the information that they are seeking."
24440 But then you say:
"For example, somebody assisting a woman seeking a shelter could target the search to, for instance, an entire city, the wider neighbourhood or even a few city blocks."
24441 MR. JANSEN: What I was referring to there, Commissioner, is what I explained earlier. If you need a service you currently can use the Web, you can use a search engine and you specify the nature of the service that you would like and you get hits from all over the country, all over the world. It is very difficult to find the information that you need on a local basis. Certainly it is even more difficult to specify the area that you are willing to consider.
24442 With this technology you can specify that area on the map and the content of the site is so rich that the information that is produced by the search is truly useful. It only gives you, in this case, the local shelters. It doesn't give you shelters all over the world.
24443 COMMISSIONER DEMERS: Thank you. I think I understand the last point.
24444 MR. JANSEN: The only way to truly demonstrate is just to actually do it on the screen, and we would be pleased to do that, but this is not the forum to do that.
24445 COMMISSIONER DEMERS: Your example that women's shelter would be on that Web site at least raised a question if it is accessible to everybody in the world. That's why I was concerned by your example and I wanted to go further into it.
24446 Thank you.
24447 MR. JANSEN: I see what you mean. There might be an information and security issue in this particular example, and you are right.
24448 Please consider it just an example. If this is an example that creates particular problems, then obviously we would like to replace that example.
24449 Another example would be, for instance, for your own use. The Commissioners are going to hear applications for an FM licence in Vancouver soon. As it turns out, a number of the applicants have submitted a soft jazz format. If you happen to like soft jazz and you were travelling to Vancouver, and say you are staying at the PanPacific in Vancouver, you might want to use this technology to do a search of jazz clubs within walking distance of the hotel.
24450 Right now the technology doesn't exist. With this technology you would enable -- you could search the map and just get the hits for that two mile radius.
24451 So the technology has applications in all fields. Every information need that you may have can be satisfied with this technology. Just because we are applying for a Justice Channel, we are starting with the justice application.
24452 COMMISSIONER DEMERS: Thank you.
24453 Thank you, Mr. Byrd. Thank you Mr. Jansen.
24454 Madam Chair.
24455 THE CHAIRPERSON: Counsel.
24456 MR. STEWART: Thank you, Madam Chair.
24457 You have characterized your commitment with the CBC as a firm commitment. Is this the commitment that is reflected in the letter of March 17 that the CBC sent to you or are there any additional commitments that have been made?
24458 MR. BYRD: No, that is the basis of our agreement. We have obviously had discussions since that, counsel, but that is the basis of the agreement.
24459 MR. STEWART: So there are no further commitments beyond --
24460 MR. BYRD: No.
24461 MR. STEWART: -- those that are set out in that letter?
24462 MR. BYRD: No.
24463 MR. STEWART: Thank you.
24464 Are you aware of the Personal Information Protection and Electronic Documents Act?
24465 MR. JANSEN: Yes, counsel.
24466 MR. STEWART: Will you be in a position to comply with that legislation effective the 1st of January, 2001?
24467 MR. JANSEN: Yes, counsel.
24468 MR. STEWART: Thank you.
24469 Is your proposed service technically equipped to permit descriptive video?
24470 MR. JANSEN: It is, counsel.
24471 MR. STEWART: Thank you.
24472 This is a question that I will direct specifically to your legal counsel, and given that your proposed service is at least trilingual, do you have any comments on the access rights vis-à-vis BDUs that would apply with respect to your service?
24473 MR. BLAKEY: Thank you, counsel.
24474 At this point I think the approach that the Justice Channel is taking is to be flexible in its negotiations. Obviously the initial level of francophone and other linguistic material that they plan to exhibit is, as I understand it, 15 per cent with the hope of increasing. At that level it is obviously difficult to go to a BDU in an area that serves a market that is primarily in a non-anglophone market and require that there be mandatory carriage and there is certainly no intention to do that.
24475 I think the hope is that flexibility will be shown on all sides and that mutually agreeable arrangements can be concluded. But at this point nothing certainly is carved in stone.
24476 MR. STEWART: Thank you.
24477 Thank you, Madam Chair. Those are my questions.
24478 THE CHAIRPERSON: Thank you.
24479 Mr. Byrd, you have the last word.
24480 MR. BYRD: Thank you, Madam Chair and Commissioners.
24481 Let me start by apologizing if anything in our application led to confusion. We hope we have clarified some of your questions today.
24482 We will get back to you about the program time issue. We do have a paper that will show how we arrived at our numbers and then perhaps with staff we can work out where there is any discrepancy.
24483 I would like to say, having said all that, that we do feel this is a unique channel; that there is a place for it in the Canadian broadcasting spectrum. Our research and marketing indicates there's an appetite for it. We have a unique approach to the Internet and to interaction with our viewers. We have minimized the overheads for this channel, in the sense of our deal with CBC, for master controlling its sports operations. We are looking for ways with other channels to share our marketing and sales expenses.
24484 We have not set out to create a production empire within this channel. We will farm the bulk of our production to private and independent producers.
24485 Our programming is very worthy. It's aimed at reducing and preventing crime. But we also have in place a foundation to help the victims of crime.
24486 Our channel is Canadian-focused. We will reach 65 per cent Canadian content by Year 7. It's good for our advertisers.
24487 It's good for all aspects of the criminal and social justice system -- and as the Chief Justice said, in The Globe and Mail, today, "This country is already leading the way in that area" -- and we think this channel can only help and support that.
24488 We thank you for your time today.
24489 THE CHAIRPERSON: Thank you, Mr. Byrd.
24490 I feel a duty to remind you that you cannot, at this stage, file major changes to your applications. We have had questions -- have asked questions of clarification. We understood your explanation about Category 5, et cetera. But in the call for applications which was issued on the 4th of February, 2000, which is Public Notice 2000-22, it said the following, at paragraph 6:
As the minimum levels of Canadian content and other commitments, including the nature of service, will be considered on a competitive basis, for Category 1 services, the Commission emphasizes that the applicant should not expect to be permitted to change their commitments after they have filed their applications. (As read)
24491 So, it would be very difficult for us to -- certainly, your explanations are on the record, et cetera -- but to have the complete change of your application.
24492 Now, Mr. Byrd, I'm told by the staff that you have filed your application, initially, on an Application 2 -- Category 2 form.
24493 Was it filed as well as a Category 2?
24494 A number of applicants have filed Category 1 services and said, "If it's not licensed as Category 1, consider it a Category 2 application, as well".
24495 Is that the case, in your case?
24496 I don't have the covering letter or any indication. I don't have your full application with me.
24497 MR. BYRD: I will ask Hans to take that question.
24498 MR. JANSEN: No, Madam Chair --
24499 THE CHAIRPERSON: You didn't.
24500 MR. JANSEN: -- we didn't file it as a Category 2. It's a Category 1 application. And --
24501 THE CHAIRPERSON: It is.
24502 MR. JANSEN: -- we noticed that was a certain form, and the representative of the CRTC, in the Toronto office, said that it would be all right, so we filed it as we did.
24503 THE CHAIRPERSON: Thank you.
24504 We thank you for your patience. We have had a long two hours early on Monday morning, and we will see you again, in the following phases.
24505 Thank you.
24506 We will now take a 15-minute break.
24507 Nous reprendrons dans 15 minutes.
--- Upon recessing at 1030 / Suspension à 1030
--- Upon resuming at 1050 / Reprise à 1050
24508 THE CHAIRPERSON: Welcome back to our hearing.
24509 Nous vous resouhaitons la bienvenue à notre audience.
24510 Monsieur le Secrétaire, s'il vous plaît.
24511 Mr. Secretary, please.
24512 MR. CUSSONS: Madam Chair, the next application on our agenda is by The Sports Network Incorporated for a new Category 1 service, to be called "The Women's Sports Network".
24513 There's a maximum presentation time of 20 minutes.
24514 We have Mr. Rick Brace and his team.
24515 Mr. Brace.
PRESENTATION / PRÉSENTATION
24516 MR. BRACE: Thank you.
24517 Good morning, Madam Chair, and good morning, Commissioners.
24518 I am Rick Brace, President of NetStar Sports and Senior Vice-President of CTV Sports and the Outdoor Life Network.
24519 I would like to introduce you to our panel and provide you with some background and strategy for WSN, the Women's Sports Network.
24520 On my left is Trina McQueen, Executive Vice-President, CTV, Inc.
24521 Next to Trina is Pat Cross, Vice-President, Human Resources, NetStar Communications.
24522 To my right is Nikki Moffat, Vice-President, Finance, CTV Specialty Operations.
24523 Directly behind her is Alonna Goldfarb, Executive Vice-President and General Counsel, Goldfarb Consultants.
24524 To her left is Monique McAlister, legal counsel, Goodman, Phillips & Vineberg; Elizabeth Duffy-MacLean, Director, Business Affairs, NetStar Communications; and Keith Pelley, Senior Vice-President, Programming and Production, for TSN.
24525 At the side table is Ivan Fecan, President and Chief Executive Officer, CTV Inc., and Kathy Robinson, partner, Goodman, Phillips & Vineberg, legal counsels to CTV, and member of the CTV Board.
24526 CTV, NetStar and our specialty services bring to you, the Canadian public, a very successful track record of great programming and strong support of Canadian culture.
24527 With our experience, in the genre of sports television, we have found that there is a need for a new sports service.
24528 WSN, Women's Sports Network, will be a 24-hour-a-day sports television specialty service, dedicated to showcasing the events, the achievements and the talent of women in sport.
24529 It is a service that represents the significant increase in women's interest and participate in sports, and it's a service that not only represents a new growth area for television but an area that I am passionate about: sports television.
24530 Yes, WSN is my idea -- and here's why.
24531 I have loved sports and sports TV since I was a kid. It's great entertainment. But I also believe in the power of sport to motivate, to inspire and to educate. When I was a kid, playing hockey with my friends kept me off the street corner and watching sports gave me heroes and inspired me to achieve my goals.
24532 Now I see my niece participating and enjoying sports the way I did. I saw the sparkle in her eyes as she received autographs from each member of our Women's Gold Medal hockey team, fresh from celebrating their victory. Sport is building her confidence, her self-esteem and the pride in her country -- and that's something I would like to see everywhere. WSN can help to make that happen.
24533 It will be a service spearheaded by and for women, to highlight women's sports and the type of programming that will further enlighten and encourage Canadian women to participate in and enjoy sports.
24534 In the last decade, women's sports have grown immensely.
24535 In 1990, Canadian women won the first World Hockey Championship ever played.
24536 Three years ago, the Women's National Basketball Association didn't even exist. The league now has grown from eight to 16 teams.
24537 Women's pro golf events have more than doubled over the past 20 years and, now, Canada's top golfer, Lorie Kane, is becoming a household name.
24538 This incredible growth means that women's events are competing head to head with the events that already fill our sports schedules. We now lack the shelf space to air all of the programming available.
24539 For example, yesterday, both the PGA World Championship tour and the Ladies' Professional Golf Association's (Oldsmobile Classic) event ran in overlapping times. Because TSN had committed to the PGA event and no other network chose to show the LPGA event, it wasn't televised.
24540 Therefore, we find ourselves addressing the evolution of this new niche in television: women's sports.
24541 Sports networks have been instrumental in ensuring of their tiers. They have high audience appeal and offer exceptional entertainment value. WSN will add that valuable sports mix to this new tier, ensuring that the roll-out of digital is as strong as possible.
24542 At a wholesale rate of 16 cents, in Year 1, holding at 19 cents, in Years 6 and 7, WSN offers one of the lowest rates amongst the current applicants.
24543 WSN will add to the diversity of the Canadian broadcast mosaic. We will air over 2,000 of original programming per year, many of which are high-quality professional events, either played by women or appealing to the female viewer, that are simply not televised.
24544 This scenario repeats time and time again.
24545 WSN will accommodate this programming, ensuring that there will be a future for women in sports and sports television.
24546 Canadians will have the opportunity to see and celebrate the achievements of female athletes, and dedicated sports women will have the opportunity to share a national stage with their male counterparts.
24547 Our interactive strategy is a key component to WSN.
24548 Sports Web sites are among the most popular on the Internet, and almost half of the Internet users looking for sports information are women.
24549 WSN will incorporate this growing phenomenon into our overall schedule by producing original Canadian programs and creating interactive programming opportunities.
24550 We will benefit from the knowledge and infrastructure of the successful CTV and NetStar interactive models, using the evolving digital technology to maximize our ability to entertain and educate our viewers.
24551 With these exciting opportunities at our doorstep, the future of television is unfolding before us.
24552 To address more of the key elements of this service is the Executive Vice-President of CTV, Trina McQueen.
24553 MS McQUEEN: Good morning.
24554 Our research and our focus groups show that women enjoy different sports from men and, most importantly, women enjoy sports that are presented differently.
24555 The results from our Goldfarb research indicate that women in the 18-to-29 age group are especially supportive of WSN. Almost 60 per cent said they would be likely to watch -- and, of all the respondents, more than half would watch WSN, on any given day.
24556 And the more that women understood that they would hear personal stories of sports champions, personal advice sports heroines and that women would be the main hosts and presenters of the channel, the more interested they became. Our own personal experience confirms this. At NetStar, the idea of WSN has created a real buzz. Women who would never be interested in TSN have been approaching Pat Cross and Rick Brace about this channel.
24557 As a programmer, I have noticed the differences too. The big male premium sports, like hockey and baseball, really depend on fan loyalty. If the Leafs are in the playoffs, the Toronto audience inevitably goes up, even if the hockey match isn't that great.
24558 But many viewers can watch women's sports without identifying with a particular team just to see the power and the beauty of the athleticism. Then the viewers find the stars and the champions with which we identify -- from Barbara Ann Scott to Nancy Greene, Silken Laumann to Sandra Schmirler to Manon Rheaume.
24559 These champions become the healthy heroines for both ordinary women and they inspire future champions. It is a virtuous circle. But to start that circle, the women have to be seen. The poet William Blake wrote: "we become what we behold", and this is the social mission of WSN.
24560 One of Canada's brightest Olympic stars is water polo player Waneek Horn-Miller. She summed up what WSN is all about when she said:
"I want to be one of the ones who succeeds. I want to show young native athletes that they can achieve. That's what drives me..."
24561 And that's what drives us -- to make WSN succeed.
24562 A key element in that success is that this service will be run by and for women.
24563 Pat Cross, our Vice-President of Human Resources, will tell you more about that.
24564 MS CROSS: WSN will also ensure that women play key roles in this progressive and unique service. We are dedicated to advancing this important issue that is a challenge for the whole television industry.
24565 Currently, women occupy only approximately 16 per cent of senior roles in Canadian television, and of that an even smaller proportion in the sports field. Although we have over-achieved the industry averages with regard to the advancement of women, and we are proud of that, the ratio of men to women seeking and qualified for jobs at TSN and RDS is still much higher than we would like to see.
24566 It is critical for the success of WSN that women take the lead in on-air roles and make the key decisions in management, production, marketing and sales. As part of our mandate, WSN will create an environment that will provide an expanded talent pool for the industry by fostering a new generation of women on-air talent and programmers, producers, directors and marketers who are highly skilled in both television and interactive content delivery.
24567 To achieve our goals we will build on our mentoring and career development initiatives, such as NetStar's successful "BEST" program, which provides internships and job placements in all facets of sports broadcasting.
24568 WSN is committed to developing the talents and careers of young Canadians, especially women, who want to break into sports television and the future of interactive broadcasting.
24569 We have good stories to tell about how we have advanced women into sports on-air and behind-the-scenes positions. WSN will allow us to fast forward this progress, and the best is yet to come.
24570 MS McQUEEN: In spite of our passion for this channel, we are not in front of you as social activists. We want to have a successful business, and we believe that WSN is the television of the future.
24571 A women's sports channel was not possible a few years ago. Today it is a business opportunity.
24572 There is a screen in front of you that shows you the incredible growth in women's participation in sport. Most importantly, these increases have occurred in the last four years.
24573 Here are some numbers for particular Canadian sports. Look at the hockey growth. It quadrupled in the last decade. And participation in soccer is up 35 per cent. We hope in the question period to have a chance to tell you the exciting story of women's curling.
24574 Women are making it to the front page of the sports section. This is yesterday's Citizen. And there are plenty of other headliners: the golfer Lorie Kane, the rower Emma Robinson, hockey star Cassie Campbell, and of course our flag bearer for this September's Olympic Games, Caroline Brunet.
24575 As Carol Anne Letheren, CEO of the Canadian Olympic Association, wrote to you: "Currently, men's sports have more hours of television time by a ratio of 15:1. Yet the Canadian Olympic team in Atlanta had 51 per cent women athletes" -- a higher percentage, by the way, than the Americans.
24576 Advertisers are seeing this future too, and we have positive interventions from two of the biggest ad agencies. Ann Boden, of OMD, which is the largest media agency in this country, said:
"With the growing appeal of women's sports -- the genre is under-represented. It would serve the general public and the advertising community well to give the public the ability to see these great athletes in action."
24577 We have an abundance of programming. Our target audience is enthusiastic and the advertising community is in full support. With that background, we have developed the WSN schedule. To lead you through the program schedule and strategy, here is Rick Brace.
24578 MR. BRACE: Thanks, Trina.
24579 Sports television has come a long way since the 1980s when cable opened up new opportunities in the Canadian television industry. TSN, Canada's first all sports network, led the way, becoming this country's most successful specialty service. It is from the strength of this team, now combined with the extensive experience of CTV, that WSN is born.
24580 WSN offers diversity to the Canadian audience, building a schedule from some of the 1,000 hours of professional sports programming presently available -- programming that is not seen on any of the current sports networks.
24581 WSN will have a solid base of live professional events from which to choose -- all quality sports with growth potential.
24582 There is an abundance of amateur sports that appeal to our viewers, such as international soccer, gymnastics, track and field, and Canadian college sports.
