TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
APPLICATION FOR NEW BROADCASTING LICENCES FOR FM IN CALGARY/
DEMANDE D'UNE LICENCE DE RADIODIFFUSION VISANT L'EXPLOITATION
D'UNE ENTREPRISE DE PROGRAMMATION DE RADIO FM À CALGARY
Telus Convention Centre
Telus Convention Centre
120 Ninth Avenue Southeast
120 - 9e avenue Sud-Est
November 2, 2000
le 2 novembre 2000
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Public Hearing / Audience publique
Application for new broadcasting licences for FM in Calgary/
Demande d'une licence de radiodiffusion visant l'exploitation
d'une entreprise de programmation de radio FM à Calgary
BEFORE / DEVANT:
ALSO PRESENT / AUSSI PRÉSENTS:
Hearing Manager and Secretary / Gérant de l'audience et Secrétaire
Legal Counsel /
Telus Convention Centre
Telus Convention Centre
120 Ninth Avenue Southeast
120 - 9e avenue Sud-Est
November 2, 2000
le 2 novembre 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
INTERVENTIONS BY / INTERVENTIONS PAR
Calgary International Children's Festival
Calgary International Organ Foundation
Caribbean Community Council of Calgary
REPLY / RÉPLIQUE
Gary Farmer (OBCI/SDEC) Aboriginal Voices Radio
Standard Radio Inc.
Craig Broadcast Systems Inc.
Telemedia Radio (West) Inc.
APPLICATION / APPLICATION
Saskatchewan Telecommunications (SaskTel)
INTERVENTIONS BY / INTERVENTIONS PAR
Access Communications Co-operative Ltd.
REPLY / RÉPLIQUE
Saskatchewan Telecommunications (SaskTel)
Calgary, Alberta / Calgary (Alberta)
--- Upon resuming on Thursday, November 2, 2000
at 0904 / L'audience reprend le jeudi 2 novembre
2000 à 0904
4622 THE CHAIRPERSON: Gentlemen, if you will please take your seats, we will reconvene the hearing, Day 4 of the Calgary public hearing.
4623 Mr. Secretary.
4624 MR. BURNSIDE: Thank you, Mr. Chair.
4625 Just a brief explanation of how we will proceed this morning to complete Phase III.
4626 We will start at Intervention No. 30 and call the five intervenors that weren't called yesterday. Then we will go back through the list of the no-shows yesterday, and they will get one chance to come up if they happen to be in the room.
4627 With that said, I would like to call Intervenor No. 30, John Hyde.
4628 THE CHAIRPERSON: Good morning, Mr. Hyde. Proceed when you are ready.
INTERVENTION / INTERVENTION
4629 MR. HYDE: Thank you for this opportunity to appear before the Commission.
4630 I appear as a proud Canadian and southern Albertan whose great grandfather came to this region from Lower Canada in the 1880s. I represent the Freelance Jazz Players of Calgary. I also sit on the Board of the Calgary Musicians Association. As well, I am Artistic Director of the Jazz Studies Program at the Mount Royal College.
4631 As a player, I have performed over the last 30 years with great Canadian artists such as Senator Tommy Banks, Brian Hughes, Denny Christianson, Rob McConnell, Oscar Lopez, Oliver Jones, Guido Basso, Ron Paley, and many more.
4632 International artists I have performed with include: Sheila Jordan, Marion McPartland, Pepper Adams, Eddie "Lockjaw" Davis, Julian Priester, Mark Murphy, and many more, locally and internationally.
4633 I have also been a member of the Juno Committee judging for best jazz album of the year, as well as Calgary International Jazz Festival Artistic Director and a contributor for the Jazz Report Magazine in Toronto.
4634 I have teaching experience at the Conservatory at Mount Royal College, University of Calgary, Faculty of Education at the University of Alberta, Red Deer College, University of Lethbridge. I have been a clinician and adjudicator for many jazz festivals in the province.
4635 I also administrate a Summer Jazz Workshop at Mount Royal College. I am very thankful to see that Telemedia's proposal, which was presented to me several months ago, includes funding for this workshop, which would be able to increase its scope and lower fees to become more available to the young students in our city.
4636 I would like to tell you what a jazz station will mean to musicians in Calgary. We have a lot of hard-working talent in the city and many students learning the craft. There are many regular venues presenting jazz. I could name 10, if I wasn't so nervous right now.
--- Laughter / Rires
4637 MR. HYDE: Many more private corporations are presenting jazz just as part of their events. It is becoming a big thing in Calgary. It's a growing industry.
4638 In the last five years I have witnessed explosive growth for the jazz idiom in Calgary in: attendance, CD sales, concerts and clubs. People in Calgary are coming out to jazz venues like never before and expressing a real interest in the art, asking performers many interesting questions and buying our CDs directly from us.
4639 I believe this is due to the fine teachers of the city who are teaching young performers the art, history and spirit of spontaneous composition, which jazz is. We are practising an art which has been created and evolved solely on this continent. Alberta was the first Canadian province to witness a true jazz band, and I think the spirit of that performance in the early 1900s has lived on here. Jazz is the pinnacle of art and music. Students who learn the complete harmonic spectrum of the jazz language have the knowledge to play any contemporary sound produced today.
4640 I want to tell you a story about a local singer friend of mine who started workshops five years ago. She invited all sorts of singers to come out, people who had never sung before in public but had a dream to sing in front of a jazz trio, and it was surprising how many people showed up -- 25 the first year. Every year since she has been full.
4641 What happens in these workshops is they rehearse a tune with the band and they get up in front of a public audience and perform in a club here in town. It's packed when they do this. Over 100 people show up, just friends and family.
4642 What happens afterwards, for years since, you know, from five years ago, these people who have shown up to watch are bringing their friends and so on, and it's snowballing. We get a different crowd every year, but the people who came five years ago are still coming, and so, you know, it's a wonderful accumulative effect.
4643 The junior and senior high school students whom I often workshop with, they also bring their mentors, their friends, their family. They continually add to the jazz-going public in Calgary.
4644 I am so impressed by the breadth of knowledge they display I have to share another anecdote with you.
4645 After hearing a very good, young, 18-year old sing, I had to tell her how mature and excellent her performance was. As I often ask young students, I asked her to tell me who she listened to. She replied: Diana Krall, Peggy Lee, Nancy Wilson, Billie Holiday, Nina Simone. I can't tell you how great that was to hear that from a young, 18-year old kid. Ten years ago I don't think I would have heard that from a college student, from a university student, and now I'm hearing it from high school students.
4646 I think my story sort of underlines the importance of jazz and the culture of this city. It is a growing art. It needs a radio station to help support it.
4647 There is no dedicated radio station in Calgary which is all jazz all the time. We need a radio station with a format devoted to jazz in order to reach a wider, more focused audience. Public service announcements about local events will reach the affluent, sophisticated audience we need to support our art.
4648 We need the programming of Canadian content to provide exposure for Canadian contemporary jazz artists so our youths will be encouraged to take on this music as a career. Although jazz is an art form which originates on this continent, there has not been enough support from private industry to nourish it. The Canada Council and CBC have done a fine job in the past, but, as we all know, they are devolving away from the support of this kind of thing, and I think it is time for commercial institutions to pick up the slack.
4649 This country has produced world class talent and jazz: Oscar Peterson, Kenny Wheeler, Tommy Banks, Moe Koffman, P.J. Perry, Diana Krall. There are many of my friends who would have loved to have stayed in Canada, but as a result in the reductions in government supported institutions like the CBC and Canada Council have moved to the U.S. to teach and play, Europe also, to continue their careers.
4650 I would like to speak on behalf of all those artists and encourage you to approve this application so that our children have a future in our country performing in this art.
4651 I applaud the Telemedia initiative to spend $350,000 on free public performances for the Jazz Festival Calgary organization. This initiative will allow local performers to mix with internationally known ones with a twofold effect. We will see great talent in a live setting, and quite possibly many local artists on the bill will get a chance to mix with this great talent. It has occurred in the past in Montreal and many other festivals around the world.
4652 Thank you for listening to my intervention today. I urge you to approve the Telemedia (West) proposal for Smooth Jazz Calgary.y
4653 THE CHAIRPERSON: Thank you, Mr. Hyde.
4654 This morning Commissioner Noël will lead the questioning.
4655 COMMISSIONER NOËL: Good morning.
4656 MR. HYDE: Good morning.
4657 COMMISSIONER NOËL: And we don't have teeth so we won't bite you.
4658 MR. HYDE: Thank you.
4659 COMMISSIONER NOËL: You mentioned that having a radio station broadcasting jazz all day long would cater to the affluent and in return you could count on their support for your jazz initiative. Is that what I understand you to say?
4660 MR. HYDE: To some degree, yes. I think it would be helpful.
4661 COMMISSIONER NOËL: And you are aware of the -- so it would have a snowball effect.
4662 MR. HYDE: I believe so. You know, most of the people I meet who study music and support their kids in music are of a more affluent nature, but it does definitely percolate all over the city. It's not just for them.
4663 COMMISSIONER NOËL: Thank you very much. I don't have any further questions.
4664 MR. HYDE: Okay.
4665 THE CHAIRPERSON: Commissioner Cram.
4666 COMMISSIONER CRAM: I asked this question of somebody in relation to urban music -- and you actually talked about people getting played on CBC and getting Canada Council assistance and then having to leave the country -- that I would assume that they also would have received money from FACTOR to make CDs and everything else.
4667 MR. HYDE: Yes. Yes, many would have.
4668 COMMISSIONER CRAM: As the case would be now, there is -- I don't even think there is one outlet for jazz in Canada in terms of a jazz radio station, except for the Hamilton one that is going to be licensed.
4669 MR. HYDE: The Hamilton station, yes.
4670 COMMISSIONER CRAM: And it has not started, I don't think, has it?
4671 MR. HYDE: I'm sorry, I don't know. I followed the application, but I don't know where they are at.
4672 COMMISSIONER CRAM: So right now they only have the one outlet in terms of a dedicated station?
4673 MR. HYDE: Yes.
4674 COMMISSIONER CRAM: Thank you.
4675 MR. HYDE: Thank you.
4676 THE CHAIRPERSON: Commissioner Langford.
4677 COMMISSIONER LANGFORD: I was just wondering, sir, in terms of what we might hear on this radio. If I could just borrow from your experience for a bit. You named some people like Billie Holiday and Diana Krall, and that is pretty -- those are obvious.
4678 MR. HYDE: Yes.
4679 COMMISSIONER LANGFORD: But I was wondering where the limits are to what you might call smooth jazz and how far does it go towards classical on one side and how far does it go towards hard rock on the other? Where are those limits?
4680 Can you give us some sort of idea of entertainers or names that might be on the fringes rather than dead in the centre?
4681 MR. HYDE: Oh, sure. From my perspective.
4682 COMMISSIONER LANGFORD: Yes.
4683 MR. HYDE: Well, I know that George Benson, he was an artist who played with Miles Davis in the early years, but he did go towards the smooth jazz kind of sound, before the term was invented really. It is, I think, a fairly recent term.
4684 Brian Hughes was someone I played with 20 years ago in Edmonton that was mimicking an artist Pat Matheeny and he learned a lot from that. That is a smoother sound too.
4685 On the fringes --
4686 COMMISSIONER LANGFORD: What I was thinking of -- and I may be completely out to lunch here, it wouldn't be unprecedented -- but if you get someone like Gershwin, to go back a bit --
4687 MR. HYDE: Yes.
4688 COMMISSIONER LANGFORD: -- he did opera, he did jazz, he did scores for movies.
4689 MR. HYDE: Right.
4690 COMMISSIONER LANGFORD: Does smooth jazz cover almost that whole spectrum or where would it stop. Would it stop short of Porgy and Bess on one side and movie scores on the other? That is what I'm trying to get a sense for.
4691 MR. HYDE: I see.
4692 COMMISSIONER LANGFORD: I find it a difficult term to nail down.
4693 MR. HYDE: It is a difficult term, but my experience of just hearing it, you know, it's hard to put it into words. I could tell you it is not John Coltrane playing A Love Supreme, I could tell you it is not Sun Ra. Just like in classical music, you wouldn't be playing a Penderecki piece on a smooth classical station, to kind of take a leap.
4694 If you were going to use a classical analogy, I would say Mozart would be smooth classical music, very tonal classical music, had a key centre that kept coming back that the listener could relate to. It wouldn't be wandering around.
4695 COMMISSIONER LANGFORD: So have they limited themselves perhaps too much by going with "smooth jazz"? Should they just have perhaps said "jazz"?
4696 MR. HYDE: No. There is an American model -- I have a lot of friends, as I said, playing down in the States, so I think there is a definite genre there. You know, you require jazz ability to play it, but it's not classical jazz, it's not like Oscar Peterson typically. It is a much more modern sound, it has some electronics in it, it has washes of sound, it is relaxing to the listener. It's not challenging. It doesn't challenge the listener.
4697 COMMISSIONER LANGFORD: It is more Windham Hill than John Coltrane.
4698 MR. HYDE: Yes, absolutely. Very much so.
4699 For that reason it is more popular. You know, I am very happy about it because it is bringing people who need those jazz skills to the forefront and I think it is an important commercial development.
4700 COMMISSIONER LANGFORD: Thank you very much.
4701 MR. HYDE: Thank you.
4702 THE CHAIRPERSON: Thank you, Mr. Hyde.
4703 There will be no further questions.
4704 MR. HYDE: Thank you.
4705 THE CHAIRPERSON: Mr. Secretary.
4706 MR. BURNSIDE: I would like to now call the Calgary Board of Education, represented by D.W. Royan.
--- Pause / Pause
4707 MR. BURNSIDE: They don't appear to be in the room, so I will move on to the next one.
4708 The Calgary International Children's Festival, represented by JoAnne James.
--- Pause / Pause
4709 THE CHAIRPERSON: Please be seated.
4710 Please proceed, Ms James.
INTERVENTION / INTERVENTION
4711 MS JAMES: Good morning. That woke everyone up, I'm sure.
4712 Good morning. I am very happy to be here to support the Craig family Harvard Developments application to launch a new FM radio station in Calgary.
4713 I welcome you to Calgary on behalf of everybody that is supporting these great initiatives, and I think that they are all superb.
4714 We really like the family and community-minded approach that the Craig family and the Harvard Developments organization is taking. We feel that there is a need in the community for a family centred programming approach in radio and we very much like their proposal.
4715 They are eager to get involved with our organization and here is one of the reasons why. Did you know that Canadian Living magazine recently named Calgary the best place to raise a family in Canada?
4716 In her introductory remarks for our Friends of the Festival campaign, Ms Kit Chan who is the wife of our Mayor Al Duerr -- I don't know if any of you have had the chance to meet him while you have been here -- opened her campaign with that question. Two of the reasons cited by Canadian Living were the Calgary International Children's Festival and Child Friendly Calgary, a program that was initiated by our festival.
4717 We are fortunate to live in a city that supports world class programs for children. Our festival is a dynamic event that has become a model of learning, artistic expression and community spirit. The festival is a five-day celebration featuring the world's finest performing artists presented right here across the street in the glorious Calgary Performing Arts Centre.
4718 For five magical days downtown Calgary is transformed by the sounds of laughter, delight and discovery as thousands of children descend on the Olympic Plaza, the Performing Arts Centre and the Calgary Public Library in a multicultural celebration that is held just for them. They experience the best performances for children that the world has to offer, presented in our city's finest theatres. In addition, they actively participate in hands-on activities that include building puppets, playing games, learning dance and building indigenous crafts.
4719 The support of The Mix, which is the station proposed by the Craig family Harvard Developments partnership, will help us do the following: It will help us enable everyone to attend. It is only through sponsorships like this one that we can keep our ticket prices affordable to everyone. We are able to offer tickets to world class performances for children for under $5. This is a fraction of what an unsubsidized ticket would cost to world class performances in theatre, dance, music, puppetry and more.
4720 It will help us to foster global awareness. Children gain a sense of themselves as citizens of a bigger world at our festival. We have hosted performances from Argentina to India, from Sweden to Uruguay. Over 70 countries have been presented, from Peruvian story-telling to South African Gumboot dancing. The festival finds a myriad of methods to teach children about the world. This application would help us to do that.
4721 We can send children a strong, clear message about the value of culture in their lives. The support of The Mix would be a testament to the vitality of the arts and their ability to challenge how we see, hear, think and feel. We would make Calgary a more dynamic place to live.
4722 The festival contributes to the reputation of ours as a world class city. We contribute to the vibrancy of our downtown core in addition to generating a significant economic impact for local businesses.
4723 We are very proud of our festival and its place in our community. On a national basis, we are now considered to be the second largest children's festival in Canada.
4724 We were proud to welcome Prime Minister Jean Chrétien to the big birthday celebration here on the Olympic Plaza next door when we had our 10th anniversary birthday in 1996. It is not often that he is welcomed here by cheering crowds of Calgarians and our festival was very proud of that, that we were able to make that happen, and we were also very pleased to receive the national coverage that resulted on such an occasion.
4725 As we enter our 15th year, some of the unique challenges that we face as an organization are ones that a sponsorship from The Mix would assist us in overcoming.
4726 Unlike many of our colleagues in the presentation of festival programming, we cannot support our operations with beer tents. We face adult-sized prices in terms of fees, airfares and hotel rooms, but we cannot subsidize any of these costs with alcohol sales, obviously.
4727 Our audience is short and our ticket prices need to be low. Unlike the adult-based festivals, we cannot charge adult-sized ticket prices. We also can't make a small fortune in the merchandising area. Whereas a jazz or folk festival patron can drop $30 or sometimes $40 on a souvenir sweatshirt on top of his or ticket price, we are glad if a child is able to buy a $1 clown nose in our merchandising tent. Still, our costs for renting that tent, cash register, insurance, venue rental, staffing, et cetera, are all the same as the other festivals.
4728 Our largest costs, of course, are the artists.
4729 For your reference, here is how our budget works.
4730 Our production costs are 53 per cent, that means the fees that we pay directly to the artists and all the costs attendant to that. Our marketing and community resources programs cost 37 per cent, and our administration represents about 10 per cent of our budget.
4731 In terms of revenue, from the community sector we bring in 53 per cent; from box office and merchandising we bring in 28 per cent; and from the public sector, 19 per cent.
4732 Our spending this year on artists is $201,000.
4733 You might want to note that six our of our 15 companies that we are bringing to our festival this year are Canadian artists, so that is about 40 per cent of our programming.
4734 We work very close with the school boards here in Calgary on making the festival a related program to the curriculum. We have representatives of the both the Calgary Public and the Calgary Catholic Board on our steering committee. They help us to develop the festival so that it works very closely with the curriculum, so that teachers can very easily justify a visit to our festival.
4735 That is a little bit about us. We would be very happy to work with the people that are putting together this very important family station.
4736 As you can see, our community sector support is very crucial to our success and we would be very pleased to welcome them to our family of sponsors.
4737 Our presentation of international artists has always been a cornerstone of our programming. With the support of this initiative we would be able to maintain our work in that area and expand our presentation of Canadian musical and artistic talent.
4738 Those are my remarks this morning. If you have any questions.
4739 THE CHAIRPERSON: Thank you, Ms James.
4740 Commissioner McKendry will lead the questioning for the Commission.
4741 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
4742 Thank you for coming this morning. Just tell me a little bit more about the performers. I think you mentioned 40 per cent of the performs are Canadian. Are any of the performers from Alberta or Calgary?
4743 MS JAMES: Yes. Yes, many of our performers are from Alberta and from Calgary.
4744 COMMISSIONER McKENDRY: In terms of the support that Craig/Harvard is proposing, could you tell us a little bit about what specifically that would allow you to do that you aren't doing now?
4745 MS JAMES: I would say that it would support the work that we are doing now. I see maybe the very real possibility of an expansion of our Canadian programming, certainly being able to support it more fully through the school system to help us cover the costs of what we are doing now is a big part of it. I would see the importance of expanding our Canadian presence at our festival would be part of it.
4746 COMMISSIONER McKENDRY: Thanks very much. Those are the questions I had.
4747 THE CHAIRPERSON: Thank you, Ms James.
4748 There are no further questions.
4749 Mr. Secretary.
4750 MR. BURNSIDE: I would now like to call the Calgary International Organ Foundation, Timothy Rendell.
INTERVENTION / INTERVENTION
4751 MR. RENDELL: Thank you.
4752 Good morning, gentlemen. My name is Tim Rendell and I am President of Calgary International Organ Foundation.
4753 I am very pleased to speak in support of the application by Craig Broadcast Systems and Harvard Developments Inc. to establish a new FM radio service for the Calgary community.
4754 In my comments I will give you a brief overview of who we are and what we do, followed by the reasons we strongly support this application by Craig and Harvard.
4755 Calgary International Organ Foundation, or CIOF for easy reference, is a Calgary based not for profit organization based right here in Calgary, operating in the community for the community.
4756 Our sense of mission, we are not about livers or hearts. It is all about music. Our sense of mission is that music enriches the community through entertainment and education. Activity in music, whether by listening or by performing, enhances quality of life for individuals in the community and for the community as a whole.
4757 Our sense of mission is all about the relevance and power of music, and how it connects people and helps build community. Our chosen instrument or vehicle, if you will, to bring music to the community is the organ. At the centre of our activities is the pipe organ, but our programs embrace the entire organ family of instruments.
4758 The organ is central to our programs for the community because we believe the pipe organ is undervalued and misunderstood by so many, and deserves a better place in our collective minds. The organ has an incredibly rich and fascinating history stretching across the past 2,500 years of socio-economic development of the western world.
4759 The organ is by far the oldest instrument of music still played today by the same principles as when it was invented 2,500 years ago. Today we think of the organ as a church instrument yet, in fact, it has been associated with the church for less than half of its life to date.
4760 When a Greek inventor named Cstebius invented the organ 2,500 years ago, it was built not as an instrument of music, but as a demonstration of man's genius and engineering prowess: If many can play the pan pipes, can we make a machine that plays the pan pipes. That tension around the organ, is it an instrument of music or is it a mechanical contraption, has endured to this day. In truth, the organ is some of both and all the more fascinating because of that tension.
4761 It was used by the Romans as an instrument of heraldry and entertainment, literally to accompany games, perhaps even the Christians versus the lions, certainly gladiatorial battles, a tradition that still lives on today in the Saddledome and other sportsplexes around Canada and North America.
4762 More music has been written for the organ than for any other solo instrument, and perhaps for all other instruments combined.
4763 Canada holds a special place on the world stage of organ building, as we are home to one of the world's leading organ builders, Casavant Frêres of Ste-Hyacinthe, Quebec, who, over their 150-year corporate history have build approximately 3,000 instruments that can be found throughout North America and the rest of the world. And then there are all the related and derivative instruments that range from the accordion to the harmonium, from the theatre organ to the Hammond B3 and the whole world of electronic instruments.
4764 As I say, a fascinating family with many fascinating stories to tell. More on that another time.
4765 We operate at two levels of mandate: the global community and the Calgary community.
4766 While the global part sounds a little grand, I want to offer this very brief overview of our global activity. We present the largest and most significant international music competition in organ in the world, largest in terms of scope and scale, largest in terms of total prize money.
4767 This competition is held once each four years, with the World Finals here in Calgary. To find the finalists from around the world, we are on the ground presenting events in Hong Kong, China; London, England; Cape Town, South Africa and Atlanta, Georgia. These events in these four locations are all presented by CIOF under the flag of Calgary, Alberta, Canada.
4768 In presenting these events outside Canada we are collaborating with all three levels of government in Canada, as they and we better understand how important this international cultural activity is to positioning Calgary, Alberta, Canada in the global competitive marketplace.
4769 Just a quick fact to drive home a point here. We are a member of the World Federation of International Music Competitions, a self-regulating federation of the world's most prestigious international music competitions. In the year 2000, world wide there are 105 members of that federation covering every discipline of music performance. Of these 105, only 10 are North American, which is some comment on the significance of classical music in North America versus Europe that is home to all the rest.
4770 Of those 10 North American competitions, three are Canadian, and here is the surprising fact, all three Canadian competitions are right here in the Bow Valley corridor; that's The Banff International String Quartet Competition, the Esther Honens Calgary International Piano Competition and the our Calgary International Organ Festival. This fact, combined with other examples of Calgary's cultural richness and diversity, contributes to the development of an enhanced image of Calgary as perceived by Calgarians and as perceived by the rest of the world.
4771 Second, and perhaps most relevant for this hearing, CIOF operates at a Calgary community level, bringing programs to the community for the entertainment and education and the benefit of this community. I will mention a few examples of our programming to show how we do this.
4772 We present Calgary's longest running series of free non hour concerts called Organ à la Carte that for the past 12 years has brought about 6,000 people each summer into Jack Singer Concert Hall to hear local talent. That's talent from Calgary, from the rest of Alberta, from Manitoba, Saskatchewan, Ontario, Quebec, British Columbia, to perform on the Carthy organ or on the theatre organ, the Hammond B3, with a huge variety of other instrumentalists, vocalists and choirs performing along with the organ.
4773 We also present an annual spring concert to celebrate the anniversary of the inauguration of the Carthy organ, which is a gift to the community from a private foundation in 1987. This annual celebration sells out each year and is designed to show that the organ can be associated with pure entertainment. Next spring our production will use a wide variety of local talent not just in music, but in dance and drama.
4774 We also present special concerts and special series from time to time, one ofs, if you will. Our most recent is a Bach 2000 Festival that we presented this past June in collaboration with the Calgary Bach Festival Society to celebrate the 250th anniversary of the life of J.S. Bach.
4775 If called upon to identify the one individual who has made the most significant contribution to music for mankind in the past millennium, many would immediately name Johann Sebastian Bach.
4776 This four-day festival didn't just result in the five outstanding concerts that happened and then disappeared. By deliberate design we brought in three individual who were key international talent, seven individuals who were world class Canadian talent and all the other talent was local, including three local choirs, two of which were adult choirs, plus the Calgary Boys Choir, local musicians from the Calgary Philharmonic Orchestra, from the Mount Royal Conservatory student orchestra, and all of that local talent, all of those individuals who were then able to work with the international and national talent, the result was some outstanding performance experience for audiences and for the performers.
4777 What was particularly telling was that afterward we had both professional musicians and amateur student musicians come forward and say that it was a seminal life-changing experience for them as artists, one that they would never forget.
4778 Our fourth program area that I want to mention, and perhaps our most compelling one, is our education program for Grades 4, 5 and 6 students, here in Calgary.
4779 This program has been developed in collaboration with the music resource staff in the public and separate school boards over the past three years and is now going into its fourth year.
4780 You have a little red folder that was handed out as promotion on this program.
4781 We believe that arts and culture, in general, and music in particular, is an integral and vital part of the education process. Old think is that school systems can integrate arts and culture into the curriculum by hiring a music teacher, much like you would hire a math teacher. When budgets get trimmed, the frills go first, but the three Rs are untouchable -- music, of course, doesn't start with the letter R -- and that scene is played out too often across Canada, and indeed Alberta has experienced this over the past number of years.
4782 A new model is developing across Canada whereby school systems are collaborating with community arts companies, such as JoAnne's Children's Festival, and ourselves to bring arts and culture back into the education process for the middle school levels in particular. This movement of learning through the arts is far deeper than arts education for art's sake. Although, in this age when a liberal arts education is taking on renewed importance in the business world, art for art's sake isn't necessarily a bad thing either.
4783 The objective of our program is to integrate music and drama into core curriculum areas to help young students better develop an understanding of that core curriculum area and develop an improved sense of the relevance of music at the same time.
4784 We have developed three programs that rotate annually so that a young student progressing through the three years of Grades 4, 5 and 6 can experience all three with no repetition. All three programs are structured as two-act plays; Act I happens right there in their classroom, ending in unresolved tension, and the resolution in Act II happens in the Jack Singer Concert Hall, with the Carthy organ. For most students, and for some teachers, it's their first trip to the Calgary Performing Arts Centre and a full-sized concert hall.
4785 Our first program -- I'm going to skip over that.
4786 To create and present this program, we engage a wide variety of local talent, including drama producers, playwrights, musicians to consult on the script and story line, musicians to perform in the production, actors, stage managers, prop designers. It's a major production and, for the past three years, has played to approximately 6,000 school children each year from approximately 80 schools.
4787 So, those are four examples of what we are doing to move forward in our mission of music to enrich the community.
4788 In developing these programs for the community, we have been fortunate, to date, to find sufficient funds through sponsors, donors and grantors. But, in order to keep these programs operating, and in order to fund the development of new programs, we are constantly looking for new partners who share a sense of commitment to serving the community through the promotion and development of music programs.
4789 We need funds to continue this Grades 4, 5 and 6 program that I have explained, and we are now planning a companion program to offer to Grades 7, 8 and 9. This will take significant resource.
4790 We are extremely pleased to see Craig and Harvard propose their Canadian talent development pool in their application now in front of you to provide funds to support programs such as ours that operate in the community for the community, for the development of talent in the community and for the education of the community.
4791 Corporate support is the much-needed third leg of the stool for programs such as our education program.
4792 The school boards have the students who represent our future, whose education can be made better by learning through the arts, whether they are future talent or future audience. The arts companies, such as CIOF, have the artistic talent to design and deliver the programs to the students. The corporate sector has the resource and, in the case of Craig and Harvard, the community orientation to make the program happen for the benefit of the community.
4793 It's a powerful triangle -- a three-way partnership between the system, the arts company and a corporate partner -- that can make a powerful impact and a significant difference in the community.
4794 In closing, I offer the following additional comments on Craig Broadcast Systems and their track record to date in the Calgary community, through my direct experience with A-Channel.
4795 Firstly, their corporate personality, as displayed by the A-Channel, is an extremely good fit with the Calgary community. The personality that shines through at the A-Channel is young in spirit, bold, daring to be different, adventurous, innovative, energetic, passionate -- all words that are appropriate to the Calgary personality and that we at CIOF feel are appropriate to our organization as well. So we have a sense of kindred spirit with those personality traits that we see in the A-Channel.
4796 Second, it's evident to me that A-Channel, and Craig Broadcast Systems behind them, delivers on their promises. When the A-Channel application came forward, they promised good coverage of the local community arts and culture scene. In my experience, they have really delivered. As a member of the arts community in Calgary, I am constantly impressed with A-Channel's responsiveness to our story pitches. Any time that TV reporters show up to cover our events, you can be sure an A-Channel camera will be there. And it's the same at other events I attend: A-Channel is there letting the community know what's going on.
4797 So, we strongly endorse this application by Craig Broadcast Systems and Harvard Developments for this new FM radio service in the Calgary community because they have shown that they can deliver on a commitment to support the development of local talent for the benefit of the community.