24583 And WSN will offer sport-oriented programs that appeal to our core audience of women: biographies, instruction and strategy, personal development, news and sport adventures; programs such as Women on the Edge, featuring women's extreme sports; The Puck Stops Here, hockey instruction and strategy; and WSN Profile, a biographical look at females in the sporting world.
24584 We will air six to eight hours of original programming per day, with a solid foundation of Canadian programming. Over the seven year licence term we will spend $14 million of the total programming budget on independent and freelance production. In year 1 alone, WSN is targeting four independently produced series, with close to 100 episodes. And we will continue to count on the support of the independent production community, averaging 525 hours of original Canadian programming per year over the licence term.
24585 Our flagship program, WSN Clubsport, is the foundation for our well-developed interactive strategy. Sport easily lends itself to interactivity. As you will see, WSN will enrich our live events, news and magazine programming with innovative and accessible interactive initiatives. Women from across this country will be able to communicate through the WSN billboard. They will be able to customize their viewing preferences and will even be able to access a virtual personal trainer.
24586 As we follow the evolution of the digital set-top box technology, our audience will be able to involve themselves in a community of WSN viewers. And because WSN and WSN Interactive are genuinely unique concepts, they will be the first of their kind to benefit women in North America.
24587 This is our vision for WSN.
--- Video presentation / Présentation vidéo
24588 MR BRACE: We have developed an attractive and affordable new sports service that adds dramatically to the appeal of this new digital tier. The programming that we plan to air is already available, but is not currently seen. WSN will accommodate this programming, adding diversity to the current Canadian sports offerings, as does the new and original Canadian productions that we have planned. Interactivity is an integral part of our programming, as digital technology allows us to entertain, educate and communicate in the new medium.
24589 The increased exposure for women's sport will showcase positive role models for our youth and will only serve to grow this genre.
24590 We have a strong team, a solid infrastructure and offer a reasonable business plan to assure that WSN will succeed.
24591 I will ensure that when I leave I will be replaced by a woman -- and women who will be the voices of WSN.
24592 The future of television is unfolding before us. WSN is the future for women's sports and sports television.
24593 Madam Chair, Commissioners, thank you and will be glad to answer your questions.
24594 THE CHAIRPERSON: Thank you, Mr. Brace, and your colleagues. Welcome to our hearing.
24595 Some of you we have become close friends with over the last two weeks.
24596 Madam Bertrand.
24597 CHAIRPERSON OF THE COMMISSION: Good morning. I will have the pleasure of trying to clarify your application. As you well know now, especially you, Ms McQueen and Mr. Fecan and Ms Robinson, who have been with us as the Chair was saying, a few times, you know the order of questions.
24598 So we will start by the general ones, but this morning given that on most of the questions you have had an opportunity to really clarify your position and your ideas, what we could do is play the game that Commissioner Wilson has proposed or had dreamt about, I think this morning it would be appropriate.
24599 What I would like though, I wouldn't want you to feel that you haven't had the chance to really express it, there's a nuance you want to bring, feel free to do it, otherwise I will just move along from one question to the other. Then we will kind of really focus on the application itself. Most of it is pretty clear, but it's on nature of service. It's always important to really have a full understanding of what you are aiming at.
24600 So, first question, criteria -- do you have anything to add to the views that have been expressed up to now by the group?
24601 MR. BRACE: In terms of, sorry, interactivity?
24602 CHAIRPERSON OF THE COMMISSION: The order of criteria, the prioritization of criteria.
24603 MR. BRACE: This will come as no surprise to you, Madam Commissioner, but we subscribe to -- I think that the answer, the response that Ms McQueen gave several weeks back, it seems like a long time ago now, but there are really three things that we think are vitally important and one that I think stands out above all of the others.
24604 Certainly, attractiveness would be that one. We think that in an effort to build digital, to roll-out digital to make the whole process work that the service has to be attractive to consumers. It has to be something that is going to be accepted and in that has to be an affordable price. It has to be something that is seen as good value.
24605 I think an interactive component is vitally crucial to achieving kind of that new level in broadcasting. I think we have tried to address that in our WSN application with the many features that we intend to include. I think that when you bundle all of those together and add in the diversity, is it bringing something new to the marketplace?
24606 If we can answer those questions, and we believe we have at WSN, and at the end of the day we will, in fact, have an attractive service which once again is the headline and the highlight of what we want to put forward as the major criteria.
24607 CHAIRPERSON OF THE COMMISSION: Is for you interactivity really like not strictly an added value, but really part of the definition of the service you have created or you are proposing here?
24608 MR. BRACE: Yes. It's funny, I was talking to someone a couple of weeks back, it was a salesperson, as a matter of fact, and they said "If something's added value, does that mean that the original thing had no value?"
24609 Now, I would suggest that our service as a broadcasting service on its down does have a tremendous amount of value, but as opposed to calling it value added or added value, interactivity for us is an integral part of the service.
24610 We think that what we are creating is a sense of community, where we can bring the viewers to the screen in a meaningful manner. The two-way communication that eventually set-top boxes will offer, the ability to transact, the ability to ask questions, the ability to gather information, so we have emphasized in our program schedule and I think in our dissertations here that WSN Clubsport is really the focus of our interactive strategy going forward, but obviously the ability to access information, to gather stats, which sport fans find so vitally important, will be available in all of our programming.
24611 I think the other thing that is really key in all of this in terms of interactivity, is that along the evolutionary trail that we take with the set-top boxes we can't alienate our viewers. And in order to do that we have to make sure that our Web site mirrors and, in fact, leads the way in terms of offering interactivity opportunity.
24612 Our vision is that over the next five to six-year period, as true convergence begins to take place, what you are going to see is that people will no longer need a PC to activate or to access the interactive components. They will be able to do it through the set-top box with their converter, with their tuner. We intend to follow that evolutionary path.
24613 I guess the short answer to the question is very simply that it's an integral part of our program strategy.
24614 CHAIRPERSON OF THE COMMISSION: We will come back to interactivity because I would be curious to understand how you approach this particular project because one would suspect that the relationship of that type of technology and women might be different. Maybe it's wrong to think that way, but that would be kind of an hypothesis that we could put forward and I would like to hear from your expertise and knowledge about it.
24615 On this here, does that mean that until you reach that kind of generation of interactivity which you plan or hope for, the fifth or sixth year, does that mean that the service you have imagined will not really fully at maturity, in a sense, that the fact that you will have to really rely heavily on the Web site being a separate activity from the viewing itself, that it's not totally what you had in mind?
24616 MR. BRACE: No, not at all. In fact, the research and the conversations we have had indicate that in fact the new generation of set-top boxes, the advanced set-top boxes, if you will, are going to begin to roll out in six months.
24617 We have had demonstrations and discussions with Bell ExpressVu who demonstrated their next generations of set-top boxes which in fact do offer two-way communication. It's limited, but they do offer two-way communication.
24618 That will then evolve into a situation where hard drives are built into the set-top boxes to allow you to download information.
24619 So, out of the gate we intend to use the latest technology available. We will have modest two-way communication. We will have things like the personal virtual trainer that we talked about. You will be able to access information. You will be able, for example, to sign your daughter up to hockey school, or you will be able to access information and discuss carpooling with people in your community.
24620 CHAIRPERSON OF THE COMMISSION: To discuss what?
24621 MR. BRACE: Carpooling in order to get your kids to practices. It's one of those four o'clock in the morning things that as parents we have all had to do from time to time.
24622 So, that's the intent out of the gate, is that it will be information driven. It will drive the set-top box. It will build the digital world.
24623 I think that what I was referring to in terms of Web site is that for people who don't have the set-top box, we would want to make sure that our Web site mirrors what we are doing with the set-top box because it's an excellent marketing tool. It makes the product available and can show you just how you can become involved with your television set and, hopefully, subscribe to our service.
24624 CHAIRPERSON OF THE COMMISSION: But then the full deployment of the interactivity would come with other generation which is five to six years, but the fact that it would be inscribed in the first generation up, that will get supposedly from six to twelve months or eighteen months, that would be already close to the concept you have.
24625 MR. BRACE: Absolutely, and it will dovetail with the launch of the service in September of 2001.
24626 CHAIRPERSON OF THE COMMISSION: Thank you. So we will come back with the interactivity and technology and women, but for now the second question in the line of general questioning is the implementation of service.
24627 Do you have other views than the ones expressed in terms of when should Category 1 be launched and should there be a life or an expectation to launch within a certain time and do you have a different view from what has been expressed already? Category 1 is one thing and what about Category 2?
24628 MR. BRACE: We would agree with what I think has become the general consensus, that the important point to deal with here is we need a common roll-out, we need to be able to launch services as a package, as a basket of services, in order to make best use of our marketing ability, of demonstrating not the value of any individual service -- obviously that's important -- but also the value of the entire package to consumers. That's what's going to be truly attractive.
24629 I don't think you are hearing anything that is really different from the general consensus of what you have heard before. That's for the Category 1s obviously.
24630 In terms of Category 2, that is going to be a situation where obviously where it is going to be a major negotiation with the distributors in order to get launched, so it's going to be, I would estimate, a little less organized and structured than what the Category 1 services would be.
24631 I would think, just to wrap up an answer for you, in terms of the Category 1 services, we think it's absolutely integral or absolutely necessary that they launch at the same time together to get the best value.
24632 CHAIRPERSON OF THE COMMISSION: I understand that the Category 2, you are saying there's subject to negotiation, but do you see that there would be a necessity there as well to have maybe a longer term, but yet a date for being launched?
24633 MR. BRACE: Absolutely. I think we do have to set some deadlines. Of course, the Commission in its wisdom will do that, but we need to I think establish some deadlines in terms of the Category 2s as well.
24634 CHAIRPERSON OF THE COMMISSION: And what would you see as a reasonable deadline?
24635 MR. BRACE: I would -- rather than answer that myself, I think I would like to have Ms McQueen answer that as part of a general policy that maybe CTV might comment on.
24636 MS McQUEEN: Well, we are hoping, first of all, that some Category 2s will be ready to launch because an attractive package would include some of the Category 2s. I think we would probably -- as to a deadline, we haven't come to an absolute conclusion. We would like to introduce that in Phase IV when we intervene.
24637 CHAIRPERSON OF THE COMMISSION: We will be here. Independent producers, we have talked about that in previous meetings. Ms Robinson had proposed a definition first of what it would be and the affiliate and non-affiliate of producers. There is also the commitment that the project here is making specifically to independent production.
24638 Maybe we can deal with the first element first. Do you still think it's important to have a commitment towards independent producers? What's an independent producer in the sense of being an affiliate or non-affiliate? From there we will be able to pursue with more specific questions.
24639 MS McQUEEN: On the first, or actually your second question, of what is an independent producer. Again, we repeat the CTV position that 34 per cent ownership by a broadcaster makes a producer an affiliated producer.
24640 On the second question or the first question, which I believe was how much independent production will be present on this network, Rick.
24641 MR. BRACE: In terms of independent production, this is Canadian independent production now, we are looking at over the seven year term to spend a total of $14.2 million. That will rise to an average number of hours over the seven year term of 525, so we will start with approximately 300 hours of independent production and rise over the seven year term averaging 525 by the end of the licence term.
24642 CHAIRPERSON OF THE COMMISSION: The $14.2 million, is that a firm commitment or is it subject to a percentage that will vary from year to year, depending on --
24643 MR. BRACE: It's a firm commitment in terms of total dollars. We have also established a business plan that supports on it based on an allocation per year, which I would be happy to go through with you if you so require.
24644 CHAIRPERSON OF THE COMMISSION: And the ramping up of the hours goes from 300 --
24645 MR. BRACE: It goes from 300 to an average of 525, so it's obviously a little higher in year seven and the dollars follow that obviously to support that program.
24646 CHAIRPERSON OF THE COMMISSION: I see in your application that everywhere you talk about independent production and free lance which is somewhat a bit different. I can see that from an affiliated point of view. It may have some relevance, but I would think that there's a difference between free lance and in-house.
24647 The independent production usually doesn't mean free lance. It's an added component or element. That means that eventually you could have in-house production with free lance. Is that what it could lead to?
24648 MR. BRACE: No. The way we define free lance in our terms is our producers that we would hire to deliver the events, they may not have their own infrastructure in terms of capital expense and office, for example, although most of them obviously do, but they may not have their own edit facilities.
24649 This really refers to our remote productions where we would have to rent gear. They could be in charge of that production and run it on a free lance basis as a free lance production company and are not affiliated directly with our organization, for example.
24650 CHAIRPERSON OF THE COMMISSION: But the equipment, the technicians, would be yours?
24651 MR. BRACE: No. What I'm saying is that what we deal with -- in terms of mobile technicians, for example, if I use the TSN experience, the vast majority of them are actually hired from outside the community or outside the realm of our own walls. They are not staff, in other words.
24652 CHAIRPERSON OF THE COMMISSION: Okay. So it wouldn't be staff. It's not independent production in the sense that it's not like necessarily the big, large companies that we may know, but they come with their own staff and would rent equipment, if they don't have any. It's not necessarily yours that is involved.
24653 MS McQUEEN: That's right. We take the position that the free lance community is part of the independent community. These are people who have decided to make their way, not by affiliating themselves by a particular broadcaster but providing services to many broadcasters as they wish.
24654 Some of them do it because they are not interested in the business aspects of it. They just want to, especially in sports -- they love the genre. They want to do it. Others do it in between. I think this is one of the most valuable services. In fact, you may want to talk about this.
24655 People who have production companies, very small ones, who need the ability to do this kind of independent free lance work in between assembling their own productions.
24656 CHAIRPERSON OF THE COMMISSION: Well, I guess the importance here is to understand whether there's one person, the producer, there might be a free lancer who would kind of work within the facilities of CTV, for example, of TSN, and then eventually even work with staff. If it's all people outside, then whether it's a larger or smaller company, it can be assimilated, I believe, from the definition of what an independent production is.
24657 MR. BRACE: Yes, and that's the intent.
24658 CHAIRPERSON OF THE COMMISSION: Okay. So that's what I needed to clarify. Thank you.
24659 In terms of Canadian expenditures, our calculation and yours -- should I say the knowledgeable and real expertise of the Chair -- suggested that with staff that your level and your commitment and ours and our calculation comes to 53 per cent, which is the same. No question there.
24660 Where there is a question is in terms of the formula and making sure that in that domain, what is your position? Is it the same one as in the other cases of CTV where you feel that there is a need for that kind of high commitment to Canadian programming or one element?
24661 The second one is calculation. I see by the notes and your application that you are open to different ways of doing it, yet you would subscribe to the traditional way of doing it. What's your preference?
24662 MR. BRACE: To answer your first question, Madam Commissioner, yes, we believe there is a need to make a guarantee, to make a promise.
24663 In answer to your second question, we believe that the proposal put forward by the Commission would be acceptable to us. We have in fact offered some alternatives, averaging past the three year point, for example, in terms of the business plan. However, we are certainly open to discussion and certainly would be willing to accept what the Commission is proposing.
24664 CHAIRPERSON OF THE COMMISSION: You have suggested an alternative. Is it an effort to be creative for that new digital world or is it very relevant to the kind of programming or sports programming initiatives that might be different from other genres? What is the basis and what do you think should be our view?
24665 This is your moment to try to influence our deliberation. But also, you know, is there a relationship with the kind of programming you are proposing where you would need another type of flexibility than the one that has been discussed.
24666 MR. BRACE: No, I don't think so. The commitments are what they are.
24667 However, on maybe an opportunity to discuss maybe a recommendation, what we tended to look at was how the business plan unfolds. Obviously in the early years of a business it is just beginning. The expenditures that you are going to spend on Canadian programming as a percentage of overall revenues is going to be very high. You know, you are in a money-losing situation.
24668 So what we tended to look at was, because we are in a start-up mode, because we are in a situation where the subscribers are going to be relatively low, it is going to be a job. We have to invest to make this thing roll-out.
24669 Maybe a more equitable way of looking at it, if I could use that word, would be to average it a little later on in the plan as we approach kind of a break even or a more favourable picture in terms of the bottom line.
24670 So that is how we kind of looked at it. I think that under that formula it amounted to a 48 per cent commitment in terms of year-over-year spending as a percentage of total revenue.
24671 But having said that, obviously if the Commission, in its wisdom, looks to the seven year average as kind of the foundation to the process, which does account for 53 per cent in our terms, we are happy to accept that.
24672 CHAIRPERSON OF THE COMMISSION: The break-even assumptions brings a CP of 46 per cent where the other one brings 48 per cent.
24673 MR. BRACE: That's right.
24674 CHAIRPERSON OF THE COMMISSION: Don't you find that the break-even assumption might be somewhat -- a lot of flexibility but maybe too much flexibility from a regulatory point of view where you try to make an assessment of different applications and try to really choose the best proposal for the viewers but also for the broadcasting system as a whole. Don't you think that it is almost giving a blank cheque?
24675 MR. BRACE: Blank cheques are good. We like those.
--- Laughter / Rires
24676 MR. BRACE: What I would say is that we have looked at it from a couple of ways, from the seven years, three years in where we haven't broken even in this business plan as of yet and then of course the break even.
24677 So maybe going to the break-even formula is a little bit too generous and maybe the middle ground might be one that would be a little more acceptable.
24678 But, as I say, there is an experience in the sporting world that we have found that as time goes on you tend to kind of overachieve in that area anyway, because what you find is that viewers in Canada want to watch Canadian athletes and in terms of the expenditures that naturally translates into a higher portion of expenditure.
24679 So I don't think that there is a lot of debate that we really feel we need to have between those percentages. We think that all of them are doable and have offered some suggestions for your consideration.
24680 CHAIRPERSON OF THE COMMISSION: So you could live with either the traditional way or even the way that the Chair was talking about which gives more flexibility --
24681 MR. BRACE: Absolutely. Absolutely.
24682 CHAIRPERSON OF THE COMMISSION: Okay. Good. Thank you.
24683 That clarifies that, because I was wondering if it was -- and thank you for putting forward ideas. That helps in terms of not only in dialogue during the hearing, but really looking at this question from different ways and we hope and we are praying to come with the wisest solution at the end.
24684 MR. BRACE: We could assume the blank cheque formula is acceptable.
--- Laughter / Rires
24685 CHAIRPERSON OF THE COMMISSION: Nature of service.
24686 Of course it is women's sports, some might say and think that is clear enough. Well, in order to make sure that it is as clear as can be, I wonder if you could help us.
24687 Because I was really surprised to find out that major sports events are evenly watched by women and men. Mind you, it might be that no choice kind of situation.
--- Laughter / Rires
24688 CHAIRPERSON OF THE COMMISSION: Not that I can relate to that.
24689 MR. BRACE: That is exactly why we are proposing this service. We need choice.
--- Laughter / Rires
24690 CHAIRPERSON OF THE COMMISSION: Still, it's a fact. You know, unless you have a gun to your head to watch it, somehow there must be some -- it robs it in terms of taste I suppose.
24691 But if you take that as one element of information, and you couple that with your nature of service definition where you say "sports of interest to women", then we are back to TSN.
24692 MR. BRACE: And we really do need to clarify that. You are absolutely right.
24693 So let me tell you what the intent is, because I think that it was kind of a two-part condition of license that we were talking about in nature of service.
24694 I think obviously sports where women play the sports is fairly clear. That is fairly clear. But let me just even elaborate on that a little bit.
24695 What we are proposing is that both the two components combined -- in other words not mutually exclusive. So that what we are saying is that we are proposing a service where women are the principal competitors in the event or the co-principal competitors.
24696 Just to explain that a little bit, there are several events where women actually compete with male counterparts, like mixed curling, like equestrian events -- in fact in equestrian they actually compete head-to-head -- so you would have events that involve women as the principal competitor or the co-principal competitor.
24697 Then that has to be combined with the second part of our nature of service which talks about sports of interest to women.
24698 So understanding that we are not saying now that we are going to air NFL football and we are not going to air Blue Jays baseball and Expo's baseball and NHL hockey, what we are saying is our research has told us that women have interest more than their male counterparts in certain sports. Equestrian is a good example, curling is a good example, gymnastics is a good example. There are several examples where those are sports that we have seen where women have specific interest. Therefore, if we take the definition to mean that if we showed gymnastics it would be women's gymnastics that we would be showing.
24699 Beyond event programming our research -- and even on TSN what we have seen is that there is a bit of a different interest in terms of what women like to watch and it goes outside the realm of what I would call event programming.
24700 What our research told us was that women also like to delve a little more into the story behind the story. Biographies, for example, are important. I see you nodding, Madam Commissioner, I hope that you are agreeing with that assessment --
--- Laughter / Rires
24701 MR. BRACE: -- coming from a man especially, but it's not me speaking, it's our research speaking. I hope we understand that.
24702 But that what we are saying is that whether it is instructional programs -- and when I'm talking about instructional programs I'm talking about instructional programs that are specific to women.
24703 The game of tennis is a great example. Men play tennis much differently than women play tennis. The men's tennis game, as you are aware, is much more of a heavy serve and very few rallies -- in fact it's far less interesting than women's tennis, to be honest with you -- and women's tennis which, of course, is a much longer, it's a softer serve but the rallies last much longer, it's far more what I would call strategical in the way they play.
24704 So that is the kind of thing that we are proposing. Women will either be the co-principal or the principal competitor in all of our programming, or performers or talent on-air, whether it is an instructional program or whether it is an event program.
24705 That, I hope, clarifies the nature of service.
24706 CHAIRPERSON OF THE COMMISSION: Well, it clarifies certainly, being a tennis player, the difference between men and women. I have experienced that, not only on the court as a matter of fact.
--- Laughter / Rires
24707 CHAIRPERSON OF THE COMMISSION: But let's get back --
24708 MR. BRACE: We would program behind the scenes in a tennis tournament.
24709 CHAIRPERSON OF THE COMMISSION: Let's get back to the nature of service.
24710 What I understand is you would be prepared to take sports of interest to women -- comment on dit ça deux points?
24711 THE CHAIRPERSON: Colon.
24712 CHAIRPERSON OF THE COMMISSION: Comme elle dit -- as she says, as the Chair says -- and then, quote/unquote, that would mean sports that women play or sports where they are the principal competitors. Like it could be mixed.
24713 MR. BRACE: And if we leave you with no other message, we will not have TSN2. It will not be TSN2, this service. I guarantee that.
24714 CHAIRPERSON OF THE COMMISSION: So you would be prepared to have --
24715 MR. BRACE: Absolutely.
24716 CHAIRPERSON OF THE COMMISSION: -- a condition of license.
24717 MR. BRACE: Absolutely.
24718 CHAIRPERSON OF THE COMMISSION: Good. That helps clarify.
24719 MS McQUEEN: In fact, I think -- I'm sorry, I didn't mean to interrupt.
24720 But in our response to an intervention by Sportscope we did set out the wording which we could read exactly the license condition that could be acceptable, but Rick has given you the general nature of it.
24721 CHAIRPERSON OF THE COMMISSION: Thank you.
24722 So that would be a condition of license you would be prepared -- which is the sense you had meant there but that wasn't really clear at the reading.
24723 MR. BRACE: Absolutely.
24724 I think we confused the Commission with talking about sports of interest to women, which could have been general interest, and -- yes.
24725 CHAIRPERSON OF THE COMMISSION: Well, especially with the kind of argumentation you had about where you came from and the kind of facts and data you had, over the years, in terms of the interests of women --
24726 MR. BRACE: Absolutely.
24727 CHAIRPERSON OF THE COMMISSION: -- for sports, and then you say, "Well, will we have the same kind of schedule?"
24728 You talked about the fact that women are interested in beyond the scene or to go deeper into some elements; like, they would be interested in the stories of the athletes, how they got there and instructional type of programs.
24729 If we look, especially at 7, as you know, it's been one element that we have tried to really have a better understanding, especially when, at first glance, that's not the natural kind of categories of programs you would attach to the genre proposed. So, of course, when you come to sports, you don't think theatrical feature films, first. You know.
24730 So you are proposing an average of three to six hours per week. Is that a ramp up? Is it depending on the situation?
24731 MR. BRACE: No. Really, what that addressed was the ability to repeat maybe one feature on a weekly basis kind of thing.
24732 It's an interesting discussion on Category 7. As you put it: how does that play into a sports service?
24733 I guess, for us, there's, very clearly, an attractiveness for that kind of programming in anybody's schedule.
24734 What we thought that we would like to include, in a minor way -- and that number, by the way, calculates to in and around 3.5 of our schedule, at a maximum, that three to six per cent. So it's below many of the other applicants who are kind of asking for the same thing.
24735 But, once again, when we even refine that a little more -- and understanding what we are dealing with here are feature films that would be about women's lives and women in sports lives where they are -- obviously, the principal component of the story, that it would add to it.
24736 We have gone through kind of the "Blockbuster catalogue of films" to see just what's available, and, in truth, there are a very limited number. There aren't a lot of those types of films available. But where they are available, and where they aren't first-run, where we are not taking away from other services, we would like to include them.
24737 In addition, it gives us the opportunity, down the road, if there were movies made for TV on Silken Laumann, on Sandra Schmirler, who's now, you know, a Canadian hero, Cassie Campbell, you know, any number of given female athletes, we would like to have the opportunity to play that on this service.
24738 CHAIRPERSON OF THE COMMISSION: So, would it be possible, within the -- because, you see, the way you have described sports of interest to women, it can be in sports where they compete with men. Where, here, in Category 7, the way I understand your description, it would be entirely devoted to women.
24739 MR. BYRD: That would be -- it's sports stories that go to the lives of women, women sports athletes.
24740 CHAIRPERSON OF THE COMMISSION: Okay. So you would be prepared to accept --
24741 MR. BRACE: Absolutely.
24742 CHAIRPERSON OF THE COMMISSION: -- a condition of licence to specify that here.
24743 And you are saying that, from your calculation -- and looking at your schedule, indeed, it doesn't seem to be, you know, like across every prime time --
24744 MR. BRACE: No, we are not trying to --
24745 CHAIRPERSON OF THE COMMISSION: -- week days; it --
24746 MR. BRACE: We are not having --
24747 CHAIRPERSON OF THE COMMISSION: -- seems to be limited --
24748 MR. BRACE: -- "movie of the night", for example. That's not the intent.
24749 CHAIRPERSON OF THE COMMISSION: And would you accept a condition of licence to limit the percentage you could run there?
24750 MR. BRACE: Yes, absolutely.
24751 CHAIRPERSON OF THE COMMISSION: And what would be your suggestion --
24752 MR. BRACE: We would suggest that maybe 5 per cent would be at the maximum.
24753 CHAIRPERSON OF THE COMMISSION: Okay. Thank you.
24754 MS McQUEEN: We don't want to leave that out because, again, one of the things that we have seen, both in the research and in good programming efforts, is that, in this kind of service, you have to tell stories. You really -- that's how you make the breakthrough, in sports television, between men and women is telling stories.
24755 And one of the best examples of that is the NBC olympic coverage from Atlanta, at which they made the decision that they wanted to attract women -- which is interesting because of advertisers, which relates to this -- and they were criticized by the traditional male sports viewers for not just going in there and showing the action but, in fact, making these people humans and understanding their struggles and their triumphs, that that was a huge breakthrough for them, in terms of the audience to the olympics -- and Keith probably would have more statistics on that.
24756 So, drama -- showing a story like -- actually, CTV has done the Silken Laumann story, but showing that is an important part of making the athlete part of the story. It's not just the power and the beauty, it's "Who is she? and "Am I like her?" and "Could I be like her?" that is very, very important.
24757 MR. PELLEY: Well, there is no doubt that sports is about superstars.
24758 If you take a look at Elvis Stojko and what he's been able to do in figure skating, Jacques Villeneuve, in car racing, and Tiger Woods, perhaps the biggest phenomenon that's ever hit the sporting world and how that has motivated children and kids around the world to play golf, he has been a role model. And in one of the intervention letters, Cassie Campbell states that she almost quit hockey. She felt pressure to quit the sport because it wasn't being accepted, and she had no role models. Then she looked at Silken Laumann and Susan Auch, two olympian greats, and that was the motivation for her.
24759 And that's really what WSN is about. It's more than live-event programming. Definitely, the biographical-type programming, the WSN profile, the long-form documentaries are part of it -- and that is different from TSN. In fact, it's quite different. And our researched showed that women definitely liked the biographical programming more than men and, as a result, on TSN, it's not very -- it's not commonplace.
24760 But we don't want that to happen. The Cassie Campbell type stories is what we are trying to do and so that, whether it be Rick's niece of Pat's daughter, they will have role models, in the future -- and you certainly see that that's needed with the participation of women's sports, at this time.
24761 CHAIRPERSON OF THE COMMISSION: Thank you.
24762 The program schedule you propose is the one of Year 5. I was wondering how different it would be from the first four years.
24763 Would that be the same, with more repeats? What would be --
24764 MR. BRACE: It would be substantially the same. And I think that what we have designed in our business plan is obviously dollars to support that.
24765 I think what we wanted to do, though, was show -- was give the Commission a glimpse of what we thought was kind of a service that was now maturing.
24766 In terms of repeats, however, though, our commitment is to do six to eight hours a day of original programming, and I think that that is going to be a key component. Even out of the gate.
24767 If you are dealing with event programming, especially in sports, it doesn't have much of a shelf life. You know. Repeats don't really do a lot for you.
24768 So, if, for example, we were to do an event a day -- events generally last three hours, and, then, with WSN Clubsport, which is another program that we do on a daily basis, it's another 90 minutes -- we are getting, very quickly, to the six to eight hours that we are committing to. Add in some instructional programs which we intend to produce.
24769 So, the five-year schedule was really just to kind of focus on something down the road that looked a little more mature, that would maybe demonstrate our ability to do interactive at a higher advanced level than out of the gate, but it won't be substantially different.
24770 CHAIRPERSON OF THE COMMISSION: So what would be the difference, if I was to tune in?
24771 If you were granted a licence in Year 2 and what you present here in Year 5, I would have about the same amount of original programming. What would be different would be the diversity of sports that are presented? Or --
24772 MR. BRACE: I think what we have got in our schedule -- and you know, people, when they do these schedules, tend to put their best foot forward -- and so, what we have got in these schedules are more properties that we would be able to acquire as time goes on. They may not be available to us out of the gate, necessarily; we would acquire them as time went on. But I emphasize it wouldn't be substantially different.
24773 CHAIRPERSON OF THE COMMISSION: So it would be very similar?
24774 MR. BRACE: Very similar. Absolutely.
24775 CHAIRPERSON OF THE COMMISSION: In terms of programming, you are talking about the six to eight hours original programming.
24776 How much will be American programming?
24777 MR. BRACE: We looked at that, and what we are anticipating is that of the foreign programming, the ratio would be 70 per cent U.S. and 30 per cent "other", if you will.
24778 CHAIRPERSON OF THE COMMISSION: And in the 70 per cent American, how much of this would be ESPN?
24779 MR. BRACE: Oh, probably very little.
24780 What we are going to have to do with this service is -- and this goes, I guess, to the availability of programming -- is go out and carve new relationships directly with the organizations.
24781 For example, what we would be looking to do is acquire programming from the WTA, the Women's Tennis Association, the LPGA, the Ladies Professional Golf Association, and those would be deals that were done directly.
24782 In terms of a sport that we would use, women's sport that we would use, from ESPN, I would estimate that it would be somewhere -- this is really -- it's not a question I anticipated, to be honest with you, so it's going to be a rough estimate -- but I would suggest that it would be somewhere in the neighbourhood of 50 to 75, maybe 100, hours a year. But maybe what I would like to do is ask Mr. Pelley, who has a real knowledge of the ins and outs of the ESPN catalogue, to maybe help me out with this one a little bit.
24784 MR. PELLEY: Sure. What we would probably get from ESPN would be more the extreme-type programming.
24785 What has happened, in the past, is most of the rights holders want to deal direct with Canada -- and we found that, at TSN.
24786 For example, the Professional Golf Association, the PGA, where we used to get our PGA golf through ESPN, we now deal direct with the PGA. And that's similar for the big properties for WSN.
24787 For example, Rick talked about women's tennis. And there's now 62 events that are available in women's tennis. As of right now, there's only about 10 that are broadcast on the Canadian networks. And that would -- we would have carve out our own relationship, with the WTA, to get rights for that.
24788 Similar to the LPGA. We have Lorie Kane, one of the biggest stars in Canadian sports, at this particular time, and there's over 40 LPGA events that are available, and, again, only 20 are seen. And that, again, we would have to carve something out with LPGA.
24789 So, when we are talking about ESPN and what we would acquire from ESPN, we are really talking about the extreme-type programming, which is the triathalons, the cycling, mountain biking and so forth. But all of the big sports, in terms of LPGA, WTA tennis, even figure skating and gymnastics, those we are not able to acquire through ESPN.
24790 So I agree. I concur with Mr. Brace that there wouldn't be a lot of programming from ESPN on this service.
24791 MR. BRACE: What I would like to emphasize, as well, is that what is important to understand is that, even in the U.S. acquisitions that we made, whether it be ESPN, whether it be directly with the organizations or with companies like IMG, what we are really looking for here is to showcase the Canadian athletes.
24792 Lorie Kane, for example, is part of the LPGA, and by virtue of that the vast majority of what she does is played in the U.S., which would be considered foreign content in our reporting to the CRTC. But I think there is no doubt that as our premier golfer we would want to show as much of Lorie Kane as we possibly could.
24793 It should also be noted that in figure skating -- Canada has an incredibly strong tradition, as you know, in figure skating, especially with athletes from Quebec. They compete in world events, U.S. events, for the most part. Probably the Canadian content of what they do on an annual basis is relatively limited. It is just another important part of our schedule that we don't want to kind of let slip through the understanding of the Commission.
24794 MS McQUEEN: If I could say one more thing about ESPN, one of the reasons they don't have the product is because they don't have a women's sports network. This would be a world first. It would be a Canadian pioneering venture.
24795 CHAIRPERSON OF THE COMMISSION: Thank you. I will touch upon that. We were curious about that as well.
24796 But to clarify this, you start with 30 per cent Canadian content in year 1, and you ramp up to 50 per cent. You say that foreign -- that means 60 per cent at first, and eventually 50 per cent -- will be divided up between 70 per cent U.S. and 30 per cent non-U.S., among which, in the 70 per cent, it will be between 50 to 100 hours coming from ESPN. What would be the percentage? Would it be a ramp-up as well? Or, will it be kind of depending on the events and --
24797 MR. BRACE: No. In point of fact, I think -- and, once again, I do emphasize for the record that that is an estimate. It is not a number that I have calculated.
24798 However, ESPN does not acquire or air a lot of what you would call women's sports programming, so that even the opportunity to acquire more is not there. I think that what we find generally is that we go to varied sources in order to acquire -- even for TSN, rather -- to acquire programming from other sources.
24799 I can say, for example, which might create an understanding, that with TSN we have settled at about 600 hours a year of programming from ESPN on an annual basis. That has been consistent now for, I would estimate -- Keith may correct me, but I would estimate for at least the last five years.
24800 Is that correct?
24801 He says that's correct.
24802 CHAIRPERSON OF THE COMMISSION: Okay. Given the nature of the programming of ESPN, you don't expect to get lots from them?
24803 MR. BRACE: No.
24804 CHAIRPERSON OF THE COMMISSION: No more than 50 to 100 hours, you said, per year, depending --
24805 MR. BRACE: As I say, as a rough estimate, yes.
24806 CHAIRPERSON OF THE COMMISSION: What about the overlap between TSN and WSN and CTV? Would you be prepared to consider a limit on the overlapping from one channel to the other, given that diversity is one element pursued here not only by the Commission but it seems to be in your criteria one element that you see as being very important?
24807 MR. BRACE: We think it is incredibly important. And, yes, we would be prepared --
24808 As a matter of fact, I think we have suggested that a limit of 10 per cent of programming from the other services be made available.