4798 Many thanks for your time and attention.
4799 THE CHAIRPERSON: Thank you, Mr. Rendell.
4800 You spoke, in your presentation, of the Carthy organ, the theatre organ and the Hammond B3; and I read in your brochure:
"The great Carthy organ, the Calgary treasure which has been called the finest organ in North America and one of the 10 great organs of the world." (As read)
4801 Can you tell us a little bit about that before we go on with other questions specific to your intervention?
4802 MR. RENDELL: A little bit about the Carthy organ?
4803 It is a Canadian-built organ by our friends Casavant Frêres, in Quebec. It is not a particularly large instrument. It would be at the larger end of a mid-sized instrument, with about 6,000 pipes, 78 stalks. But what makes it particularly fine, above and beyond the workmanship of Casavant, who are outstanding in their tradecraft, what makes it particularly fine is -- I will back up a small step and say: one characteristic of the organ, more than any other instrument, it is a symbiotic relationship, such a key relationship, with the space that it's in, and Calgary has been really fortunate with the development of the Performing Arts Centre and the Jack Singer Concert Hall within it, which is an exceptionally good acoustic space, and we have an experience here that is half science, half artistry, and half good luck, that the instrument and the hall have fit together in an extraordinarily fine way, such that that relationship has really been an instance of two plus two being five, or more. So, a fine hall and a fine instrument have combined to make something really special. And right from the time the instrument was opened and its premier performance was done by Mr. Simon Preston, a UK-based leading conductor, composer and organist -- he was the first one to say this is an exceptional instrument in an exceptional hall and that that combination is truly special. And the legend is: the morning after the inaugural performance, he went back to the giftgivers and said, "Now you've done this and created this incredible instrument and space. What are you going to do next? Will it, like so many organs around the world, just gather dust?", and the response was, "Well, you tell us what we should do, Mr. Preston", and he said, "Hold this festival and competition in Calgary. Put this instrument on the world map." And Calgary, being a "can do" place, has done that. It's taken us 10 years but our view is we are really just beginning.
4804 The theatre organ and the Hammond B3 are just excellent examples of the balance of the organ family. Without exaggeration, I think it can be said -- we heard a jazz intervenor a few moments ago. Jazz has developed around southern Baptist Afro-American roots in the church, driven by -- originating with the electronic organ. It really is the birthplace of jazz in North America. So the Hammond organ, or that member of the organ family, has, in many ways, made this huge foundational -- the origins of jazz as we know there.
4805 You can tell I'm a fan of the organ and the role it has played in music.
4806 THE CHAIRPERSON: Thank you for those comments.
4807 Commissioner McKendry will continue the questioning of your intervention.
4808 Commissioner McKendry...?
4809 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
4810 I was just looking through the appendix to your presentation where you provide a great deal of information about the prevalence of the organ throughout all forms of music and I was thinking to myself, it won't be long before we have an application for an all-organ format --
--- Laughter / Rires
4811 MR. RENDELL: We're working on it.
4812 COMMISSIONER McKENDRY: -- the amount of organ music that seems to be available, and I'm a little disappointed that you left the band off the modern Canadian music, which I always thought made good use of the organ.
4813 But, in any event, just let me ask you if you could be a bit specific about what the Harvard/Craig application would mean, in terms of allowing -- if we approved it -- in terms of allowing your organization to do things that it isn't doing now.
4814 MR. RENDELL: I want to be clear that Harvard and Craig have, to this point, made no specific commitments to us. Nor have we asked for any.
4815 Our discussions with Craig and Harvard have arisen out of our sense of connection with A-Channel and the kindred spirit, in terms of personality. Out of those discussions, they have made it clear to us their sense around Canadian talent development pool and rather than making any commitment to us, we have just had discussions around what they want to do for the community, what organizations like us in the community need and a very clear sense of connection that we see operating in the community, for the benefit of the community, for development of talent, for development of audience, that we share a sense of spirit and connection on those issues.
4816 I would like to think, if their application is approved, that we would work with them on specific proposals. Our education program. For example, we are very much in need of expansion into Grades 7, 8, 9 and the senior grades. We would like to do something in support of band programs in the school systems here in Calgary.
4817 So we are not short of specific proposals on talent development that we think we could work with Craig and Harvard and the new mix FM station, given their commitment to this Canadian talent development pool.
4818 COMMISSIONER McKENDRY: Thanks very much.
4819 Those are my questions, Mr. Chairman.
4820 THE CHAIRPERSON: Commissioner Langford...?
4821 COMMISSIONER LANGFORD: Thank you.
4822 I have a question about your educational initiatives.
4823 We had hoped to hear from the Board of Education this morning, but I guess they just couldn't make it, and that's unfortunate.
4824 We have asked a number of intervenors this sort of question, and what it comes down to is the sort of red tape, or however you would describe, that might stand between groups such as yourselves that want to work with the schools and with the children and the work you do.
4825 We don't -- I shouldn't say "we", but I don't yet have a sense for how easy it is to do good things in this city. For example, if you want to go and work with the children, do you have to be a member of a teachers union? Or do they allow people in to teach master classes and to tutor? If you want to buy some instruments for children to learn on, do you have to get permission from the school board to spend money in that way? Or how is it done? And can you earmark your money for certain things?
4826 It's important to me because there have been a number of issues -- not just the Craig one -- but a number of the applicants have pledged to see what they could do to help out at the school level. So perhaps you could just, in a couple of minutes, share with us your experience of dealing with the school board and what it's like to get in there and help and if there are any problems in that area.
4827 MR. RENDELL: Wow! Broad area. And good question.
4828 I think like any other field of endeavour it is a question of relationship building. I'm proud of the fact that our organization, and the people within in it, are collaborative by nature and have been able to work very successfully with the school board, in terms of developing relationships.
4829 Yes, there are operating difficulties. It's a bureaucracy and it's large. It is further complicated by the fact that for our initiatives in Calgary we are working with the Calgary Public School Board; the separate school board, which is the Catholic school system; we are working with the charter school system; we are working with the private school system, which is yet again different from the charter school system; and, we are working with a fifth entity called the Home School Association.
4830 Out of the 80 schools that came to this program this year, we had representation from all five school systems, if you will. So we have not had any problems with sort of trade unionism at all. We have run into some bizarre small stumbling blocks.
4831 We like to supply equipment. The organ is built around pipes. Some are wood, many are metal, and metal pipes are made with lead. We realized we had lead pipes, and we were going into the schools and the kids are putting them in their mouths and blowing on them. Well, big potential public relations problem feeding children lead.
4832 There are all sorts of issues. But I believe the school boards -- certainly from our experience, the school boards have been very open to working collaboratively with us. Nobody wants to work with someone who is going to come and tell them: We are smarter than you are; we know what you need; we know how to do it and you don't. It has to be really a collaborative spirit. We go in saying that we can bring product to the school system. We can help them. And we ask them: How can we best help; what are your needs as you perceive them?
4833 I think that a truly collaborative spirit and approach -- you know, by their "DDs" you will know them, you work with people -- the school board is just as good or sometimes just as bad as anybody else in developing those relationships.
4834 Our experience with the school boards has been excellent. They want the help. They are short of resources. What I mention in our presentation and why I am so happy to see Craig come forward is that there is this sense of a triangle. The government can't just keep throwing money into the education system, but if we have corporate citizens that are community-minded like Craig and Harvard with this Canadian talent development thing, we have product, the school systems have the need, if we can collaborate together we can make some good things happen, and we have shown so far that it can happen, it is.
4835 COMMISSIONER LANGFORD: Thank you very much.
4836 THE CHAIRPERSON: Thank you, Mr. Rendell. There are no further questions.
4837 MR. RENDELL: Thank you.
4838 THE CHAIRPERSON: Mr. Secretary.
4839 MR. BURNSIDE: I would like to now call Gloria McRae.
4840 THE CHAIRPERSON: Good morning, Ms McRae. Please proceed when you are ready.
INTERVENTION / INTERVENTION
4841 MS McRAE: I support the application of The Peak in a twofold manner: number one, as a new radio station to Calgary; and, the m.PLAY program.
4842 As a radio station, I believe it will give more selection to the audience. Number two, I believe they would support more prairie province artists with airplay that is into the musical format of mainstream. This would validate the golden objectives of the m.PLAY program to inspire the youths in the education system.
4843 This leads to the m.PLAY program.
4844 As I cited in my letter to the CRTC, I support this program in its efforts to give the youths of today opportunities that could enhance their wellbeing as valuable persons.
4845 I received my musical degree from McGill University with a concentration in music psychology, sociology, and music therapy. Since graduation, I have become a professional accompanist, singer and songwriter.
4846 As an educator, teaching children and youths in private piano instruction has allowed me to use all the disciplines that I have been taught -- except for stage performance anxiety. Yikes!
4847 THE CHAIRPERSON: Given the majority in that department, don't feel badly.
--- Laughter / Rires
4848 MS McRAE: I tell you. Okay.
4849 The most important lesson I have learned is how responsible we are for shaping a young person's mind. m.PLAY has ideas for placing mentoring programs within the music education system in schools. I feel that if this were to occur, youths would have a chance to learn more about themselves as individuals in a musical setting and a potential as a contributing member of society. It would give children a chance to learn: number one, goal setting; number two, a work process; number three, learning self-discipline and self-control to obtain objectives; and, number four, to give outlet for creativity -- when I say "giving an outlet for creativity", I mean, for example, songwriting.
4850 Songwriting is a healthy alternative for expressing emotions as opposed to a student shutting down emotionally and not communicating, potentially harming themselves in a lot of different ways just by shutting down. These cases I believe can be reduced by mentoring programs, one-on-one contact with a music professional giving the individual his or her space and freedom to communicate in a supportive setting.
4851 In my own private practice, that is what I encourage. I teach classical, I teach pop, and I also teach improvisation and songwriting. There have been children that would come to me and they would have their own difficulties at home. One way that I would help them out is, "Why don't you just stay here and why don't you just play a little bit", on the piano, because that is, again, my main instrument. Sure enough they would be able to come out with a song.
4852 A number of things can happen when a student does create on the spot in front of somebody. It builds their confidence and self-esteem. They get a better sense of themselves, and a sense of achievement. I believe these are all very positive feelings. They can go home and their parents are happy.
4853 Number five: Achievement. Obviously a sense of achievement.
4854 Music doesn't lie. This is what all my students will say too. One works at it, one gets better. One doesn't work, one doesn't get better.
4855 I believe where there is one-on-one teaching in a school situation, such as this mentoring program that m.PLAY is trying to support, the child can get a sense of what he/she must do, again, in order to become a responsible citizen and to feel better about themselves and find their potential.
4856 Obviously, the music doesn't lie. One works at it, one gets better. It applies to all of life. Giving you the chance for better music education through mentoring programs, et cetera, for m.PLAY allows them to discover who they are and what the students can become.
4857 In closing, I feel the m.PLAY program could inspire youths through musical intervention in order for them to become assets to society and an asset to themselves.
4858 Thank you for your time.
4859 THE CHAIRPERSON: Thank you, Ms McRae.
4860 Commissioner Noël will question your intervention.
4861 COMMISSIONER NOËL: Good morning.
4862 MS McRAE: Good morning.
4863 COMMISSIONER NOËL: Are you from Montreal originally or did you only study at McGill?
4864 MS McRAE: Luckily, I only studied -- luckily, I had the opportunity to get to Montreal.
--- Laughter / Rires
4865 MS McRAE: No, no, no, I'm sorry.
4866 Yesterday I had my little girl here -- no babysitter. I really believe in this program of mentoring. That is why I'm here. I'm a little bit tired. But, no, I was lucky enough to get to Montreal.
4867 I'm originally from Edmonton. Unfortunately, the University of Alberta was -- they didn't want to accept my audition, but McGill -- just because of my academic average in school -- but McGill said, "We want you. In two weeks please come here. We only accept 10 people in performance programs." So I was very lucky to get to Montreal.
4868 I stayed there for seven years. After my degree I have always been employed in music. I'm sure you know Mark Hamilton.
4869 COMMISSIONER NOËL: And you are still teaching music, as I understand.
4870 MS McRAE: Yes.
4871 COMMISSIONER NOËL: What do you think a program like m.PLAY, which is limited in time, can do to better music education of the kids? You know, it is a seven-year investment, basically.
4872 MS McRAE: Yes. I think the investment that they could do for seven years in the system is far better than if they didn't have the opportunity at all. I think, again, this one-on-one instruction from a mentor, the mentor actually being allowed to have that one-on-one time, again being able to spend that time with one student, seeing what they are made of -- if a student has problems, and there are barriers, psychological barriers, again, not believing in themselves, a teacher in the education system that is dealing with 32 students in one classroom, they cannot address those situations. The student then gets lost in the system. So what I believe, for seven years, if we can have individuals that go into the music education system, being able to have one-on-one progress with a student can really help out.
4873 COMMISSIONER NOËL: Make a difference.
4874 MS McRAE: I definitely believe so. Yes, no question.
4875 COMMISSIONER NOËL: Thank you very much, Ms McRae.
4876 THE CHAIRPERSON: Thank you, Ms McRae. There are no further questions.
4877 MS McRAE: Thanks.
4878 THE CHAIRPERSON: We appreciate you being able to make it. We understand your problem with obtaining a babysitter and that. We are glad you were able to make it.
4879 MS McRAE: Well, if I can make a difference for her growing up by being here, then I'm glad I'm here.
4880 Thank you.
4881 THE CHAIRPERSON: Thank you.
4882 Mr. Secretary.
4883 MR. BURNSIDE: I would like to now begin the recall.
4884 I will call No. 10, Hipstar Productions, Mr. Craig Glen.
4885 THE CHAIRPERSON: It is Mr. Glen, is it?
4886 MR. GLEN: Yes, it is.
4887 THE CHAIRPERSON: Please proceed when you are ready.
INTERVENTION / INTERVENTION
4888 MR. GLEN: Hello. I am here today to support the Newcap application.
4889 Basically, I will tell you a little bit about myself. My name is Craig Glen. I started my own company here about a year ago called Hipstar Productions. I started it up after working in a recording studio here in town.
4890 I moved out from Toronto after graduating from the Fanshaw College Music Industry Arts Program.
4891 In the last almost year I have been managing a band, Recipe From a Small Planet. In that time have had numerous bands approach me for management and for booking. I do a lot of booking across this country and right now I have currently about 10 bands that I am working with. I don't have the time myself to be doing all this work, and I am hiring on two other people in the new year that are coming out and we are expanding.
4892 What I am getting at here is there is a lot of talent out there right now, a lot of talent that just needs that extra push to get to the next level, and that is where I think Newcap can help out with commercial radio.
4893 These bands, Recipe From A Small Planet, in particular, when their CD came out, it was in the top three of CJSW, which is a college station here in town. For 16 weeks it was in the top three. However, it did not appear on any commercial radio. They are filling nightclubs across the country right now. They have sold out just on the weekend -- actually, sorry, a couple of nights ago for Halloween, yet they are still not getting support on commercial radio.
4894 It is hard to get support around here unless you have a name or a big huge budget. Right now I work with sort of what you might want to call the underdogs. The talent is there, but specifically the advertising budget isn't there, so they might not have been heard of, say, like some bigger bands in Canada.
4895 Now, what Newcap is proposing is that they will have one hour a week of local music programming, which would enable these bands to get the opportunity to be played in what some people might call the big time with well-known acts.
4896 Also, what they propose is, every Friday, as far as I understand, they will be taking a live recording from clubs here in town to support this local talent. I think that is fabulous because people will listen to what they are given.
4897 I believe that very strongly the youth will listen to any mainstream radio station and pretty much enjoy most of what they hear on it in regular rotation. To have these bands, that are local, getting supported on there, even if it is minimal rotation, they are still hearing this and comparing it to some of these other bands that have a well-established name for themselves.
4898 I think that can only benefit these bands and benefit the station and the community of Calgary by supporting this local talent in that way.
4899 Also, they are proposing 40 per cent Canadian content, which is 5 per cent above what the mandatory is. I also think that is great. I don't think you can ever have too much Canadian content in the programming.
4900 As far as Canadian music goes, I think the more of it the better. If people listen to it more -- like I said, they will listen to what they are given, and if people get used to hearing Canadian content on a regular basis they are going to appreciate it more for what it is.
4901 Also, if we have a strong sense of community, of loving Canada for what it is and what it produces, the great talent it produces, that will spread over into the States. Like bands like Barenaked Ladies getting their chance, bands like The Tea Party, 54-40, this is the kind of programming that I believe that they would be doing and it can only help out our culture, I believe.
4902 We have nothing to be ashamed about as Canadians and often it is looked down upon: Oh, Canadian music, we have to put this 35 per cent in. I think we should want to and I think that it is a great thing that these guys are doing that.
4903 Now, Recipe From a Small Planet, I'm using that as an example because they are the biggest band, the breakthrough band that I have right now on the go. They have been touring around Canada since May and they have been getting played on college stations around the country and on private radio stations out on the Island in Vancouver, it's just getting them to that next step that is rather hard without a major label behind you.
4904 I am really proud of them and I am proud to be Canadian and I would like for them to have this opportunity in Calgary to be on a major station. It is very hard to get that kind of publicity. They are on CJSW all the time and they have a great following here in Calgary. They are selling out everywhere they go. The other night at the Night Gallery, there is line-ups around the corner. At 10:00 at night they were sold out.
4905 You would think that a band with this kind of support from their audience and their fan base could get onto radio stations, even just a little bit.
4906 I will jump to my next point, which is that this band right now is going into the studio again in January to record their next album. We have a bit more of a budget now, we have found a private investor and we want to take it to the next level.
4907 What we are also doing is, we are applying to FACTOR. I think FACTOR is a fabulous program, very hard to get, and I think it is well-deserved if you do get it because there is a lot of work that goes into a FACTOR application. That is also what Newcap is proposing, is to donate a specific amount of money to FACTOR and to support FACTOR, and that in turn supports this local talent that is out there that works hard enough.
4908 I'm not saying that everyone who is out there should get played on the radio, because I don't believe everyone out there deserves it, but there are a lot of bands in this Alberta region, as well as Edmonton, that do deserve a chance like this to get onto mainstream radio. It would help them. They would be doubling their audience. They would be taking it from somewhere like the Night Gallery to Mac Hall and then maybe to the Jubilee, you know. It would just escalate. That way the word would get out around the country and it can only continue from there.
4909 Something like this that supports local talent would be fabulous because there is very little support, other than I find Shaw TV and the A-Channel to be outstanding in their support and they have helped us out on television quite a bit. But as far as radio, it is very hard unless you have, like I said, that standing.
4910 There has to be something out there with all this local talent because I can't do my job. I don't have enough time. I have myself, I have my wife who helps me out, and I am hiring two other people. Still, with those two other people, I am still going to be turning away great talent that I think should be represented properly and I just can't do it. There is too much out there.
4911 Right now, as far as promotion goes for the bands that I work with, the main way we promote is through postering campaigns, which get torn down about 10 minutes after you put them up, so that doesn't work.
4912 So we have resorted to handbilling. We will go out on a given day and hand out like 3,000 handbills at the colleges and universities. Now, if we had this radio promo, we wouldn't have to go and spend so much time out of their practice, rehearsal, out of searching for record deals, et cetera, et cetera, going out to these places and standing there handing out handbills hour after hour to get people out to the clubs.
4913 Radio has a lot of power and it really influences the youth, and I think to have local bands on a major radio would even inspire other younger students from the schools who are taking music or trying out in bands and it might enable them to get a little further with what they want to do. They can see other bands that are sort of -- not big, but are coming out of this Calgary area, the scene, the music scene here, and they might want to give it a little bit more of a chance before they give up.
4914 The band I manage, none of them have day jobs. This is their job. They work really hard. They are supporting the scene in Calgary. The scene in Calgary is lacking a bit. If you look at clubs like The Republic, Java Sharks which was going for a while on 17th Avenue, they have both closed down due to lack of public support. It is just not there.
4915 I think to have support like this on a major radio station would improve business all around, just to keep the scene going other than college radio. College radio is great and supportive, it's fine, but at the same time it is not getting the listenership that these bands greatly deserve.
4916 In closing I would just like to say that a band that can get on college radio and hold the top three for 16 weeks in a row and now is sold out of their CD, three pressings already, has toured the country twice, I think something like that should be noticed by major radio and I think that for them to have the opportunity, even if it is once a week to be played or to go and have their live show covered would be fabulous.
4917 The only radio support we have by major radio is the CBC. This band that I manage, one in The Key of A, it is a program they do, and they got supported. They came out and they taped it live. That was fabulous. They got on the radio and lots of people heard it and it really helped them, it is good for their press pack, and I think more of this kind of programming should occur, I really do.
4918 In closing I would just like to say I think Newcap has the right idea here. That's it.
4919 Thank you.
4920 THE CHAIRPERSON: Thank you, Mr. Glen.
4921 Commissioner Langford will question your intervention.
4922 COMMISSIONER LANGFORD: I think you were very clear on your support of Newcap and why, so I will set that aside.
4923 MR. GLEN: Okay.
4924 COMMISSIONER LANGFORD: You were just very clear on it and I would like to just sort of borrow from your experiences a little bit to explore a few other areas.
4925 We have heard a lot of different applicants here today talk about how they want to get into the community and help in different ways. This is really a common thread, that they feel that there is a way they can help musicians, particularly young musicians.
4926 Where do your musicians come from? I will be a little more clear on that. Are they self-taught in their basements or are they originally music students from high schools that have then gone their own way. Is there a kind of typical background to the members of the band you manage and are managed around Calgary or is it just so eclectic that it is impossible to say?
4927 MR. GLEN: I tend to side with the eclectic. I'm tired of that.
4928 I know the band that I manage, they are trained. The guitar player, for instance, and lead vocalist, he works at a guitar shop in town. He is a guitar technician and he gives lessons to other younger children who come in for guitar lessons. He has done that in the past. He has had to give it up because his touring schedule is really hectic right now. He was doing that.
4929 The keyboard player is trained. I'm not sure what grade of piano he has, but he is phenomenal, an absolutely phenomenal musician.
4930 The drummer also has been trained throughout high school in music class -- they were all in music class, as far as I understand -- and he, until his touring schedule got hectic as well, was teaching drums at Johnny Cruise Music. The guitar player was at the Guitar Connection and they were both giving lessons.
4931 As far as the base player, I think he just sort of picked it up way back when and liked it and continued it.
4932 Other bands that I work with, it is really hard to pinpoint it down, but I think they all do come from a musical background in high school somewhere.
4933 I know that myself, I started playing music when I was in Grade 4. It was on the recorder. You know, you start up back then and then you move on from there. I continued all through high school and made a career out of it. That is what I went to college for.
4934 COMMISSIONER LANGFORD: What is your sense now? You have obviously been at this since Grade 4 so you have some experience. What is your sense of the quality of musical education through the school system, elementary and high school? Is it as good as it has ever been or is it worse or is it better or is it just different?
4935 Do you have any sense of what has happened or can you gauge it by the level of the musicians that are coming to you and looking for your sort of support?
4936 MR. GLEN: Yes. Well, I am always amazed when I see how young these people are and how diverse they are at their instrument, how trained they are. The band that I manage is all roughly about 21. They have been at it for years and years. When I was 21 I couldn't even begin to think about playing as well as they do.
4937 I am from the Ontario background. I moved out here about two years back, as I said. The music curriculum there I think is great, it has helped me through it, but I don't think it is pushed as much in school as it should be. You have your math and science and everything, and that is all important, but then you sort of lose a bit of the creative side. They don't really push for art in high school. They don't push for music or drama. I took all of those.
4938 I gave up on math and stuff in grade 10 and I got my required amount of credits and I did take drama, music and art throughout the rest of my stay in high school.
4939 Now, as far as Calgary schooling goes, I wouldn't be the person to ask. I don't really know. All I can say is the musicianship that I have seen has been fabulous and seems to be a little bit ahead of some of the younger bands I have seen in Ontario.
4940 There are more bands in Ontario, more musicians in Ontario just per capita, but here I think the quality is great. I think some of these bands, I can use the name Interstellar Root Cellar, which is a band that has sort of been really big in the last little while and just from pure lack of support I think they have sort of fizzled out. I don't want to see that happen to more younger bands that are making a name for themselves here.
4941 COMMISSIONER LANGFORD: Thanks very much.
4942 MR. GLEN: Thank you.
4943 THE CHAIRPERSON: Thank you, Mr. Glen. There is no further questioning.
4944 MR. GLEN: Thank you.
4945 THE CHAIRPERSON: Mr. Secretary.
4946 MR. BURNSIDE: I would now like to call Caribbean Community Council of Calgary, Lorna Ann Murray.
4947 THE CHAIRPERSON: Good morning, Ms Murray. Please proceed when you are ready.
INTERVENTION / INTERVENTION
4948 MS MURRAY: Good morning, Mr. Chairman and members of the Commission. My name is Lorna Ann Murray and I am the President of the Caribbean Community Council of Calgary. Our council is comprised of seven Island members associations and hosts Canada's second-largest Caribbean festival, "Carifest".
4949 I am very pleased to be appearing before you today to support Standard's application for an Urban music radio station. We believe that Standard's proposed station, The Rhythm 98.5, will be a very positive and welcome addition to our community here in Calgary.
4950 There are a number of compelling reasons for which we have decided to support Standard in this public process.
4951 First, The Rhythm will provide a wonderful forum for the development and exposure of Canadian Urban music and artists. This is a wonderfully diverse type of music that encapsulates various types of music, such as Rhythm & Blues, Hip Hop, Dance, Soul Reggae and World Beat. There is a wealth of Canadian talent out there right now, both in Calgary and across Canada, that is getting very little, if any, airplay on the radio.
4952 Licensing The Rhythm will be a step in the right direction for rectifying that situation. It will provide the much needed exposure on radio to this music and our artists, as well as satisfy the unquenchable demand for Urban music at this time.
4953 The second reason for our support of Standard's proposal is that The Rhythm will provide a voice to the Afro-Canadian, as well as other ethnic communities in Calgary. We have a wonderful ethnic community here in Calgary. It ranges from Chinese, South Asian, Filipino, to Arabic, Latin American and, of course, Afro-Canadian. We are very active, i.e. Carifest, the Latino Festival, Africa Today, to name a few. We have a very rich diverse culture.
4954 There is currently nowhere on the radio dial in Calgary for these groups to express themselves, or share their knowledge and talent with others. There are also no radio stations in Calgary that discuss community and cultural events, or provide information that is relevant to the ethnic communities. There is most definitely a void in Calgary's radio industry in this regard.
4955 The licensing of The Rhythm will therefore provide much needed opportunities for members of our community to bring their cultures, music and history to the broadcasting system. It will allow radio listeners in our great city to learn more about what has taken place, what is happening, and what is head that is of interest and relevance to them.
4956 If you decide to licence Standard's service, Calgary's airwaves will definitely be richer, more diverse, and dare I say spicier.
4957 The third reason for our support is that we view The Rhythm as an opportunity for the ethnic and non-ethnic communities to come together, in the same way that Calgary's Carifest brings these groups together every year.
4958 Carifest is a week-long celebration of Calgary's Caribbean community. It has grown to be one of the largest and most respected ethnic festivals in western Canada since 1981. Its aim is to allow all Canadians to become more familiar with the culture and warmth of Caribbean people.
4959 Every year we attract somewhere in the neighbourhood of over 50,000 people. This exciting event hosts concerts and showcases Calypso and Reggae music. It also hosts open sky luncheon events coupled with live entertainment, as well as the revered "Taste of Carifest", and to mention the vibrant and intoxicating "Carnival Parade".
4960 Carifest is supported by ethnic and non-ethnic communities by way of attendance and participation in the events, such as Carnival Parade, Taste of Carifest and Sunshine Festival and Princess Island Park.
4961 It is at Princess Island Park that participants will experience the very Canadian artistic talent, particularly Canadian Urban music artists.
4962 We were thrilled to learn of Standard's proposal to provide financial support to Carifest in the even that The Rhythm is licensed. We will use the $25,000 annual contribution to showcase Canadian artistic talent, which is always a highlight at our festival.
4963 The final reason, but by no means the last important, for our support of Standard's proposal is due to its commitment to provide employment opportunities to individuals within the ethnic communities. You can have all of the talent in the world, but without a laboratory to use it it is difficult to flourish and grow.
4964 The presence of The Rhythm in Calgary will provide heightened opportunities for members of our ethnic communities to gain experience in broadcasting, to develop their skills, teach others what they know, and advance their careers. There is a lot to be said for that.
4965 In closing, I would like to say that we are very excited about the prospect of an Urban music radio station here in Calgary. It will add diversity and flavour to our airwaves. It will also provide a long overdue voice for our ethnic communities on the radio, and it will be a key source of cultural information for members of our community.
4966 Finally, The Rhythm will be a place for the launch and development of careers in broadcasting, and it will provide much needed financial support for our tremendously popular Carifest festival.
4967 It is without a doubt that Standard's financial support will not only significantly contribute to the continued success of our festival, but will also allow us to develop other avenues to showcase throughout the year budding talents, in particular Canadian urban artists in music.
4968 Mr. Chairman and members of the Commission, thank you very much for the opportunity to provide you with my comments today.
4969 THE CHAIRPERSON: Thank you, Ms Murray.
4970 Commissioner Cram will question your intervention.
4971 COMMISSIONER CRAM: Thank you for coming here today.
4972 Ms Murray, I wanted to get some idea of the population in Calgary of people from the seven islands that your community council consists of. Do you know how many people?
4973 MS MURRAY: The last time, to my understanding, I heard there were over 30,000 members of the different communities, not all necessarily being members of our association.
4974 COMMISSIONER CRAM: Yes.
4975 Then when you were talking about the larger ethnic community, have you any idea of that size in Calgary?
4976 MS MURRAY: No; I don't know for sure. But I have attended several of the other ethnic communities -- i.e, the Latino Festival, Afrikaday Festival -- and from those festivals I have seen, you know, well over 20,000. I know the Asian or the Chinese population, they are very big, too, in Calgary, but I do not have a definite figure as to how many there is.
4977 COMMISSIONER CRAM: Then I heard you say Carifest is the second largest festival in -- sort of Caribbean festival -- in Canada. And I look at -- I'm assuming Toronto is the first, is the biggest.
4978 MS MURRAY: Yes.
4979 COMMISSIONER CRAM: And yet, there are a lot of communities in Canada -- the Vancouver area, for one, that has, if my memory is right, somewhere around 700,000 ethnic people in the Greater Vancouver area. And yours is the second biggest. How have you done it?
4980 MS MURRAY: Second largest Caribbean --
4981 COMMISSIONER CRAM: Oh, okay.
4982 MS MURRAY: -- festival.
4983 COMMISSIONER CRAM: But I guess maybe I'm assuming -- and I know that means make an ass of me -- but would you say there would be more people from the seven islands in other places, in addition to Toronto, than here?
4984 MS MURRAY: Yes, you probably would say so. In Vancouver -- and I don't know specific figures -- but there is a large Caribbean community there also. In Winnipeg, I understand that there is also a large Caribbean community. Montreal. And other places.
4985 COMMISSIONER CRAM: So, can I say, then, that the success of Carifest may have something to do with the fact that non-Caribbean people are interested in the music --
4986 MS MURRAY: Oh, yes. Definitely.
4987 COMMISSIONER CRAM: -- here compared to other places?
4988 MS MURRAY: Definitely, yes.
4989 Compared to other places, we do also have support from Caribbean communities outside of Calgary that come, you know, and participate, for example, in our parade, because that is, you know, very vibrant, very colourful. We even have people from south of the border that come up and participate in our parade also. So it's not just necessarily the people here in Calgary, but people from outside, you know, will come and support us also.