24809 I think that, you know, even at that we are looking at probably the very high end. The kinds of things that we would want to repeat are things like the final --
24810 We don't want to take profile women's programming from TSN, like the women's world hockey championship final, and just put it on WSN. But perhaps as a second window, and as a complement to what we are doing with the round robin games leading up to the final on WSN, it could make some sense.
24811 There are other events. If Lorie Kane, for example, on TSN, in an event that we carried from the LPGA, were to win the tournament, that might bear repeating on WSN. That is kind of the intent of what we were talking about.
24812 That is really what goes to the six to eight hours of original programming on a daily basis. We have committed to, at a minimum, doing six hours of original programming, but more often that not it will be closer to eight. The difference is the 10 per cent that we are discussing here as a condition of licence.
24813 CHAIRPERSON OF THE COMMISSION: So 10 per cent, and that goes for CTV as well?
24814 MR. BRACE: From all other sources, yes.
24815 CHAIRPERSON OF THE COMMISSION: Okay. Excellent. Thank you. That helps to clarify this point.
24816 Ms McQueen, you talked about the fact that it would be a world premier if you were granted the licence because there is no other similar service in the U.S. or anywhere else in the world. That raises the question of, you know, on the one hand we can say that is fantastic, the possibility of being pioneers, or, if we are on a pessimistic side one morning, say that might be an adventure that we cannot really carry the responsibility for because there will be a shortage of programming, and why is it that our neighbour has not really come up with a solution.
24817 Can you tell us which side of the moon we should look at: the bright one or the dark one?
24818 MS McQUEEN: Here are some reasons why you should be optimistic rather than pessimistic.
24819 I think, for one thing, the interest in female Canadian athletes and the participation rates have been higher in Canada than they are in other countries. We said that 50 per cent of Olympic athletes in Canada are -- or 50 per cent of Olympic athletes are women. In the United States, that is much less. I think about one-third of their Olympic team will be women.
24820 We have an intervention from IMG, which, as you may know, is the largest event marketing company, in which they state their belief that Canada produces some of the world's greatest female athletes, and the opportunity for women's sports is an absolutely growing women's sport. This is a professional organization telling us that.
24821 The other thing, I think, that is really important is when you look at -- its is hard to use a word other than "explosion" -- the explosion in participation. When you see the statistics of in just a few years how many more women are participating in sports, especially in team sports, this is a wave that we think is just at the point of catching.
24822 You are right. This is the essential decision. Should you be optimistic that this is the channel of the future, or should you say, well, you know, maybe it is not in the same league as the tried and true? Our belief is that one of the things that digital is going to do is appeal to younger people, people who are adapters of technology and people who are willing to think in different ways.
24823 We see that this channel is most attractive to younger women who are just on the edge of that explosion in the popularity of women's sports. So we say, yes, this will be a channel that will do a couple of things. It is the only sports application in Category 1, and sports is probably the most popular category -- sports, news and movies are probably the most popular kinds of television there is. It's the only sports Category 1 application.
24824 It represents the edge of something -- I am revealing my age, but Bob Dylan used to say "you don't need a weather man; the wind is blowing this way." I think we can see it.
24825 There is no argument against the increasing popularity of women's sports. None. Younger women are the most interested.
24826 All of those, I think, give you good reasons to be optimistic that this is something that will make digital exciting and interesting.
24827 MR. BRACE: Madam Commissioner, you talked about availability of product as part of that question, and the growth of product, I would think, hitchhikes on exactly what Ms McQueen said, and I would like to have Keith Pelley just talk about what is in the marketplace that we could acquire.
24828 MR. PELLEY: We honestly believe that we are on the cutting edge of something that is about to explode, so we are in fact pioneers.
24829 In the last three years TSN has significantly increased its commitment to women's sports. But, at the end of the day, TSN and SportsNet can't match the growth.
24830 CIU, women's hockey, started three years ago.
24831 Perhaps the best example is the NWHL, which is the New Women's Hockey League. There are nine teams. In fact, since we have written this application they have added a 10th team for the year 2001 in Vancouver. There are 10 teams, 18 games -- 180 games. Even if TSN wanted to grow that property, even if SportsNet wanted to grow that property, with their commitments already with the National Hockey League, both regional and national packages, as well as the National Basketball Association, it wouldn't be there.
24832 But the CHA believes that the NWHL is the future. We believe it is the future. And it could be the next national hockey league. This is the first year of its inception, so it is just a new league.
24833 Women's tour of curling -- 30 events have never been televised. And of course, as Trina mentioned, the women's national hockey team.
24834 In 1990 there was no such thing as the women's national team. Now they play over 20 games, and the CHA, the Canadian Hockey Association, believes they will play over 50 games in another 10 years.
24835 So women's sports are growing at a feverish pace.
24836 Trina mentioned this headline on the front page of the Ottawa Citizen about two women playing rugby. I went back to my room and got on the Internet and found the Canadian rugby Internet site, and here is the line of the article called "Women's Rugby on the Move", by Julia Potter, which was on the Web site. It says:
"Watch out, guys. Women's rugby is on the move. Clubhouses and dressing rooms around the globe are no longer the boys only world they once were. Be prepared to see the sport played by the fairer sex on a pitch near you soon. And rest assured that it will be played with the same levels of commitment as the men's game."
24837 It goes on to say that in 1983 there was no such thing as women's rugby. Now there are over 130 women's clubs in Canada, 20 university and 250 school teams, with around 8,000 women competing in total. It is a sport that has really grown, but it is still in its infancy.
24838 So there is no doubt that women's sports are increasing at a feverish pace that even TSN and CTV Sports cannot match.
24839 And I am told, too -- Rick has told me -- that if in fact we do get the licence I will be replaced as well.
24840 MR. BRACE: Maybe even if we don't.
24841 MS McQUEEN: I'm going to be busy, but here's something we would like to say to the Chair, the Vice-Chair and the Commissioners. Don't bet against women.
24842 MR. FECAN: If I could jump in, Americans have no unique grasp on program ideas. News magazine, the late night variety show, all kinds of program ideas that have succeeded around the world started in Canada. What the Americans have is scale and that's something that we have to fight against every day. But the originality of ideas are just as strong here as they are anywhere else.
24843 What I think you have to add to in terms of your question, should we be optimistic or should we be cautious, is the credibility of that team. The team in front of you at the main table, they are not just people that say "hey, this is a great idea, let's do it".
24844 They know this particular field. They know what's out there. They believe there is an audience need for it and I suspect that if you give them the opportunity this will be one of many such channels around the world.
24845 MS CROSS: If I could add one final point to that, Commissioner. I believe when you licensed Women's Television Network a few years ago there was no counterpart that we knew of in the U.S., and yet now there are, and particularly typified by the very successful launch of Oxygen, but it's very much the same format. So I believe you were pioneering then.
24846 CHAIRPERSON OF THE COMMISSION: Well, it was important to hear your views, but rest assured the Commission doesn't think that all the good ideas come from elsewhere. We believe the Canadian broadcasting system is one of the most interesting, challenging and creative in the world. You can be totally assured of that.
24847 Interactivity, you have described how you would see this system evolve. I have two questions here: One is, I have seen that in terms of interactivity you are quite hopeful that it will be also a way of creating revenues.
24848 There will be costs, of course, but you are expecting and you might say, like many have said, that you are conservative in your figures, yet you have committed, not committed, but you have exposed more optimism than we have seen in other applicants.
24849 I was wondering if it was related to my second question, a case of the specific target audience that you have, or is it because of the type of interactivity you are proposing? So, I thought of getting more clarity.
24850 MR. BRACE: I guess the quick answer is all of the above. First of all, we feel sports is incredibly attractive from an interactive standpoint and we have a track record to show that.
24851 Both tsn.ca and rds.ca are incredibly popular sites. So, tsn.ca is the number one sports destination site in the country. It even eclipses the NHL site. So we know that what we have developed is working.
24852 Secondly, we know it's marketable. In TSN's case we have been able to attract advertising to the point, without revealing a lot of information, that we will break even on our interactive site this year, on our Web site this year. That gives us a lot of, I guess, optimism in terms of going forward.
24853 We have got a site that is going to be new and novel, that is dedicated to a niche audience that has shown interest and that interest has grown.
24854 We are dealing with product that is growing on an annual basis, as Mr. Pelley has pointed out, and we have got, as I say, a genre that is incredibly interactivity.
24855 So I think that when you add that all together, plus what we hope -- what we consider I guess maybe a bit boldly as innovative ideas that we are going to incorporate on our Web site because after all it all comes down to product. It all comes down to product at the end of the day. Everything else is just kind of the support and surround for that.
24856 We think that the innovative ideas that will add to all those other components give us cause for not only being able to achieve these numbers, but I think that in some cases maybe they are a little bit low.
24857 CHAIRPERSON OF THE COMMISSION: I guess you have approached it with a sense of caution, like many applicants.
24858 MR. BRACE: A sense of caution, but with a track record, that's what has given us --
24859 CHAIRPERSON OF THE COMMISSION: Yes. That's helpful. Thank you.
24860 I was wondering, we have discussed with applicants the possibility of who is paying what. In terms of costs, in order to get to the new generation of set-top boxes and the changes, what's the portion of costs that belong to the programmer and the broadcaster? Which one does belong to the distributor and down the road what does it mean for the revenues? I would like to hear you.
24861 MR. BRACE: I would suggest that the commitment of the broadcaster is to develop the product. All of the costs that are involved in developing that product and creating the innovations behind that product, in marketing that product, will be the responsibility of the broadcaster.
24862 I believe that the technical side of it, the distribution side of it should fall to the distributors and I think that is consistent with what we have said elsewhere.
24863 Down the road, in terms of sharing revenues, we believe that the ability, whether it be e-commerce or whatever the revenue stream, whether it be direct advertising, I guess both of those in reality, that revenue should fall to the broadcaster with the distributor being able to derive their revenues from the retail rate that is passed on to the consumer.
24864 We know it is going to be a negotiation. We know it would be a wonderful world if we could just make a decision and just go forward with it and it's not that easy.
24865 We know that the Commission may have to address this, but we believe that it's probably best left to the market to decide how we can determine revenues and costs.
24866 CHAIRPERSON OF THE COMMISSION: Would I misinterpret what you have said is you are hoping for the revenues to be solely the ones of the broadcaster, but being lucid about life that it will be dependent upon a negotiation where, you know, that maybe through the determination of the Commission or through market forces some revenue cost sharing might be established?
24867 MR. BRACE: That could potentially happen. You are right, we are hopeful that it will be as we addressed it in the beginning of the answer, but we will have to see how it rolls out.
24868 There could be, for example, opportunities to market together, that kind of thing which is indirect costs that would be related to rolling out the digital early scene or active component of the digital tier.
24869 CHAIRPERSON OF THE COMMISSION: If I was to characterize your answer, instead of saying open to negotiation or open to the idea of revenue cost sharing, I would put realistic about the necessity to negotiate.
24870 MR. BRACE: Well, we all count on being realistic.
24871 MS McQUEEN: I think you should put us down also as philosophically believing what Rick said is that the provision of programming and the revenue that comes form that programming has always gone back to the programmer.
24872 Interactivity is just another kind of programming and the revenues should flow back to the broadcaster. What the distributor gets is the ability to market up the package and deliver it to a bunch of homes, depending on the attractiveness of the programming.
24873 So what we give them is attractive programming which when it gets direct revenue comes back to us. What they get is something they can sell to their customers and they get the mark-up from that.
24874 CHAIRPERSON OF THE COMMISSION: I hear your views and really the point of the discussion this morning, like it has been since Monday, is really to get your views and understanding your position.
24875 Yet, there has been another suggestion put forward, I think it was by Global or another applicant, about an idea of having kind of an assessed process type of -- when maybe you are not -- in telecom you might not know, you know kind of an industry group, a task force that would kind of together establish some parameters by which the launch and those questions could be debated.
24876 What's your view on this approach? Do you see that as a positive or do you just stay with your position as you have just stated, which is fine. I am not trying to force any views on you. I am just trying to get your reaction.
24877 MS McQUEEN: I was looking around to see if there was anyone who had noted that particular exchange during the hearings. I think we will always work with any industry group that is set up and see whether there is value in that. Certainly, if there is an industry group looking at it we will be there.
24878 CHAIRPERSON OF THE COMMISSION: Thank you very much. That completes the questions I have. Thank you.
24879 THE CHAIRPERSON: Commissioner Wilson.
24880 COMMISSIONER WILSON: I do have some serious questions, but I have one not so serious question to start off. I was listening closely to the discussion that you had with Madam Bertrand about your nature of service and was very amused when I read the phrase "sports of interest to women". For me, that would be the tennis, baseball and figure skating channel, maybe some Olympics and the dog obedience trials.
24881 In fact, I notice that your schedule includes Purina's Incredible Dog Channel. I guess in view of the refinement of your nature of service, those would be female dogs. Oh, no --
24882 MR. BRACE: No, no. We do have an answer for that.
24883 COMMISSIONER WILSON: Oh, no, of course the co-competitors.
24884 MR. BRACE: It's the --
24885 COMMISSIONER WILSON: So you could have male dogs too.
24886 MR. BRACE: You would have male dogs and female dogs, but like equestrian, the athletes are truly the horses, I guess, but really when you look at it, in the case of dog shows, you have male and female trainers and handlers. They are really the stars of the show.
24887 COMMISSIONER WILSON: I think I said that it wasn't really a serious question. Anybody who has been watching knows I am always interested in dog shows.
24888 MR. BRACE: We take every question seriously from the Commission.
24889 COMMISSIONER WILSON: That's very good, Mr. Brace, and so you should.
24890 Maybe I could just ask with respect to the conversation, Ms McQueen, you were just having with the Chair with respect to interactivity just being another programming element.
24891 I think the aspect of that discussion that interests me is when you get to the point where the interactive elements start eating band width. I think we have had a number of discussions with people about the potential interactivity that can be associated with these programming services and what happens when the interactive element starts requiring as much band width as the channel itself. Is it at that point?
24892 That's sort of the point at which I start asking myself since band width costs money, is that a point at which the programmer and the cable company or the DTH company or the distributor of any kind has to start looking at whether or not there is a point of discussion? I'm just wondering if you could comment on that.
24893 MR. BRACE: It could potentially be, but what I would like to emphasize is that in terms of band width utilization, and I will refer back to the CTV application right at the beginning of the hearing where Mr. Ken Murphy spoke, I think very eloquently, on interactivity.
24894 What he said was that the band width in terms of what we are going to do as part of our evolution will certainly not be anywhere near the capacity that equals the actual channel itself. In point of fact, in his expert I think estimation, he is determined that there will be enough band width to go around.
24895 There will come a time when we are going to have to expand it as more and more of the digital services become more and more interactive and more and more aggressive in terms of their innovation, and possibly at that point, to answer your question, we will need to have a discussion, but I don't think it's necessarily out of the case.
24896 COMMISSIONER WILSON: Okay. The second thing that I wanted to ask you about, Mr. Brace and Ms McQueen -- I think both of you were here this morning when we were talking with members of the panel for The Justice Channel. They mentioned a new technology that they had become aware of whereby the set-top box would be integrated directly into the TV set and that this would really cause the penetration rate -- I think they used the analogy of a hockey stick or the diagram on the targets -- that it would just loom all of a sudden because the set-top box would be part of the TV set.
24897 Are you aware of that technology? I think they mentioned Sony and RCA as being the two manufacturers that they spoke to. I was just wondering if you were aware of that technology, if you had heard anything about it.
24898 MR. BRACE: No, I'm not. The technology that we are familiar with is that proposed, as I say, by the cable companies and their digital boxes and most specifically, as I mentioned earlier, ExpressVu and the evolution of set-top boxes that they have proposed, but I'm not aware of a set-top box that is going to be integrated into a television set. I'm not sure. Trina, if you are -- I guess the answer is no, we are not aware of that.
24899 COMMISSIONER WILSON: Okay. Thank you.
24900 THE CHAIRPERSON: Mr. Brace and Ms McQueen, I may not have been paying sufficient attention, for which I will be chastised by the real Chair shortly if that was the case.
24901 What is the change to your description of service as a result of interventions? What is it that you are prepared to be bound by?
24902 MR. BRACE: I'm going to in a moment ask Monique McAlister, our legal counsel, to maybe read it into the record, but just as a bit of a paraphrase because I don't have it right here in front of me.
24903 It was an answer to a response that we -- or at least intervention -- that we received from Sportscope that was concerned that WSN might become a TSN by virtue of carrying what are traditionally sporting events carried now on TSN, like NHL and so on.
24904 In order to provide them with comfort, we wrote as a response to them, and also copied the Commission, to say that we will commit as a condition of licence to not carry programming where males are the principal competitors or dominant I guess people in the product, but I would ask Monique to maybe read into the record exactly how we responded.
24905 MS McALISTER: The specific condition of licence which we set out in our July 17 reply to the Sportscope intervention reads:
"Live events sports programming on WSN shall not include sports where males are exclusively the principal competitors." (As read)
24906 We would be prepared to abide by that as a condition of licence if the Commission deems it necessary.
24907 THE CHAIRPERSON: Why did you not retain their language and that of SportsNet as well which, instead of doing it by saying the men are not dominant, where it says "coverage of events exclusively involving women athletes" or in the other case "dedicated exclusively to sports that feature female athletes and participants"?
24908 MR. BRACE: I think that the answer to that is that we wanted to be able to ensure that we dealt with sports events where women were not only the principal athletes, but also where they were the co-principal athletes, like the mixed events, or where they actually competed head to head like in the case of equestrian or the dog show in point of fact where they compete head to head with men. I think that's why we preferred to state it the way we did.
24909 THE CHAIRPERSON: Could you not instead not have used the word "exclusively"? There is, obviously, a question of having another sports channel and programming this one from the same company's facilities, or at least CTV's facilities. Correct?
24910 MR. BRACE: I would comment on that by saying that we have had recent discussions with Sportscope and they have stated that they are comfortable --
24911 THE CHAIRPERSON: I notice you haven't mentioned SportsNet which intervened as well and will intervene. There is obviously -- we heard when you were before us for the NetStar how sports services often purchase programming that they don't have enough broadcast time to air. Obviously it raises the question of how do we fence it sufficiently so that we don't have a channel that becomes a spillover of TSN purchased programming?
24912 MR. BRACE: I think that in terms of being able to buy bulk programming, this is a little bit of a different situation in the case of SportsNet and TSN. I think there was a concern in what we called, I think, at that time "warehousing programming" where we were buying in bulk and didn't have the ability to show all of an event.
24913 We were talking about premier events of a lot of events that we were purchasing that really were kind of a general interest, if you will. The way we were able to do that was that you were going to, for example, to major league baseball, and that was one of the examples we used, where in point of fact at that time we were buying 160 games and couldn't possibly carry all of those.
24914 What we are talking about in this case is developing --
24915 THE CHAIRPERSON: Exactly. I don't know if we understood each other. I was talking about TSN purchasing programming, not all of which it can air. What a great idea then to have a second service where some of that programming can be shown.
24916 MR. BRACE: Exactly, except that the product we are talking about here, we are having to deal with different leagues and organizations. In other words, when we go out to buy golf in the case of women's golf, which we will be doing, it will be from the LPGA. There is no relationship with the PGA tour, for example. That is a completely different organization.
24917 What we are talking about is whether it's a rugby league, whether it's the WNBA, which operates autonomously from the NBA, whether it's the new women's hockey league that Mr. Pelley spoke about, we are talking about new programming with which we have no association at this point in time.
24918 THE CHAIRPERSON: Mr. Brace, I understand that. That's women's sports. Suppose you don't fill your entire schedule with women's sports. Then there is broadcast time left for other programming unless the fencing is quite strict.
24919 MR. BRACE: And I understand that. We do want to give the Commission the assurance that we are not going to move into the realm of male sports. That's why we recommended the wording that Ms McAlister has read.
24920 THE CHAIRPERSON: Where you wanted it to say "where the dominant participants are males" rather than "exclusively", as both intervenors -- since you are responding to the interventions -- have put it differently by saying that "feature female athletes and participants".
24921 MR. BRACE: But I think what the intervenors were suggesting is that the programming be exclusively female. In other words, there couldn't be male competitors at all. I think that is the way we interpreted that.
24922 Our response to that was that there are some events -- figure skating once again just another example -- where the competitors actually compete together, males and females together. We know that that sport, for example, is of interest to women. So we wanted to massage that to the extent that if men and women were competing together in the same event head-to-head or competing together against each other, like mixed events, that that would be programming that we would like to access.
24923 THE CHAIRPERSON: You are concerned about things, for example, like figure skating where there are men and women.
24924 MR. BRACE: Yes. I believe they are, yes.
24925 I believe what they were trying to suggest is that there couldn't be a man competing on this service. We were saying, "Well, that would eliminate, for example, pairs figure skating". Men and women compete together on that. It would be an obvious choice for a women's sports network, we believe.
24926 THE CHAIRPERSON: But you could remove the word "exclusively".
24927 MR. BRACE: Yes.
24928 THE CHAIRPERSON: Then you would have "dedicated to sports that feature female athletes and participants", which to me -- well, it's up to you but it would seem to me to fence it in better than what was read into the record.
24929 What was the suggested -- you know, "dominant" has --
24930 MS McALISTER: Madam Chair, the suggestion was that where males are exclusively the principal competitors, so that would exclude any premier sporting events such as NHL or NFL or male figure skating where males are exclusively the principal competitors.
24931 THE CHAIRPERSON: You feel that that is better than putting it positively, that your intention is "to dedicate the programming to sports featuring female athletes and participants", remove the "exclusively" and will be able to keep the male skater if holding the female skater?
24932 MS McALISTER: Yes.
24933 MR. BRACE: If that is the interpretation of the Commission then we are absolutely delighted. That's fine.
24934 MS McQUEEN: Our only concern --
24935 THE CHAIRPERSON: We will look at it.
24937 MS McQUEEN: Our only concern would be if "feature" means that women have to play a very strong role in these sporting events, yes. If "feature" says "no men allowed" --
24938 THE CHAIRPERSON: No. I don't think it does, no.
24939 MS McQUEEN: Okay. I don't think it does either.
24940 THE CHAIRPERSON: But it seems to me possibly a better test.
24941 MS McQUEEN: We think --
24942 THE CHAIRPERSON: Of the two, what is your view as to --
24943 MS McQUEEN: We would be happy --
24944 THE CHAIRPERSON: -- to convince us that you are going to have a women's sports network?
24945 MS McQUEEN: We would be happy to have the word "feature" included. That seems to us like a reasonable suggestion.
24946 THE CHAIRPERSON: Because "dominant" gets you into 51 and the other --
24947 MS McQUEEN: Exactly.
24948 THE CHAIRPERSON: -- I think expresses, without using the word "exclusively", which would then, you know, theoretically remove the male skater from the possibility, which of course doesn't make much sense.
24949 MS McQUEEN: That expresses entirely --
24950 THE CHAIRPERSON: Your intention, yes.
24951 MS McQUEEN: -- what the schedule is. So it's great.
24952 THE CHAIRPERSON: Counsel?
24953 MR. STEWART: Will the service be technically equipped to allow for the broadcast of descriptive video?
24954 MR. BRACE: I'm sorry. Yes, it will.
24955 MR. STEWART: Thank you.
24956 I think you are aware of the discussions that have been held on the Personal Information Protection Act. You will be compliant with that Act?
24957 MR. BRACE: Yes, we will.
24958 MR. STEWART: I would assume from other discussions you have deleted filler programming from the list of categories?
24959 MR. BRACE: That is correct.
24960 MR. STEWART: Thank you, Madam Chair.
24961 THE CHAIRPERSON: Mr. Brace, the last word is yours.
24962 MR. BRACE: Well, thank you.
24963 I wanted to just first of all thank the Commission and thank you, Madam Bertrand for your questions.
24964 You know, the idea for this service came a long time ago and it really came to us during the All Star Game this year at the Air Canada Centre where we carried an event called the TSN Challenge. It is an event we have carried for several years and it pits the Women's Canadian National Hockey Team against the U.S. Women's National Hockey Team in a head-to-head competition.
24965 We have seen the growth of women's hockey from being something that was just a novelty in the beginning to something that now is really becoming core for our schedule in a lot of ways.
24966 That night I was entertaining a new sponsor who had joined us and we were anxious, obviously, to impress them, because that is what you want to do with sponsors. We went into the building, and I was a little nervous because the night before they had held the Canadian Hockey League Prospects game, and that is the game where all of the major stars of the future play head-to-head. It's the stars of the CHL, the future Eric Lindros', the future Wayne Gretzkys'. So I was worried that we were going to really take a back seat to that.
24967 When I walked into the building there were 15,000 people sitting there. These weren't your traditional viewers. These were young girl hockey teams, mothers, women who had found new role models and new heroes on the ice.
24968 For me, that really kind of consolidated the idea that, you know what, we are onto something here. This can work. This is where we are going to grow from. We are going to grow from the grassroots and we are going to build this thing.
24969 I would like to say that, you know, we really do truly believe that the timing is right. It is going to be a growth and an evolution. We have the product, we have the technology, and boy do we have the team. We have a team with CTV and TSN that I think is absolutely second to none. We have senior women -- and I don't mean in terms of age, I mean in terms of ability and position --
--- Laughter / Rires
24970 MR. BRACE: -- in our ranks that are ready to jump into the fray and are dying for this to happen and to make it work.
24971 So I would ask the Commission to maybe follow-up. I will steal a phrase from Mr. Fecan when he sat here a couple of weeks ago and he said "We really want to ask for the order and we hope that you will accommodate us".
24972 Thank you.
24973 THE CHAIRPERSON: Thank you, Mr. Brace, Ms McQueen and your colleagues.
24974 It has been nice to see you again on the Monday and we will see you before the week is over.
24975 We will adjourn for one hour. So we will be back shortly after 1:30.
24976 Nous reprendrons vers une heure et demie, moins vingt-cinq.
--- Upon recessing at 1233 / Suspension à 1233
--- Upon resuming at 1330 / Reprise à 1330
24977 THE CHAIRPERSON: Good afternoon. Welcome back to this hearing.
24978 We will hear, this afternoon, the last of the applicants.
24979 We will proceed, tomorrow, with Phase II of the hearing. We intend to hear all applicants and interventions and begin with Phase III, if time permits.
24980 We have already put applicants on notice that we expect them to clarify their commitments, with regard to hours or original, first-window, Canadian programming to be provided, for each year, for each service proposed.
24981 I want to emphasize that now that all applicants have been heard exactly as scheduled, we will revert to our usual practice of requiring some flexibility for the hearing of all intervenors and for the remaining part of the hearing, in order to ensure that our hearing time is used effectively and that our hearing days are full -- fully used. We, therefore, ask for your co-operation, in this regard, and encourage you to contact our staff, as needed.
24982 Nous procéderons à la Phase II de l'audience demain matin puisque nous entendrons maintenant la dernière requérante. Nous avons l'intention d'entendre toutes les interventions des requérantes demain et de commencer la Phase III si le temps le permet. Vous vous souviendrez que nous avons déjà avisé les requérantes que nous nous attendions à ce qu'elles nous indiquent le nombre d'heures de programmes canadiens originaux première fenêtre proposés pour chaque année pour chaque service.
24983 Maintenant que toutes les requérantes ont été entendues ou seront entendues à la fin de cet après-midi, exactement comme indiqué à l'agenda, nous retournerons à notre pratique habituelle d'exiger une certaine flexibilité pour l'audience des intervenants et pour le reste de l'audience pour que nous puissions faire une utilisation efficace de notre temps et pour que nos journées d'audience soient bien remplies.
24984 Nous nous attendons donc à votre coopération à cet égard et nous vous invitons à communiquer avec le personnel si nécessaire.
24985 Monsieur le Secrétaire.
24986 Mr. Secretary....?
24987 MR. CUSSONS: Madam Chair, our next applicant is KRG Television Limited.
24988 KRG proposes one new Category 1 service that will be called "TV to Web - The Information Network".
24989 There is a maximum presentation time of 20 minutes.
24990 We have Mr. Koehler and colleagues.
24991 Mr. Koehler....?
PRESENTATION / PRÉSENTATION
24992 MR. KOEHLER: Good afternoon, Madam Chairman, Madam Chairperson, Commissioners and staff.
24993 My name is Dieter Koehler. I am the CEO of KRG Television.
24994 With me, today, is Steffany Hanlen, our Vice-President of Market, and Shawna Larratt, our Vice-President of Programming.
24995 It's a pleasure to have this opportunity to tell you about TV to Web, our proposal.
24996 I would like to start just with a little history about KRG and myself.
24997 I am producer, have been a producer for quite a while. And, of course, being a producer, you come up with script ideas, you go to network and, of course, you try and make it work. And I had been doing that for quite a few years, with some success. And then, about 10 years ago, I wanted to get on air more than I was getting on air. I wanted to see our programs on air. So, we looked at infomercials -- which I thought was an interesting way to go because they were coming out of the United States and people like Anthony Robbins were getting on air, they were paying for the air time and they were making a lot of money. That is how an infomercial works -- and I'm sure you all know that.
24998 So that was very interesting to me because this was an opportunity for me to produce television programs and get on air. Be it, it was late night, two or three in the morning. But, still, we produced television for companies that were paying us and we got on air.
24999 Now, 10 years have gone by. We have produced 600 infomercials. And there have been a lot changes in the infomercial work and in television because you see them almost on every network and every specialty channel. We think that's good.
25000 Now, what I would like to do is -- we have a little video that we brought along. And infomercials are based on testimonials, as we all know, so what we would like to do is we would like to run a little testimonial from one of our regular customers, by the name of Stan Dyer.
25001 So, if you could run that video for me, please.
--- Video presentation / Présentation vidéo
25002 MR. KOEHLER: Well, that's Stan, and he's a -- I guess he's a long-time customer of ours. He's 79 years old. He just got married two years ago. He's a very interesting fellow and we love him, actually.
25003 What I would like to do, I would like to read some statistics which, hopefully, will be of some interest to you.
25004 Response Magazine says the direct-response television business generates nearly $100 billion in sales each year in North America. That's $100 billion! On average, for every $2 spent on media, markets expect to bring in $2.50 in sales. The Direct Marketing Association predicts revenue will continue to grow, reaching $126 billion in the year 2002. So that is a substantial market. Infomercials have snuck up on us, and they are here, and they are profitable -- and TV to Web is going to be, we feel, the next generation of information programming.
25005 It's a small wonder that the hosts of infomercials that we all recognize, like Richard Simmons and Anthony Robbins, Susan Powter, George Foreman, they are perhaps better known than some of the MLAs or the Leader of the Opposition.
25006 KRG Television is a publicly-traded company. I am the CEO of that company. I own the majority of shares. We went public in January; so we are well-funded. We have our head office in Edmonton. We have a staff of about 14 or 15 people. We have edit suites. We have shooters. We have equipment. We have all of the things necessary, obviously, to produce 600 infomercials. We have done a lot of programming.
25007 We, also -- because of the nature of the infomercial, we operate our own channels. We pay cable companies for access, and they put us on. That's how we have been able to get on, in some areas, and that's because of your third-party exempt ruling. So we are actually paying to be on air. So the prospect of licensing, of course, is will be very exciting for us.
25008 Okay. I would like to just pass this over, now, and I would like to introduce Shawna.
25009 She is going to talk a little bit more about TV to Web and the programming.
25010 MS LARRATT: TV to Web is going to produce what we are calling "edumercials"; in other words, consumer information programming designed to educate customers about products and services. I should say "exclusively" to educate about products and services.
25011 Each of our original shows has a theme, a host and an interactive component that will drive future programming. Twelve minutes per hour will be commercial content during all our original programs.
25012 TV to Web is immediate. It's interactive. If you want a product, you can get it. You can buy it from your home, through the interactive digital television channel, the Internet, or the old-fashioned way: over the telephone. Our hosts and our audience will have many opportunities to interact. You can meet our hosts and guests in our Internet chat rooms and, eventually, as the technology advances, our audience will literally join us on digital television. Our programming will be informative and entertaining, focused, again, exclusively on products and services.
25013 We are extremely excited about the opportunities in the electronic marketplace and we want to help our viewers take full advantage of that.
25014 TV to Web programming will be affordable, within the reach of small business. We will assist Canadian businesses to tell the nation what they have to offer.
25015 One program we are particularly proud of is The Art and Music Market. Artists and musicians can reach out directly to their audience. They can skip the promoters, skip the record labels -- they won't have to wait to be discovered.
25016 Canadians will be able to share their cultural diversity through this program and then profit by it.
25017 We are also proud of our plans to work with independent producers. Forty-two per cent of all our original programming will come from independents.
25018 KRG Television has already developed a strong relationship with film and television students. Young producers need an open door. We all know that, and we are going to give it to them.
25019 Our customers and clients will design the diversity of our programming. It will reflect the diverse nature of Canadian society, and that is truly interactive.
25020 We have started with 12 new shows. There is something for everyone, no matter what the race, religion or gender. And if our customers say that we need something new, they are going to get it.
25021 TV to Web is poised and ready to grow with the industry.
25022 Steffany Hanlen, our Vice-President of Marketing, will explain further.
25023 MS HANLEN: Thank you, Shawna.
25024 TV to Web is a giant leap forward for the direct response industry. Using digital technology and multimedia tools, TV to Web will be unlike anything seen on Canadian television today.
25025 TV to Web will be truly interactive. Customers will be able to purchase and receive products, services and information directly through their television and the Internet. Businesses will be able to respond directly to their customers with a speed and service they have been unable to achieve so far.
25026 KRG Television has a proven track record of listening and responding to our customers and clients. Businesses and customers are driving our operation. Customers have told us that they want greater convenience in purchasing, they want more product information, assurances and guarantees, and they want a relationship with the people they are buying their products from. With a national digital television licence we can provide all of that.
25027 Our business clients have told us they want to move forward in the electronic marketplace. They want to do business in the digital world, through the Internet and the television. Surveys indicate that consumers are uncomfortable doing business on the web for various and obvious reasons. TV to Web is designed to drive both business and customers on to the electronic super highway, using the familiar and comfortable medium of television.
25028 TV to Web will take Canadians to the electronic marketplace with ease, comfort and results.
25029 About one year ago, in Paris, John Manley, our Minister of Industry, made a speech to the Global Business Dialogue on Electronic Commerce. He told the audience that he wants Canadians to have access to and feel comfortable in the digital marketplace. His Connecting Canadians agenda provides Internet access to all communities with more than 400 people.
25030 His only concern was ensuring public confidence in the benefits and opportunities of the electronic marketplace. He called on the business sector to create a marketplace in which consumers are confident in entering transactions. We have heard him and we are answering that call.
25031 In preparation for the TV to Web licence, KRG Television has taken a number of bold steps.
25032 We are a multimedia company. We produce television, we produce programs and we produce commercials. We are web builders. We operate several cable television channels. We currently buy air-time for our clients. We publish a magazine called "The Comfort Zone". And now we are combining all of these services into the digital world.
25033 We certainly respect the way the traditional television industry works, but we are constantly looking for new and innovative ways to generate revenue.
25034 We are responsive to the desires of our clients and our customers. We respond quickly because we are open to new ideas. We are very flexible and very energetic. With subscriber fees, revenue from our sales force and investment from business we expect to thrive in the digital television world.
25035 MR. KOHLER: That concludes our opening presentation.
25036 THE CHAIRPERSON: Thank you, Mr. Kohler, and your colleagues.
25037 Commissioner Demers, please.
25038 COMMISSIONER DEMERS: Thank you, Madam Chair.
25039 Good afternoon. I will start. You probably know how we do things now and what is our game plan. Everything is in order for you, through words, to indicate exactly the nature of your application and all of the nuances there are in it. It is a very positive experience.