4990 COMMISSIONER CRAM: Thank you.
4991 I wish you continuing success.
4992 MS MURRAY: Thank you.
4993 THE CHAIRPERSON: There's no further questions, Ms Murray.
4994 Thank you very much.
4995 MS MURRAY: Thank you.
4996 THE CHAIRPERSON: Mr. Secretary, it's nearing 10:30. If there's only a few more, maybe we can finish them first.
4997 MR. BURNSIDE: My understanding -- we have four more on the list, but my understanding is there is only one person in the room; so we may only have one more to do, if you want to finish that before break.
4998 THE CHAIRPERSON: That will be fine.
4999 MR. BURNSIDE: If it turns out, perhaps, that there are all four here, we could --
5000 THE CHAIRPERSON: Well, we will do this one more and then take a break and see where it goes.
5001 MR. BURNSIDE: Okay. I would like to call the White Raven Group of Companies.
5002 They don't appear to be in the room.
5003 I would then like to call the Tsuut'ina Nation. Roy Whitney.
5004 They don't appear to be in the room.
5005 I next would like to call Exit303. Cameron Ambrose.
5006 THE CHAIRPERSON: Mr. Secretary, Number 13, Choclair, have they --
5007 MR. BURNSIDE: I'm searching. That is a list that you are working from; we are working from the one that's in the agenda.
5008 They withdrew prior to the hearing.
5009 THE CHAIRPERSON: Thank you, Mr. Secretary.
5010 Please proceed when you are ready, Mr. Ambrose.
INTERVENTION / INTERVENTION
5011 MR. AMBROSE: Good morning, Commissioners.
5012 My name is Cameron Ambrose. I'm here to support the Newcap application for a forward-thinking, modern adult contemporary/ modern rock station in Calgary.
5013 I represent the interests of Exit303, a reasonably successful independent modern rock band based in Edmonton, Alberta.
5014 To give you a little background on myself: I am an electrical engineer by training, a computer programmer/analyst by trade, the owner of a part-time recording studio and, most importantly, the key voice for the band Exit303.
5015 I have been involved in music for most of my life and involved professionally for the last 10 years.
5016 Having run the band's business aspects for the last year, I have learned the limitations of the independent band, as it relates to the music industry in general. I have learned that the music industry is not geared towards developing new talent. For the most part, independent music has the greatest resistance against it. This shows in radio and it shows in lives venues.
5017 It is difficult, at the best of times, to find a venue that will dedicate their prime time to an original act. These bands usually find themselves playing for their immediate friends or to mostly empty clubs.
5018 To illustrate this point: we have been recently trying to book into some of the major venues in Edmonton and they have actually, categorically, stated to us that they will not book local talent because it does not fit into their schedules -- which I find to be quite alarming.
5019 This is not to say that it is impossible to be a successful original artist. Exit303 has found successes here through a lot of hard work and, often, a great deal of luck. We have used the resources available to us; namely, the Internet, mailing lists and poster advertising. In the end, we have a sound that audiences find interesting and a live show that leaves viewers entertained.
5020 I said earlier that Exit303 is a reasonably successful band. I say "reasonably" because, for all the successes we have achieved, and for the demand we have seen at our live shows, we have yet to have our music playlisted on any applicable radio stations.
5021 Radio provides a source of new listeners and, with that, new fans. Without radio, widespread support for a band comes at a glacial pace. Word of mouth is a very powerful tool but it is limited to the frequency of the band's performances -- and, as I said, live performances are limited by a scant selection of venues amiable to original music.
5022 All in all, it is a daunting task for any independent band to reach commercial success; and, in the end, musical diversity suffers.
5023 I'm here because I believe that the Newcap application addresses some of the shortcomings found in current modern rock radio stations. Calgary currently lacks a modern AC/modern rock format station. Not only does this application promise to fill that vacancy but it also proposes an open and accessible atmosphere that is more accommodating to local independent music.
5024 This is the first step in creating a relationship with the independent artists.
5025 Current radio stations, for the most part, are foreboding and intimidating institutions. The promise of an open and accessible atmosphere is a welcome change.
5026 As I stated in my original letter of support, I believe that one's music should be judged by one's peers -- in this case: the public.
5027 The current success of an original band is dependent on the whims of A&R directors and where the artist's music fits into the sound of the day. These people have the control of what the public hears and what they don't. Instead, I would prefer that the public decide what it wants to hear.
5028 To that end, I appreciate Newcap's proposed Like it or Spike it Program where the audience decides what new songs should make it into regular rotation. Including independent acts in this program would provide these artists not only with a possible inlet into rotation but feedback on the public perception of their music.
5029 Programs Locals Only and Virtual Calgary, coupled with at least 21 announcements per week of Canadian and local artists' performances, would also be a big win for independent artists. Independent acts need all the advertising they can get. Outside of regular rotation, on-air advertising of gigs and occasional spins reach a greater audience than a band could hope to reach on its own.
5030 The contribution of $100,000 per year to FACTOR for the development of local artists is also worthy to note. Exit303 has benefited from FACTOR funding and believes that FACTOR makes it possible for independent acts to achieve goals that would not otherwise be attainable.
5031 Newcap's contribution is another great support of local independent talent; especially considering that FACTOR has allowed the contribution to be specifically aimed at developing Alberta-based artists.
5032 The Newcap application has Exit303's support because it's taking departure from the normal operations of current conventional radio stations. Independent artists need radio support. They especially need support in their hometown. The special programs that have been proposed and the more open atmosphere would create a new and, currently, very rare relationship between artists and stations. We believe this is a very good thing.
5033 In closing, I would like to say that, as a studio operator, I have been involved in the creation of a great deal of quality original music. As an independent artist, I realize the struggles and roadblocks that these acts face. Great music is being created by independent artists and with Newcap's help, that music may find it's way to the public ear.
5034 THE CHAIRPERSON: Thank you, Mr. Ambrose.
5035 Commissioner Langford will question your intervention.
5036 COMMISSIONER LANGFORD: Mr. Ambrose, I won't keep you long. Your position is very clear and understandable and I don't have any questions on the main thrust. It doesn't mean I didn't hear it; it's clear enough that I don't have to follow it up.
5037 I would like to pursue, just for a minute, the same line of questioning I pursued with Mr. Craig Glen, who was here earlier -- I don't know whether you heard him -- from Hipstar.
5038 I'm just trying to get a sense of an idea where your bands come from, because there has been so much talk of education and helping and mentoring and getting into the community.
5039 Are most of the players you know, your own band, yourself, other bands, did they begin their musical education in the schools? Or what's the background --
5040 MR. AMBROSE: I started piano and vocal lessons at five, from private instruction. I did pop into the musical system in the schools in junior high because we had an excellent vocal teacher there.
5041 I think I'm the only person in our band who has actually trained. The rest of our musicians are self-taught.
5042 My comment on the current state of -- as I have seen it; I have been out of the school system for over 10 years so I'm not exactly certain of the current standing, but I know for the few years after I had left I was actually -- I grew up in Stetler, which is about an hour and a half from here, and it's a small community, 5,000 people in the town, serving a community of about 50,000, and we were very fortunate to have some very excellent private instructors in both piano and vocal instruction. What I have seen since then, in that school in particular, is that the music programs have seemed to disappear.
5043 Actually, I was surprised, years after I had left, band programs were no longer available in high school. And the thrust in vocal training, in junior high, had evaporated quite a bit. I don't know if that was because of the quality instructors had disappeared, because we had an excellent music instructor in junior high. Actually, in that case, he was moved out of that, he was moved out of music because -- actually, I have no idea why he was moved out, but he was, and the vocal instruction seemed to dry up a lot.
5044 What also interested me there, when I went back, is that there were more bands. Music was more accepted, from a band perspective. When I was growing up, in school, I was actually looked down on. The athletes were popular and musicians were not. When I went back, I did a competition for the school a few years after I left and I went back and I was amazed to see how that had almost turned around and the kids that were playing in bands were looked up on and were heralded as doing something original, and I was quite amazed to see that and I really appreciated that.
5045 COMMISSIONER LANGFORD: Does your old school still have a football team?
5046 MR. AMBROSE: Yes, it does.
5047 COMMISSIONER LANGFORD: Interesting.
5048 Thank you very much.
5049 MR. AMBROSE: Thank you.
5050 THE CHAIRPERSON: Mr. Ambrose, as you may or may not know, we are streaming the audio of this public hearing over the Internet, on the CRTC Web site, and other intervenors have been able to provide us with samples of their music and we have, in most cases, been able to accommodate them and put them on during either our breaks or the lunch break, or that type of thing.
5051 So if you have a sample of your music, you are more than welcome to leave it with the Secretary and it may, in fact, be on between 12 and one today.
5052 MR. AMBROSE: Okay. Thank you.
5053 THE CHAIRPERSON: You are welcome.
5054 Mr. Secretary...?
5055 MR. BURNSIDE: I have just been informed that our final intervenor that was to appear, Mr. L'Heureux, will not be attending the hearing, so this would end Phase III.
5056 THE CHAIRPERSON: Thank you, Mr. Secretary.
5057 Well, then, I propose we take a 20-minute break prior to commencing Phase IV.
5058 MR. BURNSIDE: We will reconvene at 11 o'clock.
--- Upon recessing at 1040 / Suspension à 1040
--- Upon resuming at 1108 / Reprise à 1108
5059 THE CHAIRPERSON: Ladies and gentlemen. We will resume the Calgary public hearing.
5060 Mr. Secretary.
5061 MR. BURNSIDE: Thank you, Mr. Chair.
5062 Before I call the next presenter I would like to remind everybody we are now in Phase IV. Each of the applicants has a maximum of 10 minutes to do their rebuttal. The applicants are called in reverse order from Phase I.
5063 I would now call Gary Farmer on behalf of a company being incorporated.
5064 MR. FARMER: Thank you.
REPLY / RÉPLIQUE
5065 MR. FARMER: Mr. Chair, Members of the Commission, Commission Staff, I'm Gary Farmer on behalf of Aboriginal Voices Radio. The members of our team are pleased to be before you again today to offer our few final remarks.
5066 With me are Marilyn Buffalo, Bob Kennedy, and Margaret Rider.
5067 We wish to take only a few minutes to provide the Commission with assurance that licensing Calgary's first aboriginal radio service is the right decision.
5068 MS RIDER: Members of the Committee, AVR will be a completely new voice in Calgary, a first service to Calgary's estimated 40,000 aboriginal people. Licensing AVR is the best use of the 88.1 frequency.
5069 The Calgary community has overwhelmingly said they wanted AVR's urban aboriginal service. Local native broadcasters have said they want to accept AVR's network programming at Siksika and in Morley. We want to offer our own programming back to the network.
5070 Calgary needs aboriginal radio now.
5071 MR. FARMER: We have committed to roll out more local programming as resources become available. We will start with as much local programming as CBC Radio Two. It is our goal to have more local programming like Radio One by the end of our first term of licence.
5072 Our network service is inclusive. It is national in scope, not a Toronto repeater. AVR will give and take aboriginal programming from across the country.
5073 We are cautious about our commitments. We promise what we know we can deliver.
5074 MR. KENNEDY: Our business plan is based on conservative revenue projections that move our revenue base towards greater national advertising sales and away from program underwriting and other fund raising.
5075 Newcap's Calgary benefits will allow us much faster roll out of our local programming, including a news bureau with local full-time staff. We are creating an accountable corporate structure and an experienced team that can meet our objectives. This structure, and our inclusive community process, will ensure accountability as we run our Aboriginal Voices Radio business.
5076 MS BUFFALO: Commissioners, the need is urgent. There is no doubt the need is well established. All the elements are together now. Aboriginal Voices Radio can afford to launch in Calgary now; Calgary can't afford to wait. This is the right time. Commissioners, grant us the licence and we will succeed.
5077 Thank you.
5078 MR. FARMER: Thank you, Commissioners. Thank you, Commission Staff, and all the local support we have gotten. We would like to thank our intervenors at this time as well, and our corporate partner of course, Newcap Broadcasting. Also, we would like to thank all the people of Treaty 7 for being with us in spirit.
--- Native language spoken / Langage autochtone
5079 Thank you.
5080 THE CHAIRPERSON: Thank you, Mr. Farmer and panel members. There are no questions at this time.
5081 Mr. Secretary.
5082 MR. BURNSIDE: I would now like to call the representatives of CHUM Limited.
--- Pause / Pause
5083 THE CHAIRPERSON: Good morning, Mr. Waters. Please proceed when your team is ready.
REPLY / RÉPLIQUE
5084 MR. WATERS: Good morning.
5085 Mr. Chairman, Members of the Commission. After four days of hearings I don't think I can add much to the public record.
5086 I do want to thank all of the intervenors, both those who appeared at this hearing and those who took time to write to the Commission in support of The Peak and in support of m.PLAY.
5087 We are impressed at the level of community activism in Calgary and the pride of purpose of all the people and organizations with whom we have consulted over the past month.
5088 As you heard yesterday, Calgary has many educational institutions and volunteer organizations that are universally in need of additional support from the private sector. As you have heard from the intervenors, it is not just one or two Calgarians who go on to the international stage. It is many people in many different genres of music.
5089 Starting children in music education at a young age can elevate them to the world stage. There are dozens, possibly hundreds of young people, who are reaching that critical stage where they will either commit their lives to music or move on with frustrated dreams. m.PLAY will help make dreams come true.
5090 Several times yesterday and again this morning, intervenors have been asked: how will funds find their way through the bureaucracy of the school system to the designated recipients?
5091 As has been stated by virtually every intervenor, for m.PLAY and other applicants' private initiatives, music training in the schools, instruments, materials and cash funding would be welcomed with open arms.
5092 Based on our community consultations, there are no bureaucratic barriers to legitimate contributions and other assistance from corporate and other outside sources. Parent committees and volunteer groups for these purposes are the norm in the Alberta schools system, not the exception. That message has been delivered loud and clear by all intervenors.
5093 Further, the purpose of the m.PLAY symposium is to submit such a collaborative process with all stakeholders so that funding can be directed to recipients with no impediments whatsoever.
5094 Again, several times this morning and yesterday, intervenors were questioned concerning the effectiveness of a seven-year commitment for funding. I would like to make clear that m.PLAY is a formal COL commitment to an initial licence term of seven years.
5095 As demonstrated by our experience in establishing and sustaining funding mechanisms such as FACTOR, ArtsFact, VideoFact and BravoFact, it is our intention to extend the m.PLAY program beyond a single licence term in Calgary and throughout CHUM Group Radio, subject to our ongoing evaluation of the achievements of this initiative.
5096 You have asked the question: what criteria should the Commission use in evaluating competitive applications where each applicant proposes significant Canadian talent development benefits.
5097 In your last revue of Canadian talent development held in 1995 and 1996, the total nationwide contributions of the radio industry stood at $11 million a year. Of that amount, a total of $4 million a year was being contributed by licensees of new radio services and those who had acquired existing radio stations.
5098 I think it is important to look at that annual $4-million national CTD expenditure, in light of the excellent proposals before you here. CHUM proposes over $4.2 million for m.PLAY over the licence term, and that money would stay right here in Calgary developing local talent.
5099 We also note in Public Notice 1996-114, which put the new CTD policy into effect, the Commission recognized that licensees had the relatively simple choice of contributing exclusively to national organizations such as FACTOR, or had the option of making contributions to community-based organizations including, and I quote:
"...music organizations, performing arts groups, schools and scholarship recipients." (As read)
5100 We think there was an important and clear message in the 1996 CTD policy. Licensees could make an easy choice and work with national organizations, or do the much harder thing and disperse the money locally where it is needed.
5101 Chairman, Members of the Commission, CHUM chose to follow both paths by providing FACTOR more than double the annual benchmark, and our m.PLAY initiative follows the second, more difficult path. You have heard from a wide group of organizations, and the performers themselves. They need this money to move to the next level. For that reason, CHUM believes that the m.PLAY initiative distinguishes our application.
5102 You have heard from a number of people that Calgary needs more diversity and radio choices. You have also heard evidence from many of the applicants that there are sufficient frequencies to accommodate at least three new Calgary radio stations and possibly more.
5103 You have before you CHUM's modern AC format application and at least two specialty format applications. CHUM believes that the Commission could licence at least three applications, possibly a fourth, and provide Calgary with diversity, a broad range of new Canadian music which is not being played on existing stations, additional news voices, and millions of dollars of Canadian talent development money spent locally.
5104 CHUM is ready and willing to work with other successful applicants to ensure that new radio services utilize the allocated radio frequencies in the best possible way.
5105 Last, Mr. Chairman, I have attended CRTC hearings for many years. This hearing has been unique. Not one applicant in a highly competitive proceeding chose to intervene against its competitors. I think that speaks volumes as to the quality of the applications and the excellent services being proposed.
5106 We thank you again for a stimulating and thorough hearing and await your decisions.
5107 THE CHAIRPERSON: Thank you, Mr. Waters.
5108 There will be no questions.
5109 MR. WATERS: Mr. Chairman, one additional point that I might just offer.
5110 We did a little bit of homework last night on the frequencies and we have a sheet here, if you would like me to read it into the record, or I will just file it with the Commission if you would like that. It is just a little bit of further information on the frequencies.
5111 So if it would be useful to you we would be happy to file it, or --
5112 THE CHAIRPERSON: I will ask legal counsel to make a ruling on that.
5113 MR. BATSTONE: Well, I am just concerned that entering new evidence at this point in the proceeding could be -- there may be other parties in the room who would be concerned about that.
5114 MR. WATERS: It's not a problem at all. We thought it might be helpful. We can file it, if you like, at a later time, and send copies to everyone, if that would be suitable -- or not, that's fine.
--- Pause / Pause
5115 MR. BURNSIDE: It's not necessary.
5116 THE CHAIRPERSON: It is not necessary to file it, but thank you very much for the offer and for the effort that you put into it.
5117 MR. WATERS: Thank you, Mr. Chairman.
5118 THE CHAIRPERSON: Thank you, Mr. Waters.
5119 Mr. Secretary.
5120 MR. BURNSIDE: Thank you, Mr. Chair.
5121 Before I call the next item, I was remiss at the beginning of Phase IV because there were seven applicants, of course, in Phase I, but the seventh applicant, Golden West Broadcasting, waived their right to the rebuttal phase and I just wanted to clarify that.
5122 I would now like to call the representatives of Standard Radio Inc.
--- Pause / Pause
5123 THE CHAIRPERSON: Please proceed when you are ready, Mr. Grant -- or, I'm sorry, Mr. Peacock.
5124 MR. PEACOCK: Tom Peacock.
5125 THE CHAIRPERSON: Mr. Peacock.
REPLY / RÉPLIQUE
5126 MR. PEACOCK: Good morning, Mr. Chairman, Members of the Commission.
5127 My name is Tom Peacock and I am the General Manager of the two Standard radio stations currently operating in Calgary. With me is Peter Grant, our regulatory counsel.
5128 Gary Slaight asked me to offer his apologies this morning as he was unable to appear. He was called back to Toronto last night due to an illness in his family.
5129 We would like to take this opportunity to thank all of the intervenors who have been before you yesterday and today, and we would also like to thank the many intervenors who wrote letters supporting our application.
5130 There were no negative interventions. We would, however, like to address one question that was brought up earlier this morning by Commissioner Cram regarding the ethnic composition of the City of Calgary.
5131 To do that I would like to ask Mr. Grant.
5132 MR. GRANT: Thank you, Mr. Peacock.
5133 Mr. Chairman, this morning Commissioner Cram asked Ms Murray from the Caribbean Community Council about the ethnic composition of Calgary. Ms Murray didn't have the Statistics Canada numbers in front of her, but I do have them here.
5134 Just to deal with that question, the 1996 Statistics Canada numbers show that the total population of Calgary is 762,790, and of that amount 126,050 is made up of visible minority populations, which is about 16.5 per cent of the population. Of that number, a little over 10,000 is made up of black population. The rest of the visible minorities are Chinese, South Asian, Arab and West Indian, Filipino, and a number of others.
5135 Now, in looking at those numbers it is important to bear in mind that, as indicated in the opening presentation for The Rhythm, the audience for The Rhythm will come from both the visible minority groups and the rest of Calgarians.
5136 From that perspective, the Angus Reid study filed with the application, if you go into the detail, they do break out the responses between visible minorities and others and it becomes clear that about 30 per cent of the audience for the station will be from this visible minority group, so disproportionate to their amount in the community. But 70 per cent of the audience will come from Calgarians who are not among the visible minorities and that reflects the broad audience interested in urban music.
5137 So on that basis I would urge you to bear in mind that this format is not a specialty format, it is a mainstream format, but it will have a disproportionate interest among the visible minorities because they will be about 30 per cent of the audience although they are only representing 16.5 per cent of the actual statistics of the city.
5138 Thank you.
5139 MR. PEACOCK: Thank you, Mr. Chairman, for allowing us that opportunity.
5140 That concludes our reply.
5141 THE CHAIRPERSON: Thank you, Mr. Peacock and Mr. Grant.
5142 We have no questions.
5143 Mr. Secretary.
5144 MR. BURNSIDE: I would now like to call the representatives of Craig Broadcast Systems Inc. on behalf of a company to be incorporated.
--- Pause / Pause
5145 THE CHAIRPERSON: Mr. Cowie, please proceed when you are ready.
REPLY / RÉPLIQUE
5146 MR. COWIE: Thank you.
5147 Good morning, Mr. Chairman, Commissioners and Commission staff.
5148 I am Bruce Cowie and with me is Jennifer Strain on behalf of the application by Harvard Developments and Craig Broadcast Systems for a new FM licence offering a hot AC format with the best music from the eighties and nineties.
5149 Our reply comments will be brief and they will focus primarily on our Canadian Talent Development Fund.
5150 First of all, we would like to thank all of the intervenors who wrote in support of our application, and particularly those intervenors who took the time to come here and appear before you in person: Ian Hogg from TGS Properties; Ron Renaud from Rencor Development; Colin Jackson from Calgary Performing Arts Centre; Brenda-Ann Marks from the Calgary Opera; Jim Finkbeiner from the MidSun School; Mike Walters from the Mount Royal College Foundation; JoAnne James from Calgary International Children's Festival; and Tim Rendell from the International Organ Foundation.
5151 We hope that these intervenors have given you a sense of the kinds of programs and organizations that exist here in Calgary for music and other artistic endeavours and of the links that already exist between performing arts groups and public education.
5152 The attractiveness of our $5 million CTD plan is that it will make use of the organizations and contacts and programs that already exist here in Calgary. The money will not be spent on setting up more layers of administration.
5153 Through our volunteer advisory board, which will cost nothing and will include members of the Calgary arts and education community, we will focus on getting Canadian talent development funding directly into the hands of artists, performers and students, to find those initiatives which offer the most "bang for the buck", as Commissioner Cram put it.
5154 The infrastructure is already here, mentoring programs are already here to develop new talent. These organizations just need more money.
5155 Commissioner Cram, we think that you asked a very good question about whether the Commission should consider not just the magnitude of the CTD commitment, but the impact it will have.
5156 I don't think that any of us in this room here today can tell you with certainty, what kind of program will have the biggest impact. I do think that providing music education programs to kids is an important part of it, but it is likely not the whole answer. We are confident with members of our Advisory Board that we can assess this very issue in each and every case where we receive a request for funding from an eligible third party organization.
5157 We are very excited about the prospect of being involved in Mount Royal's Music Bridge program. We think if ever there was an opportunity to get real bang for the buck and to create stars, it is this program. We would very much like the opportunity to replace the corporate funding that this program has just lost.
5158 We will leave you with that thought on our Canadian Talent Development Fund.
5159 Second, we want to say a word about our western Canadian ownership.
5160 We do not subscribe to the view that an eastern Canadian-based broadcaster cannot come in here and do an excellent job of serving the Calgary community. They are doing it now. We are suggesting that this proceeding is an opportunity to license an new, diverse voice in a highly concentrated market. Our proposed station will offer not just a new format but a distinct, regional perspective in its news programming and in its coverage of community events.
5161 Section 3(1)(d) of the Broadcasting Act says that the broadcasting system should:
"...serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada."
5162 We believe that the existence of regionally diverse owners is an important part of fulfilling that objective.
5163 Third, we want to reiterate that our business plan is sound. It was developed on the basis of independent research that shows high consumer demand for the format that we are proposing. Our revenues are a little higher than some other applicants because the format is very attractive. Indeed, it is a distinct and popular format in many markets across the country.
5164 Finally, the added benefit of licensing our application is that it will help us maintain the services we operate in the smaller and much tougher markets of Brandon, Winnipeg and Regina. This application is very important to solidify Harvard's and Craig's existing radio operations.
5165 This concludes our remarks. We than you, Chairman Williams, Commissioners and Commission staff for what we believe is a very thorough and a very thoughtful examination of all of these applications. We would be honoured to be rewarded with the licence. Thank you very much.
5166 THE CHAIRPERSON: Thank you, Mr. Cowie and Ms Strain. There will be no questions.
5167 MR. COWIE: Thank you.
5168 THE CHAIRPERSON: Mr. Secretary.
5169 MR. BURNSIDE: I would now like to call the representatives of Newcap Inc.
5170 THE CHAIRPERSON: Mr. Steele and Mr. Templeton, please when you are ready.
REPLY / RÉPLIQUE
5171 MR. TEMPLETON: Thank you, Mr. Chairman, Commissioners, staff. I am Bob Templeton and with me is Rob Steele, who will be making our closing comments.
5172 We are pleased to be before you again in this final phase, Phase IV. Before I call on Rob to conclude our remarks, I would like to thank the numerous intervenors, both appearing and non-appearing who wholeheartedly supported our application.
5173 MR. STEELE: While Newcap has appeared at this hearing before, this is my first time in front of the Commission. I must say it is quite an experience.
5174 Over the last several days we have had the chance to hear from all the applicants. I'm absolutely amazed at what's on the table.
5175 We are all mindful of the value of a Calgary licence and it's wonderful that the market can afford everyone the ability to offer what I consider to be spectacular benefits packages. So I can appreciate what a difficult task you have in ultimately deciding who gets the licence.
5176 This is a huge opportunity and there is a lot of money at stake. To pretend otherwise is silly because we all know what a tremendous business opportunity this is. It is also an opportunity to give something back to the community. And I guess that's the purpose of this exercise.
5177 So why would you consider the Newcap application over the others?
5178 Well, what Newcap offers is this. The package in its totality is comprehensive and it meets the objectives as outlined in your licensing criteria and I will be brief.
5179 Our thorough research has identified the format that most listeners want.
5180 Our format is distinctly different from the existing stations in the market.
5181 We propose a 40 per cent Canadian content.
5182 We will also provide a new and high quality news voice to Calgary.
5183 We propose to spend significantly more money on programming than any other applicant.
5184 Newcap will provide over $2.3 million to Aboriginal Voices Radio.
5185 And also, we are offering $700,000 of tangible local talent development.
5186 Finally, the strengthening of a smaller player will maintain diversity in an increasingly concentrated media environment.
5187 Those are our commitments and when we make commitments we keep them. Our credibility is important because we know we are going to be in front of you again.
5188 It is interesting to note that most applicants here are undergoing a generational change, and that's certainly the case with us.
5189 My brothers and I wish to grow this business but, quite frankly, we have to do it by winning licences because it is cost prohibitive in most cases to pay the high multiples that existing stations are selling for. We have been able to expand to some degree by purchasing stations, such as our Edmonton purchase in the late eighties and then again in '97, our purchase of Newfoundland stations from CHUM in the early eighties and, of course, VOCM last year. But these expansions do not give us anywhere near the critical mass of most of the other applicants at this hearing. In fact, we have to compete with the nationals in our own backyard.
5190 So we have to grow beyond Atlantic Canada. There are simply few opportunities left there and we need a stronger foundation.
5191 We want to win licences one at a time based on the quality of our applications. We believe that we have demonstrated at this hearing that we deserve, and we would be honoured to receive a licence here in Calgary.
5192 Thank you for your attention. I appreciate it very much. We wish you well with your deliberations.
5193 THE CHAIRPERSON: Mr. Steele and Mr. Templeton, thank you. There will be no questions.
5194 Mr. Secretary.
5195 MR. BURNSIDE: Thank you, Mr. Chairman.
5196 For our final rebuttal I would like to call the representatives of Telemedia Radio (West) Inc. on behalf of a company to be incorporated.
REPLY / RÉPLIQUE
5197 MR. BEAUDOIN: I am Claude Beaudoin and with me is Nanon de Gaspé Beaubien and on my right is Dave Calder and Hugh McKinnon.
5198 Mr. Chairman, Commissioners, staff, Telemedia is gratified and humbled by the significant public support for this new non-mainstream specialty format, Smooth Jazz 98.5 FM. We would especially like to recognize and thank the intervenors who took the time to underline the depth of support for this format in Calgary, Kevin Wilms, high school educator and Vice-President of the Alberta International Band Festival; John Hyde, a jazz musician and educator at Mount Royal College; Professor Edwards, University of Calgary, and Calgary Councillor Ray Jones. The 425 letters of support on file with the Commission make the point far more strongly than I ever could, that Smooth Jazz 98.5 FM will find an eager audience in Calgary.
5199 We note that you did not receive any opposition from the other applicants on Telemedia's application to increase our Canadian content level to 35 per cent weekly in both Category 2 and Category 3. We have made this change largely in response to the jazz musicians and educators who demonstrated through their interventions that there is a depth of material available to make this commitment. However, the Commission will decide whether to accept this amendment or not, and we respect this process.
5200 Many of the intervenors who have appeared support many initiatives that contribute to the development of individual talent, and replace government funding in Calgary. These individuals and groups are excited to have new sources of funding and it is important, but it is important, however, that these initiatives also support in a tangible way the Canadian broadcasting system.
5201 We ask the Commission to consider the comments made by John Hyde and Kevin Wilms. They made the point that what is really needed is to expand the opportunities in the Canadian broadcast system for Canadian jazz artists who now receive little airplay. Investment through Canadian talent development is half of the equation. Telemedia also delivers the committed specialty format that expands opportunities for Canadian artists.
5202 Our last point, in the intervention phase the Commission heard comments from applicants about the alternative frequencies. After listening to the various responses we believe each of the applicants expressed a willingness to consider an alternative if the Commission issues moire than one licence.
5203 Telemedia wishes to underline the fact that we are in a unique position with respect to the use of the frequency for which this call was issued. At the tower site where Telemedia is planning to locate, none of the alternative frequencies are technically possible, while the other applicants appear to have alternative frequencies on the site they have chosen to locate on.
5204 And for the very last few words, Nanon.
5205 MS de GASPÉ BEAUBIEN: Merci, M. Beaudoin.
5206 Calgary has told us it is ready for Smooth Jazz 98.5 FM. Mr. Chairman, Commissioners and CRTC staff, thank you for your attention and the opportunity to present to you this week.
5207 THE CHAIRPERSON: You are welcome, Ms Beaubien.
5208 There will be no questions for the Telemedia panel, Mr. Beaudoin.
5209 Mr. Secretary...?
5210 MR. BURNSIDE: That now concludes all the four phases of the seven radio applications that were heard.
5211 I will now call the representatives of Saskatchewan Telecommunications, better known as SaskTel, who are applying for a broadcasting licence for a cable distribution undertaking to serve a number of communities in Saskatchewan which are listed on page 7 of this agenda.
5212 THE CHAIRPERSON: Mr. Secretary, perhaps we could take a brief 3 to 5-minute break while they are getting organized.
--- Upon recessing at 1140 / Suspension à 1140
--- Upon resuming at 1145 / Reprise à 1145
5213 THE CHAIRPERSON: We will reconvene the public hearing, Mr. Secretary.
5214 MR. SECRETARY: You can proceed when you are ready.
APPLICATION / APPLICATION
5215 MR. CHING: Good morning, Mr. Chairman, Members of the Commission and Commission staff.
5216 My name is Don Ching. I'm the President of SaskTel and Saskatchewan Telecommunications Holding Corporation.
5217 I would like to thank you, on behalf of myself and my colleagues, for the opportunity to come here this morning and address you.
5218 Before I begin my formal presentation, I would like to introduce the other members of our panel.
5219 On my immediate left is John Meldrum, who is the Vice-President, Corporate Counsel and Regulatory Affairs.
5220 On my immediate right is Kelvin Shepherd, Senior Vice-President and Chief Technology Officer.
5221 And over on the left is Candice Molnar, who is the General Manager of Regulatory Affairs.
5222 I am pleased to be here before you today to discuss SaskTel's application for a broadcast licence. As you may know, this is one of the first appearances by SaskTel before the Commission.
5223 It may seem a bit ironic that we are dealing today with broadcast matters but, in some respects, it's a sign of the times, reflecting the convergence that is occurring between the broadcasting and telecommunications industries.
5224 SaskTel is the third telephone company to seek Commission approval for a broadcast licence. The New Brunswick Telephone Company, of course, was the first -- obtaining their licence in 1998. The technology that SaskTel is proposing is very similar to that which has been rolled out successfully by NBTel and it is the same technology which will be utilized by MT&T, in conjunction with their recently-approved broadcast licence.
5225 Our proposed service is a fully-integrated Internet and broadcast service that we refer to as "DIV", digital interactive video. It is convergence as envisioned by the federal government in the convergency policy statement of 1996.
5226 Our first steps towards becoming a convergent communications provider have been met with a particular amount of comment and opposition. Having reviewed the comments filed by intervenors, it appears that the majority of the opposition relates to who we are versus what we propose to deliver. In other words, these intervenors have focused on our status as a crown corporation rather than on what we intend to deliver to potential customers. With all respect, it's my view that that strikes the wrong emphasis.
5227 Yes, there are some issues related to our crown corporation status -- and I will address those in a few moments.
5228 But, first, I would like to speak about our service offering and the benefits which we believe it will bring to customers in Saskatchewan.
5229 We at SaskTel have been conducting an employee trial of our interactive TV service for approximately one year. We are very excited about the service and the potential benefits it will bring to potential customers in Saskatchewan. It's not simply broadcasting over another medium; it is bringing Internet and entertainment together on a single device to provide full-featured interactive TV.
5230 We have brought with us a very short presentation of our service proposal.
5231 At this time, I would ask Kelvin Shepherd to briefly outline the features of our DIV service.
5232 MR. SHEPHERD: Thank you, Don.
5233 This is slide is an example of the DIV home page all customers will have access to. Whenever a customer turns on their set-top box or hits the "home" key on the remote control, they will come to this screen.
5234 This home page serves as the launchpad for all of the services available with DIV that customers can access with a simple click of a button on their remote.
5235 Let's start with the interactive guide.
5236 The interactive guide is the gateway to the broadcasting content. All of the broadcasting and audio channels are displayed and the customer can scroll around to see what programs are available, up to seven days in advance, and read a quick description of each. The guide also includes a TV manager function, which allows parents to password protect channels they wish to restrict from their children, as well as any pay-per-use services. The customer selects the channel they want by entering the channel number, or by hitting the "select" key on the remote for the channel they have scrolled to.
5237 At any time, the customer can return to the home page to access the other services.
5238 DIV includes an e-mail service, local weather information, and we also have a video-on-demand service. Customers will have a library of movie titles to choose from and they can view the movie when they want. The customer will rent the movie for a period of time, for example, 24 hours, and they will have full VCR-like control with the movie.
5239 DIV also provides a high-speed access to the Internet and, in particular, "point and click" access to community information. Customers will have the ability to roam all over the World Wide Web but we will also provide them easy access to Saskatchewan and local content. A customer can choose their local community, for example, Prince Albert, and we will provide them with a variety of categories that are linked to information and content to Prince Albert. Under the sports category, for example, the customer could choose to access information about the Saskatchewan Roughriders.
5240 From the home page, the customer can access other services, such as the audio services which DIV will provide, a self-help area, or view their SaskTel bill on line and contact us.
5241 Finally, because DIV combines both broadcasting and the Internet on one device, interactive TV will be available to Saskatchewan consumers. For example, you will be able to watch and play along with Regis during "Who Wants to be a Millionaire?", or you can shop or bank on line while keeping tabs on your favourite show.
5242 As you can see, DIV will provide customers with more than just broadcasting. The customer is in control of what type of content they choose to see and can switch back and forth between broadcasting programs and Internet content on demand.
5244 MR. CHING: We believe the added choice and functionality this service provides over traditional broadcasting and Internet services will be welcomed by the people of Saskatchewan. There continues to be a block of customers who do not own a personal computer and, for those customers especially, this service offers the opportunity to become connected to the World Wide Web.
5245 In focus group testing conducted recently, where groups of participants were shown our interactive TV proposal, approximately 50 per cent of the group indicated that they would consider purchasing our bundled Internet/TV service. Of the focus group participants without a home computer, nearly 70 per cent indicated interest in purchasing our interactive service.
5246 Consumers desire choice and access to innovative new services. Certainly, the letter of support filed by the Saskatchewan branch of the Consumers Association substantiates this claim.
5247 As the CAC noted; quote:
"It has long been our policy to encourage workable, competitive markets that stimulate innovation, customer choice and increased efficiencies. The consumer interest can best be protected by open competition in all areas of the communications marketplace."
5248 We trust that, having reviewed our application, the Commission will agree that SaskTel's proposal will provide Saskatchewan customers with both choice and innovation.
5249 It is important, I believe, to emphasize that our service is more than a simple competitive alternative to that of the cable companies and has the potential to deliver significant benefits to the Saskatchewan customer base.
5250 SaskTel's integrated Internet and broadcast service will support the development of Saskatchewan Web-based content and commerce. By providing a focal point for local Web sites and information, it will encourage the development and use of the Internet in Saskatchewan.
5251 But, more importantly, in our view, our service provides an alternative medium for accessing the Internet, a medium that is both economical and familiar to consumers. That medium is the television set.
5252 Much has been written about the widening digital divide that exists in Canada today. For a number of reasons -- many of them social and economic -- there is a large segment of Canadians who do not have access to the Internet and, absent government programs or innovative service solutions such as SaskTel is proposing, are likely to remain unconnected, for the foreseeable future.
5253 We believe that our service can help to narrow the divide in Saskatchewan by making the Internet available to those consumers who do not own a computer. In fact, our business case relies upon it. We have estimated that approximately 60 per cent of the customers using our service will be new, high-speed Internet adopters.
5254 The term "digital divide" is also sometimes used in relation to urban versus rural and remote communities. We fully support the federal government's goal of making high-speed broadband Internet services available to all Canadians. In fact, we have a similar objective and believe we have a vital role to play in making the federal government's goal a reality in Saskatchewan.
5255 I am proud to say that SaskTel has long been a leader in bringing the people of Saskatchewan, including those in rural and remote communities, the latest in technological and service innovation.
5256 For example, we were the first telephone company in Canada to provide individual line service to all customers. We were the first telephone company in Canada to deploy a commercial fibre optic network, and one of the first to have an all digital switching network.
5257 We were at the forefront in Canada to offer universal Internet access to both urban and rural residence without long-distance charges, and we were the first company in North America to offer high-speed Internet service using DSL technology. Today, more than half of Saskatchewan residents can access SaskTel's high-speed Internet service, and SaskTel will continue to extend broadband access as quickly as it is economically feasible.
5258 As a Crown corporation, SaskTel has a responsibility to further the social and economic development in Saskatchewan. We believe we have been successful in the past and can continue to be successful in contributing in this way in the future.
5259 As we stated in our written response to the interventions filed opposing our application, there are no other communications providers operating in Saskatchewan who are more committed or better positioned to extend high-speed broadband access to all of Saskatchewan. But to deliver broadband to the home within rural and remote communities in a commercially viable manner, SaskTel will require the economies of scale and scope that accrue from serving both urban and rural customers, and from carrying more than just traditional telecommunications services.
5260 The ability to provide a convergent package of broadcast and Internet services will contribute to making the extension of high-speed Internet a commercially viable proposition and supports the continued viability of a strong communications network in Saskatchewan.
5261 As a point of clarification, SaskTel is not requesting a broadcasting licence for all of Saskatchewan at this time, but rather approval to operate within Saskatchewan's nine largest centres where our broadcast network is capable of offering this service.
5262 With Commission approval to proceed, SaskTel will roll out its interactive TV service to all of these nine centres within approximately one year from Commission approval.
5263 The near term launch of our service is a critical factor to the success of our business proposal. I would like to emphasize that SaskTel is the new entrant into the broadcast distribution market and we are in a race against two strong established competitive forces.
5264 Firstly, there are the incumbent cable companies. Some of these companies, such as Shaw, have stated that they will soon launch interactive TV services. But, more importantly, in the areas where they operate, as in other parts of Canada, the cable companies have the largest share of the high-speed Internet services market.
5265 A rapid launch of our interactive TV service is necessary if SaskTel is to retain its market share and provide an attractive service proposition to high-speed adopters.
5266 Secondly, there are the DTH providers. An ever-increasing number of dishes are appearing on the walls and rooftops of Saskatchewan homes. Our view is that a customer who makes the commitment to move to satellite service, not only invest the money but physically attaches the dish to his or her home, that is a customer who is lost to SaskTel and the cable companies for a period of approximately five years. In our view, SaskTel must quickly enter the market before customers who may be dissatisfied with the services of their traditional cable companies move to DTH providers.
5267 Before closing, I would like to return to the issue of our Crown corporation status.
5268 There have been four general arguments put forward by parties opposing our application, and I would like to quickly address each of them.
5269 First, there are those who philosophically oppose a Crown corporation competing against private industry.
5270 In response, I would note that the federal government's convergent policy statement and the subsequent order in council that amended the eligibility requirements to hold a broadcast licence, clearly illustrate that the federal government intended that all communications carriers, including SaskTel, are eligible to hold a licence, assuming of course that the eligibility criteria are met.
5271 Secondly, there are parties who have suggested that SaskTel's Crown Corporation status provides us with a competitive advantage that would allow us to dominate the market.
5272 SaskTel's written response to the interventions provides a full discussion of these perceived advantages we believe clearly illustrating that the advantages we derive from our status as a Crown corporation are not significant and in fact are less than the competitive advantages of the incumbent cable companies. It is the incumbent cable companies who dominate the market when measured against the relevant markets of Internet and broadcast distribution.
5273 Thirdly, some parties have suggested that SaskTel might cross-subsidize its broadcasting activities with revenues earned from its telecommunications operations and, as a result, the Commission should delay providing a broadcast licence until further regulatory reviews are completed.
5274 To that point, I would argue that SaskTel should be treated no differently than any other telephone company in Canada. SaskTel has aligned its telecommunications policies with those of the other regulated telephone companies, and a regulatory framework has been established for us.
5275 This framework includes safeguards to protect SaskTel's utility services customers and assure against cross-subsidy of competitive telecommunications services. These same safeguards will provide assurance SaskTel is not cross-subsidizing its broadcast activities.
5276 Finally, parties have argued that SaskTel does not meet the criteria of an "independent carrier". We are aware that the Commission must find that SaskTel is not directly controlled by the provincial government and that SaskTel enjoys freedom of expression and journalistic creative and programming independence. As detailed in our written response, SaskTel maintains there are a number of factors that dictate against SaskTel being found to be directly controlled by the provincial government.
5277 SaskTel's governance model has, at its core, an independent board of directors which, together with the management team, is responsible for the day-to-day operations of SaskTel. When we compare the statutes governing SaskTel to those of the CBC, for example, it would appear that the federal cabinet has greater control over the CBC than the provincial government has with respect to SaskTel.
5278 Similarly, a review of provincial statutes suggest that SaskTel, a commercial Crown corporation, operates with greater freedom than SCN, a Treasury Board Crown that was found by the Commission to be an independent corporation and not directly controlled by the provincial government.
5279 SaskTel's operating autonomy is also evident by its actions. We have been involved in Internet service since 1996, and providing movies in hotels since 1993, and at no time has the Government of Saskatchewan interfered with the content of these services. In fact, the Chairman of SaskTel's board has attested to the fact that since his involvement with the Board in 1992, the Government of Saskatchewan has never interfered with any of SaskTel's day-to-day operations.
5280 In addition, attached to this presentation is a copy of a recent order in council that confirms that SaskTel has freedom of expression and journalistic creative and programming independence. In our view, all of these factors collectively illustrate that SaskTel meets the requirements of an independent carrier.
5281 In closing, I would like to summarize that we believe SaskTel meets all of the requirements necessary to hold a broadcast distribution licence and that the customers of Saskatchewan will benefit from our application if it is approved.
5282 I would like to thank the Commission and the staff for your time and attention on this matter.
5283 Thank you very much.
5284 MR. MELDRUM: Mr. Chairperson.
5285 THE CHAIRPERSON: Please proceed.
5286 MR. MELDRUM: We have filed with the Secretary copies of the 1999 Annual Report of Regina Cablevision Co-Operative, now named Access Communications, one of the appearing intervenors today.
5287 We are proposing to file this since we believe we may be making reference to excerpts from the report in response to questions from the Commission and as well in support of statements that we have made in our response.
5288 THE CHAIRPERSON: I understand the information has been filed with the Secretary and has the permission of Access, so there is no problem there.
5289 Thank you, Mr. Ching and panellists, for your opening presentation.
5290 We will now take an hour and 20 minute break for lunch and then we will reconvene the hearing.
5291 Mr. Secretary.
5292 MR. BURNSIDE: We will reconvene at 1:30.
--- Upon recessing at 1206/ Suspension à 1206
--- Upon resuming at 1330 / Reprise à 1330
5293 THE CHAIRPERSON: Good afternoon.
5294 We will now continue on with the Calgary public hearing.
5295 Mr. Secretary.
5296 MR. BURNSIDE: We will now start the questioning phase of this applicant.
5297 THE CHAIRPERSON: Commissioner Cram, if you would lead our questioning, please?
5298 COMMISSIONER CRAM: Hello. Welcome.
5299 I guess I better start off with a few little definitions because I know we are going to be going through a fair bit of the legalities.
5300 So when I use the terms "the holding company" or "holdco" I am referring to Saskatchewan Telecommunications Holding Corporation.
5301 When I use the term "Sasktel" -- and SaskTel, if I understand it correctly, is the applicant here. Is that correct?
5302 MR. CHING: That's correct.
5303 COMMISSIONER CRAM: I am referring to the subsidiary of the holding company and it is SaskTel that is incorporated under the Saskatchewan Telecommunications Act.
5304 MR. CHING: That is correct.
5305 COMMISSIONER CRAM: When I refer to "CIC" I mean the Crown Investments Corporation. They are, of course, governed by the Crown Corporations Act, 1993, and I will simply call it the "CIC Act" for ease.
5306 Then I will be referring to "the directive", which is the government directive to us, amended, I believe, 1997, on eligibility. It is the direction to the CRTC "ineligibility to hold broadcast licences". So we all are speaking from the same page.
5307 I wanted to start off, of course, with the directive, which is the issue that appears to be of concern to the intervenors, and of course the wording of subparagraph (a), the salient wording is:
"...not directly controlled by Her Majesty in Right of any province". (As read)
5308 Do I understand your position to be that this essentially means control directly by the provincial cabinet without any intermediaries?
5309 MR. CHING: I think it is actually a little bit different flavour than that, although that is certainly part of it.
5310 As I interpret that reference, the key issue is the extent to which the entity that is seeking the licence has operating freedom so that his day-to-day activities aren't controlled by the political arm of government, if I can put it that way.
5311 The extent to which it is distanced from the organs of government which represent the political arm of government I think speak to the issue, but they aren't necessarily the only factors in play, if I can put it in that manner.
5312 COMMISSIONER CRAM: So can I then sort of ask you what you believe the mischief that is being addressed by subparagraph (a), and in particular the mischief that is to be addressed by the word "directly"?
5313 MR. CHING: I guess I would say that I think what the federal government did not want to have happen was that broadcasting entities become the play thing of the political arm of government. I think that is the best way of putting it. So I think that what they were looking for is evidence that the actual decisions on broadcast content would be sufficiently insulated from the political arms of government that it would give to the operating entity a degree of journalistic freedom from the, I guess, idea of a political play thing.
5314 If we look at CBC for instance, there is an entity which could have a major aspect which would be troublesome, I'm sure, to any free and democratic society because it is owned by the federal government.
5315 If it were used in a manner to perpetuate the political entity that presently controls a federal government, then I think that that would be perceived as being an excellent example of the mischief that might very well be potentially at play and a danger to the system.
5316 So I think that one may look at CBC, they try to make sure that there are sufficient safeguards between the CBC and the federal cabinet to make sure that the CBC functions beyond the, I guess, political aspects of the federal cabinet.
5317 Now, the truth of the matter is, that on the other side of the ledger, that when the people of Canada elect a federal government and un-elect the one that is already there, they want to see change. That may very well be change in institutions like the general approach which CBC takes. But I think that they don't expect that when they cast their ballot to either re-elect a government or to change a government, that they are turning over to the political entity that makes up that government the power to run its way down into the actual day-by-day activities as an institution as powerful and pervasive as the CBC so as to simply perpetuate the party in power.
5318 I think that, as I read the directive and the order in council that followed, it is aimed at trying to, on one hand, recognize the fact that within Canada there are a number of entities which are ultimately owned by the people through their government and, at the same time -- and allowing them to participate in things like broadcast licences, but at the same time making sure that if they are owned by the government there are adequate protections against them becoming a political play thing.
5319 COMMISSIONER CRAM: So can I suggest to you when we talk about political play things, that -- I'm sorry, somebody is turning me on back there.
--- Laughter / Rires
5320 COMMISSIONER CRAM: Turning my microphone on.
--- Laughter / Rires
5321 COMMISSIONER CRAM: When you are talking about a political play thing, though, there are the two parts, there is the (b) of the directive, which is journalistic freedom, but would you agree with me that (a) is really directing itself to the fact that ensuring that it will not be a political play thing in perpetuity, or at least for so far as based on the structure we see?
5322 MR. CHING: Well, I think that the very existence of this order in council indicates that there is an acceptance of the concept that a government-owned entity can have a broadcast licence. If that were not to be permitted, I mean, OC itself -- I'm sorry, the directive would be nonsensical.
5323 So obviously I think that the federal legislators were trying to wrestle with the issue of how to allow that to happen, but at the same time protect against the abuse that could arise from a powerful institution such as a broadcast medium being in the hands of an entity which has obviously a very large political flavour to it.
5324 COMMISSIONER CRAM: Now, when you use the words "could have been", then I take it that you agree with me that we should be talking not only about what is happening now, but the potential.
5325 MR. CHING: I think that certainly the Commission should be wary that it isn't something which in the short term is going to reverse itself.
5326 In other words, you may come to the conclusion that an entity like SaskTel is indeed operating separately from the political arm of government to the extent that is necessary to fall within the four corners of the directive, but you should also, I think, be comfortable that there is no impending doom in that regard.
5327 But I think that, as with all of the requirements which you, as a Commission, put upon recipients of licences, you obviously have the capacity to police those requirements, and I would assume that you don't have to necessarily be 100 per cent sure that there isn't some danger that could arise 5 or 10 years from now because indeed you have the policing power of reviewing those licences on a routine basis.
5328 COMMISSIONER CRAM: Directing it to the issue of potential, if there lies within the legislation a potential for direct control, we can't give a licence and take it back if that control -- that potential is then exercised, can we?
5329 MR. CHING: I think you can give a licence on the condition that the political control is not there and that it ought not to be in the future. Clearly if some evidence arose that there was a an interference with day-to-day operations, that could bring it back in front of the Commission and you could exercise the powers you have under the statute to review that, I would submit.
5330 COMMISSIONER CRAM: You believe we can actually revoke a licence based on the fact that we made a finding that there was no direct control and then there then became direct control.
5331 MR. CHING: I think if you made your decision on the basis that there should be no direct control and that you came to the conclusion that there was no direct control, if at a later point there was evidence of direct control then I would assume that the very basis of the order that you made giving us the broadcast licence would be completely undermined.
5332 COMMISSIONER CRAM: You mean sort of like a fraud issue.
5333 MR. CHING: That's right.
5334 COMMISSIONER CRAM: A misrepresentation.
5335 MR. CHING: That's right.
5336 COMMISSIONER CRAM: If, though, Mr. Ching, there was the seed of what you call "impending doom" in what we have with us today -- "impending doom" meaning direct control -- you would agree with me that we would then say we cannot issue a licence?
5337 MR. CHING: Let me see if I can try to focus in on what may be bothering you.
5338 Clearly always I think in the end the Government of Canada has the power to control CBC, and in the end the Government of Saskatchewan has the power to control SCN, and in the end the Government of Saskatchewan has the power to control SaskTel.
5339 I think the most that you can hope for under these circumstances, and this is why I think the directive and the OC, when they are read together, seem to walk a bit of a tightrope, is that there is no question in my mind that if a government coming to power in Saskatchewan decided to misuse SCN and to transgress what I would consider to be the directive, then I would assume that the CRTC would hear about that, that it would be brought forward before you and that you would review the matter.
5340 Certainly you review the licence in a routine manner anyway and would examine those sorts of things, but it has to be renewed on a regular basis, as I understand it, and so in that renewal process you would review it automatically, but I think that if an abuse occurred in the meantime it would be open to anybody who was troubled by that to bring it back in front of the Commission.
5341 It is fundamental to the existence of that broadcast licence, I believe, that there is a finding that it is not directly controlled by the government. If that finding falls away or is undermined by the behaviour of a future government, or even the present government under different circumstances, then I believe the very foundation of that broadcast licence has been destroyed.
5342 COMMISSIONER CRAM: In your rebuttal -- which I can't find, I think it says, starting at about paragraph 9, you talked about the fact of direct control and without intermediaries, et cetera. I think it is starting at 9. Yes, your definition.
5343 So you are talking about:
"`directly controlled' means control in a direct manner, not obliquely or roundabout and without intermediaries." (As read)
5344 Is that your position today?
5345 MR. CHING: I think that you come to the conclusion that we are directly or indirectly controlled on the issue of our journalistic freedom, then I think we have got problems with our application.
5346 COMMISSIONER CRAM: What about if you are indirectly controlled through an intermediary as to your independence of decision-making?
5347 MR. CHING: Well, in my mind I am not sure that, for instance, if one came to the conclusion that CIC, which is our holding company, were prone to interfering with our journalistic freedom, I suspect that would be just as bad as if the Cabinet was because the board of directors of CIC is in fact seven members of Cabinet.
5348 COMMISSIONER CRAM: Do I then understand you that you think the directive only refers to independence of decision-making as it affects journalistic freedom?
5349 MR. CHING: Yes, I think that is the primary thing. When I look at it, I look at it and say to myself, as you did, what is the mischief that is lurking about here that the directive is meant to try to deal with? My view is that the mischief is exactly as I have mentioned to you already, political interference in what would be areas of journalistic freedom.
5350 From my vantage point I think that's the crux of the issue. Clearly, the government has the power, for instance, to review our capital budgets and I guess it is conceivable in some way, shape or form that in doing that they could impact on how we go about our day-to-day business, but it is extremely indirect and is not the sort of thing that one would I think expect to have been forbidden by the directive and the OC and the words surrounding that.
5351 COMMISSIONER CRAM: So no problem with direct or indirect control in any area, except journalistic freedom, freedom of expression. That's what you think the directive tells us?
5352 MR. CHING: That's what I believe.
5353 COMMISSIONER CRAM: In terms of decision-making and independence of the board, in any other issue you believe is irrelevant to the applicability of the directions?
5354 MR. CHING: No. I think, as I that it is conceivable that other ways can get at the issue of journalistic freedom.
5355 If you came to the conclusion that other controls which the government has over SaskTel could conceivably influence journalistic freedom, then I think you should be on your guard and look into those issues and pry into them. I think that's a legitimate area for your investigation, absolutely.
5356 COMMISSIONER CRAM: And so you would agree then we should be looking at independent decision-making ability and independence of the board of directors per se?
5357 MR. CHING: Yes. The critical thing I think is the board because in the end the board really is the entity that has the day-to-day operation of final decision-making.
5358 You will see from the material that we filed that the board is not only through its requirements vested upon it by the government required to act in the best interests of the corporation and not in the interests necessarily of the government in such a way that that requirement vests itself upon each individual board member individually. They are required to abide by that responsibility, even at the risk of either being replaced or reprimanded, open to sanction if they violate it.
5359 COMMISSIONER CRAM: We have talked about the CBC and SCN and you have provided the matrixes of SaskTel, CBC, SCN. You of course know that the direction doesn't prevent licensing Her Majesty in right of Canada or its agents.
5360 MR. CHING: Yes.
5361 COMMISSIONER CRAM: So of course that's something we have nothing to do with.
5362 IN terms of SCN, you know it was licensed as a complement non-competitive educational service provider.
5363 MR. CHING: Yes. I would suggest to you that those distinctions are significant distinctions, but looking at the issue of the mischief, what was meant by the directive, what the federal government intended to do and not to do I think it is still useful to look at those examples, even though they aren't on all fours necessarily with the application which we are filing, as good examples of I guess the thinking behind the directive and the effort to walk this balance between trying to allow government-owned entities to have broadcast licences, but at the same time avoid mischief that might do harm by putting in the hands of the political arm of government the day-to-day control over a broadcast facility.
5364 COMMISSIONER CRAM: In this case though, SaskTel is not asking for a complementary non-competitive service. We are talking about something that would compete with BDUs.
5365 MR. CHING: Yes.
5366 COMMISSIONER CRAM: Given that, do you think our direct control test should be more stringent in a case such as this?
5367 MR. CHING: Actually, in some respects it probably could be less stringent. The reason that I say that is the very suggestion that you are in the business of competing with some other entities goes to show that there is another foil out there active in exactly the broadcast activity that one worries about with regard to this whole question of governmental control.
5368 When you look at something like SCN which sort of has an area to itself, if I can put it that way, in some respects there is even greater risk because if there is abuse in that particular realm there is no sort of secondary entity which is clearly operating beyond the realm of the government, and hence it really has something of a monopoly.
5369 In the case that we are looking at here of SaskTel, there are a number of other entities out there in the broadcast industry in Saskatchewan that would be competing with us and we with them, and so in some respects you are I guess less locking in the consumer to a medium which could be abused.
5370 COMMISSIONER CRAM: On the other hand, in a competitive market it is SaskTel, an agent of the Crown -- of the government, asking against private entrepreneurs. So again I ask would that be the other side in favour of a stringent test?
5371 MR. CHING: I don't think that the issue of whether we are competing against somebody or not competing with somebody was meant to be the issue around which the directive took shape.
5372 COMMISSIONER CRAM: I was just asking the level of vigilance I guess in terms of the test of direct control. Are you actually suggesting we should be less vigilant about the issue of direct control in a competitive situation?
5373 MR. CHING: Well, let me change around this way, if we were the only broadcast media in Saskatchewan and there weren't cable companies, I think you as a tribunal might want to be more vigilant than under the present circumstances where we would not be the only game in town so to speak.
5374 Clearly, if we were the only broadcast medium in Saskatchewan and there was the slightest hint of abuse of political interference, I would think that that would have larger ramifications than if we were simply one as would be one of four participants in this particular industry.
5375 That's not to say that you should waive merrily if there is some clear indication of political interference in our activities. All I am saying is that if I were sitting in your place I think I would be even more troubled if there was a single entity of the nature of SaskTel than if SaskTel was one of four entities all in that broadcast medium.
5376 COMMISSIONER CRAM: Okay. If we could start with the holding company and I have mentioned the boards of directors, can you off the top of your head, and I don't want you to look it up, tell me the gross revenue of the holding company last year?
5377 MR. CHING: I think it was about $700 million.
5378 COMMISSIONER CRAM: And the gross asset value?
5379 MR. CHING: On our books it would probably be about $700 million I think. That would not be the market value in my opinion.
5380 COMMISSIONER CRAM: I hear you.
5381 At the holding company level there are 12 directors?
5382 MR. CHING: That's correct.
5383 COMMISSIONER CRAM: And do I understand it correctly that they are at Schedule 5 of your application?
5384 MR. CHING: I believe that's both the directors and the officers, yes.
5385 COMMISSIONER CRAM: Yes. If we could just go to the directors, and do I understand this, are these joint appointments, SaskTel and the holding company?
5386 MR. CHING: Yes.
5387 COMMISSIONER CRAM: And what I would like you to do, if you could, is briefly go through each of the individuals and talk about their business experience, any links they have with government past and present and if they have any other appointments by government to other boards.
5388 MR. CHING: Sure. The Chairman of the Board is Mr. Tom Kehoe. He is presently resident in I believe it's a resort about 30 miles south of Swift Current. At the present time he works in Swift Current and he is a salesperson with I believe it is the GMC dealer there. I could be wrong on which make.
5389 Before that he was the President and CEO of a company based in Swift Current which was in the making of hardware. His company was subsequently acquired by a larger company and he left there.
5390 He had a fair amount of business experience not only in the capacity of CEO of that particular company, but in previous iterations of that company and I believe spent much of his career -- he originally was born I believe in Ontario -- and grew up within the Black and Decker corporate structure.
5391 COMMISSIONER CRAM: The next part was links with government, past and present.
5392 MR. CHING: I believe he is a professional engineer incidentally.
5393 To the best of my knowledge he has no connection with any political party that I am aware of and has held no positions within government that I am aware of.
5394 Mr. James Scharfstein is a solicitor in Saskatoon. I think he practised law for some period of time in rural Saskatchewan, maybe in the Melfort region, and then I think, for the last 20 years, has been in Saskatoon. He, I think, focuses primarily on corporate and commercial.
5395 Again, to the best of my knowledge, he has never been in government, in any capacity whatsoever.
5396 Mr. Allan Blakeney, formerly premier of the Province of Saskatchewan, is retired now. He may have some connection with the University of Saskatchewan, in Saskatoon, and I know that he sits on a number of other boards, including Algoma. I think he was on Cominco's board, but I think he has retired from Cominco's Board.
5397 COMMISSIONER CRAM: How long was Mr. Blakeney the premier?
5398 MR. CHING: He held office from 1971 to 1980, I believe. He was the premier during that period of time.
5399 Incidentally, prior to that, and during all that period of time, he was an MLA, member of the legislative assembly, elected in Regina, and held some portfolios in the government of Mr. Douglas and the government of Mr. Lloyd, which would have been in the early sixties, I believe.
5400 Incidentally, prior to that, I think, was secretary to the creature that predated CIC, an entity called the Government Finance Office. I think he was the secretary of that entity. And before that, I believe he lived in Nova Scotia and practised law in Nova Scotia.
5401 Delores Burkart is a businesswoman in Saskatoon. She, I think, sits on a number of boards around Saskatoon and, I think, does public relations work, if I recall correctly.