25040 MR. KOHLER: Thank you.
25041 COMMISSIONER DEMERS: The first question is based on the fact that there are many applications and the Commission indicated that about 10 licences would be issued in its public notice. There are more than 10, as you know, and the first question is always on the criteria that the Commission should use; that is, in your estimation, which criteria should be the key criteria and in which order should the Commission analyze an application on the basis of its criteria.
25042 My question is: What do you feel the Commission should use as the key criteria to analyze your application as well as others?
25043 MR. KOHLER: Our application -- the order that we have them in is that diversity would be the first one.
25044 I guess because we are new -- sort of new to the hearings and new to the Commission -- I think we find that to be an advantage, and part of the diversity.
25045 Also, I think our programming is diverse in nature because, if you think about, everyone is a consumer. Everybody buys products. Everybody buys services. So I think we would put that in our number one spot.
25046 Two is attractiveness of service. Once again, we are consumer friendly. With the direct response business being as large as it is and continuing to grow, with our TV to Web and the information we are going to provide and the ability of the consumer to purchase and draw them to the web, I think we are very, very attractive.
25047 Number three is affordability. We started out producing infomercials. If you are a producer, you will know that when you first start out, especially in the information business, you have to be very sharp with your pencil. A lot of the infomercials that we produced were local. That's where we started. We started with local businesses that supported us, and it just grew from there.
25048 So when it comes to producing affordable programming, we are very strong in that area.
25049 Contribution to Canadian programming is another area that we are very, very strong in. We have put the 45 per cent down as our first objective for the year. That is an area that we can be very aggressive in, we feel, because we are so strong in Canada.
25050 The ability to fulfil our commitment. Our business plan is totally realistic and totally viable. It is very reasonable and very achievable.
25051 Then the last one we have is interactivity. We are already interactive. We are the one company that deals directly with our customers now, so we need to be interactive. Our customers need to be interactive with us.
25052 That is the order I would put.
25053 Does Steffany or anybody else have anything to add?
25054 COMMISSIONER DEMERS: Thank you. You have indicated that you are new to the Commission, but, on the other hand, you are not new to the production of programs, as you indicated at the beginning. As I understand it, you have produced programs that are being seen on television apart from your infomercials.
25055 MR. KOHLER: We have produced over 600 television programs -- original television programs -- in the last 10 years.
25056 COMMISSIONER DEMERS: Okay. Now we get to the implementation of service. It is a general question again.
25057 Category 1, which is what you have applied for and what we are hearing today -- there were indications that a date for these licences to be available could be September 2001. There were also questions as to what the Commission's involvement should be in the preparation and in licensees going on to offer their programs.
25058 Would you have comments as to the timetable for the implementation of licensees' services, and other related comments you may have?
25059 MR. KOHLER: I tend to agree with most everyone else who suggests September 2001 as a good date.
25060 I think you should probably have some flexibility of perhaps six months for some of them, but, obviously, it's ideal for them all to launch at the same time to put their promotional budgets towards the launch, so you get more and more subscribers. Is that what you are looking for?
25061 COMMISSIONER DEMERS: Yes. Another point was the number of channels. We have had some comments on the fact that the Commissioner has indicated in its Public Notice that it would licence approximately 10 channels, and some people have come forward and said that maybe a few more would be a good thing. Do you have an opinion?
25062 MR. KOEHLER: I have an opinion that might be quite obvious here. A few more would be a good idea.
25063 Obviously, the more choices people have the better it will do in the long run. So, if you are licensing more, I think that's better for everyone involved. They want more subscribers. The more money you throw at something, eventually the more response you are going to get. So, if you have more people that have licences and they are launching, it's going to be perhaps away more exciting than just restricting it to 10 -- I think it's 10.
25064 So I would suggest, certainly, sure go with more. That would be my opinion.
25065 COMMISSIONER DEMERS: Thank you.
25066 On Category 2 do you have comments on the launching date that the Commission should indicate or not indicate for Category 2?
25067 MR. KOEHLER: The Category 2, my understanding is that they are sort in a free for all position and they will have to perhaps deal with some of the packagers to get in if they have an attractive service or deal directly with the cable companies and try and get on somehow. To me it's not clear how that's going to proceed, so I really don't have a strong opinion on how that --
25068 I suspect if you have got that many that are going to have a digital 2 licence that most of them probably won't do anything with it. That would be my guess, but I really don't have a real strong opinion on that.
25069 COMMISSIONER DEMERS: Although it's not strong, why would you say they would not launch?
25070 MR. KOEHLER: I think it's financial. They have to deal with the cable company if they are on their own. The cable company is going to make it very difficult for them when it comes to their subscriber base and the money.
25071 It's a financial issue more than anything, it would seem to me, because if you are on your own and you are going to the cable company, you are going to want some revenue from the cable company. So the cable company, I am sure will make it -- they will bargain very hard for those 2s I think.
25072 COMMISSIONER DEMERS: Thank you.
25073 Now we will get on to programming in a sense and we will start, generally, but then we will go down the road as we have done with other applicants.
25074 In the nature of service, let's start with -- and it's clear. It refers to your application. So the wording that you have provided as a nature of service is quite descriptive and lengthy. Would you accept as a condition of licence the following instead of the wording proposed in your application, and here would be the suggestion on which I would like to have your comments:
"TV to Web will be an English-language Category 1 specialty television service that will provide a programming undertaking devoted exclusively to programming related to information, how-to programming and interactive information related to sites, goods and services available on the Internet." (As read)
25075 MR. KOEHLER: We are comfortable with that, with that wording. I think you included "exclusive" into that which we included in our opening. I think Shawna included that. So I think that's the wording.
25076 Shawna, do you want to comment on that?
25077 MS LARRATT: I would like to hear that one more time please because I don't have it in front of me.
25078 COMMISSIONER DEMERS: I should read it one more time?
25079 MS LARRATT: Please.
25080 COMMISSIONER DEMERS: It's good practice for me.
25081 MS. LARRATT: There you go.
25082 COMMISSIONER DEMERS: "TV to Web will
be an English-language Category 1 specialty television service that will provide a programming undertaking devoted exclusively to programming related to information, how-to programming and interactive information related to sites, goods and services available on the Internet." (As read)
25083 MR. KOEHLER: We are very comfortable with that. That will be fine. Thank you.
25084 COMMISSIONER DEMERS: Thank you.
25085 Of course, that sentence will have been taken by the court reporter and you will see it in words by tomorrow morning probably.
25086 Another point, generally, the web has been considered by broadcasters as an asset to promote their radio and television programming service. You seem to reverse the role and use a programming service to promote the use of the web. Could you expand on this theme and elaborate on the programming that TV to Web intends to offer?
25087 You have referred in your presentation on that, but I think from that point of view it would be interesting to hear from you.
25088 MR. KOEHLER: All right.
25089 If I understand your question correctly, I was assuming Steffany was going to take this one, so let me give this one a thought.
25090 We do drive people to the web in our type of programming. I am sorry, I missed the question, but I will try and go with my thought here.
25091 The programs are information based. We found that one of the things people really need before they make a purchase is to have all of the information. Even some of the infomercial programming, we find that if we run them three, four or five times it results in a sale. So the web portion of it is that added little feature where they can go and they can say -- get additional information that is going to make them close a deal.
25092 We think television drives viewers -- or customers to the web. I think that's the order that we feel good about.
25093 Conversely, the web with streaming video and our programs on there and so forth could conceivably drive them to television, but I firmly believe it's certainly the other way around. Television has to drive the web.
25095 MS HANLEN: The reason we are looking at television driving the web is eventually some of the earlier applicants suggested that we will be actually dictating what's on the web through the television. So with the addition of the set-top box the web will be available to you directly on your television.
25096 So we are looking at it further down the road because we are dealing with this on a day-to-day basis already, sort of trying to project as to how we see the future unfolding.
25097 MS LARRATT: The only thing I would add to that is I think a great deal of time is spent surfing the web looking for things that you can't find. So, if you want to book a trip or go somewhere, buy a service or product, you can punch up anything, and I know you have heard this from other applicants, you can get all kinds of things, including some things that you may even find offensive that you don't want to deal with.
25098 But this way you are going straight from the television to a site that you are familiar with, that you know has the things that you want. That's why we want to go the other direction, to go from television to the web and, hopefully, as we said in the opening remarks and as Steffany pointed out, there is some concern on behalf of consumers about their own security and other issues that they don't feel quite comfortable doing business on the web.
25099 We believe this kind of programming will probably make them a lot more comfortable. That's the concept behind it is getting them there, getting them used to using that technology and as it progresses going along with them and taking our viewers and our clients with us.
25100 MR. KOEHLER: Just one quick addition, an infomercial, when we produced them, we expect you to pick up the phone and make a purchase and we have been very good at doing that.
25101 The web perhaps hasn't had that same strength and maybe it wasn't designed to do that in the first place. So in order to get people to do the same kind of thing, it has to I believe driven by television. It has to be specific. You have to know exactly where you are going and what you are looking for, or in some cases there is information overload.
25102 MS HANLEN: The last comment on that is introducing our friend Stan from Edmonton. He is a real person and at 79-years old and watching infomercials for the last 10 years on our channel, he was able to actually convince us to bring him to Hull with us. He wanted to actually get a ticket and fly here, but one of the things we did learn from Stan is that it's his grandson that's introducing him to the Internet through the medium of television.
25103 To create that comfort for that particular demographic is important to us as well because they are already familiar with our products and our services.
25104 COMMISSIONER DEMERS: The program schedule that you have included in your application indicates that nine to six hours or 57 per cent of TV to Web's 24 hour program schedule will be devoted to paid programming infomercials. The remainder of the programming seems to be largely dedicated to programs whose main goal, with a how-to information type package, seems to be to sell products and company services.
25105 Could you provide your comments on this issue, the fact that these programs are of Category 5(b), informal education, recreation, leisure? It would seem that some of this programming might be more aptly described as infomercials.
25106 MS LARRATT: Okay. I think I can address that question. The difference between our programming that we are creating is that when you are watching an infomercial, during the infomercial they are calling you to action. They are asking you to call. They are asking you to send your money in now.
25107 In our programs, that's not what we are about. What we want to do is give people information about the products and services that they will be able to purchase. The only time there will be a call to action at all is during the commercial breaks, the 12 minute rule, if you like.
25108 Does that clarify at all for you?
25109 COMMISSIONER DEMERS: There's a real difference between your programming and your infomercials.
25110 MS LARRATT: Yes, there is a very real difference between those two.
25111 COMMISSIONER DEMERS: So, could you explain how the programming you are proposing will differ to infomercials, Category 14, which is infomercials. At the end of the day, sometimes the numbers may not -- yes, infomercials and promotion and corporate.
25112 MR. KOEHLER: The difference, I guess, the basic difference is an infomercial generally sells one product throughout the whole program. Our programming will have more than one product. You will be able to compare. If it's one piece of exercise equipment in one segment, you will have another one in another segment.
25113 It's intended to -- some of the things consumers don't like about infomercials, I suppose, are obvious, so what we are trying to do is fix that and give the viewers more choice. Part of that will be having the ability to compare, to choose for themselves. Instead of saying "Well, this is the only product and the best product", they will be able to decide if they want a product in an upper price range or a middle or a lower price range and they will know the features so they can match a budget or a requirement to their purchase.
25114 COMMISSIONER DEMERS: All right. So the content of that programming, as you describe it, you would devise yourself. Taking your example of exercise equipment, you would decide which exercise equipment you would bring into your programming to compare. You would conclude in some way for the viewer as to what is -- well, you would have content comments, would you?
25115 MR. KOEHLER: Well, I think that's where the experts come in. You know, if you have a certain budget on something, I'm not going to be able to sell you something twice the price of that product. The quick answer is the viewer decides. We give them the options to decide. They make the decision. We don't make it for them. We say this is available, this is available and this is available. Then the viewer will match his needs to what we have got on the program.
25116 MS HANLEN: And just to continue on that line, part of being host driven and the excitement over the set-top box and interactivity is that they can actually ask the host questions. The host will be driving the show so that the products can be represented logically, creatively and from an interesting standpoint.
25117 We are actually achieving the entertainment value as well as the information value because the information of the products and the services -- if you don't have all the information as an informed Canadian consumer nowadays, chances are you are going to buy, you know, obviously uninformed, so we are really committed to informing and giving people an opportunity to compare and then to give us feedback on that, which is where we came from.
25118 We heard what people want and they are saying "We want more information. The infomercials aren't coming out right now, the way they are, let's see some changes".
25119 COMMISSIONER DEMERS: So the host would be well versed into what he would do. Would he be a specialist or she be a specialist?
25120 MS LARRATT: There would be a host with certain specialty areas. As well, there will be guests on these programs. It won't be just one host sitting there telling you about the different products. There will be a representative from either the manufacturer or the service or whatever is being presented on that given program.
25121 There would be additional people. As we said in our application, we have a good relationship with some of the educational institutions in the area, so we will be drawing some expertise from there as well.
25122 COMMISSIONER DEMERS: Thank you. Again, in your nature of programming, you indicate that you will air programming from subcategory 2, analysis and interpretation, and Category 3, reporting and actualities.
25123 On the other hand, Schedule 10 indicates Category 5(b), informal education, recreation and leisure. It does not include programs from Category B. At one place there is something and at the other one. Could you explain what your plans are in this regard?
25124 In the case of describing -- do you get my question? In the nature of programming, you indicate that it would be from Category B, analysis and interpretation, and Category 3, reporting and actualities.
25125 On the other hand, Schedule 10 indicates Category 5(b), informal education, recreation and leisure programming exclusively and does not include programs from Category 2(a).
25126 When you say what kind of programming you will do --
25127 MS LARRATT: Yes. I think I understand the question. I think part of it is an oversight and part of it is the kind of programming we are doing may not fit quite as neatly into some of the boxes that have been created.
25128 When you are talking about analysis and reporting, yes, there will be an element of that in all of the programs, but do I call them exclusively "entertainment" or exclusively "reporting" or do they cover a lot of variety of these categories? As a result, it will be something that people haven't seen before.
25129 It's very difficult for us to say it's only going to be this or it's only going to be that, but definitely those should have been included.
25130 COMMISSIONER DEMERS: Now to Cancon exhibition. You commit to program 45 per cent Canadian content during the broadcast day from six to 24 and during the evening 18 to 24, increasing to 50 per cent Canadian programming during the broadcast day and during evening hours in year three.
25131 On the other hand, you indicate in your program schedule, Schedule 9 and 10, that all of your programming, 12 hours per day during weekdays and six hours per day during the weekend, will be produced in-house or as co-productions. The remainder would be paid programming.
25132 In your application, you also project minimal foreign acquisition. The question is could you explain why you are proposing a 45 and 50 Canadian content level when your schedule indicates that all of your programming, including paid programming, will be produced in-house or co-produced?
25133 MS LARRATT: Okay. I think I can explain that. Our budget reflects that there will be foreign acquisition and Canadian acquisition programming. Yes, that should have been included in the program schedule.
25134 However, there's a number of things going on here. I don't know where to start first. Let's start here. With the foreign and Canadian acquisition programming, it was very difficult -- we were finding it very difficult to find programs that we felt were suitable to our format. This is a different kind of format than what's out there currently.
25135 What we did was we put the money in the budget and it's there and we will use it. We are starting to find some programs that do make those crossovers that aren't paid programming. While you see in the schedule the rest being paid programming, it won't actually all be paid programming. There will be foreign acquisition and Canadian acquisition as well in there.
25136 It's not reflected in the schedule. It's reflected in the budget, in the financial statements, and we will do that.
25137 The other thing on Canadian content that I would like to point out is that we do have, as you said, these minimums, the 45 per cent and in year 3 we go to 50 per cent. We think those are minimums.
25138 Our view might be a little different than some of the other applicants in that it is to our advantage to have a high level of Canadian content, perhaps higher than other people who have had licenses in the past. We are in the business of showing people products and services that they can purchase and a great number of our clients are Canadian clients.
25139 If you will notice, in prime time we have indicated 100 per cent Canadian programming. Now, in the area you are speaking about we have set a minimum of 50 per cent and that provides us, we believe, with the flexibility.
25140 So what you are seeing in the schedule itself is quite accurate with exception to the Canadian and foreign acquisition. That is very likely -- very, very likely close to what you will actually see on-air is a very high level of Canadian content. However, we still want to set those 45 and 50 per cents as minimums.
25141 COMMISSIONER DEMERS: Okay. Then could you be more precise as to what kind of non-Canadian programming you would be purchasing, you know, in relation to paid/non-paid infomercials in your concept?
25142 MS LARRATT: You are talking about what kind of paid programming or what kind of acquisition programming?
25143 COMMISSIONER DEMERS: What kind of non-Canadian programming are you proposing to fill the rest of your schedule. So what you will buy for --
25144 MS LARRATT: The programs that we are seeing in the U.S. and Australia and Great Britain that are more the how-to consumer information-type programs. That is the type of programming that we are seriously looking at now to acquire as, you know, second/third window kind of programs that we would augment our own programming with. Paid programming is paid programming.
25145 MR. KOEHLER: Where you are looking for percentages.
25146 MS LARRATT: Where you are looking for a percentage in terms of what type of -- because we look at them as two sort of different areas. We have to delineate ourselves -- or we have done this, we have delineated ourselves between the paid programming infomercial that we are all used to seeing, that you saw in our video, and then the kinds of programming that we are looking to put on the air and the kinds of programming that we are looking to produce.
25147 COMMISSIONER DEMERS: I was more --
25148 MS LARRATT: Would you like a further breakdown?
25149 COMMISSIONER DEMERS: Well, if you have a breakdown. At least my main question was that you would indicate what would they be.
25150 MS LARRATT: Oh, the foreign and Canadian acquisition.
25151 That would be that type of consumer information programming that -- I don't -- not necessarily how-to but more of a market-oriented, consumer-oriented programming, not infomercial programming. That is paid programming for us, or that is how we have delineated it.