5402 To the best of my knowledge, she has not held either an elected or appointed position in government.
5403 Mr. Byers, Wayne Byers, is one of two people on our board of directors -- the other one is Karen Leir, a little further down -- who are there representing our inscope employees.
5404 While they are ultimately appointed by order in council, they are selected, actually, by the union that represents our inscope employees. Our union has got a structure which creates I think it is nine executive positions, and those nine executive positions annually review the two appointments and either elect or unelect them from their vantage point. The government still has the power to ignore the recommendation of the union but I think, without any variation, has always honoured those appointments.
5405 The arrangements with the union is that, because our workforce is roughly half male and half female, one of the union appointees will be male and the other one will be females, and I believe that their system of selection is that on one year they will review the male position and on the next year they review the female position and, as a result, the person is really on a two-year tenure, if I can put it that way, and obviously very much plugged in with the inscope employees and their union, the CEP.
5406 COMMISSIONER CRAM: Business experience?
5407 MR. CHING: Mr. Byers has worked for the company, I think, virtually all of his life. He's an installer/repair individual. He's based in Lloydminster, I believe.
5408 In the case of Karen Leir, she's part of our IT staff and is based in Regina.
5409 Mr. Byers is relatively recent to our board. I think he's only been on our board less than a year.
5410 Whereas Karen Leir, I believe, is in her second term, so she will have something like three years under her belt as a member of our board, maybe closer to four.
5411 Again, Karen Leir, to the best of my knowledge, is a long-term employee with the corporation, and I really can't say if she's had a job other than with SaskTel.
5412 Obviously, my name is next. I have had an association with not only this particular government but also with the government of Mr. Blakeney, during the seventies.
5413 I'm a lawyer by profession, practised originally in Saskatoon, subsequently joined the Blakeney administration in the fall of 1971 as a Deputy Minister of Labour for the Province of Saskatchewan. I held that portfolio for approximately three years.
5414 After that, I moved over to become the head of the organization I referred to a few moments which was a predecessor of CIC, called the Government Finance Office, and I held the position of Executive Director, which is essentially the CEO of that organization, for approximately one year.
5415 After that, I became the Executive Vice-President of an entity called the Potash Corporation of Saskatchewan which, at that point, was a crown corporation; it since has been privatized.
5416 I left government service in January of 1979 and practised law in Saskatoon through until November of 1991, when I became the CEO of CIC, which was essentially the same I had held for one year earlier. I held the job of CEO of CIC for, I guess, about four years, approximately. Left there. Actually had intended to be the President and CEO of a subsidiary of SaskTel which, at that time, was operating in Lester, England, and a buyer came along for that particular operation that was so attractive that SaskTel sold it and, suddenly, I was out of a job. And so, for a period of something like seven months, or something of that nature, I did some consulting work around Saskatoon.
5417 Then I applied for and became the President of SaskTel in April of 1996.
5418 Richard Gladue is a person of aboriginal ancestry.
5419 There's a general rule of thumb that every one of the crown corporations in Saskatchewan will have a person from the First Nations community on the board of directors.
5420 Richard is, I believe, Chief of the Flying Dust Indian Band up, in the northwest part of Saskatchewan. I believe he is also of the Chief of the Meadow Lake Tribal Council, which is a group of something like I think it's nine of the bands in and around Meadow Lake. I believe that he holds at least one and maybe two university degrees. He's a major farmer in that northwestern part of the province; very active within the First Nations community in Saskatchewan.
5421 I mentioned Karen Leir earlier.
5422 Don Lowry is the President and CEO of Epcor, which is the power company based in Edmonton.
5423 Don's past is that he used to be the Chief Operating Officer of Telus. Before that, I believe, was the Chief Operating Officer of Alberta Government Telephones, which as you know evolved into Telus. And I know that Don sits on a number of other boards of directors.
5424 John MacDonald. John is based in North York, in Ontario. He is presently the President and CEO of Leitch Communications. Before that, of course, he was the Chief Operating Office of Bell Canada. Before that, he was, I believe, the Chief Technology Officer for Bell Canada. Before that, I believe he was the CEO of NBTel. Before that, I believe he might have been the Chief Technology Officer of NBTel.
5425 COMMISSIONER CRAM: And those are the two gentlemen that were appointed after the ministers were removed. Is that what happened?
5426 MR. CHING: That's correct.
5427 Alison Renny is a professor at the University of Saskatchewan, in Saskatoon. I believe she is a department head in the College of Commerce. Her degrees, obviously, are in the area of commerce. Originally from Great Britain. I believe has been teaching at the University of Saskatchewan for at least the last 15 to 20 years. Her expertise is obviously in the financial area.
5428 Garf Stevenson. Garf Stevenson is presently retired. He used to be the Chairman of the Board and President of Saskatchewan Wheat Pool and was a major farmer himself.
5429 The way in which the crop system in Saskatchewan, or at least the major producer of crops in Saskatchewan are set up is that the person who's elected as Chairman also holds the position of President. Under that, there is a CEO who is actually the Chief Operating Officer. Garf was not the Chief Operating Officer; he was the Chairman of the Board and President of the Wheat Pool for quite a number of years and a major farmer around Saskatchewan.
5430 If you go back through them, because I didn't answer some of the questions, to the best of my knowledge, the following people have not held either an elected or appointed office with the Government of Saskatchewan: Garf Stevenson; Alison Renny; John MacDonald; Don Lowry; Karen Leir; Richard Gladue; Wayne Byers; Delores Burkart; James Scharfstein; Tom Kehoe.
5431 The ones who have held positions with the provincial government, at one time or another, would be myself and Allan Blakeney.
5432 COMMISSIONER CRAM: Wasn't Mr. Stevenson appointed to the Regina Health Board and wasn't he the government appointment?
5433 MR. CHING: I believe you are right. Yes, he was the Chairman of the Regina Health District Board, and I believe may still be a member of that board but is no longer the Chair.
5434 COMMISSIONER CRAM: I want to talk about the process of appointment.
5435 For all save yourself, is the vacancy advertised?
5436 MR. CHING: No, it is not.
5437 COMMISSIONER CRAM: For all save yourself, do people put applications in?
5438 MR. CHING: No. What happens is that -- first of all, you have to go back because some of the board was appointed at a time I think when the process was a little less distant from government. That would be Mr. Kehoe, Mr. Scharfstein, and Mr. Stevenson. They are the longest-serving people on my board. I believe that Tom Kehoe goes back to somewhere around 1992.
5439 COMMISSIONER CRAM: Both he and Jim Scharfstein do.
5440 MR. CHING: Yes. I believe he and Scharfstein go back there. And Garf would be maybe six months or a year later.
5441 I don't know how they came to be appointed. I simply wasn't associated with SaskTel at the time, and so I'm not familiar with that.
5442 COMMISSIONER CRAM: Let's talk about today what happens.
5443 MR. CHING: Okay.
5444 At the present time, the board of directors has a governance committee and that committee is charged with the responsibility of coming up with potential candidates to be appointed to the Board. They have the obligation to review those appointments and to pass on their recommendation to the board, the entirety of the board, who then have the responsibility of passing it on up to CIC.
5445 It then becomes CIC's decision as to whether or not that person is actually appointed to the board. So far, all appointees to the Board, since the changeover that I referred to a little while ago, have been generated within the Board. Nobody has been appointed to our board other than people that we have put forward by way of suggested names.
5446 COMMISSIONER CRAM: And that is the new structure that came out of the Crown Corporations Review Task Force?
5447 MR. CHING: That's right.
5448 COMMISSIONER CRAM: So you nominate, CIC recommends, and --
5449 MR. CHING: And cabinet appoints.
5450 COMMISSIONER CRAM: -- cabinet approves?
5451 MR. CHING: That's correct.
5452 COMMISSIONER CRAM: In the nomination process, when you are looking for people, do you advertise the vacancies?
5453 MR. CHING: We do not.
5454 COMMISSIONER CRAM: Do you take applications from people?
5455 MR. CHING: Certainly we would. I mean, if anybody came forward showing some interest, and that has happened from time to time, we have indicated to them that we would be very interested in receiving the proposal or a CV or something of some nature from them.
5456 Mostly what happens, I can tell you, though, is that -- for instance, the most recent appointments to our board -- other than Wayne Byers who as I told you goes through the process of being recommended by the union -- in the case of, for instance, Mr. MacDonald and Mr. Lowry, those were two individuals which I knew from previous association with them as part of the Stentor alliance. I knew that they each had expertise in the industry, the telecommunications industry. Both were very astute individuals.
5457 In the case of Mr. Lowry, one of the things which strongly recommended him was that he had been very much associated with the international activities of Telus before he left Telus. On our board, one of the things which had been identified as a potential weakness on our board was the fact that while there were a number of people who had investment experience, there was really nobody on our board who had any experience particularly with international activities. So that recommended him very strongly to us.
5458 Those two names then came forward as a result of my suggestion to the governance committee, and the governance committee interviewed both of them and then made recommendation to the board, which went on through the decision-making process.
5459 COMMISSIONER CRAM: I take it, then, if there are no applications filed, there are no interviews, there are no grading of the individuals. It is simply who you know and --
5460 MR. CHING: I think that our board appointments are made in approximately the same way that most board appointments across Canada are in the private sector, that is to say that if some other member of the board knows of somebody who they think would be skilled and knowledgeable, or somebody on the senior management team knew of somebody who was skilled and knowledgeable, those people would be contacted.
5461 As you can imagine, being appointed or being considered for a board of this nature is not something which -- you can't get really skilled and good people by approaching them and then not appointing them. You have to be fairly sure that the person that you are approaching, that there is a fairly strong likelihood that they are the type of candidate that would be very strong on your board and very good on your board and work well with the other people around the board. You simply don't get a person, for instance, of the quality of a guy like John MacDonald by sort of going fishing for him, so to speak.
5462 In the case of John MacDonald, I had a pretty good idea that he would be well received as a possible candidate for our board and I approached him and asked him if he would be interested. When he signalled that he would, bang, the process then started to unfold. He was interviewed at some length. I think it was about a three-hour interview of him by the governance committee of the board. It was only after that interview that his name went up then to the full board and through the decision-making process.
5463 COMMISSIONER CRAM: You realize, Mr. Ching, that we all applied for our jobs and we all had interviews. It was a fishing expedition by the federal government, to use your terms. I hope they did get good appointments, but I will let that go.
--- Laughter / Rires
--- Pause / Pause
5464 COMMISSIONER CRAM: Once we got up to your recommendation, and this process where you nominate, approve and appoint, when did that start?
5465 MR. CHING: That would have started, I believe, in about 1997.
5466 The only recommendation I think that we have put forward so far that has been rejected through the decision-making process was the inclusion of myself on the board. We strongly recommended against that, but cabinet made a decision to appoint me to the board regardless of the wishes of both myself, the governance committee and our board of directors.
5467 COMMISSIONER CRAM: Who is the governance committee?
5468 MR. CHING: The governance committee is chaired by Jim Scharfstein, I think Tom Kehoe is on it, Karen Leir, and Garf Stevenson.
5469 COMMISSIONER CRAM: Eventually, we get to the appointment process and the --
5470 MR. CHING: Incidentally --
5471 COMMISSIONER CRAM: Sorry.
5472 MR. CHING: -- it might be useful to add that there are four committees of our board and the board itself selects those positions. Those are not appointed by me or by the shareholder. The board itself subdivides its duties, if I can put it that way. The boards are very active.
5473 As a matter of fact, the more significant review of management's decisions takes place at the committees. The board generally hears a report from the committee and may question that, may send it back to the committee for further activity, but most of the activities that occur, that go up to the board, are scrutinized by one or other of those four committees
5474 COMMISSIONER CRAM: And the Lieutenant Governor in Council appoints them -- that's cabinet.
5475 MR. CHING: Sorry?
5476 COMMISSIONER CRAM: The Lieutenant Governor in Council appoints them, when we get to that stage, as board of director.
5477 MR. CHING: Appoints the board but it doesn't appoint the committees.
5478 COMMISSIONER CRAM: Yes. I understand that.
5479 Under the holding company statute, there is no specific term but there is a limit on it. Not more than five years. Is that correct?
5480 MR. CHING: I know that CIC has been wrestling with the issue of term of appointment. I don't believe that a final decision has been made. Although my understanding is that they are virtually fixed on two-, three-year appointments. But that issue of tenure has been bouncing around as a decision within CIC and, to the best of my knowledge, no final decision has been made.
5481 At the present time, they appoint the board members for fixed periods of time and review those appointments at the end of that time.
5482 COMMISSIONER CRAM: But the Act says, at section 3(3)(a):
"Persons appointed pursuant to subsection (2)..."
5483 Which is the board of directors:
"...hold office for a period not exceeding five years and until a successor is appointed." (As read)
5484 MR. CHING: That's correct.
5485 COMMISSIONER CRAM: So you agree that there is no definitive terms and they are just up to five years?
5486 MR. CHING: That's correct.
5487 COMMISSIONER CRAM: I am assuming that it is the practice that when government changes a goodly number of the directors change.
5488 Sorry, Mr. Meldrum. Go ahead.
5489 MR. MELDRUM: I would say that when it says "and may be reappointed" --
5490 COMMISSIONER CRAM: Yes?
5491 MR. MELDRUM: -- I believe that the position would be that they could be reappointed for a further term.
5492 COMMISSIONER CRAM: Sure. Yes.
5493 MR. MELDRUM: Okay.
5494 COMMISSIONER CRAM: In other words, it is pretty indefinite.
5495 MR. MELDRUM: Yes.
5496 COMMISSIONER CRAM: My point in this is there is no specificity to the term.
5497 MR. MELDRUM: That's correct.
5498 COMMISSIONER CRAM: Yes.
5499 I am assuming that the practice is that when government changes, i.e. in 1982, and in 1991, a goodly number of the board of directors change.
5500 MR. CHING: I believe that all of the board changed in 1991. I think that virtually all of the board has changed since then.
5501 COMMISSIONER CRAM: Except Mr. Scharfstein and Mr. Kehoe.
5502 MR. CHING: I believe that Messrs Kehoe, Scharfstein and Stevenson are the only ones who did not change.
5503 COMMISSIONER CRAM: Yes.
5504 So there is nothing, then, if I understand it, to prevent a government from housecleaning the board of directors if they are unhappy with the actions of the board of directors?
5505 MR. CHING: There is no question. I think that the government -- supposing the government were to fall in Saskatchewan and change tomorrow, there is nothing which stops an incoming government from passing an order in council removing all of the people who are on the board of directors and replacing them with a new group of board members. Unless they went on then to change some of the requirements for how those board members act, they would then be bound by the obligations which sit upon the shoulders of the present board.
5506 But indeed a government, if it was up to it, could go forward and actually change the circumstances under which those board members function, as well as who actually sits on the board.
5507 COMMISSIONER CRAM: Yes.
5508 And indeed the issue of an indefinite term was addressed in the Crown review -- the review of Crown committees. The Saskatchewan Crown Corporations: A New Era, June 1997 -- I think they called themselves TASC --
5509 MR. CHING: Yes.
5510 COMMISSIONER CRAM: At page 7, the second last paragraph, it says -- do you have that?
5511 MR. CHING: I do not. I think I have it.
5512 COMMISSIONER CRAM: Page 7 of 8. I don't know what schedule it is in.
5513 MR. CHING: Yes, okay.
5514 COMMISSIONER CRAM: You have it?
5515 MR. CHING: Yes.
5516 COMMISSIONER CRAM: Page 7, the second last paragraph:
"With CIA and Cabinet retaining the ability to remove Crown board members and/or CEOs based on their performance, ultimate control is still vested in the agents of the people of Saskatchewan." (As read)
5517 MR. CHING: That's correct.
5518 COMMISSIONER CRAM: Yes. So it is a deliberate decision, thus far, to retain the ability to dismiss directors of the board summarily?
5519 MR. CHING: I think that is right.
5520 I think that if you read through that report what you will find is that the Government of Saskatchewan, or that particular committee which was struck by the Government of Saskatchewan, was wrestling essentially with many of the same issues that are caught up in that whole issue of the directive, of trying to find some balance between ultimate authority being vested in the government, but at the same time trying to restrict the government's interference or involvement in the day-to-day operational activities of the entity.
5521 COMMISSIONER CRAM: Indeed, this power to summarily dismiss, it came to me fairly strikingly about a couple of weeks ago, there is at least one cabinet minister in Saskatchewan that has chosen to exercise a power to summarily dismiss board members. Is that not correct?
5522 MR. CHING: That is correct.
5523 COMMISSIONER CRAM: I believe it was Mr. Laudermilk(ph), was it?
5524 MR. CHING: Laudermilk.
5525 COMMISSIONER CRAM: Who summarily dismissed an entire board by a fax, by sending them a fax. Is that correct?
5526 MR. CHING: I don't know the details of that.
5527 My suspicion is that he may have notified the board members that they were dismissed through a fax, but my understanding is he would have had to have obtained an order in council to have effectively done what was done.
5528 COMMISSIONER CRAM: Okay.
5529 Also the review, the TASC -- T-A-S-C Review --
5530 MR. CHING: Could I just perhaps make another comment on it?
5531 COMMISSIONER CRAM: Yes.
5532 MR. CHING: I must confess that I am not intimately familiar with the incident that you refer to.
5533 The creature in existence was not a Crown corporation.
5534 COMMISSIONER CRAM: I know.
5535 MR. CHING: It was, in effect, a board of a local research council, but it is not governed by the same set of apparatus that governs the board of a commercial Crown corporation.
5536 COMMISSIONER CRAM: I hear you.
5537 My point was that ministers seem to be aware of their ability to do that, at least one member of the cabinet, and I think you would agree with me.
5538 MR. CHING: I think that is right.
5539 COMMISSIONER CRAM: The TASC Review also talked about ministers being removed from the boards of the Crown corporations, and they were removed in 1999?
5540 MR. CHING: That's correct.
5541 COMMISSIONER CRAM: If I understand it, then --
5542 MR. CHING: Earlier perhaps than that. In 1998.
5543 COMMISSIONER CRAM: In 1998?
5544 MR. CHING: Yes.
5545 COMMISSIONER CRAM: If I understand it, then, the relevant Act, the SaskTel Act and the Holding Company Act were amended to delete the requirement to have ministers on the board?
5546 MR. CHING: That's right.
5547 COMMISSIONER CRAM: Why, if the government -- and I know you can't speak for the government, but do you have any idea why, when the government went to the trouble of deleting the requirement, they didn't insert an inability to sit on the boards by ministers?
5548 MR. CHING: I am sure that that is what they had in mind, because the debate that went on there was part of a whole process that was going on.
5549 You will be aware of the fact that the government of the day was very interested in trying to understand how the people of Saskatchewan wanted their commercial Crown corporations to be structured and to function in relationship to the government.
5550 You will be aware that the government actually struck a committee external to government which held a series of regional meetings around the province and went in at some great depth into trying to enter a dialogue with people in Saskatchewan as to how they wanted their corporations to be structured.
5551 One of the things that came out of that, I think very loud and clear, was that people of Saskatchewan seem to be very content and happy with the idea of retaining Crown corporations as owned by the government, and they wanted the government to take ultimate responsibility for the affairs that go on with the corporations, but they also wanted to remove and minimize the degree to which political decision-making came into play in the affairs of the Crown corporations as operating entities.
5552 Certainly that was the underpinnings of the move to remove ministers from boards, but I don't know why they didn't go on to prohibit it.
5553 COMMISSIONER CRAM: I have to tell you, I don't think either the drafters or people in government are lacking in grey matter, but the point of the issue is there still is nothing preventing a minister from sitting on a board.
5554 MR. CHING: That is correct. The history had always been that there was a requirement for a person to be on the board -- a minister to be on the board. I think most people in Saskatchewan probably saw the removal of that as addressing the issue. Whether they should have gone one step further and made a prohibition against ministers being on board, it is an interesting question.
5555 COMMISSIONER CRAM: Yes.
5556 Again I am talking about potential and that is why I wanted to raise that issue, is that the potential still exists, that some future government or the present government may choose to have a cabinet minister on the board.
5557 MR. CHING: I would be somewhat astonished if the present government did, knowing the flavour of their view on this issue.
5558 COMMISSIONER CRAM: Yes, but there is --
5559 MR. CHING: But it is a possibility.
5560 COMMISSIONER CRAM: Yes.
5561 Likewise, there is nothing preventing MPs being appointed, although that would --
5562 MR. CHING: That's right.
5563 COMMISSIONER CRAM: Likewise, there is nothing preventing MPs from being appointed on the board.
5564 MR. CHING: That's correct.
5565 COMMISSIONER CRAM: Now, I also see that the holding company, the Act, the Lieutenant Governor appoints both the chair and the vice-chair.
5566 MR. CHING: That is correct.
5567 COMMISSIONER CRAM: And section 5:
"The board is responsible to the minister who is appointed to be responsible to the executive council." (As read)
5568 MR. CHING: That is correct.
5569 COMMISSIONER CRAM: What statutory safeguards do you see that would safeguard, that would keep the independence of the board safeguarded?
5570 MR. MELDRUM: I think the main section would be section 46 of the Crown Corporations Act that sets forth the duty of care that is expected of the board of directors.
5571 COMMISSIONER CRAM: If I read section 46 -- and this is the safeguard for the independence of the board. That is your position?
5572 ME. MELDRUM: Yes.
5573 COMMISSIONER CRAM: Section 46 talks about in exercising the power and performing their duties -- and I'm not going to quote it directly -- they shall:
(a) act in all honesty and in good faith, et cetera;
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise, and comply with this Act;" (As read)
5574 The Crown Corporations Act.
5575 We will be going into that further because, of course, CIC can direct SaskTel to do what they would wish them to in a lot of areas, in section 6.
5576 Against that safeguard is, again, the ultimate control, as stated in the TASC report, the ability to remove.
5577 MR. CHING: I think that is right. But I think you have to bear in mind that nothing, the Act which gives the CIC the power to direct removes from the shoulders of the board members their obligations under the statute.
5578 In other words, I think that if a board member were faced with some directive that required them to act in a manner that they considered to be either dishonest or not in good faith but to be in the best interests of the corporation, I would think that the board member has an obligation to decline to accept the directive from CIC. Certainly as a board member I would.
5579 COMMISSIONER CRAM: So you don't see the obligations in (a), (b) and (c) of 46(1) as equal?
5580 MR. CHING: I consider that nothing in there overrides my obligation as set out in 46(1)(a).
5581 COMMISSIONER CRAM: You think that there is some sort of a paramountcy in there?
5582 MR. CHING: No. I just simply think that if you are obliged by statute to act honestly and in good faith I don't think you can look to another section and say something told me to do it.
5583 MR. MELDRUM: I would say because (a), (b) and (c) are joined by the word "and" I would say each and every one of those is an expectation of the statute on the board of directors.
5584 COMMISSIONER CRAM: Silly me, after only practising for 20 years, I would say they would be equal obligations, but I mean that's certainly subject to any -- I mean I understand we are all lawyers here, so it doesn't really --
5585 I wanted to go then to SaskTel, the same people, the same appointment type, but in the SaskTel Act there is in fact no length of appointment stated in the SaskTel Act, or have I missed it?
5586 MR. CHING: I don't think there is any term that is dictated by the SaskTel Act.
5587 COMMISSIONER CRAM: Section 6 again refers to responsibility as such member of the Executive Council as designated by the Lieutenant Governor in Council. So each of them are responsible to one member of Cabinet via CIC. Is that how the structure goes?
5588 MR. CHING: Yes. It's a little bit more complex than that, but that's essentially it.
5589 John Nilson is designated as the minister responsible for CIC and as such becomes essentially the minister on the Crown side of government. He has as board of directors, I believe made up of six other Cabinet ministers, who functions as his board and I suppose to some extent all members of CIC board have some responsibility for the Crown sector, but clearly John Nilson as the Chair of the CIC board is the minister identified in Cabinet as being the minister of the Crown side.
5590 COMMISSIONER CRAM: Can I get this straight, if you are responsible to a minister and that minister is a member of Cabinet, do you think that that is a direct --
5591 MR. CHING: Well, bear in mind we are not responsible in a direct sense to John Nilson. Our board would be responsible to CIC and hence to John Nilson as Chairman of that board.
5592 COMMISSIONER CRAM: Or to such member of the Executive Council as designated by the L.A.?
5593 MR. CHING: Yes.
5594 COMMISSIONER CRAM: So it would be Mr. Nilson?
5595 MR. CHING: He or his replacement, yes.
5596 COMMISSIONER CRAM: In fact, the Act, the Crown Corporations Act or the CIC Act refers to CIC supervising the activities of SaskTel and the Crown corporation?
5597 MR. CHING: Yes, and they have a fairly extensive process of supervision. They review our capital budgets and actually approve or disapprove them.
5598 They also review our operating budgets, but do not exercise approval or disapproval of them, and they set out for us a series of operational targets which they expect us to make part and parcel of our annual plan and budget. They expect us to perform up to the targets or better.
5599 The targets tend to fall into two categories. One is financial and the other tends to be things like number of aboriginal people in our workforce or number of females in senior management positions or non-traditional positions within the corporation. That tends to be the sort of directive that they give to us.
5600 With the exception of those sort of obligations to be better corporate citizens, if I could put it that way, their directive to us tends to be purely financial.
5601 COMMISSIONER CRAM: Thank you for telling me what is happening now.
5602 I must say the potential for what they could do is likewise there, that they may under section 6(1):
"(a) make orders and issue directive to subsidiary Crown corporations respecting any of the matters set out in 5(2), which is objectives, goals, revenues, expenses, expenditures, investments, operating results, administrative policy, management practices, systems, accounting policies, financial relationships and any matter in addition to those that the Lieutenant Governor in Council may assign." (As read)
5603 So they can order you on -- what can they not order you on? What would be independent and I am talking potential again. We have to talk not only the factual situation, but the potential.
5604 MR. MELDRUM: There is an interesting provision 5(1)(a) that says that:
"The CIC is the holding company for all subsidiary Crown corporations and shall exercise its supervisory powers granted by this Act in the interests of all Saskatchewan residents." (As read)
5605 So there is a bit of an overriding statutory direction in terms of going to that particular board.
5606 COMMISSIONER CRAM: Let me put to you a scenario, the government changes and they may have a different view of the interests of Saskatchewan residents and some member of Cabinet who is the head of CIC and they choose to make orders and issue directives under 5(2), what does that leave to the management of the board of directors?
5607 MR. MELDRUM: I think that takes us back to section 46. It continues to state that she has to act in the best interests of the corporation.
5608 COMMISSIONER CRAM: So we are getting down to then your rebuttal, what you said in your rebuttal, which was there are 14. If the minister ordered something, it would need to be reviewed by the board.
5609 MR. CHING: You see, I think one of the things you have got to stop and say to yourself, I mean clearly wherever you have got a Crown corporation ultimately -- ultimately the government, which has established that Crown corporation and at whose behest it exists, has always got the power to interfere with it.
5610 You can build whatever you want to in statute or in order in council or in regulations or, for that matter, in practice. The fact of the matter is an incumbent government or a new government coming in can choose to change all of those parameters.
5611 The federal government, for instance, could change the statute under which the CBC functions.
5612 COMMISSIONER CRAM: Or we operate.
5613 MR. CHING: Or you operate, certainly.
5614 So if you want us to acknowledge the fact that as the ultimate owner of SaskTel that no matter what structure is built in there to try and give us operating independence, that there is a way around that, then you have our full acknowledgment that that is true.
5615 I am not sure that you will ever find a circumstance that the human mind can dream up where on the one hand you can have a Crown corporation created by a provincial or federal government where ultimately that government hasn't got the power to jerk the chain to whatever level it wants to in that particular Crown corporation.
5616 So then you have to say to yourself if that be a truism, why did the federal government issue the directive? Because you are absolutely correct, if you strip it all down you can put into existence anything you want to to try and give SaskTel independence. But if ultimately that is dependent on government and government can change it, then obviously it is one of those protections which could easily go away. Maybe not easily, but it could certainly go away.
5617 So you are in a situation where if you follow the logic of that, then you inevitably come to the conclusion, which I think perhaps even a predecessor board of this nature came to, which is that you can never issue a broadcast licence to an entity which is the shape and form of a Crown corporation.
5618 But the government I think has looked at that and said, "No, no, there are circumstances where on an operational basis the government makes an effort to try to give operational independence to the entity which is a Crown corporation, and those entities should be allowed a broadcast licence."
5619 Therein lies the dilemma that I think we are all wrestling with here and the dilemma that I think is endemic to the issue of public ownership and the idea that you shouldn't allow a broadcast facility to be used by a political entity to thwart the basic fundamentals of our democratic society.
5620 But, nevertheless, there is the directive from the federal government saying, "But you can't just simply say, `If ultimately we have got a way of getting at the creature as a government, there can't be a licence issued'".
5621 COMMISSIONER CRAM: Thank you.
5622 THE CHAIRPERSON: Thank you, Commissioner Cram.
5623 We would like to take a five-minute break, Mr. Secretary.
5624 MR. BURNSIDE: We will return at 10 to three.
--- Upon recessing at 1442 / Suspension à 1442
--- Upon resuming at 1453 / Reprise à 1453
5625 THE CHAIRPERSON: Ladies and gentlemen, if you will take your seats we will re-open the hearing.
5626 Mr. Secretary...?
5627 MR. BURNSIDE: I don't think I have anything to do right now. I guess Commissioner Cram will resume her questioning.
5628 THE CHAIRPERSON: Commissioner Cram...?
5629 COMMISSIONER CRAM: Thank you.
5630 In discussing your -- and just for terms of shorthand, I will call it the "all or nothing argument" that if the directive would be of no use whatsoever if we considered that the rent control was ultimate control or was control as a consequence of ownership, would you agree that the reason -- the very issue of the directive is to look at whether the control is direct and also the degree of control? Because, otherwise, I think you are right, in terms of a crown corporation, that the directive would be meaningless.
5631 MR. CHING: I think that's correct.
5632 Clearly, the federal government was trying to, I think, on one side, say that it's proper for a crown-owned entity to hold a broadcast licence, provided it meets the basic criteria, but, on the other side of the fence, it shouldn't ought to be, I guess, abusing that privilege. And therein lies, I think, the dilemma that you are obviously probing around on.
5633 COMMISSIONER CRAM: Yes. And so, when I talk about -- and I'm trying to get at the issue of the independence of the board in managing the affairs of the holding company in SaskTel -- in the event that the CIC exercised all of their powers under 5(2), pursuant to 6(1)(a), what would be left for the board to manage?
5634 MR. CHING: I think that this goes right back to the issue that we were discussing prior to the break.
5635 I mean you will always find that a government has got ultimate control over a crown corporation. Probably the most interesting thing that you can look to is: what has the government tried to do in the way in which it actually operates. And the fact of the matter is, I think, that any fair observer would look at the way in which the Government of Saskatchewan has tried to operate not simply SaskTel but the other commercial crowns is to try and distance the political decision-making of a government from the operations of the crown corporation.
5636 Now, one might focus in on this word, or this phrase, and say, "But it gives them the power sometimes --"
5637 COMMISSIONER CRAM: And we do have to talk about potential, don't we? I mean because --
5638 MR. CHING: Well, I mean my colleague makes an argument that you don't have to -- and he will come to that in a few moments when he addresses the actual legal interpretation of the section under which we are functioning.
5639 But I think that -- I guess what I would invite the Commission is not to be unduly troubled by this phrase or that phrase because it doesn't matter what the phrases say when you scrape it right down to the bottom. The power is always vested in the legislative creature that creates the crown corporation to change whatever that phrase is. The phrase may lead you to believe that there's independence, but the fact of the matter is they legislatively enjoy the power to remove that section. Or they can legislatively change and make it more stringent.
5640 So, ultimately, the power is vested in the government creating the crown corporation to do with that crown corporation as it sees fit. That's true at the federal level; it's true at the provincial level.
5641 COMMISSIONER CRAM: So, then, do you think ultimate control is direct control?
5642 MR. CHING: No; I think that what I would suggest to you is this: I think that the directive was meant to convey the message to the CRTC that, number one, automatically, you shouldn't assume that because it is publicly owned or owned by a government that a crown corporation is disentitled.
5643 The second thing is that it's put upon your shoulders the very difficult decision that we have just been debating and wrestling with. Trying to judge in your mind whether or not the right of a crown to be considered favourably as any other applicant for a broadcast licence is thwarted by the way in which that entity operates is a danger to political interference in the journalistic freedom which is exercised within that broadcast licence.
5644 Now, understand that in this particular case, first of all, we already, in some respects, I suppose, broadcast almost as much as this broadcast licence would allow us to. We have been running an Internet service for quite some period of time. And, in many respects, the ability, I suppose, to exercise journalist input is as significant in what we are already doing as would exist under the aegis of this particular broadcast licence, if you saw fit to extend it to us.
5645 So, I guess what I would invite the Commission to do is to look at the way in which the government in Saskatchewan has tried to craft its relationship with the crowns, the way in which we have been actually functioning, and say to yourself, "Given the level of journalistic input, is there a danger here?"
5646 I would urge upon you, of course, the argument, given the level of journalist input that is really being contemplated here, the answer to that question is, no.
5647 However -- and maybe at the end of the day that this troubles the Commission to the point that the Commission wants to attach to the broadcast licence certain conditions which relate to this issue of journalist independence, I think we would be prepared to dialogue with staff to try and come up with something that addressed this issue, because I don't think that there's any disagreement, at our end that the danger, the mischief that we talked about earlier, is a mischief to be protected against.
5648 The key thing here, I think, is that it's not necessarily answered by simply saying, "You are a crown corporation, you can be ultimately controlled by a government and, hence, you should not be entitled to a broadcast licence". I think, for better or for worse, that option is probably not available, simply by virtue of what the federal government itself has done.
5649 COMMISSIONER CRAM: I want to sort of go back to SaskTel as a subsidiary of the holding company.
5650 Would you agree with me that SaskTel itself is -- well, that the holding company has supervisory powers over SaskTel?
5651 MR. CHING: Oh, the truth of the matter is that the management of the two entities is interwoven. The board of directors is essentially the same. There are some issues about how they are run, which distinguishes one from the other. When we have our executive meetings, for instance, there is an agenda for the holdco part of the agenda and then another for the telco part. And the same is true with regard to the board of directors: they deal with holdco items and then they deal with telco items. So they run with some degree of separation, but the truth of the matter is, there's one CEO, there's one board of directors, there's one management team and there's two corporate entities.
5652 COMMISSIONER CRAM: What, then, can you tell me is the difference between the holding company and -- how do you distinguish it from being a subsidiary of CIC?
5653 MR. CHING: Well, ultimately, it is. I mean the way in which it's corporately structured, it's a subsidiary of the holding company which, in turn, is a subsidiary of --
5654 COMMISSIONER CRAM: Oh, I was talking about the holding company being a subsidiary of CIC.
5655 MR. CHING: Oh, yes, it is. It is. It's contemplated as being and, in law, I believe that it is a subsidiary --
5656 COMMISSIONER CRAM: And in operations it is also, would you say?
5657 MR. CHING: Yes. In certain areas they involve themselves in our activities; in certain areas they do not.
5658 COMMISSIONER CRAM: And so, in terms of the independence of the board, they would be responsible to CIC?
5659 The independence of the board would be subject to the directions of CIC?
5660 MR. CHING: You know, I don't believe that to be the case. I don't believe that CIC has got an unfettered right to direct the board of directors of either SaskTel Holding Corporation or SaskTel as it sees fit.
5661 As a member of that board, I can only speak for myself and what I believe to be the general demeanour of the other board members. If I found that the direction from CIC was offensive, that it offended the obligations that I have got under the Crown Corporations Act, I mean frankly I would refuse to do. If CIC wanted to, they could obviously replace me -- cabinet can, not CIC. And they could do that with the rest of the board.
5662 I mean, the board of directors of CBC, I'm assuming, could be replaced. Now, it may require an order in council, it may require a legislative activity, but they can be replaced. I believe that each and every one of them know that.
5663 But I think that each one of them is expected to take their personal integrity to the board table. I think if they found that they were being obliged in any way, shape or form, direct or indirect, legal or illegal, to allow political favouritism to creep into how they did their job, especially on something as critical as the journalistic content, I can't believe that those individuals wouldn't do the very same thing as our board.
5664 COMMISSIONER CRAM: Once again we are talking about the individuals on your board. The individuals may change, and so I think I would like to look at the statutory issues.
5665 If we looked at SaskTel as a private company, its own board of directors, and then we look at the reality in sections 5 and 6 of the Crown Corporations Act --
5666 MR. CHING: But I think you could even go further than that. I mean, the truth of the matter is that perhaps with some limitation on their authority under the Canadian constitution, I suppose the Government of Saskatchewan, if it set about trying to interfere with the journalistic activities of any one of the private companies in Saskatchewan, they could do that too. I mean, the legislative power of our governments is very powerful. I don't think we can sort of sit here and say to ourselves: Well, look, the Government of Saskatchewan could go a little crazy or a little bit strange and start to interfere with how CHAB is run and, therefore, CHAB shouldn't have a broadcast licence.
5667 It seems to me that those possibilities, with all due respect, are not the hitchpin of your decision.
5668 COMMISSIONER CRAM: I go back to if SaskTel were a private entity, a private corporation, scenario one, scenario two is SaskTel the way it is with sections 5 and 6 of the Crowns Corporations Act, how much do you believe the independence of the board of directors is impaired?
5669 In other words, from scenario one, where it is 100 per cent independent, just like any private corporation, how much do you think it is impaired by sections 5 and 6 of the Crown Corporations Act in terms of their independence: 10 per cent, 30?
5670 MR. CHING: I'm not sure I can offer any meaningful response to the estimation. I mean, the best I can do is try and tell you the extent to which I believe the government has expected the board to operate independently and the degree to which it has operated independently.
5671 The issue of whether or not a government could use either the power that is set out in the statute or the power to pass statute, to change that or alter it, either for us or for any other broadcast creature, is I think a matter of speculation that I just don't find myself competent on.
5672 COMMISSIONER CRAM: Okay.
5673 In fact, right now, how much does sections 5 and 6 impair the independence of the board of directors?
5674 MR. CHING: We are required to submit, for instance, our capital budget to CIC for approval, so our entire capital budget, theoretically, is subject to the yes or no of CIC. The issue of the appointment and the salary of the CEO is a matter reserved to cabinet. The appointment of the board itself is reserved to cabinet. There is a lot of power vested in the Government of Saskatchewan, as it deals with any of the Crown corporations, including SaskTel.
5675 I guess in some respects it would be strange if it would be otherwise, because the electors of the Province of Saskatchewan are the ones who gave to each one of the Crown corporations their seed capital. Ultimately, the people of Saskatchewan own SaskTel and the other Crown corporations. It would be strange indeed if somehow or other we were out there floating in the ether uncontrolled ultimately by the people who are elected by the people of the Province of Saskatchewan.
5676 COMMISSIONER CRAM: So, Mr. Ching, how much does sections 5 and 6 of the Crown Corporations Act impair the independence of the board of directors? Not cabinet appointing a CEO or...
5677 You ran your own law business. You know what independence is.
5678 MR. CHING: Yes.
5679 COMMISSIONER CRAM: Now you are in a business where you are supervised by another group.
5680 How much does that, right now, impair the independence of your board?
5681 MR. CHING: If you are asking on a day-by-day basis as to how we operate at the present time, it is virtually no impairment at all.
5682 If you are asking me whether or not they have the power to say no, they have never done so yet, but whether they have the power to say no to one of our capital budgets, it is 100 per cent.
5683 COMMISSIONER CRAM: Yes.
5684 Some of the other things -- and capital budgets are one -- the other part, some of the other parts that interested me was submitting for review and prior approval "any rate charges and prices." That in fact does happen. I mean, you have to go to CIC.
5685 MR. CHING: That is now I guess a little bit in the murky area because, of course, as you know, prior to us coming under the responsibility of the CRTC, we were in a situation where we submitted to the provincial cabinet any request for changes in our rates. The cabinet then immediately downloaded that into a review panel which reviewed that issue and did public hearings on it, and then made a recommendation back to cabinet, and cabinet made the ultimate decision on whether or not those rates would be proceed with.
5686 I believe that we still have an obligation to request the permission of our shareholder before we would submit a request to the CRTC to change our rates.
5687 COMMISSIONER CRAM: Well, it's still in the Act, so --
5688 MR. CHING: Yes.
5689 MR. MELDRUM: It is just that the word "may" I think precedes the whole thing, so these are just simply powers. If CIC decided that they wanted us to --
5690 COMMISSIONER CRAM: Or they could dispense with it.
5691 MR. MELDRUM: Or they could dispense with it, yes.
5692 And the current status, as far as I know, is that it has been dispensed with.
5693 COMMISSIONER CRAM: Oh. As of when?
5694 MR. MELDRUM: Well, when the Saskatchewan Interim Rate Review Panel was set up, which is the entity which prior to June 30th we actually had to go to approve rates. It was very clear that the mandate of that entity would expire with respect to SaskTel effective June 30th.
5695 Certainly the new creature that has come after the Saskatchewan Independent Rate Review Panel has no jurisdiction or powers with respect to SaskTel, and any discussions that at least I have been privy to have indicated that SaskTel was now regulated by the CRTC and that is where, ultimately, we will go, and I don't see any requirements to pull it back to CIC before we go to CRTC, although that power does still exist.
5696 COMMISSIONER CRAM: So your knowledge is that CIC no longer requires you to submit for review and prior approval any rate changes?
5697 MR. MELDRUM: That's correct.
5698 MR. CHING: They still have that power, however.
5699 COMMISSIONER CRAM: Well, they still have the statutory power.
5700 MR. CHING: Yes.
5701 COMMISSIONER CRAM: Yes.
5702 I mean some of them -- "submit for review, evaluation and approval, the results", what would be the consequence of non-approval?
5703 MR. CHING: Which section are you referring to?
5704 COMMISSIONER CRAM: I'm sorry. It's right after -- it's (k).
5705 MR. CHING: They have, that is CIC has, what they call the balance scorecard evaluation of us.
5706 What they do is that they -- in approximately this time of year we are expected to go to CIC and to take forward our capital budgets and our operating plan. They will then review that and come back to us and say: No, we are not happy that you have set it up in such a way as to make a dividend of this size; we would like it to be larger. Or: We would like you to pay down your debt a little bit more because we want the debt of the government in its totality reduced, and here is the place where it is going to have it. Or they may say to us: We are not happy that you have the proper targets for the number of aboriginal employees that you have, or something else of that nature.
5707 They set those targets for us approximately this year for a plan and a budget which is essentially based upon a calendar year. So we will then be back in front of them at the end of that year, and they will do what they call their balanced scorecard on us.
5708 If they set for us a target of having 65 employees of First Nations ancestry and we come up with one that is -- well, if we came up with one that was 64, I'm not sure there would be a whole lot of problems, but if we came up with a thing which said there is 55 or actually down from the 58 that we had going into the plan, I rather suspect that CIC would want to have a clear and concise explanation as to why we had missed the target that they set for us.
5709 That is the sort of process that you see going through here.
5710 They also expect us to earn a certain amount and to pay down our debt a certain amount or to handle our debt in a certain amount, and they set those targets for us this time every year. They come back and monitor them this time every year. If we don't have a good explanation as to why we are missing our targets, I rather suspect that our life would be kind of uncomfortable.
5711 Whether they would go so far as to fire the CEO is something that I really haven't plumbed with any great enthusiasm, and you can imagine why.
--- Laughter / Rires
5712 COMMISSIONER CRAM: I want to go back to a private company versus SaskTel and what is the actual impact of the fact that Treasury Board can issue directives and orders that would impact on you?
5713 MR. CHING: I didn't follow your question. About a private company?
5714 COMMISSIONER CRAM: Private companies and a Crown corporation and what is the reduction in independence by virtue of being subject to directives and orders that are issued by Treasury Board?
5715 MR. CHING: I think the only thing that Treasury Board can do with regard to a commercial Crown corporation is to decide whether we can go out and raise debt in our own capacity.
5716 I could be wrong in that regard, but I believe that the Financial Administration Act says that we require Treasury Board approval before we can actually go out and raise money in our own name.
5717 COMMISSIONER CRAM: Mr. Meldrum will now show you section 5(3).
5718 MR. CHING: I think Treasury Board may also have some scrutinizing role vis-à-vis the use of derivatives by a Crown corporation as well.
5719 MR. MELDRUM: I think what I was just discussing with Don there is that I believe that the Treasury Board would actually have to have some legislative powers with respect to CIC, and I think what Don was describing was what those powers were. I don't think they can just sort of decide, in the absence of a statutory power, to issue a directive concerning a Crown corporation.
5720 COMMISSIONER CRAM: Section 5(3) talks about CIC being subject to any directives or orders respecting finances and accounting policies and practices that are issued by Treasury Board that apply to Crown corporations.
5721 MR. CHING: That's right. I think they fall into three categories, and I'm flying a little with one wing here, but I think that it the issue of raising money in our own right, it is the issue of how we handle derivatives, and I believe that there is also the responsibility on the shoulders of Treasury Board to deal with the accounting practices required by the provincial auditor.
5722 The provincial auditor exercises certain powers over the Crown corporations and from time to time the provincial auditor and Treasury Board will agree that the accounting process will change somewhat or slightly this way or that and they will issue -- that is Treasury Board will issue -- a directive to all the entities of government to comply with this particular accounting practice which has been agreed to with the provincial auditor. We are subject to those sorts of directives.
5723 COMMISSIONER CRAM: Has Sasktel, in your tenure, Mr. Ching, ever received any orders or directives under section (6)(1)(a) to (z) and said "No, I refuse"?
5724 MR. CHING: You know, I guess I have been associated with either CIC or its predecessor GFO and/or Crown corporations that have come under the responsibility of CIC for probably a total of somewhere in the neighbourhood of 15 years, in two separate times, and I have never seen an order issued under section 6.
5725 MR. MELDRUM: I guess I have been at SaskTel for 22 years and have never seen an order or a directive pursuant to those sections.
5726 COMMISSIONER CRAM: Even verbal?
5727 MR. CHING: I beg your pardon?
5728 COMMISSIONER CRAM: Even verbal? Even verbal?
5729 MR. MELDRUM: Pursuant to those sections, no.
5730 COMMISSIONER CRAM: Would you agree that there would be -- or that we could foresee -- I guess you can't agree what we think.
5731 Would you agree that there would be more independence, or at least a perception of more independence of the board if the CIC consisted of ministers and non-ministers? I will call them "normal people".
5732 MR. CHING: Well, I think that if you look at what the situation was with regard to the boards of the freestanding Crowns where there was a mixture of ministers and non-ministers, I think there was a belief that ministers should be removed. Because whether you put independent people on or not, there was a perception, I think, out there that the ministers dominated the decision-making even though there might be non-ministers on the board.
5733 If that would be the case with regard to SaskTel or SaskPower, I would assume it would also be with regard to CIC board as well.
5734 I think you could add non-politicians or non-practising politicians to the CIC board. I'm not sure that you would change the optics of it terribly.
5735 You know that for a period of time the previous administration under Grant Devine did in fact have non-ministers on the CIC board. I don't think that there was any less of a perception that the CIC was what it was.
5736 COMMISSIONER CRAM: So the only way perception would be changed was if CIC were all non-ministers?
5737 MR. CHING: But even then you would still be left in the dilemma that we have been wrestling with here. You would still be in a situation where those appointees would be there at the behest of the government of the day, ultimately the government would have the power to do as they saw fit to influence the direction taken by those individuals. Those individuals would then have to decide whether or not that offended their personal point of view or their dignity and, if they didn't, they would capitulate to that and, if they did, then they would dig in their heels.
5738 So, I mean, from my vantage point, even if all of the members of the board of directors of CIC were non-cabinet ministers I think you would be left with the same dilemma that we have been wrestling with whether or not they were all ministers, half ministers or all non-ministers.
5739 COMMISSIONER CRAM: You had been using, throughout your brief, the CBC analogy and the fact that Treasury Board approves their capital budget and corporate plans. CIC essentially does the same with you? Is there a distinction between that?
5740 MR. CHING: There is a bit of a distinction and that is that at the present time under its set of rules CIC does not approve or disapprove of our operating budget.
5741 But again, our point in making references to that was simply to convey the argument that Crown corporations can be made independent or non-independent by the behaviour of the government that has the responsibility for it.
5742 COMMISSIONER CRAM: I want to go on to board duties.
5743 You have talked about section 46. Section 46 talks about public policy -- 46(1)(a):
"...while taking into account the public policy and business objectives".
5744 I need you to tell me the difference between "public policy" and "government policy".
5745 MR. CHING: Well, I mean, I'm not in the business of jousting on semantics, but what I can tell you is this: is that CIC requires certain things of us which fall into the category which I think one would call good corporate citizenship but arguably would not necessarily be at least in the short term interest of a shareholder, which might not be considered to be commercial in that sense.
5746 The words "commercial activities of a corporation" can be stretched and pulled in a whole series of different directions, and if I were looking at a corporation and saying to that corporation "I expect you to be around for 25 years and to perform well and to have a good image in the community", then a whole bunch of social obligations fall out of that.
5747 But if I am a short-term investor and I am in for the next year or so, whether or not that corporation is rigorous about some social obligations may be of less importance to me, then I might characterize that as being not commercially prudent to spend a whole lot of time, effort and money, for instance, including groups of people in your workforce who are significant portions of the workforce but not necessarily significant portions or similar proportions of your workforce.
5748 So at the present time CIC looks at a number of things and they so far have been things like employment within the province and creating employment, hiring of people of aboriginal ancestry, hiring people who are disadvantaged. Those have been the category of things which there have been directions to us in the course of scrutinizing our operational budget and setting our operational targets that CIC has required of us.
5749 At no time has there been something that looks like you have to put out ads at this time or that have this flavour to it, or you have to do something else that might be looked at as being political interference in the operational activities of the corporation.
5750 COMMISSIONER CRAM: In fact, if I read your supplementary brief you refer to public policy, it's page 37, I don't think you really need to look it up -- public policy referring to the social and economic policies of government.
5751 MR. CHING: That's right.
5752 COMMISSIONER CRAM: And I looked at this review --
5753 MR. CHING: Could I just add a comment there? I am not sure that when we talk about the balancing exercise that the directive the OC deal with, I am not sure that it would be my view that that directive suggests that the government ought to have no involvement in the activities of a Crown corporation and thereby negative their ability to hold a broadcast licence.
5754 Surely, if we go back and look at the very issue which you raised with me in your first question, what is the mischief here? Surely by requiring us to hire a larger number of aboriginal people and maybe even dictating that to us, that can't be the mischief that was worried about when the directive was put in place.
5755 I would say that the mischief is something which leads any reasonable, independent third party to draw the conclusion that here is a government trying to thwart the democratic process by using the broadcast capacities of a company to improper purposes.
5756 There is no question, we are obliged by CIC to follow certain public policy endeavours which the government has committed itself to. If that answers the question, then I guess we are doomed in our application.
5757 COMMISSIONER CRAM: Maybe wait for the questions and then --
5758 I look at the TASC review and I look at the part about SaskTel that is at page 35, the public policy -- did I pronounce that right, TASC?
5759 MR. CHING: Yes.
--- Pause / Pause
5760 COMMISSIONER CRAM: I will have two more questions.
5761 THE CHAIRPERSON: I am mindful that we are approaching the time of our afternoon break, so that would be great.
5762 COMMISSIONER CRAM: Are we at page 35, Public Policy, Part 3 of the TASC report? Clearly you guys haven't found out the value of post-it notes.
5763 MR. CHING: All right.
5764 COMMISSIONER CRAM: What that is is the public policy that we were talking about. I was seeing it in the CIC Act and there is sort of the public policy. Number one is:
"Advance social and economic policies based on community values." (As read)
5765 It talks about job creation, support to business, developing skills, economy, and CIC sets that. Is that correct?
5766 MR. CHING: What happens is that we come forward with a list of what we consider to be objectives that we set for ourselves. They may add to those or they may focus on another one, but it is us coming forward with a set of policy objectives for the ensuing year and CIC reviewing those, satisfying themselves with them and perhaps adding or modifying them.
5767 COMMISSIONER CRAM: I notice that the social and economic policies is number one. Number two is what I always thought SaskTel did, which was provide universal essential services to the people of Saskatchewan. Is that an indication of priority?
5768 MR. CHING: No. I think it is they had to be in some order. We certainly don't treat one of those as being pre-eminent over another.
5769 COMMISSIONER CRAM: After the break I want to talk about sort of the expectations of the board of directors when business objectives and public policy objectives clash. So you can think about the homework over the break.
5770 THE CHAIRPERSON: Mr. Secretary, I propose our normal 20 minutes would be appropriate.
5771 MR. BURNSIDE: We will return at five minutes to four.
--- Upon recessing at 1535 / Suspension à 1535
--- Upon resuming at 1555 / Reprise à 1555
5772 THE CHAIRPERSON: I will reconvene the hearing and Commissioner Cram will continue with her questioning of the SaskTel application.
5773 Commissioner Cram.
5774 COMMISSIONER CRAM: Thank you.
5775 We were talking about the clash between public policy and business objectives and clearly that would happen in SaskTel?
5776 MR. CHING: Yes. We actually run into this on a fairly routine basis, as you can imagine. Let me give you a few examples.
5777 First of all, our shareholder sets for us an earnings target and a dividends target. That clashes with other business objectives. We may, for instance, want to take some of our retained earnings and plough it back into some capital investment.
5778 It may also clash with a social objective. For instance, over the last three years I think we spent something around $20 million improving the access to I believe it was 32 or 36 First Nations communities in Saskatchewan. Clearly, that is money that comes right out of the up-front available money for dividend payment. That's one where the decision was made to accept the less robust financial target, but go ahead with the social objective of making sure that First Nations communities have better access than they had in the past.
5779 COMMISSIONER CRAM: That was the extension of services to the reserves. Is that correct?
5780 MR. CHING: That's right.
5781 On the other hand, you will find another type of situation arising. We do not cover 100 per cent of the province of Saskatchewan with our cellular service. We get pressed by some communities who are not covered by our cellular service to extend cellular service to them. When we do our review it is quite clear that it is simply not a commercially sensible proposition to extend that cellular coverage.
5782 There is a situation where perhaps the social objective has taken second fiddle to the financial objective of making sure that all the cellular sites are expected to be good financial investments.
5783 So you are right, we routinely run into a whole series of issues that arose. We had a service, for instance, in Saskatchewan called GMTS which is a mobile radio service which extended throughout the province. It was clear that that service was not paying its own way. We moved to curtail that service.
5784 In the end, because of pressure from our shareholder, because of pressure from our customer base, it became clear that we would be wise to shut down the southern portion of that system where there were viable alternatives based upon our cellular system and our fleet system, but in northern Saskatchewan where the alternatives were really very high priced, by and large satellite based, that we should not discontinue that service. Again, a typical example of balancing our social obligations on one side and our commercial obligations on the other.
5785 We have a program of I guess community assistance and, as you can imagine as a high-profile corporation in Saskatchewan, along with a lot of other corporations, we are inundated by requests to fund this organization for this particular type of a program. As you know, we support, for instance, the Jazz Festival in Saskatoon and various other festivals and programs and organizations of that nature, and we could obviously double or triple that part of our budget which is aimed at supporting community organizations, but there has to be a trade-off at some particular point between being socially responsible to those organizations, but commercially prudent, and again there is a balance between the two.
5786 COMMISSIONER CRAM: In your brief you talked about this being the making of uneconomic decisions as being similar to good corporate stewardship. You would draw a distinction, though, between sort of donations as private companies give and sort of these uneconomic decisions that pursue a social value?
5787 MR. CHING: I think that practically every program that is identified as a social program when looked at over a long time span can be said to be commercially prudent.
5788 For instance, the $20 million expenditure in extending service to First Nations communities in Saskatchewan, if you look at that over one or two years and you balance the doing of that program as against the ability to pay dividends and you could call it a social program.
5789 But if you look at the province of Saskatchewan and look out 25 or 30 years and hopefully SaskTel is going to be a viable corporate entity during all that period of time and beyond, it simply is the right thing to do.
5790 It is not simply right in a social sense, but it is also right in the commercial sense because if the First Nations community isn't given the tools with which they could find their way into the middle of our economic structure that we have made for ourselves within our society and are going to remain on the periphery, which unfortunately many of them have been relegated to, then in the long run commercially that is going to be extremely negative from the point of view of any company like SaskTel.
5791 So to some extent when one looks at so-called public policy or social programs, if you look at them on the short term you have to characterize them that way. If you look at them in the long term, in my mind they are good common sense practical business activities.
5792 COMMISSIONER CRAM: I said it before, but I think I will say it again and sort of fit it in with your brief, you talked about the difference between owner control and direct operating control. If I said owner control is like shareholder control, sort of what I would call ultimate control and direct operating control is management, would you agree with that?
5793 MR. CHING: I think that is probably as good a dividing line between the two parts of it.
5794 COMMISSIONER CRAM: And so if we equated in some way what a shareholder could do with what the government could do --
5795 MR. CHING: I think you have to refine that just a little bit, if I may be so bold as to suggest.
5796 If you have a single shareholder, I think you start to have vested in that single shareholder, in the private sector, something roughly akin to what a government shareholder would represent, with regard to a crown corporation.
5797 Where you have a widely distributed corporation, with a lot of shares out there, one individual shareholder -- I may hold a share in General Motors, and to think that I somehow or other have an influence over its activities is -- doesn't have much reality behind it. But, on the other hand, if I owned all the shares of General Motors, I guess I would probably have something akin to what a government would have vis-à-vis a crown corporation.
5798 COMMISSIONER NOËL: I suggest you wouldn't be sitting here either.
--- Laughter / Rires
5799 MR. CHING: No; I would probably --
5800 COMMISSIONER CRAM: If you did, you wouldn't be here.
5801 COMMISSIONER NOËL: You would be a missionary.
--- Laughter / Rires
5802 THE CHAIRPERSON: If in the unlikely or likely or any event that we the Panel should find that there were some problems in relation to the issue of direct control, would there be a willingness to review, say, the cabinet authority over a CEO appointment and salary?
5803 MR. CHING: That is an issue which -- I simply can't answer that question. I simply don't know. The cabinet has reserved that right to themselves. It's an issue which never arose in our dialogue with our shareholder, in conjunction with this application, so I'm not sure that if we went back to them and said, "Look, this is a bone in the throat of the regulator. Would you do something about it?", I don't know how they would respond.
5804 One of the things you might consider -- and bear in mind that our base proposition to you is that we have the level of freedom which is anticipated or required by the drafters of the directive. But if this whole area troubles you, especially on a go-forward basis, one of the alternatives you might want to consider is issuing a licence which is conditional upon the existence of either legislation or some other act of the government which is as the efficacy of law. For instance, you have before you, I think, an order in council from the Government of Saskatchewan which is really meant, I think, to emphasize the argument we are already making, which is that there is independence already. But if a licence is issued subject to the continuance of that order in council and it's efficacy in law, then the moment that it ceased to be in existence our licence would be forfeited, and I would argue that the existence of that order in council would not only bind our board of directors and our management, but also CIC, to functioning in accordance with that order in council.
5805 I would still urge upon you the proposition that you should, as a tribunal, come to the conclusion that regardless of the order in council that we have the required independence. But if you came to the conclusion that you were still troubled by the issue of political interference, that might be one easy way to, I guess, ram home the proposition that any political interference would put into jeopardy the existence of a broadcast licence.
5806 Clearly, from the point of view of the board members, while they still are open to appointment or unappointment, it would put them into the position where to fail to honour that would not only bring upon them any sanction that was inherent in your legislation but would clearly also put them in a position where they would be in violation of the Crown Corporations Act.
5807 COMMISSIONER CRAM: I know it's your belief that you are in compliance, but if the Panel doesn't agree that you are, are you aware whether or not there would be a willingness that cabinet would decline its powers under the creation of subsidiaries?
5808 MR. CHING: Again, I simply don't know.
5809 COMMISSIONER CRAM: What about --
5810 MR. CHING: My suspicion is that they would not accept that. And the reason that I say that is because you will recall that some years ago the Government of Saskatchewan got into a lot of problems, and part of those problems were occasioned by the creation of some subsidiaries not within the freestanding crown corporation such as NCPC, and some of those subsidiaries really incurred some very large financial negative consequences for the province and, as a result, I know that the provincial auditor and his office and the two standing committees of the legislative assembly for Saskatchewan have really got a very negative attitude about forming a subsidiary without public exposure of that and they have got a very negative attitude, also, towards the creation of a subsidiary that hasn't got the -- that relieves the parent organization of some obligation at law. Because that was done for a number of years as well. And so, there has actually been a fair amount of attention on making sure that any time a crown corporation in Saskatchewan creates a subsidiary that that must receive an order in council approval, and the reason for that is that orders in council have to be made public within I believe it is 10 days or seven days of their passage by the Lieutenant Governor in Council and it was deemed, I think, by the provincial auditor, and a couple of other agencies, that the fact that that was made public was in itself a very significant restriction on the abuse of that particular power.
5811 COMMISSIONER CRAM: But that isn't the issue. The issue is that cabinet would no longer approve it. I mean that's -- not that it wouldn't be publicized but --
5812 MR. CHING: Yes. Well, there could be other ways of accomplishing the publicity. The way in which the provincial auditor, I think, focused on was: If you force the government to pass an OC, then they had to make the existence of a subsidiary open for public scrutiny.
5813 COMMISSIONER CRAM: What about -- and with the same preface -- if we required that cabinet, or CIC, would no longer have to approve a utility rate application? Like they are not doing it now; they have waived it now. So, presumably that wouldn't be a problem?
5814 MR. CHING: That one I don't think there would be any problems with.
5815 COMMISSIONER CRAM: What about if we required that the CIC would no longer approve the appointment of auditors?
5816 MR. CHING: That I suspect would be blocked. They guard that power very jealously. They consider it to be a shareholder right. And, frankly, I'm not sure that it would be good governance to allow the board of directors, or the management, to appoint the auditor.
5817 COMMISSIONER CRAM: What about the requirement, or a choice of requirements, that board appointments would be for a specific term?
5818 MR. CHING: That I think is not only a welcome suggestion but I believe that probably by year end there will be, at least in policy if not in statute, a set term for board appointees.