25152 Does this makes sense now, I hope?
25153 COMMISSIONER DEMERS: Well, we will see.
25154 MS LARRATT: Okay.
25155 COMMISSIONER DEMERS: Do you have figures -- are you able to go further into amounts, into percentages from different countries, or U.S. versus other countries?
25156 MS LARRATT: You are talking of the --
25157 COMMISSIONER DEMERS: Non-Canadian programming that you describe --
25158 MS LARRATT: Non-Canadian.
25159 COMMISSIONER DEMERS: Yes, you describe as --
25160 MS LARRATT: We are looking at a 70/30 -- 70 U.S., 30 foreign -- percentage.
25161 COMMISSIONER DEMERS: Thank you.
25162 Cancon --
25163 MS LARRATT: I'm sorry, I would like to just clarify that.
25164 That is where we are starting at 70/30. The reason why we are looking at it that way is because that is what our market seems to want. That's what our people seem to want. They relate very well to the American consumer market, but our hope is that as time goes on we will rely less and it will be more of a 50/50 split where we will see more programming from United Kingdom countries and less from the U.S.
25165 COMMISSIONER DEMERS: Thank you.
25166 In Cancon expenditures. In your presentation I think you did confirm -- maybe not. That was on independent.
25167 In the Summary in Schedule 1 of your application you indicated that:
"TV to Web would invest at least 40 per cent of gross revenues over a seven year license period in the production of Canadian programming." (As read)
25168 These are the same figures I think. No change there.
25169 In your response to a deficiency question, you indicated that:
"TV to Web would accept a condition of license to expand on Canadian programming in the second and subsequent broadcast years: 45 per cent of the previous years' total advertising and subscription revenues." (As read)
25170 In the deficiency letter, this would exclude both interactive expenses and interactive revenues.
25171 Our staff has recalculated your seven year total Canadian program expenditures at 41 per cent of your total seven year projected advertising and subscription revenues.
25172 Would you be prepared to accept a condition of license which requires you to spend 41 per cent of the previous years' advertising and subscriber revenue on Canadian programming starting in year 2 in accordance with the Commission's definition of eligible Canadian programming expenditures?
25173 MR. KOEHLER: Yes, we would.
25174 COMMISSIONER DEMERS: Thank you.
25175 On original programming I believe you made reference --
25176 MS LARRATT: You are just talking original first window Canadian?
25177 COMMISSIONER DEMERS: That's right, yes.
25178 MS LARRATT: Okay.
25179 COMMISSIONER DEMERS: So in your programming schedule, and let's say that both -- in your program Schedules 9 and 10, you indicate that all the programming during weekdays and six hours per day during weekends will be produced in-house or as co-productions.
25180 MS LARRATT: M'hm.
25181 COMMISSIONER DEMERS: In view of the fact that there appears to be a common theme or purpose or production approach to all the programs that you are proposing, could you explain why you have chosen to produce some programs in-house while other programs will be co-productions?
25182 MS LARRATT: Do you want to take that?
25183 MR. KOEHLER: Sure, go ahead.
25184 MS LARRATT: Well, to be quite honest, we believe that that is what -- that is part of the mandate of the CRTC that it wants to have more independent production, and we have history ourselves of working with independent producers and independent production companies who -- not everything we have ever done has been completely in-house, so we have this history of using a number of different independent producers.
25185 We don't always go back to the same person and we don't always produce everything in-house. It depends on the expertise that we have at that time and what expertise the independent producers have as well.
25186 So this is kind of how we operate as it stands today and we continue -- you know, we look forward to continuing in that direction.
25187 COMMISSIONER DEMERS: Thank you.
25188 So since we are on independent producers, what is an independent producer, from your point of view. You have probably heard all our discussion --
25189 MR. KOEHLER: Yes.
25190 COMMISSIONER DEMERS: -- with all the applicants up to now.
25191 MS LARRATT: Go for it, Dieter.
25192 MR. KOEHLER: Yes, we discussed that. I guess it depends on the perspective.
25193 We don't have any investment in any of the production companies, no plan to. We are just quite comfortable with our own.
25194 So I guess the definition of an individual who owns his own production company would be 50 per cent of the voting shares, that would consequently make him the owner of that company.
25195 So what other percentages might be acceptable or what investment might be acceptable in another production company, I guess from our perspective -- do you know, we support independent production and I think once you invest in another production or you have a sharehold position, you tend to have a lot of influence.
25196 So, consequently, in the true fashion, I think they should be totally independent. But that is our view at this time. I suspect that --
25197 MS LARRATT: You have said something different before.
25198 MR. KOEHLER: I know, I just changed my opinion, that's right.
--- Laughter / Rires
25199 MR. KOEHLER: I changed my opinion to that opinion.
25200 Our other one is probably more conventional, but in thinking about it, where we come from, we are independent producers and we like to be able to control our destiny. So I guess -- so why not. You know, why not give them all the money and give them a project and we don't have any involvement.
25201 So I have sort of just changed my opinion as we have been sitting here. It's not what I have written down here.
25202 COMMISSIONER DEMERS: If a broadcaster has investment in a producer it is not an independent producer. Is that what --
25203 MR. KOEHLER: Well, I think if he has an investment in -- it depends on your term. I guess the legal side of the coin, who owns the company, it's 51 per cent. It's a percentage issue.
25204 COMMISSIONER DEMERS: Right.
25205 MR. KOEHLER: I'm saying that you if you are investing in a company, if it's dollars or buying a portion of shares, there's influence, there, on that independent producer and they are not quite as independent as probably they would like to be. So, that being the reality, I think. But that's my view, only -- and I don't think it matches with too many others.
25206 COMMISSIONER DEMERS: I hope all those applicants we asked the question to were answering as to their opinion.
25207 MR. KOEHLER: And I guess if we had an investment in a production company it would be about 35 per cent.
25208 COMMISSIONER DEMERS: So you do not have any financial relations with other producers, other affiliated --
25209 MR. KOEHLER: No, we don't have any --
25210 COMMISSIONER DEMERS: -- today? You -- what you have, you own?
25211 The company you own is the applicant here and this company, or you, have no investment in other -- in independent --
25212 COMMISSIONER DEMERS: Our objective is to look after our own production facilities and make them as good as they can be, and I don't think we have, at this point in time, any interest in other production companies in a minority position.
25213 COMMISSIONER DEMERS: Thank you.
25214 And in your oral presentation, you indicated that 42 per cent of all your original programming will come from independents.
25215 Would this be Canadian independents as --
25216 MS LARRATT: Yes, Canadian independents.
25217 COMMISSIONER DEMERS: That's what you mean here?
25218 MS LARRATT: Yes. Exactly.
25219 COMMISSIONER DEMERS: Thank you.
25220 I have two questions on infomercials -- although they have been very close to what we were talking about, up to now.
25221 In your application, you say that there will be significant infomercial revenues, given that this is a primary focus of this service. Infomercials will account for more than 90 per cent of your combined advertising infomercials revenue.
25222 Is that a percentage that --
25223 MR. KOEHLER: I don't have the exact numbers here. Infomercials are a -- initially, will be a high portion of our revenue. I don't think -- as far as being an infomercial channel, we are running infomercials, but, really, TV to Web, it's a new direction and, as our programming increases, our infomercials will decrease.
25224 So, at this point in time, a good portion of our budget comes from running infomercials.
25225 COMMISSIONER DEMERS: Thank you.
25226 We have, I think, maybe discussed this question in a previous few minutes ago.
25227 Could you indicate whether all of the revenue -- from the 90 per cent advertising infomercial revenues -- all of this revenue will come from the blocks indicated in your schedule as paid programs?
25228 MR. KOEHLER: Yes.
25229 COMMISSIONER DEMERS: Thank you.
25230 Which other programs would be considered infomercials or would include infomercials?
25231 Would there be other --
25232 MR. KOEHLER: No; just the ones that we have listed as paid programs.
25233 COMMISSIONER DEMERS: Thank you.
25234 Synergies. Could you provide the Commission with an update on your involvement with LTA? Learning Television of Alberta?
25235 MR. KOEHLER: Yes. That's Access and Learning Television.
25236 COMMISSIONER DEMERS: Yes.
25237 MR. KOEHLER: They have an uplink there and we would be considering using their facilities for uplinking so -- because, obviously, they are in Edmonton and --
25238 COMMISSIONER DEMERS: Any other aspect, any other services that it would provide to you?
25239 MR. KOEHLER: Well, they have the ability, the have additional studies and things like that, on the production side, that they could provide us.
25240 We haven't discussed that with, actually. Just the uplink.
25241 COMMISSIONER DEMERS: Up to now, it is only the uplink that --
25242 MR. KOEHLER: Just the uplinking, yes.
25243 COMMISSIONER DEMERS: Thank you.
25244 On interactivity, should the distributors be obliged to carry the interactive elements of your proposal?
25245 MR. KOEHLER: I will let Steffany look after that.
25246 MS HANLEN: Yes.
--- Laughter / Rires
25247 MS HANLEN: It benefits them -- because we are consumer station -- as it benefits us. Absolutely.
25248 COMMISSIONER DEMERS: Thank you.
25249 Could you provide us with a timetable of the proposed roll-out of interactivity capabilities on your service?
25250 MR. KOEHLER: Well, we are ready to go -- we are interactive, now. We feel we are interactive now. And when the step-top boxes are there, we will definitely be ready.
25251 COMMISSIONER DEMERS: What interactive capabilities are you proposing, from Day One, in reality?
25252 MS HANLEN: From Day One. From the licence Day One, in reality?
25253 COMMISSIONER DEMERS: Yes; when you go on the air.
25254 MS HANLEN: When we go on the air.
25255 Well, we already are driving our viewers to the Web. We are receiving calls. We are interacting already, through our telephone system, through the Internet and now, basically, just waiting for the capability of the set-top box to give us our conversations. We are using chat rooms.
25256 So, at this point, we are -- we have our magazine.
25257 So, technically, we are in constant pursuit of how to drive the viewer to us, at this point.
25258 MR. KOEHLER: But we have also built a fairly substantial mall, the World Canadian Mall. It has 200 retailers in it now, with information about them. So it's something that we have been building, and will continue to build. That's ready to go. That's in existence as we speak. That's not something we are going to build; that's there, ready, and performing.
25259 MS HANLEN: Our mall is our Web site. It's our -- the World Canadian Mall is up and running.
25260 COMMISSIONER DEMERS: Thank you.
25261 I have no further questions.
25262 Thank you very much, Madam Chair.
25263 THE CHAIRPERSON: Commissioner Wilson...?
25264 COMMISSIONER WILSON: Good afternoon.
25265 What I would like to do is just ask you two or three questions of clarification, first, and then sort of pose a question once I get that information.
25266 Do I understand correctly, from your application, that you are producing six hours per month of original programming? Or is six hours per week? Because I think we have got six hours repeated twice daily --
25267 MS LARRATT: Six hours per week.
25268 COMMISSIONER WILSON: Per week?
25269 MS LARRATT: Per week. Not per month.
25270 COMMISSIONER WILSON: Okay. And of that, three and a half hours will be in house and two and half hours will be co-productions?
25271 MS LARRATT: Yes, that's correct.
25272 COMMISSIONER WILSON: And the two and a half hours, extrapolated over --
25273 MS LARRATT: Actually, independent productions.
25274 COMMISSIONER WILSON: Okay. I was just going to ask that, if what you meant was independent.
25275 MS LARRATT: Independent.
25276 COMMISSIONER WILSON: And that would be a company --
25277 MS LARRATT: Outside companies.
25278 COMMISSIONER WILSON: -- at arm's length?
25279 MS LARRATT: At arm's length. We do not own any --
25280 COMMISSIONER WILSON: Okay. And the 2.5 hours, extrapolated over the course of the year, would equate to the 42 per cent --
25281 MS LARRATT: Yes.
25282 COMMISSIONER WILSON: -- independent production?
25283 MS LARRATT: Yes. It's based on hours.
25284 COMMISSIONER WILSON: Okay. And, once again, what's the distinction that you make between paid programming and infomercials? I don't -- I didn't understand what the distinction is.
25285 MS LARRATT: Paid programming is infomercials.
25286 COMMISSIONER WILSON: So they are one and the same?
25287 MS LARRATT: Yes, absolutely.
25288 COMMISSIONER WILSON: There's no distinction.
25289 So, in your schedule, where it shows --
25290 MS LARRATT: At this time.
25291 COMMISSIONER WILSON: -- "paid programming" --
25292 MS LARRATT: In our programming, where it shows "paid programming", with the exception of those foreign and Canadian acquisitions that we have not yet included but are reflected in our budget, yes, those are infomercials.
25293 COMMISSIONER WILSON: Okay. And --
25294 MS LARRATT: At this time.
25295 COMMISSIONER WILSON: -- will your company, Mr. Koehler, be producing any of those hours of infomercials?
25296 I mean the channel is one entity and your production company is another entity, so --
25297 MR. KOEHLER: That's a very good question.
25298 COMMISSIONER WILSON: -- will the channel be contracting with your production company to produce any of those infomercials that will be appearing on your channel?
25299 MR. KOEHLER: We hadn't -- that was not in our proposal, but --
25300 COMMISSIONER WILSON: It's not contemplated?
25301 MR. KOEHLER: No. No.
25302 COMMISSIONER WILSON: Okay. So here's what I want to pose to you -- and I'm just going to play a bit of the devil's advocate.
25303 There is, as you know, a shopping channel in the system already, which is an exempt service. And it seems to me that what you are proposing is kind of a variation on that theme. It's not that you are not providing a service to viewers but it's really focused on moving products -- and I noticed, in your opening remarks you said "TV to Web is a giant leap forward for the direct response industry", and the note that I wrote to myself was, "Okay, but what about the broadcasting system?", which is what we are here for; and, typically, people sort of look at the broadcasting system in two ways. There's a cultural side to it and there's an industrial side to it.
25304 The industrial side promotes the production of programming. It supports the production industry for programming that's seen on our screens. And then there's the side where we tell Canadian stories.
25305 Now, some of those stories may be product-related but -- I guess what I'm really trying to get at is: If you are coming here, today, and saying to us, "Give us a Category 1 licence, with all of the supports and the privileges that go with having a Category 1 licence", what is the cultural contribution that your channel is making to the broadcasting system? Because I need to understand that.
25306 MS LARRATT: Okay. A couple of things.
25307 I think that, from our point of view, that television in Canada, as in the rest of the world, with the exception of some of the public broadcasters who do not carry commercials -- and that's not here in Canada but in other countries -- it is perhaps the view of business that they all do one thing, and that's sell product. Whether you are running a movie and getting people to watch the commercials or --
25308 COMMISSIONER WILSON: They also tell stories.
25309 MS LARRATT: They do. They also tell stories. And that is not to say that we won't either, as you pointed out.
25310 I guess I don't understand. You say all the supports, but also all the restrictions that are set on a Category 1 licence, too, we would be more than willing to fulfil.
25311 Our view is that we can provide entertaining and informative programming that Canadians do want to see --
25312 COMMISSIONER WILSON: And that makes product.
25313 MS LARRATT: Yes, that will be completely different from what they are seeing. It will not be The Shopping Channel, but a different kind of information product moving, if you want to put it that way -- programming. We don't really see anything wrong with that.
25314 The other thing that I would like to point out -- and I believe this very strongly -- is that there is very limited opportunity for independent artists and people who, if you like, sell culture to get out there and sell it. They have to go through big promoters. They have to go through big business. In this case they don't. They can come to a smaller situation and deal directly with their client.
25315 To me, that gives them a tremendous opportunity to share their culture.
25316 COMMISSIONER WILSON: I agree with you.
25317 MS LARRATT: And I think that is wonderful.
25318 COMMISSIONER WILSON: I agree with the point you are making, but I guess that the sense that I get from reading your application is that it is not about necessarily giving Canadian artists an opportunity to move their product without having to go through the big distributors; it's about selling stuff.
25319 MS LARRATT: I think that is what those artists would like to do.
25320 COMMISSIONER WILSON: Okay. What proportion of your programming would be artists -- Canadian artists -- whether they are graphic artists or painters or musicians or actors?
25321 MS LARRATT: That would be one in 12 --
25322 COMMISSIONER WILSON: One in 12.
25323 MS LARRATT: -- of our original programming.
25324 COMMISSIONER WILSON: Okay.
25325 MS LARRATT: I'm sorry. I forgot to mention the fashion show, which would also give -- you know, if you consider fashion and high fashion to be cultural -- and a lot of people do -- then I guess it would be two in 12.
25326 The programs do reflect what we have understood our audience to tell us they are interested in. Part of that is their own culture, yes. So at least two of those shows would answer that call quite readily.
25327 MR. KOEHLER: Perhaps Lifestyle as well. We have a fashion program. You know, people want to know what is out there, and I suspect that is part of the culture: what is new and --
25328 We have thought of artists throughout the whole cross-section of what is out there. We try to cover as much as we can. Obviously, this is just an initial 12-program pack, and we can extend our programming as we go on to appeal to as many diverse -- population as we can.
25329 MS LARRATT: I would also like to add that the program "Take Off, Eh!" is a perfect opportunity for Canadians to get to know one another. Plus, the interactivity of it provides yet another opportunity for them to exchange their ideas and their thoughts about all kinds of issues as they see them throughout all of these different programs.
25330 So I think that it goes a lot further than just buying and selling. It has a lot more opportunities, and I really believe that our audience is going to grab hold of that and run with it, because it is not going to be the same as they have seen in the exempt service.
25331 COMMISSIONER WILSON: Thank you.
25332 THE CHAIRPERSON: Madam Bertrand...
25333 CHAIRPERSON OF THE COMMISSION: Good afternoon. I will apologize because, despite the discussion you had with Commissioners Demers and Wilson, and the notes I have read, I cannot see very clearly the diversity you are bringing. I see that you are bringing more of what I think we have seen, but I don't see the diversity. Maybe that is where you want, with a bit of patience with me, to try again to explain what would be the difference of an infomercial we may have seen on any other channel or The Shopping Channel and what you will bring. What would be an example of what would be an education? You have 5(b) as a category. What do you consider an informal education program?