5819 COMMISSIONER CRAM: What if we would, then, or alternatively, talk about the setting up of an alternate corporate structure as an alternate to all of the above, or perhaps in addition, that SaskTel would set up a subsidiary with directors for a term specific, the chair to be independently appointed, no telcom employees or related companies, different directors?
5820 MR. CHING: Bear in mind that, in my mind, creating a further bureaucratic web I don't think addresses the fundamental question, because I think we are agreed with you that, regardless of how intricate that web gets, it always stands in the power of the legislative creature to reach through it if it so desires.
5821 Worse yet from our vantage point, if you follow along sort of the process by which we got in front of you, we have obviously been trying to find technology that allows us to do more with the plant that we have in the ground. So the twisted pair which we take to the individual home was always believed to have very limited capacity to carry voice and data.
5822 As a matter of fact, at one time I think it was generally agreed that a twisted copper pair to the home could transport voice pretty good and probably fax, and suddenly it was bumping its head.
5823 Then out came ADSL technology and we started to realize that we can put broadband down a twisted pair. This is the ADSL solution.
5824 Initially, I think, most people believed that that was going to be around one or two megabytes of capacity. Now of course, we can see that we are already in a position where the technology is well tried and we can put six to eight megabytes. Of course, as soon as we get into that range we are in a situation where we can stream video. Because we can stream video, now it presents us with the technological ability to basically provide a product similar to what cable companies can through their particular technology.
5825 They, in turn, are evolving their technology to be able to move into the telephony region. They are on the verge, if not already there, with the technical capacity to basically do what has been our traditional lines of business through the cable plant.
5826 What we are doing here is we are increasing the ability of our plant to handle broadband solutions. It starts out with being a focus on high-speed Internet, but clearly if you can stream video through a high-speed Internet type of solution, then you can also do some of the things which fall into the category of being broadcast or entertainment.
5827 So this project isn't sort of a separate thing over there. It is intricately interwoven with the high-speed Internet strategy of SaskTel. To try and run the video portion of it as a separate business really becomes very problematic from our vantage point.
5828 COMMISSIONER CRAM: Independence and journalistic freedom. What does this mean to you?
5829 MR. CHING: I can only give it an interpretation within the reality of what we are actually doing. If one looks at it very closely, the truth of the matter is we don't manufacture any programs. Our program doesn't contemplate that we do. It isn't as if we are preparing editorials for the Star Phoenix or for The Globe and Mail. We are not doing those things so obviously journalistic freedom doesn't make any sense in that sort of context.
5830 When you really boil it down, the truth of the matter is we don't exercise any significant journalistic powers within the context of our DIV product that are as great as, I would argue, the journalistic freedom which we already bring to bear on our Internet, our dial-up Internet and our high-speed Internet products.
5831 So, first of all, understand that we are talking about here a relatively small issue of journalist freedom. It simply doesn't arise in any significant way with regard to what we are actually doing. It does with regard to, I guess, the selection of programs that we put out and the order in which they appear. But you have to really rummage around to find a journalistic input related to our DIV project beyond that.
5832 So when you ask me what it means, it really means probably those two things: what programs do you select to put out over your particular service, and what order are they arranged in. If you turn it on, do you normally start with CBC or do you start with a religious program?
5833 COMMISSIONER CRAM: Or a French channel?
5834 MR. CHING: Or a French channel or an aboriginal channel or a women's network, or whatever. There are certain places obviously on the channel that are more prized I suppose than others so, when it comes right down to it, the level of journalistic input that we will make isn't a terribly big thing; and, to the extent that we do, from my vantage point I find it hard to try to put my finger on very many occasions where the political arm of government would really have a whole lot of interest in it.
5835 COMMISSIONER CRAM: You have said you are not going to have a community channel and that you put 5 per cent of the gross receipts into the CTF and another fund. Would you agree to a COL, that you won't have a -- a condition of licence -- that you won't have a community channel?
5836 Ms Molnar is nodding like this.
--- Laughter / Rires
5837 MR. CHING: The question was whether or not to answer yes or reserve on the issue. My colleagues seemed to have voted --
5838 COMMISSIONER CRAM: Out voted you, yes.
5839 An alternate I guess to should we have any concerns about journalistic freedom --
5840 MR. CHING: Just let me make one more comment.
5841 My understanding is, and correct me if I'm wrong here, but my understanding is that if we wanted to move from the format that we are suggesting to a community channel format, we would have to come back to the Commission and ask for permission to do that.
5842 COMMISSIONER CRAM: If you agree to a COL that you won't have one, that is exactly what will happen --
5843 MR. CHING: Even if you didn't do that, I think we would still have to come back, as I understand it, and ask for your permission.
5844 COMMISSIONER CRAM: An alternate, should we have concerns, would be an independent programming committee. Would you have a problem with that?
5845 MR. CHING: No, no problem with it at all.
5846 How would you see a creature like that being selected?
5847 COMMISSIONER CRAM: Mr. Ching, do you remember when I was practising law and I used to say "I ask the questions; I don't answer them"?
--- Laughter / Rires
5848 MR. CHING: All I want I guess really is a workable solution. That's really the only reason for making a reference to that.
5849 COMMISSIONER CRAM: Yes. And I want to make this very clear. My colleague, Commissioner Noël, wants to know -- and this is the big test in terms of independence and journalistic freedom -- the movies in hotels since 1993, do you offer porn?
5850 MR. CHING: I think we offer an array of movies, which include triple "X" movies.
5851 COMMISSIONER CRAM: Oh, man.
5852 MR. CHING: I may say incidentally that that issue did not go unnoticed by the legislative assembly, was the subject matter of some extensive debate, and a bit of a thrashing of the government by the opposition, but it did not result in any, any, even mild suggestion to us that somehow or other this issue was beyond our control.
5853 COMMISSIONER CRAM: That was a good tip. Now she is going to immediately -- are you at the Hyatt? Are you working on the --
--- Laughter / Rires
5854 COMMISSIONER CRAM: You appended the OIC, dated yesterday, to your submission today, and on page 7, on the third last paragraph --
5855 MR. CHING: Seven of the OC?
5856 COMMISSIONER CRAM: No, not the OIC, the presentation itself describing the OIC.
5857 MR. MELDRUM: Your speech.
5858 MR. CHING: Mine? Oh, okay.
5859 COMMISSIONER CRAM: Yes, your speech.
--- Pause / Pause
5860 COMMISSIONER CRAM: You refer to the OIC in the third last paragraph, second last sentence:
"In addition, attached to this presentation is a copy of a recent Order-in-Council that confirms that SaskTel has freedom of expression and journalistic, creative and programming independence."
5861 Now, again, based on the fact that I am certain that the people in council are very, very bright, I look at paragraph 4 of the OIC, the second paragraph under that, and it refers to "empowering" SaskTel.
5862 MR. CHING: Yes. What our legislation, which I believe is the legislation under which this OC is issued, the cabinet, as you know, can't simply issue an order in council, it must issue it under a legislative power given to it by the legislative assembly. This particular OC is issued under the Saskatchewan Telecommunications Act, and that act says that the Lieutenant Governor in Council may give to the corporation certain powers, and that is why the OC is couched in the terms I believe that it is.
5863 COMMISSIONER CRAM: Okay. But you say it merely confirms the fact that it already exists.
5864 MR. CHING: When we received the interventions which raised this issue, we passed that information along to Minister Nilson. I can tell you that his immediate response was: Well, there is simply nothing to it because you enjoy that operating independence already. I said: Well, yes, but it has been raised, and the issue is is there anything which needs to be done. One of the things we raised with Minister Nilson was whether or not a letter which explained what the government's position would be, whether it would be fair to do that.
5865 I think that when he considered the matter it appears -- and I must say that I was away when this happened -- it appears that, after considering the matter, he and his colleagues felt that they should go further and issue an order in council. Hence the document you have in front of you.
5866 COMMISSIONER CRAM: So then my next question is whatever can be OICed can be unOICed.
5867 MR. CHING: I think that is correct.
5868 COMMISSIONER CRAM: And what happens then?
5869 MR. CHING: Well, I would of course argue that this OC simply sanctifies what is already there. So whether it exists or doesn't exist I think is an irrelevancy in reality, but it does emphasize what is already the operating format.
5870 On the other hand, I mean clearly the one good thing about the order in council is that when we were worrying a little earlier about the issue of the responsibilities of the board of directors and whether or not a director from CIC could issue so as to require the board of directors to function in a certain manner, as long as that order in council exists I don't think there is any question what the responsibility of the board of directors would be. They simply couldn't pay any attention or heed to a director from CIC that might offend the power that is set out as vested in the corporation by that order in council.
5871 COMMISSIONER CRAM: Does this really say -- and I'm sorry -- does it say that you can only then accept a licence from us on the condition that such licence is operated by you:
"...with freedom of expression and journalistic creative and programming independence"? (As read)
5872 MR. CHING: That's correct.
5873 COMMISSIONER CRAM: So we could only give you a licence that says "Conditional, that you operate with freedom of expression and journalistic creative and programming independence"?
5874 MR. CHING: I think what I read that order in council to say is that if we did not exercise the independence that is contemplated that we would have to forfeit our licence.
5875 COMMISSIONER CRAM: "Until such time", then, kind of thing? So you would only be authorized to carry the licence until such time?
5876 MR. CHING: That's right.
5877 COMMISSIONER CRAM: Okay.
5878 MR. CHING: If we were not able to discharge that independence, as I understand it, we would have to voluntarily forfeit the licence, regardless of whether or not you people took a negative attitude about it or not. That is what I understand that OC now to be saying.
5879 COMMISSIONER CRAM: Okay.
5880 This is, of course, as you know -- I mean, we are talking about BDU, a competitive issue. We are not necessarily talking about programming.
5881 Is it in the plans at the present time of SaskTel to go further into the broadcasting business and perhaps apply for a Category 2 in the digital world?
5882 MR. CHING: No. I think it is correct to say that our intention is to endeavour, as much as we possibly can, to roll high-speed Internet out to as many localities in Saskatchewan as we can find a commercial sound basis for doing it.
5883 We would also, I think, try to roll out digital interactive digital to as many locales in Saskatchewan as we can find a commercially sound basis for doing it.
5884 At the present time, however, we have extended our high-speed Internet beyond the cities within Saskatchewan -- we are in the process of doing that -- but at the present time we can only find a viable business case for DIV and high-speed Internet within Regina, Saskatoon and, I believe, seven of the eight small cities.
5885 COMMISSIONER CRAM: At page 28 of your brief you were talking about that you don't propose to bundle this service with local telephony.
5886 MR. CHING: That's correct.
5887 COMMISSIONER CRAM: If we granted you a licence, what would stop you from bundling it?
5888 MR. CHING: I guess the fact of the matter is that we, or any other company in Saskatchewan, could bundle as we saw fit. The fact of the matter is, all of our services are unbundled.
5889 For instance, Access Cable, if they wanted to put together a bundle which included local service they really have two choices, they can acquire that service from us, we have an obligation to supply it to them, or they could deploy that particular service through their own technology. I think that is true of any other supplier of communications or cable services in Saskatchewan.
5890 COMMISSIONER CRAM: You can certainly reserve on this.
5891 Would you agree to a COL that you not bundle it with your telecom?
5892 MR. CHING: I think we would -- we certainly have not discussed it amongst ourselves, as you can see, and perhaps we should reserve on that one.
5893 COMMISSIONER CRAM: Maybe you can come back in Phase II with that.
5894 MR. CHING: Yes.
5895 COMMISSIONER CRAM: Because clearly that affects the market and the market dominance issues and the whole ball of wax that goes with that.
5896 MR. CHING: I think one of the problems that we might have with that -- and I don't want to --
5897 COMMISSIONER CRAM: Phase III, I'm sorry.
5898 MR. CHING: -- pre-guess this, but it would leave us in a position where our competitors could put together that sort of a bundle but we could not.
5899 COMMISSIONER CRAM: Yes. And the issue then, though, would be the market in which we would be talking about.
5900 MR. CHING: You see, one of the things I think that is happening is, as we move through the technological and convergence process that is going on, is that more and more I think the issue of whether or not you have a successful package of components is being left to the consumer. If you have a good package and if you have a good price, you are going to get a good response from the marketplace. If you don't have a good package and if you don't have a good price, you aren't going to get a very positive response from your customer base.
5901 So in my mind it strikes me that probably the best restriction on what should or should not be in bundles and what prices should be attached to those bundles is really the marketplace.
5902 COMMISSIONER CRAM: I only say that because in your speech you were talking at page 6 under your "Secondly" that:
"...the Crown corporation status provides us with a competitive advantage ... allows us to dominate the market." (As read)
5903 Then the last sentence of that is:
"It is the incumbent cable companies who have the dominant market position when measured against the relevant markets of Internet and broadcast distribution." (As read)
5904 A totally different issue if we are talking about the bundling of the three. Wouldn't you agree?
5905 MR. CHING: Yes, that's -- I think it is legitimate to say that a cable company might have 80 per cent penetration in cable, we might have 80 per cent penetration in local service. They have the ability to bundle the two things together, we have the ability to bundle the two things together. I'm not sure that that necessarily somehow or other gives us a big leg-up over the cable company.
5906 COMMISSIONER CRAM: Then you talked about "a lost customer for five years because of DTH". Well, you wouldn't necessarily lose the customer in local telephony if you lost them in Internet or if you lost them in broadcasting.
5907 MR. CHING: No, I think that is correct.
5908 The point I was making there was that delay from our vantage point was dangerous because if we sat back and didn't go forward with regard to a broadcast thrust, to the extent that DTH were able to come in and secure a customer, it is very difficult to pry that customer loose from DTH simply because of the capital and commitment that has to be made to get plugged into that level of service.
5909 COMMISSIONER CRAM: But if you could bundle all three you would have an advantage over DTH?
5910 MR. CHING: Yes, but DTH could bundle all three as well. So, to some extent, they are right back with their -- to the extent that they have an advantage with their base product, they probably have an advantage over us, because they certainly have the access to bundle our product, less clear as to whether we have a right to bundle theirs.
5911 COMMISSIONER CRAM: So I think what I am going to do is leave the issue of dominance until we get back to the answer about the bundling.
5912 The one thing I wanted to talk about in terms of cable dominance was at paragraph 47 of your brief.
5913 Do you have that?
5914 MR. MELDRUM: Yes.
5915 COMMISSIONER CRAM: You actually only talk about cable dominance in Regina and Saskatoon.
5916 MR. MELDRUM: I'm sorry, which document?
5917 COMMISSIONER CRAM: It is the supplemental brief I believe.
5918 Oh, it could be your rebuttal, I'm sorry.
--- Pause / Pause
5919 COMMISSIONER CRAM: It would be the supplemental.
5920 It is paragraph 47 of your rebuttal.
--- Pause / Pause
5921 COMMISSIONER CRAM: Yes.
"Sasktel noticed that the cable companies currently hold the majority share of the Internet market in both Regina and Saskatoon." (As read)
5922 You make no reference to the rest of the areas that you are applying to serve.
5923 MR. CHING: Well, I think it is correct to say that the cable companies occupy the video dominance in all areas they seek to.
5924 The issue of Internet is much more complex and more difficult for us to estimate there, but as nearly as we can make out, certainly in Regina and Saskatoon the cable companies, I believe, have an edge over us in high-speed Internet.
5925 COMMISSIONER CRAM: Then you talked about the lack of application for forbearance at page 51.
5926 I don't know, it has been brought to our attention by the Class 3s that our policy in that is pyrrhic.
5927 In other words, even if they have lost 5 per cent they are lost 5 per cent they are not going to apply to us to deregulate because then the world knows they are a failure.
5928 MR. CHING: Boy, the telcos didn't have any trouble screwing up their courage to come looking for forbearance when they lost market share and they didn't treat it as being necessarily an impediment to maintaining market share. They treated it as being an opportunity to enhance their market share.
5929 COMMISSIONER CRAM: You then talk about the fact that once you have got the critical mass you can expand to the rest of the province. Timing in your business plan, when will Price Albert South be covered totally?
5930 MR. CHING: With DIV?
5931 COMMISSIONER CRAM: Yes.
5932 MR. CHING: Or high speed?
5933 COMMISSIONER CRAM: DIV.
5934 MR. SHEPHERD: I guess in terms of time, the specific area that we have asked a licence for we expect to cover within a year.
5935 If we look at areas outside of those geographic areas, we haven't committed to any specific timing in our business plan. Our view is that some of those areas we will be extending high speed Internet to and clearly are already in the process of doing that, but we will have to undertake specific studies of the business case and the economics in each area to determine whether there would be future potential for DIV.
5936 Certainly the take rate of high speed Internet would be one of the indicators of the readiness of the market for advanced services in those areas.
5937 COMMISSIONER CRAM: In addition to the potential for dominance, we hear from the intervenors that you have loans on demand. As VCC says, the only limit on your resources are Cabinet. What do you say to that?
5938 MR. CHING: That we have which, loans on demand?
5939 COMMISSIONER CRAM: Yes, from Cabinet. The only limit on your resources, on your financial resources -- in other words, getting loans, is Cabinet?
5940 MR. CHING: Well, there is no question that there is one factor at work which is the issue of getting approval to receive a block of funding.
5941 There is also the issue of the impact of carrying that debt load on our books and the financial restraint. We have a requirement to maintain a debt to equity ratio as one of the obligations put upon our shoulders.
5942 So for us to simply acquire big blocks of debt not only would put us off side with regard to our debt to equity ratio target of 45/55, but in addition to that, I mean, it would incur a carrying cost that would weigh down our operating side of our budget in a way that frankly we are not terribly interested in.
5943 We have to find a business case that justifies the deployment of any capital. We can't simply go out and willy-nilly ask our shareholder to deliver up more capital to us. They simply won't do it.
5944 COMMISSIONER CRAM: At what interest rate because what I notice is I think the interest rate that the government pays, plus a carrying charge.
5945 MR. CHING: Yes. I think, first of all, you will recall that a few years ago the Government of Saskatchewan got into a lot of financial difficulties and, frankly, they are still not out of it.
5946 Some of those difficulties were borne out of simply strange usages of capital, but some of their difficulties were borne out of the fact that various agencies were rating capital over here and over there and over there, and not only did this sort of give to the government overall a bit of a loss of control over how capital was being deployed within the government at large, but in addition to that you had the strange phenomenon of the price of capital going up for various component parts of the government because the suppliers of capital, the capital marketplace, was being approached by more than one entity.
5947 The result of it was that about 10 years ago the government as part of their financial restraint program issued an edict to all parts of government that nobody was to raise capital without express permission of the Treasury Board, other than through Treasury Board.
5948 They simply had to do that for the very simple reason that the province of Saskatchewan, both on the treasury side and on the Crown side of government, was in a situation where its debt load was simply beyond its capacity to repay it. The government I think was looking very closely into the eyes of, if it is possible, provincial bankruptcy.
5949 As a result, at the present time there is a requirement that all units of government, including SaskTel, raise all of its capital through the Department of Finance and Treasury Board.
5950 So, if we want capital we make our arguments, our business arguments for doing it. There are approvals for it, but then we go to the Department of Finance who approaches the money markets, raises the necessary capital and they may raise a block of maybe $400 million, of which SaskPower will use a chunk of it, SaskEnergy will use a chunk. The Treasury side might be replacing some of the capital rollover that they have continually got and SaskTel may want $30 million for a project we are working on.
5951 Then they download that money to us and the cost that it takes them to raise it, including the costs which they have to pay in the form of interest.
5952 COMMISSIONER CRAM: As I read it there was also what I call a carrying charge?
5953 MR. CHING: Yes. I include that. The cost that they have got of actually the interest that they would pay, plus the cost that they incur in putting that into place, that is the Department of Finance puts into place.
5954 COMMISSIONER CRAM: So are the interest rates that you pay actually lower than somebody in the private market, a private company?
5955 MR. CHING: It depends a little bit on where you are in the private market. If you were, say, Bell Canada with a triple A rating, it probably raises money much more cheaply than the Government of Saskatchewan which, as you know, was floating around at single A, single A-plus.
5956 COMMISSIONER CRAM: That wasn't --
5957 MR. CHING: It's coming back gradually.
5958 There was a point at which, frankly, three out of the four major rating agencies rated the province of Saskatchewan as being below an A rating, in the B rating, which meant that the sources of funding for the province of Saskatchewan was restricted to about 25 entities in North America. At that particular point the cost of our capital was probably higher than most companies that we do business against.
5959 COMMISSIONER CRAM: The second issue in terms of dominance and what I call a barracuda in the marketplace is the allegation of having a close relationship with government and I think that's fair. In your reply to deficiencies you refer to a lack of a statutory requirement by government and Crown to use SaskTel. Tell me, in terms of the Internet business for not bundling, do you have any idea of what proportion of government business you have?
5960 MR. CHING: I am not sure I can even make a sensible guess at it. Certainly there are agencies of government who source their telephony needs and their communications needs from sources other than SaskTel. But you are right, the fact that we are owned by the province of Saskatchewan, the Government of Saskatchewan, there is a natural tendency on the part of certain agencies to look to us first.
5961 I have got to tell you that it is a bit of a mixed blessing because -- as is frankly our association with government.
5962 I mean, to some people there is this idea that somehow or other because we are associated with government as a Crown corporation that we can do practically anything we want to. Let me assure the Commission that that is far from the truth.
5963 As a matter of fact, I can tell you that the average person within Saskatchewan who is our customer demands a level of responsiveness from us that I think is borne out of the fact that we aren't simply at arm's length from the average person in Saskatchewan. They expect an awful lot from us.
5964 We get a lot of beating up by the average person in Saskatchewan who feels that we haven't delivered the level of service to them that they expect of us.
5965 Frankly, that's also true of other agencies of government. Some of the toughest grinding that we get in the marketplace is from our so-called friends in the government structure and some of the business there we might wish upon our competitors.
5966 COMMISSIONER CRAM: The third item is that you pay no tax.
5967 MR. CHING: Yes, not quite --
5968 COMMISSIONER CRAM: Wait. So, theoretically, you have lower costs, so, theoretically, your rates could be lower and recognize, of course, I am from the consumer side. It's a double-edge sword and I recognize that.
5969 MR. CHING: Bear in mind that we do pay an awful lot of tax. For instance, last year I think we paid something in the neighbourhood of $25 million worth of taxes.
5970 COMMISSIONER CRAM: You are referring to GST and PST?
5971 MR. CHING: And provincial taxes. What we don't pay is federal income tax.
5972 COMMISSIONER CRAM: That's a chunk though.
5973 MR. CHING: Yes, you are right.
5974 I must say though that when our shareholder computes what they consider to be the dividend payment, they look at what they consider to be average earnings within basically the industry function. They add to that a premium which they describe as being an offset for the fact that we don't pay certain taxes.
5975 Now, you should also be aware that we pay a pretty healthy dividend. Some of the cable companies don't pay either dividend of taxes. As I understand it, a co-operative, for instance, receives an exemption from the federal tax and, as a matter of fact, you will see from some of the documents that have been filed that I believe the patronage dividends have not been paid by, for instance, Access Communications for the cable company.
5976 So, compared to Access, they are probably in a better financial position to compete with us than we are, just on the issue of taxes and dividends. We pay much more on those two categories than they do and so if one of us is at a disadvantage in that particular area it would be us vis-à-vis them, rather than the reverse.
5977 COMMISSIONER CRAM: Have I missed something? You mean to say you do pay provincial income tax?
5978 MR. MELDRUM: I thought I would just list the taxes that comes to the $25 million.
5979 COMMISSIONER CRAM: Yes.
5980 MR. MELDRUM: There is the payroll taxes, plus Worker's Compensation. We pay the capital tax and that came to $4.7 million last year. We do pay all property taxes. We in effect pay a grant in lieu of taxes. We also pay provincial sales tax and fuel tax. We do not pay a provincial income tax per se.
5981 COMMISSIONER CRAM: Thank you. I didn't think you did.
5982 And not GST in there either?
5983 MR. MELDRUM: Well, because the GST is refunded in effect, none of the businesses really pay GST.
5984 COMMISSIONER CRAM: So your point then is the co-operatives are probably in a better position than you, but Shaw is out to lunch in Saskatoon? Now I have done it for the record. I don't mean they are out to lunch. I mean they're --
5985 MR. CHING: Certainly as compared to a co-operative we are in a position where we are at something of a disadvantage. I think we can live with that.
5986 I think probably Shaw, given its economic power could probably live with whatever advantage or disadvantage they enjoy.
5987 COMMISSIONER CRAM: We have heard the arguments about our regulatory framework and that we are going to be going ahead to look at your financial situation and review each and every issue, depreciation and the whole -- and addressing the other issues of number portability, subsidy, change of fund, recovery start-up. These are fairly important issues.
5988 Given the concerns about head-start, do you believe it might be argued, others do, that it is more appropriate for the Commission to await that 18-month transition and issue a licence only then? What's your response to this?
5989 MS MOLNAR: I have been waiting for the regulatory question. As some of you know, we spent quite a bit of time before June 30 and preparing for federal regulations. We went through the process of aligning all our terms and conditions and our terms for competition, filed our tariffs for approval and they were approved by the Commission.
5990 We have in place a form of price regulation. Well, not the same as the others. We think it is certainly providing as much protection to consumers and to competitors in our market as in other markets.
5991 The fact that there are certain things -- I guess maybe I would talk financial review separate from head-start because I think they are different issues. The financial review is, as you said, there are certain items such as depreciation that haven't been looked at, but what has been looked at I believe significantly as a precondition to forbearance is the split-rate base. Have we split the rate base to ensure there is no cross-subsidy and I think that's the issue that is relevant here. I believe that issue was looked at and there has been a conclusive decision on that. So I don't think depreciation is really relevant to that decision.
5992 The other one is head-start. We have in place tariffs for local competition, the same as every other company. We are working through the bounding proceedings with all the other companies. I mean, we are in the same position as them. LNP, we have said that we will adopt it. It is according to the national framework I believe on demand, so we are in place with the others, in my view, on every head-start issue.
5993 COMMISSIONER CRAM: I heard you asked to join LNP and they said thank you, no. Have you applied since after June 30?
5994 MS MOLNAR: No, not to my knowledge. Our view is that as part of our local competition implementation there are a number of steps that are still in place to actually get to the stage of interconnecting with the first CLEC and that is obviously one of our steps. But we have had, to my knowledge, no CLEC come to SaskTel at this point.
5995 COMMISSIONER CRAM: Do I understand you are not ready for CLEC to come in terms of the steps or what --
5996 MS MOLNAR: We are ready from the perspective that all of the terms and prices are in order, but there are certainly things like the interconnection arrangements you can't do beforehand.
5997 We have tested LNP. We have been testing it for the last year, but to be honest joining the consortium costs money. We will hold off as long as we can.
5998 COMMISSIONER CRAM: I think that's all of my questions. Thank you very much. I am sorry it was so lengthy.
5999 THE CHAIRPERSON: Thank you, Commissioner Cram. You have given us a comprehensive review of the issues involving the independence of SaskTel from the Saskatchewan government.
6000 Mr. Ching, you are the President of SaskTel, you regularly review financial performance and return the reports to superiors on the performance of financial and other targets and goals within the company?
6001 MR. CHING: Yes.
6002 THE CHAIRPERSON: You have told us about debt to equity ratio targets of 45/55 and at the tip of your tongue you had how much tax your corporation has paid. I am curious as to what your 1999 sales were in SaskTel, your last year's report.
6003 MR. CHING: The 1999 gross revenue for the telco was $615.5 million. The gross revenue for holco was $737.7 million.
6004 THE CHAIRPERSON: You spoke in great detail throughout the afternoon about meeting certain aboriginal targets. What are your targets this year?
6005 MR. CHING: One of the problems we have had here is our target has bounced around a little bit because we are in the process of a voluntary severance program to reduce staff head count.
6006 THE CHAIRPERSON: Maybe we will go to last year then. What were your targets last year, the historical target?
6007 MR. CHING: We will have to give that to you, I'm sorry.
6008 THE CHAIRPERSON: All right. I guess what the targets were and what you did achieve on those targets.
6009 I have another question. Can you please discuss -- some have alleged that there has been a departure from SaskTel principles of providing service to larger urban centres only at the jeopardy of rural and remote residents.
6010 In that your company has targeted 11 of the larger communities within the province, can you please speak to that?
6011 MR. CHING: Sure. Well, I think it's correct to say that when we had a monopoly within Saskatchewan there was an expectation -- and this is an expectation which goes back a long way; this goes back to the period of 1908-1909 when the precursor of SaskTel was originally created -- that rural Saskatchewan would be treated virtually identically with urban Saskatchewan in as many respects as one could possibly achieve and I think it's correct to say that people in rural Saskatchewan, when we extended the basic telephone system, the hardwire system, received perhaps a little later sometimes than the urban areas but almost inevitably a roughly equivalent service; that is to say that if rotary dial came in in Regina and Saskatoon, it was just a question of time before it came in in my hometown of Oxbow. The same thing with regard to touchtone, when it replaced rotary.
6012 But, of course, that was under a scheme where the sum total, really, of SaskTel's activities were local and long distance and Yellow Pages and where the corporation simply treated its revenue streams as being a revenue stream -- and, frankly, we have got some pretty expensive hardwire plant out in rural Saskatchewan which I think had there been a fully competitive marketplace, it might have been harder to see that plant out there.
6013 If you compare that, for instance, with the cellular, the mobility system, that came in under an entirely different conceptual regime. There, there was a duopoly, and it was expected that that system could not be cross-subsidized from the hardwire system -- that was expressly forbidden by the regulatory process.
6014 Well, as a result, when we deploy our cellular system, the good folks in Good Soil, Saskatchewan, have a hard time understanding why they can't have two cellular towers up there. This is a small town in northwestern Saskatchewan. They look and they see that they have got essentially the same hardwire system as their cousin in Moose Jaw, but they don't have the same cellular system, and I think there is a belief that somehow or other SaskTel has done them one in the eye because we haven't built a cellular system to extend up into Good Soil.
6015 Now, we have spent a lot of time with communities who have raised concerns of this nature and tried to explain to them that they are two fundamentally different systems, that was built on a concept of universality and cross-subsidization and the other system was based upon a fully commercialized concept, or a fully competitive concept.
6016 One of the difficulties that we have got as SaskTel is being owned by all the people in Saskatchewan. Regardless of whether they do business with us, they still own us. And, boy, they expect us to give them levels of service that make them as happy as they want to be. There's no question that there are people in rural Saskatchewan who feel that SaskTel is not as in touch with rural Saskatchewan as it was 15 or 20 years ago. While I don't think it's really a fair criticism of SaskTel, I can understand how they arrive at it because when you get your mobility system based upon a commercial basis it's difficult, if not impossible, to find a business case which allows the good folks in Good Soil to have access to that.
6017 The same as can true with regard to Internet. It's already happening. We are trying our level best to extend the Internet, and especially high-speed Internet, to rural Saskatchewan, but the fact of the matter is we have got to find a commercial basis for doing so.
6018 So, you have put your finger on one of the difficult public image problems that we have got out there. People in rural Saskatchewan who look back 10-15 years saw a sense equanimity between urban and rural Saskatchewan that was very, very powerful. They look at the types of communication systems that are evolving over the last 15 years and they see themselves not doing as well in a fully competitive, commercially-based world. And I can talk until I'm blue in the face and tell the good folks in Good Soil or Frontier, Saskatchewan, or even my old hometown of Oxbow, that they aren't going to get the quality of service that the folks in Regina and Saskatoon are getting and explain the commercial realities of that, but they still give me a little bit of a beating in the process.