25334 MR. KOEHLER: If we take the difference between an infomercial and one of our programs, an infomercial does not allow you to compare. An infomercial --
25335 CHAIRPERSON OF THE COMMISSION: To what?
25336 MR. KOEHLER: An infomercial does not allow you to compare to other products. It says: Here is what it is. This is the best that it is. And it has company testimonials and it encourages you to buy that. We are talking about products now.
25337 So if there were something that, say, perhaps you were interested in, or perhaps I am interested in, which is perhaps golf -- I enjoy playing golf. Now, if I have the opportunity to look at a number of different golf clubs, I think that is your basic difference. We are not saying: Buy this one. This is the best; we are saying: This one is a good club for the features and has this particular price, and then there are a number of others to choose from.
25338 So no matter what your interests are, you are in the driver's seat. You make the decision. That is basically the difference. We are giving you the information to empower you to decide.
25339 Does that help at all?
25340 CHAIRPERSON OF THE COMMISSION: But there will not be an analysis. Like, it is not like Consumer Report, or -- I don't know what it is called, tu sais protection aux consommateurs -- Marketplace -- a consumer protection type of magazine where you will compare products and say: On this dimension this product is superior. On this other -- that is not what we are talking about. What you are talking about, if I understand you correctly, is: You need glasses. Those are the frames that are available. Those are the prices. Pick the ones you want.
25341 You will not, from what I understand, kind of explain the merits and the values of one product in comparison to another; you will just kind of make a -- comment dire donc? Enumerate what are the qualities of each for the consumer to make his choice.
25342 Am I understanding correctly?
25343 MR. KOEHLER: Yes, I think you are. I think what we excluded, and what you are thinking about in Marketplace, is that they perhaps bash another product. They point out all of the negatives of another product. So they say: This product is better than that product.
25344 We believe that you don't have to bash a product. Products are made and the features match the price. We will highlight the differences in our programs. I don't think we would say: This one is better than the other one. Because obviously there would be a price -- there are some advantages to one or the other, and I don't think we should say: This one is the best one for you. That is what an infomercial does. We let you decide. We give you the positive features of the product and we give you the price, and you decide. We don't make a judgment value for you.
25345 CHAIRPERSON OF THE COMMISSION: I see a difference, that it is still the same as we are having, but instead of having one at a time there will be many at a time.
25346 MR. KOEHLER: That's correct.
25347 CHAIRPERSON OF THE COMMISSION: Is that what you call and educational program?
25348 MR. KOEHLER: Certainly, when it comes to products, information about the product is what people are looking for.
25349 There are so many products out there and so many different styles and options -- that is what we are finding. People want to know more information before they make a purchase, so they are an educated purchaser. They feel much better about making that buying decision once they know more about the product.
25350 MS HANLEN: We don't take the term "edumercial" lightly. We are not an education station. But what we are finding in our experience, in dealing with our clients over the last 10 years, is that people wanting to be informed have lots of questions. So we are creating not only diversity in offering that, but also interactivity.
25351 And not unlike a consumer report, our chat rooms will provide conversations with the hosts or our guests or our manufacturers who have actually been on the shows. When somebody is going to make a decision on a tennis racket or a golf club, if you can't actually touch it to start, or if you have gone to the store and touched it and you want to get it for a better price, it makes sense to go to TV to Web to actually make your purchase. It makes it more comfortable, more familiar. You are in your own home, you can do your own research, and you can have the direct response right from the manufacturer if you want it.
25352 The difference between that and The Shopping Channel is that the celebrities, or the products they are producing, are still directly selling their product. They are not giving you the opportunity to compare cosmetic product A in the moment with cosmetic product B. They don't have that opportunity.
25353 So what we are trying to give the consumer and our client the opportunity to do is to take that one step further so they can find out exactly what is in it and maybe, possibly, compare the products.
25354 The other thing is our clients. We are directly in touch every day with the business community, locally, regionally and nationally.
25355 Our programs have provided us this information, that this is definitely something that our customers want. They are happy with the infomercials that are there. We have proven it. We have got the numbers. We are a publicly-trade company.
25356 The difference is now where we want to be able to take it is to give those particular businesses opportunity to share their story, to tell the nation, if that's the case, why they are so much better and why people should buy their product in comparison, not bashing, but in comparison to their biggest competitor.
25357 Let's create a little bit of controversy. Let's have some conversation between Ping and Ben Hogan. Let's have some conversation between those types of manufacturers.
25358 CHAIRPERSON OF THE COMMISSION: All the information will come from the announcers themselves. It's not a treatment or an analysis that will be done --
25359 MS LARRATT: No
25360 CHAIRPERSON OF THE COMMISSION: No. It will be like if I want to announce my glasses here and Madam Chair wants to do it. We can do it, but then we bring the information and because we both bring it and it's a comparison, you categorize then the program as being informative or educative by nature because there is a comparison of products brought forward.
25361 MS LARRATT: And you are educating us about your product and you are answering the questions of the people who are out there, the viewers. If they have questions have about your product, questions that they don't feel have been answered during our program, they can get answers to that question either directly over the telephone, through the web and eventually digitally.
25362 CHAIRPERSON OF THE COMMISSION: In the programs you will be bringing to life, either through your own company or in-house facilities or through independent producers, how much of that programming will be an overlap of what we will see on other channels, either The Shopping Channel, either "comment on appelle ça?" available times on conventional channels, what would be the percentage?
25363 MS LARRATT: Are you asking us if we are going to sell our programming, our original programming to other stations?
25364 CHAIRPERSON OF THE COMMISSION: Or buy it. It could be both ways I suppose.
25365 MS LARRATT: Or the paid programming, are we going to see Tai Bo on one channel and Tai Bo on another channel?
25366 CHAIRPERSON OF THE COMMISSION: How much of your programming will we see on other channels, or have we seen on other channels, or are we about to see on other channels?
25367 It doesn't matter which way it goes, but it's always with the same concern about diversity being one of our criteria. It's important that we get an image for the viewer out there, how much of what you are proposing is unique.
25368 MR. KOEHLER: I think the programs that we are going to produce or have produced are going to be exclusive to KRG, or to TV to Web, I'm sorry. So you won't see them anywhere else other than our channel.
25369 CHAIRPERSON OF THE COMMISSION: So it would be 100 per cent exclusive to your channel?
25370 MR. KOEHLER: That's correct. Our original and our Canadian production, yes.
25371 CHAIRPERSON OF THE COMMISSION: What about the total schedule you are proposing?
25372 MR. KOEHLER: The paid programming --
25373 CHAIRPERSON OF THE COMMISSION: Because that's what I am talking about, it's the schedule itself because the viewer doesn't know whether it's -- here's the original hours and then you can, you know --
25374 MR. KOEHLER: What we have discovered and I guess it's very hard to say, I mean there's the top 50 infomercials that do very, very well, and some of the networks run them in prime time. You see them all over and they have their life and they leave and so on and so forth and that's how it works.
25375 I don't know how much of ours -- of those types of program other people will have. Our objective is to broaden our programming and decrease that, but I guess it's a reality that infomercials are a very strong form and a lot of people are using them. I have no idea what the percentage that someone else carries and we are going to carry.
25376 CHAIRPERSON OF THE COMMISSION: Well, you have the knowledge, though, of the business you are in and in that project I suppose you have some idea.
25377 We have been talking, for example, in the digital universe there is a pessimistic forecast and optimistic forecasts. What would be -- in terms of diversity what would be your pessimistic forecast and your optimistic forecast, optimistic being not too much overlap and pessimistic being more overlap in the sense of the dimension of diversity, not necessarily that the viewer might be delighted. We are talking here about the measurement of diversity.
25378 MS HANLEN: I think percentage-wise I think if we are looking after our station and taking care of our clients the overlap I don't think is significant.
25379 If you are asking about the repeat factor in there as well, we are looking at extremely low. We are looking at maybe 17 per cent. Is that the repeat factor? So 17 --
25380 CHAIRPERSON OF THE COMMISSION: Seventeen?
25381 MS HANLEN: Seventeen. So we are looking at once we get our original programming on the air and it starts to repeat, it's very, very low.
25382 CHAIRPERSON OF THE COMMISSION: For yourself.
25383 MS HANLEN: Ourselves. However, the paid programming that is coming in, say from the U.S., and we want to run a Tai Bo and we want to have the option to run it on a Saturday afternoon at four o'clock or something, I think optimistically we would like to keep that quite low because it would benefit us and it would also benefit the structure of this Commission.
25384 But, realistically, to start because that's where we are coming from, we want to reverse the process and say this is where we are starting. We could maybe look at maybe 25 per cent and decreasing it to match our repeat factor of 17 per cent and then just build up. Is that too low?
25385 CHAIRPERSON OF THE COMMISSION: Pardon me. Go ahead.
25386 MS LARRATT: It's not a percentage. It's the repeat factor is 70.
25387 CHAIRPERSON OF THE COMMISSION: But what you are saying at start to launch the channel might be as high as an overlap of 25 per cent, and then there would be --
25388 MS LARRATT: That would be a high end.
25389 CHAIRPERSON OF THE COMMISSION: -- normally a decrease where it could come down to 17 or in that vicinity?
25390 MS HANLEN: I think in our situation that would be realistic.
25391 CHAIRPERSON OF THE COMMISSION: Thank you very much.
25392 Thank you, Madam Chair.
25393 THE CHAIRPERSON: Commissioner Williams.
25394 COMMISSIONER WILLIAMS: Thank you.
25395 TV to Web, I guess I am getting the impression through your presentations and through our analysis of your application that it will enrich and strengthen Canada's cultural, political, economic and social fabric by helping Canadians do business through their television and Internet services. Is that some of the things that you have said?
25396 And it will give Canadians clear and valuable information as to what is available on the world-wide web, how to use the web most effectively and how they can make the web work for them. Would those statements all generally be true about your application?
25397 MR. KOEHLER: Yes.
25398 COMMISSIONER WILLIAMS: So if you are more of a how-to programming service than an Internet shopping and promotion channel, in your opinion would that add programming diversity to the Canadian broadcasting system?
25399 MS LARRATT: Are you saying that if we could add more how-to, is that what --
25400 COMMISSIONER WILLIAMS: No. Let's assume that you are a how-to.
25401 MS LARRATT: Okay.
25402 COMMISSIONER WILLIAMS: Are you a how-to?
25403 MS LARRATT: Well, I think that in essence that's part of it, but I think our assumption is our viewers are not starting at ground zero. So if we are to do a sport-type show, which we have included in there, we are not going to teach them how to ski.
25404 COMMISSIONER WILLIAMS: You might teach them how to find the best pair of skis that --
25405 MS LARRATT: And what all the various options are and if you are this type of skier what type of product is best for you if you are just beginning, if you are in the middle, if you are an advanced or an expert skier. So you would be able to see those products, but we are not going to show you how to ski. Does that help clarify?
25406 COMMISSIONER WILLIAMS: Are there any services currently providing that type of information to viewers now?
25407 MR. KOEHLER: Not that we are aware of.
25408 COMMISSIONER WILLIAMS: You talk a bit about, and following up on Commissioner Wilson's art and music market, it says it will offer an unprecedented opportunity for the promotion of indigenous arts. Can you tell me a bit about that program and how you plan on doing it? Give me an example of what a typical program would be like from a content point of view.
25409 MS LARRATT: I think like all our programs it will have a host and a series of experts and/or guests. In this particular case, say in one program you might have, say, an artist who is from Nunavut who is a part of the program. There may also be a rap artist from downtown Toronto who will part of the program and so on. They will get an opportunity to show us some of their work and to talk to us about that work, and then, obviously, during the commercial breaks they get an opportunity to sell it.
25410 We believe -- and why I say it's an unprecedented opportunity is because the kind of programming we do is exceptionally affordable. So this isn't out of their league. This isn't out of the realm of possibility, whereas getting some space in a swish art gallery in Vancouver or Toronto or Halifax or Edmonton, for that matter, wold be out of reach for many of them.
25411 We always hear stories of people toiling away in poverty for what seems like forever. If they have a good product and it's going to, you know, have that opportunity to get an audience now instead of having to wait for a promoter to show up in a remove area of Nunavut or whatever.
25412 COMMISSIONER WILLIAMS: What kind of outreach program would you have? I would imagine this artist will have to find the TV to Web office and get in contact with you much as they would a gallery.
25413 MS LARRATT: That would be our sales force. That would be us. Our sales force actually at this time is very strong in that area. We have people who are actively in these types of industries, people who we have brought on staff are people with various experience. We have artists, athletes, coaches, people who are passionate about what they do and who are doing sales and who are actually out there in the community as well as -- have come from various backgrounds.
25414 When we are promoting TV to Web, whether it's on our Internet, Web site, we will have certain access to our magazine. We have a subscriber base. We have very good networking capabilities within our grassroots community.
25415 Being from Edmonton, we are very aware of the importance of being out west, the benefits and the drawbacks of that. We are already very good at outreach.
25416 Thank you for that question.
25417 COMMISSIONER WILLIAMS: In your expense projections, and I don't have the full expense projections here, but I have a brief summary -- I am going to question you in general terms anyway, so you can probably answer in a general manner.
25418 TV to Web has indicated somewhat higher technical costs and revenues. For example, 41 per cent in year one, moving towards 17 per cent over the seven year term.
25419 I guess what our staff has noted is that some of the service also indicates the satellite charges that are virtually double to those indicated by some of the other applicants. Could you comment on the apparent high costs for satellite carriage?
25420 MR. KOEHLER: That was acquired by Access, I believe, at the time. We have consequently received other quotes that have been lower. That's the one we put in at the time. The comment I can make is --
25421 COMMISSIONER WILLIAMS: I guess it was based on an earlier quote and you have since gone to the marketplace and found a more attractive deal.
25422 MR. KOEHLER: Perhaps better deal, yes.
25423 COMMISSIONER WILLIAMS: Okay. Thank you very much.
25424 I have no further questions, Madam Chairman.
25425 THE CHAIRPERSON: Thank you.
25427 MR. STEWART: Thank you, Madam Chair.
25428 Just for clarification as to whether the infomercial revenue projections that you have will stem exclusively from the paid programming category.
25429 MR. KOEHLER: Yes, it is.
25430 MR. STEWART: And further clarification. Is the term that you have used, "edumercial", different from paid programming?
25431 MR. KOEHLER: Yes, it is.
25432 MR. STEWART: Thank you. In your calculation of the Canadian content exhibition percentages, did you include Canadian paid programming?
25433 MR. KOEHLER: Shawna.
25434 MS LARRATT: I'm sorry, could you repeat the question. I didn't quite hear you. I'm actually having difficulty with the volume here.
25435 MR. STEWART: In your commitment for the Canadian content exhibition, which goes from 45 per cent to 50 per cent, did you include Canadian paid programming as part of the 45 per cent?
25436 MS LARRATT: Do we include --
25437 MR. STEWART: That's correct, did you include.
25438 MS LARRATT: Yes.
25439 MR. STEWART: The answer is yes.
25440 MS LARRATT: Yes, we would.
25441 MR. STEWART: Thank you. Are you familiar with the personal Information Protection and Electronic Documents Act?
25442 MR. KOEHLER: Yes, we are.
25443 MR. STEWART: Will you be in a position to comply with that legislation, assuming your proposed service is licensed?
25444 MR. KOEHLER: Yes, we will.
25445 MR. STEWART: Thank you. Will your proposed service be technically equipped to allow for descriptive video?
25446 MR. KOEHLER: Yes.
25447 MR. STEWART: Thank you.
25448 Those are my questions, Madam Chair.
25449 THE CHAIRPERSON: Thank you.
25450 I apologize, Mr. Koehler. I think I mistakenly referred to you by your first name earlier. My apologies.
25451 The last word is yours.
25452 MR. KOEHLER: All right. I would just like to read a quick summation and that should sum it up for us. Thanks for your patience.
25453 KRG Television is a fresh face in Canadian television. We are interactive now, using existing technology and with the addition of the set-top box, we will be fully interactive.
25454 We are the only applicant you have seen in these hearings who requires interactivity from its audience. We appeal to everyone because everyone is a consumer. Our strength is our partnership with the business community. We are not in competition with any other applicant. In fact, no one has intervenor application.
25455 We do not own any other production company. We do not want to own any other production companies. We want them to be successful on their own merits. Our aim is to hire various production companies, not just a select few.
25456 We are different. We are what the viewers need. We are not duplicating something that is already out there in great abundance. If the Commission truly wants to deal with new players who have new ideas, then TV to Web is their obvious choice.
25457 One thing we all understand in this industry is the change -- that things are changing and it's time for a change.
25458 Thank you very much.
25459 THE CHAIRPERSON: Thank you, Mr. Koehler, and your colleagues. We may see you then in the next phases of the hearing. You have the privilege of being the last of the applicants. You are getting the last word in this phase at least.
25460 Thank you very much.
25461 MR. KOEHLER: Thank you very much.
25462 MS LARRATT: Thank you very much.
25463 THE CHAIRPERSON: This completes Phase 1 of the hearing, which is the hearing of the hearing of the applicants. We will proceed tomorrow with Phase II, which is the applicants in intervention and then to Phase III, the intervenors.
25464 I remind you of my comment earlier this afternoon that we will fill the hearing day tomorrow, so after Phase II, we will proceed with Phase III.
25465 Ceci complète l'audience des requérantes, puisque voilà que nous avons entendu la dernière requérante. Demain matin nous procéderons à la Phase II qui est la phase où les requérantes peuvent intervenir l'une contre l'autre et à la fin de la Phase II comme je l'ai indiqué plus tôt cet après-midi nous commencerons la Phase III qui consiste en les interventions de parties autres que les requérantes.
25466 Alors nous reprendrons demain matin à 8 h 30.
25467 We will be back at 8:30 tomorrow morning.
25468 Thank you.
--- Whereupon the hearing adjourned at 1512, to resume
on Tuesday, August 29, 2000 at 0830 / L'audience
est ajournée à 1512, pour reprendre le mardi
29 août 2000 à 0830