6019 THE CHAIRPERSON: Thank you, Mr. Ching.
6020 You may be aware that the Government of Alberta, for example, has an initiative of connecting every community of Alberta, regardless of size, as long as there's a school. I guess the basic criteria is if you are too small to have a school, then maybe you would have to wait a little while before connecting. That's one approach. But they don't own a phone company, so it may be a different answer there.
6021 I guess before we get to that, you talk about the good folks in Good Soil and I imagine, from your comments, that it's one of the smaller communities in Saskatchewan -- I'm not from Saskatchewan.
6022 Battleford Cablevision Company, in their intervention, has this objective of tying together other smaller communities, such as Wilkie, Unity, Biggar, Rosetown, Kindersley, Lashburn, Maidstone, Meadow Lake, and they are saying that they need -- they don't need the extra competition because it will just, in their core centres, where SaskTel really only wants to -- is only interested in Battleford or North Battleford markets, which is their largest part of their -- it's the base of their pyramid, so to speak, and it would affect the roll-out into these smaller communities.
6023 What comment do you have about that? And, because I'm mindful of time, if you can also work into your comment some discussion about the fairness and is it appropriate for a government-owned enterprise to be competing with private-sector business on a competitive basis? Is it a level playing field?
6024 I won't give you too many more than that; you have got two or three right there.
6025 MR. CHING: Well, let me maybe address some comments to the latter, because I recently gave a speech to the Rotary Club in downtown Saskatoon and in the question period afterwards, one of the individuals stood up and said, "Why are you competing against private sector companies?", and I think he was referring, actually, to a subsidiary that we have created, called Securetek, which is in the security business and is competing against private sector. But what I drew to his attention is that every line of business that we are in is competitive. We don't have anything that looks like a monopoly any more.
6026 If you said to SaskTel, tomorrow morning, that we weren't going to, or we shouldn't compete with anybody in the private sector, we would simply shut down, because everything we do is in the competitive sector: local; long distance; cellular. Every part of our business is in the competitive area.
6027 So, I think some of the people who make the observation that, as a crown corporation, we shouldn't compete against the private sector haven't had to sort of really come to rest in their minds yet that it isn't the old days of where we had a monopoly. We don't have a monopoly any more, and I think they are sort of forgetting about that. They are sort of like the people who make the direct equation between when you had a hardwire service, it was all even all across Saskatchewan, but now that you have got a cellular system it isn't even all across Saskatchewan. That's right, things have changed in the meantime.
6028 With regard to the issue of the North Battleford Co-Op, we have a certain amount of sympathy, I think, for the argument that's made there because, frankly, I can still hear echoes of us making the same argument. We made the argument to the Province of Saskatchewan, "Don't allow competition in here. Stay with a monopoly."
6029 I think, when we look back on that, that was a really dumb argument for us to be making. The fact of the matter is competition has been very good for Saskatchewan. It's caused us to be smarter; it's caused us to sharpen our pencil on prices; it's caused to innovate -- that's why we are rolling out a high-speed Internet product that is the six to eight megabytes, and looking at trying to get into the broadcast business. It's caused us to look at getting into the security business, into the entertainment business and hospitals. It's caused us to take a look at all lines of business that could be reasonably performed by SaskTel and the way in which we go about it. It's forced us to be more nimble, quicker off the mark and to innovate and to use the resources that we have got as wisely as we possibly can.
6030 It has forced us to get into some diversification programs. It has forced us to try and use our system in a way that we never even thought about prior to competition.
6031 So I think when, for instance, North Battlefords' cable co-op looks at SaskTel and says "You are a danger to me", we are really not. Competition may be a big danger to them, but it is all a question of who brings the things on the doorstep. It may be SaskTel, it may be ExpressVu, it may be some other competitor. The danger to North Battlefords' co-op is competition, but it is a danger only so long as they focus on the fact that it may have some negative impacts on them. It is going to have a lot of positive impacts too.
6032 They are either going to learn to be quick and to be innovative and to be good in their customer service -- not just good but excellent in their customer service. They are going to have to innovate and do the things that they need to wed themselves to their customer base because they are really doing what the customer wants or, alternatively, it is just a question of time before they are dead. Now, it ain't necessarily going to be SaskTel that drives that stake in.
6033 THE CHAIRPERSON: Okay. I that's great. I think I have an understanding of your point. Thank you.
6034 We will probably here a bit more from this in Phase II, and certainly we can hear from you again in Phase III on the same topic if it does come up in Phase II.
6035 One of the other areas that we talked about was, you know, there are three major issues, at least in my mind, that we have to try and resolve on this particular application. One is the independence of SaskTel from the government.
6036 MR. CHING: Right.
6037 THE CHAIRPERSON: And if it is not determined that there is quite enough distance there, then, you know, what type of safeguards need to be put in place should their application be approved? There are some competitive issues and there are some head-start issues. Maybe you are getting into the cable business before the cable guys are getting into the phone business.
6038 The last area I want to explore right now, though, does deal with those safeguards.
6039 Briefly, if you can maybe talk a bit about the safeguards that the Commission should consider placing to combat the arguments of cross-subsidization, inappropriate allocations of costs and revenues of the broadband side of the business, fairness in access to support structures, and then I guess the issue of market dominance, not so much -- because we have heard your arguments that you are not dominant in that business, but in the broader communications realm, perhaps you are a larger player than some of the others.
6040 I guess that's my question. If you have it all, great; if not, I will repeat some of it.
6041 MS MOLNAR: I am going to try. And I was trying to write down your questions, so we will see.
6042 THE CHAIRPERSON: We have lots of time, so I can repeat it if it helps.
6043 MS MOLNAR: I think what I heard is what are the safeguards that might be required.
6044 THE CHAIRPERSON: Yes. In your corporation's opinion, what types of safeguards do you think the CRTC should impose should they decide to approve this application in order to alleviate some of the concerns that the intervenors have raised such as cross-subsidization, inappropriate allocation of costs and revenues from broadband, access to various support structures in the province, and just the market domination argument that some of the smaller players expressed.
6045 MS MOLNAR: I think first off, I guess our position is all the safeguards are in place. We, as we were talking about earlier, have gone through an extensive proceeding to establish a transitional framework for SaskTel, and that set up a split rate base with a cost allocation methodology. We had that in place since competition was introduced in Saskatchewan. That was reviewed by the Commission and it was accepted. That is the safeguard that has been identified by the Commission in the decisions we looked at to ensure that there is no cross-subsidy between utility services and competitive services, including broadcast.
6046 That, in my view, as I said, also includes broadcast. I think with that in place the Commission has established that safeguard. What we also have is part of our transitional framework, which is different than any other telco, that is, we are required to report those split rate base results more frequently than any other telco. We also are required to have those results audited, and no other telco has to do that -- I guess I should be a little more clear -- none of the larger incumbent telephone companies.
6047 To me, those safeguards are in place and I think that they are sufficient.
6048 THE CHAIRPERSON: Okay. Thank you very much.
6049 Commissioner McKendry, do you have questions.
6050 Actually, just before Commissioner McKendry, I believe Mr. Meldrum has a point to make.
6051 MR. MELDRUM: I would like to have a stab at your question on employment equity.
6052 THE CHAIRPERSON: Hey, if you have done your research already, why not?
6053 MR. MELDRUM: In our application, in tab 13, we do have our 1999 report on employment equity. Unfortunately, 1999 was a very confusing year in terms of both targets and results because we did an employee census part way through that year which changed the percentages within the company in terms of which employees have self-identified themselves as actually coming from a minority group. We did, though, and in terms of permanent hiring there wasn't very much that was going on during the course of that year. But I think the results for our summer hiring program were quite good. Our equity target was 35 per cent and the results achieved were actually 37 per cent.
6054 Now, of the 37 per cent, 16 per cent was attributed to aboriginal. So, in other words, out of 197 hires for summer hiring we hired 31 aboriginal folks, we hired three people with disabilities, 19 were visible minorities and 20 were women in non-traditional roles. So we did exceed our target terms of summer hiring.
6055 In terms of the year 2000, again, the reason Don just doesn't have it at his fingertips, the number, is because the census caused the board to reset the number for us. As part of dealing with the committee of the board, they said: We want to set a specific target of hiring permanent aboriginal employees this year. We don't want to just look at the percentages and how things are going. We want to ensure that you hire X people.
6056 That was just recently changed again as a result of some of the issues related to the employee census. My recollection is that it is 32 people that we are required to hire of aboriginal descent.
6057 THE CHAIRPERSON: That's good. I was just wondering how conversant as an organization you were with your targets. You spent a lot of time earlier this afternoon referring to these targets, so I figured you would have a fairly ready answer.
6058 MR. CHING: We set a target at the beginning of the year. Then we did the survey, the result of which was that we discovered that we were actually doing better than the target we had set for ourselves, so the board then scaled up our target. Then, in the middle of the year, we engaged in a voluntary severance program to downsize a little bit. The uptake amongst First Nations folks was quite significant and as a result our compliance dropped again, so they brought the target down.
6059 So one of our problems has been that within that particular time frame they were talking about, our target, we were trying to set it out there as a stretch target but discovered that we were actually almost bypassing it when we did our survey, and then we discovered that the stretch target was almost unattainable when the dust settled on the voluntary severance program.
6060 THE CHAIRPERSON: I'm not really overly concerned about what your targets are. I guess that is something between your shareholders and yourself.
6061 It was just more how conversant as managers were you of targets set by your shareholders. Then why I wanted the answer on your level of success, what you achieved, would be to see how your shareholders, so to speak, would react to that. What you have told me is they do follow that information and they do react.
6062 MR. CHING: Yes.
6063 THE CHAIRPERSON: Thank you.
6064 Commissioner McKendry.
6065 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
6066 I just have two things I would like to talk to you about. One, I want to make sure I understand the scope and nature of the potential mischief that has been discussed. The other is I want to ask you about the treatment of federal tax. You discussed that with Commissioner Cram in terms of the dividends. I would just like to make sure that I understand that.
6067 The scope and nature of the potential mischief, you are not going to offer a community channel, so it strikes me that there is not an issue there in terms of the government telling you what to put on or what not to put on a community channel.
6068 I took it from your comments to Commissioner Cram that where you saw in theory the potential mischief was with respect to the priority given to certain programming services in your channel listing. I'm not sure I quite understood that. Perhaps I could just refer you to the overheads that you showed earlier. I take it you were referring to the interactive guide when you made that comment.
6069 Is the potential mischief that -- looking to the next page, the little window that is on the portal page is expanded. Is the potential mischief that first window that comes to the viewer will give priority to certain services that the government has directed you to give priority to? Is that what we should be worried about?
6070 MR. CHING: I must say that I have a lot of trouble with knowing what our journalistic input is. As nearly as I can make out, whether or not we included, for instance, a religious channel, or didn't include a religious channel in our offering, is obviously a decision that we could make which would have journalistic import and might also be something that the government might have in for political reasons or ideological reasons.
6071 The other thing is that the order in which they are presented to the viewer could have an influence. When you get beyond that you start to run into some pretty thin soup in trying to find out just exactly what our journalist activities are going to be.
6072 I struggle with this, because when this whole issue sort of blossomed out in preparation for these hearings I kept pestering my staff "Exactly what is the journalistic input that could be interfered with? What are we going to be doing that a government would want to come and say `Hey, for political reasons I want you to do it this way rather than that way'?"
6073 I must say that I have a hard time finding out exactly what our journalistic activities are going to be because, as I say, we are not writing editorials, we are not making programs, we don't have a community channel. When you look at this issue I think it behooves the Commission to remember that there ain't much there insofar as journalistic activity.
6074 COMMISSIONER McKENDRY: Just so I understand this, does this window scroll?
6075 MR. CHING: Yes.
6076 COMMISSIONER McKENDRY: So there would be no advantage -- and I assume at whatever time you turn your TV on you might see one -- because it is continually scrolling, one time you will see one set of channels and another time you might see another set of channels. You are not always going to get the same set of channels, are you, when you turn your TV on, in this little window?
6077 MR. SHEPHERD: Typically what would happen, the window scrolls but only at the instruction of the user. So the window will typically come up at the last channel that you were at. So if you were to turn it on it is going to come up at the first channel initially, if you scroll through it to channel 35 and then come back later it is going to be at that position.
6078 COMMISSIONER McKENDRY: So it will change, depending on whatever you ended at the last time you were watching television?
6079 MR. SHEPHERD: Yes.
6080 COMMISSIONER McKENDRY: Okay. Thank you.
6081 In terms of, then, whether or not you carried a channel as the result of government direction, certain channels you would be required to carry if we granted you your licence because we require BDUs to carry certain channels, but there are channels or services that we issue a licence to where it is optional, and really that is the heart of the potential mischief is that the government might say "No, don't carry that one" or they might say "Carry that one for sure", even assuming you didn't want to. That is the heart of the problem, is it?
6082 MR. CHING: I think that is as broad a display of the problem as one could find.
6083 COMMISSIONER McKENDRY: Thank you.
6084 I just wanted to ask you now about the dividends with respect to the federal tax.
6085 You don't pay federal tax. I think Commissioner Cram was asking you "Well, you don't pay federal tax so you are in a position to -- you don't have to recover that in your prices and your competitors do."
6086 As I understood your response, it was that is not a concern because the amount that we would otherwise pay in taxes is added to the dividend that we would pay even if we were paying taxes. So that shouldn't be a concern to us.
6087 My question is: Dividends don't show up as a charge on your profit and loss statement, only the operating expenses, and so on, of the company do. So when you set a price for you DIV service how do you factor in this dividend in the rate-setting process?
--- Pause / Pause
6088 MS MOLNAR: I'm going to take a stab at that.
6089 The price for DIV is not based on cost but on the competitive market and what in its view the customer would bear with us becoming a new entrant into the market.
6090 COMMISSIONER McKENDRY: So you could price this below cost if you felt that you couldn't recover the cost of the service in a competitive market?
6091 MS MOLNAR: I don't believe that is the intent, based on the business case that is attached.
6092 We certainly view that this is a profitable service, so it is -- it will be profitable.
6093 COMMISSIONER McKENDRY: But you have told me that you are not going to set the price based on cost and it is going to be set based on a market price, or what you believe the market will bear for your service in a competitive environment.
6094 MS MOLNAR: Yes.
6095 COMMISSIONER McKENDRY: My question was: At least in theory the service could then be priced below cost?
6096 MS MOLNAR: I guess you could say theoretically that would be the case. That is certainly the case in the Internet market for example and has, I think, been acknowledged by even the Commission in certain decisions that when there is a new service that comes on board it could be priced below cost until you reach the economies of scale and scope.
6097 But that isn't the case with our broadcast. We have, as a condition of bringing it forward, developed a business proposal --
6098 COMMISSIONER McKENDRY: So the issue -- I'm sorry, were you done?
6099 MS MOLNAR: I'm done.
6100 COMMISSIONER McKENDRY: So the issue of whether or not you recover your federal tax through -- or whether, in effect, you bear the burden of federal tax through increased dividends isn't really relevant to set the price for DIV?
6101 MR. CHING: Well, it is in this regard: What happens is that when we go into our approval phase with our holding company, CIC, they expect us to analyze the marketplace that we are functioning in and give them an idea as to what the approximate dividend stream and net earning stream are within that particular industry.
6102 They then set for us a dividend target which is based upon the concept that we should be equal with the private sector, plus there should be a notional amount added on that reflects the fact that we don't pay taxes.
6103 Then they set for us a target in all of our planning phase which is based upon those two items.
6104 We then, when we go into any particular project, whether it is our thrust into the security business or whether it is our thrust into DIV, have as part of our financial planning the idea that we are expected to earn that sort of a return on our business.
6105 So it lurks in the background, if I can put it that way, of all of our planning for all of our projects. It is not sufficient for us to go into a project with the idea that somehow or other we will occupy that field but in the long run we will lose money at it.
6106 I think that, for instance, if you take Securetek, which is our security operation, clearly it is in the start-up phases, will be probably for the next year and-a-half or two years. That is when we project that it starts to go cash-flow positive and start delivering revenue to our bottom line.
6107 So we are prepared to bear the loss of that in the total operation of SaskTel, but only on the assumption that it is building to a business which is going to be a successful part of the corporation. If we find after a period of time that it isn't on a trajectory to be a successful business in that regard, then we are going to find a way to extract ourselves from that business.
6108 Frankly, there has been things that we have started off on that didn't prove out to be on-line with the business case as we had originally intended it and we have discontinued those parts of our business.
6109 COMMISSIONER McKENDRY: Given what you have said about your pricing approach to DIV, you would be in a position, as I understand it, to cross-subsidize within your competitive sector the price of DIV. You could, if you chose, price it below cost and cross-subsidize it from other revenues in the competitive sector. I understand you couldn't cross-subsidize it in the utility sector.
6110 MR. CHING: Right. I think your statement is correct.
6111 COMMISSIONER McKENDRY: Okay. Thank you very much.
6112 I just have one little question I meant to ask about the potential mischief and I neglected to ask it. That comes from the third page in your presentation on DIV, the my.saskcom page.
6113 There is a reference in there to the cybersoapbox. Is that in any way akin to a community channel?
6114 That is the page that has bread or milk or milk and bread at the top.
6115 MR. SHEPHERD: Because the service is a mix of traditional broadcast and Internet there clearly will be services delivered that are I guess more Internet centric and they will include things like news feeds and potentially things like chat groups around content and those sorts of things.
6116 I don't believe they are equivalent to the traditional concept of a community channel, but they certainly do start to bring the ability for people to access information and for other people in the community through the Internet really to put their own views and their own content out and to make that available to other consumers through the service, as they basically can today through web pages and other types of Internet services.
6117 COMMISSIONER McKENDRY: So this is a distinct Internet service. It's not a part of your broadcast proposal?
6118 MR. SHEPHERD: That's right. This will be essentially a web-based service.
6119 MR. MELDRUM: In fact, it is an Internet that exists today.
6120 COMMISSIONER McKENDRY: Thanks.
6121 Just as a matter of interest, how does one get on -- just looking at the first page, the portal page, how does one get onto the Internet? I take it clicking on the Internet, the icon for myfast.com that takes you to that page. How do you then get out into the Internet?
6122 MR. SHEPHERD: The main mechanism is that would take you to the myfast.com home page, which is really just an Internet portal. From that point you can actually type in the web address and use a search engine or a browser and just go directly from there to other web pages.
6123 COMMISSIONER McKENDRY: Will your customers be able to stream video from the Internet up onto their television sets?
6124 MR. SHEPHERD: Eventually, we do see that they will be able to access I guess what you would call Internet based video streaming services on the set top, similarly to what they could do on a PC. Much of that is dependent upon the technological development of the set top. The data service that we have trialed is not really capable of doing that because it doesn't support the type of plug-ins that are required for those streaming services, but we do see as we go forward with set-top development that that capability will exist.
6125 COMMISSIONER McKENDRY: Do you have plans to offer the personal video recorder as part of this service?
6126 MR. SHEPHERD: That certainly is one of the areas that we are considering. We have not finalized plans to do that and I guess we are aware of some of the issues around that in terms of things like copyright protection that we would have to work through before we could really commercially deploy that type of a service.
6127 COMMISSIONER McKENDRY: Thanks very much.
6128 THE CHAIRPERSON: Thank you, Commissioner McKendry.
6129 Commissioner Noël.
6130 COMMISSIONER NOËL: On a more humoristic tone, Mr. Ching, and you don't have to answer that question, you mentioned earlier that you had entered into the field of providing entertainment in the hospital. Is that part of a larger conspiracy to accelerate the healing process and get people out of the hospital and reducing the costs for the Department of Health?
6131 MR. CHING: I don't think the Department of Health sees a whole lot of use in what we are doing really.
6132 THE CHAIRPERSON: Any other questions?
6133 COMMISSIONER NOËL: No, that's it.
6134 THE CHAIRPERSON: Legal counsel.
6135 MR. BATSTONE: I have one question left and it goes back to some that you, Mr. Ching, said earlier. You had indicated at one point that Mr. Meldrum had a response to the question of whether the Commission should look at the current circumstances of control in respect of SaskTel or the potential ones. I guess I would just like to hear that particular argument.
6136 MR. MELDRUM: I am not sure I can add my two bits to the issue of whether or not SaskTel is an independent carrier. I guess my perspective would be that of a solicitor that has drafted far too many contracts over the years and then had to interpret contracts as well.
6137 The key section that we have explored this afternoon is the definition of independent carrier and it is subsection (a). I know it is here somewhere, subsection (a) in which the key section is:
"where the Commission determines that the corporation is not directly controlled by Her Majesty in right of any province." (As read)
6138 The key point I want to make is that the drafter of this order in council, whoever he or she may be, chose the present tense. The key words used are "is not directly controlled". They didn't choose words that looked to a future kind of test. Future words would have been something like "will operate in a manner which does not directly control", that would be both present and future, or "the commission determines that the corporation is not and will continue to not be directly controlled".
6139 Again, somebody could have drafted that way, but instead they used the present tense and it is probably because of the challenges that one would have as a commissioner looking out into the future to try and say where would the future take you. I think they deliberately chose the present tense for a reason.
6140 MR. BATSTONE: But would you accept then, I mean if you take that view, I take it then you would also argue that if the Commission concluded at one specific point in time that SaskTel was not directly controlled by Her Majesty in right of Saskatchewan, but then the next day it was and then they issued a licence, but then the very next day it did become directly controlled, that there would be nothing to be done there and the direction doesn't speak any more. Is that what you would be saying?
6141 MR. MELDRUM: I think it might take you back to the conditions of licence and the degree to which those are enforceable by the Commission if you built that in as part of the condition of licence.
6142 For example, I was surprised to see -- not necessarily surprised, but there is a section in the Broadcasting Act that allows for it to be an offence in the event you are found to be breaching a condition of licence. So the Commission certainly has a lot of remedies, but again I am not super familiar with broadcasting and the issuance of licences.
6143 MR. BATSTONE: But it would be your view that absent those conditions the Commission would be without a power to go back?
6144 I mean another thing that I think factors in is section 24 of the Broadcasting Act.
6145 MR. MELDRUM: Well, I guess section 3 of the direction is again the section that directs directly to the Commission as to what they can or can't do. It says:
"Broadcasting licences may not be issued and renewals may not be granted...." (As read)
unless you fit within the definition of independent carrier. Perhaps it is only the renewals which again the Commission would have the jurisdiction to deal with the question of whether or not we were or were not or had not been directly controlled.
6146 I would think that if at that point you look backwards and said that we had breached that, then I think that would likely be the end of the licence, and woe be somebody who made a lot of investment to provide a service and then all of a sudden found themselves without a licence.
6147 MR. BATSTONE: I guess I just find it a bit strange, like on that interpretation you could be not directly in control when you get the licence, directly controlled in the intervening period and then when you come up for your renewal make sure you are not directly controlled again and there would be nothing the Commission could do about it. Myself, I find that strange. To me it seems to strain the intention of the direction, but I guess I was curious as to you view on that.
6148 MR. CHING: I guess if I can make an offering here, when you get three lawyers in the room you generally have three separate opinions. My view of the thing would be I believe if the court were looking in on this that they would assume that the sections were meant to make a workable system, not an unworkable system. Therefore, I believe that if we lost our independence that a court looking at it would probably go out of its way to find that the Commission had the authority to do something about it.
6149 Certainly from my vantage point, if I were pleading the case on behalf of the Commission, I think I would argue very strongly that to find otherwise, not just simply wrecks havoc in this circumstance because this happens to be one condition which plagues the issue of Sasktel, but every broadcast licence that you grant, I am sure, has with it certain things that are important from the point of view of the act and the Commission.
6150 I can't believe that the Commission would be without a remedy in dealing of violations of a broadcast licence, whether it was our type of violation or some other.
6151 MR. BATSTONE: Thank you very much.
6152 THE CHAIRPERSON: Thank you, Mr. Ching and SaskTel panel members.
6153 This brings us to the end of Phase I.
6154 We will take a 20-minute break prior to beginning Phase II, which as you know is the intervention phase.
6155 Mr. Secretary.
6156 MR. BURNSIDE: We will reconvene at five minutes after six. I wish we could get this on the hour instead of these weird times.
6157 COMMISSIONER McKENDRY: Make it 7:00.
6158 MR. BURNSIDE: I think it has been long enough. We will make it five minutes after six.
--- Upon recessing at 1745 / Suspension à 1745
--- Upon resuming at 1807 / Reprise à 1807
6159 THE CHAIRPERSON: Good evening, ladies and gentlemen. Welcome back to the Calgary public hearing, Phase II of SaskTel.
6160 Mr. Secretary, are there any matters?
6161 MR. BURNSIDE: No. At this point I would like to call Access Communications Co-operative Ltd.
6162 Mr. Jim Deane, Derek Aitken and Mr. Scott Prescott, you can proceed when you are ready.
INTERVENTION / INTERVENTION
6163 MR. DEANE: Thank you.
6164 Good evening, Commissioners. I am Jim Deane. I am President and CEO of Access Communications Co-operative.
6165 Joining me today, on my left, are Derek Aitken, Senior Vice-President, Engineering, and, on my right, Scott Prescott of Johnston and Buchan, our legal counsel.
6166 Commissioners, Access Communications is here today because we believe that SaskTel's proposed entry into the broadcasting distribution market would have a profound impact on the communications industry in our province.
6167 This hearing may very well decide the future of the broadcasting distribution industry in Saskatchewan.
6168 A decision to allow SaskTel to operate as a broadcasting distributor would inevitably tilt the playing field so far in SaskTel's favour that we could witness the demise of some cable operators in Saskatchewan.
6169 The crown corporation would be in a position to offer customers a more complete range of communications services than any other service provider operating in the province.
6170 The crown corporation would also have the ability to use its current position in the communications market and its ongoing relationship with the Government of Saskatchewan to completely dominate the provincial broadcasting and telecommunications industry.
6171 Approval of this application would also permit, for the first time, a telecommunications carrier that is an agent of a provincial government to hold a broadcasting licence. Based on the record of this proceeding, we do not believe that SaskTel is eligible to hold a broadcasting licence in Canada. In our view, SaskTel has provided no credible evidence that demonstrates that SaskTel enjoys the requisite freedom of expression and journalistic, creative and programming independence to satisfy the requirements of the direction of the CRTC.
6172 As the Commission is aware, the key to sustained competition is having more than one strong competitor in a given market. Clearly, it would not be in the public interest to create a single entity that could dominate the broadcasting and communications market across all platforms in the Province of Saskatchewan.
6173 We do not believe that competition will be sustainable if SaskTel is endowed with the additional advantage of holding a broadcasting licence. As the Commission is well aware, the advantages that SaskTel already enjoys over every other service provider in our province are daunting.
6174 First, SaskTel is, by any measure, the dominant communications company in the province. No other service provider operating in our province is able to offer the same range of services as SaskTel.
6175 Second, no other service provider operating in Saskatchewan even comes close to equalling SaskTel's share of the communications market. From its 100 per cent market share of local telephony to its overwhelming dominance of long distance and cellular markets in Saskatchewan, SaskTel is the undisputed telecommunications champion. By SaskTel's own admission, well over half of the communications services purchased in Saskatchewan are provided by the crown corporation.
6176 Third, SaskTel has spent years and expended an enormous amount of money putting fibre into the ground. It has used its monopoly telephony status to fund the creation of its broadcasting distribution network. It has also used its monopoly status over rights-of-way and support structures within the province to hinder our ability to service our customers.
6177 Fourth, SaskTel's status as a provincial crown corporation provides the company with enormous benefits, including guaranteed funding and loan guarantees. Regardless of whether SaskTel is currently utilizing such benefits, there should be no doubt that a company who can turn to the government in the event of a revenue shortfall would have an enormous competitive advantage over other service providers.
6178 Fifth, SaskTel provides the Saskatchewan government with virtually all of its telecommunication needs, including local and long distance telephony, wireless services and Internet services. We note with interest that SaskTel has not identified any other company that provides communication services to the provincial government. These revenues from the Saskatchewan government provide the crown corporation with clear advantages over the other service providers in our province.
6179 SaskTel has also tried to minimize the advantages that it receives from its relationship with the Saskatchewan government.
6180 The Commission recognized, a number of years ago, that SaskTel's status as a crown corporation would provide it with unique advantages if it were to be licensed as a broadcasting distributor. For example, in the convergence report which was released on May 19, 1995, the Commission said:
"...in the case of Crown entities such as SaskTel and Manitoba Telephone System, entry [into the broadcasting distribution market] should be predicated on regulatory safeguards to address competitive advantages that may arise from their unique status as Crown corporations."
6181 To our knowledge, SaskTel has not proposed any safeguards in this proceeding to address the competitive advantages it derives from its unique status as a crown corporation.
6182 In its reply to interventions, SaskTel has tried to minimize its market dominance by suggesting that communications companies like Rogers, BCE and Telus are all much larger. The comparison is hardly fair.
6183 As the Commission is well aware, SaskTel's alliance with BCE prevents SaskTel from facing competition from companies affiliated with BCE, with the exception of Bell ExpressVu. Moreover, the realities of the marketplace effectively preclude companies like Rogers and Telus from offering more than cellular/PCS services to residents of Saskatchewan.
6184 Another reason why this application should be denied is that SaskTel is ineligible to hold a broadcasting licence. We do not believe that approving this application would be consistent with the direction to the CRTC.
6185 We would note, in this regard, that SaskTel has provided an exhausting discussion of the term "directly controlled" in its reply submission. While that discussion was interesting, it did not respond to the concerns that were outlined in our written intervention. We did not argue that SaskTel is directly controlled by the Saskatchewan government. Rather, Access Communications opposes this application on the grounds that the crown corporation has failed to provide any evidence that SaskTel operates at arm's length from the government of Saskatchewan. We do not believe that SaskTel enjoys the requisite freedom of expression, journalistic and creative and programming independence to satisfy the definition of "independent carrier" which is set out in the direction.
6186 We have examined the evidence that is before the Commission in this proceeding, which includes SaskTel's incorporating legislation and the policy framework document for crown corporations that was issued by the Saskatchewan government in 1996.
6187 As noted in our written intervention, this material raises serious doubts as to whether SaskTel operates independently from the provincial government. SaskTel's directors are appointed to the board at the pleasure of the Saskatchewan government. They can, therefore, be removed by the government at any time.
6188 An example of political interference in the operations of a government-appointed board occurred early in October of this year. The Saskatchewan energy minister fired the entire board, and the president, of the Saskatchewan Research Council.
6189 In addition, the Saskatchewan government has clearly stated for the record that its crown corporations will remain accountable to the government for the day-to-day operating decisions of those corporations.
6190 We have also examined those portions of the Broadcasting Act which are designed to ensure that the CBC operates at arm's length from the federal government. We have done this because, as SaskTel notes, there are some parallels between the two crown corporations.
6191 Unlike the Saskatchewan Telecommunications Act, however, the Broadcasting Act contains provisions which are specifically designed to ensure that the CBC enjoys freedom of expression and journalistic, creative and programming independence from the federal government.
6192 For example, the members of the CBC board are appointed for fixed terms. The board enacts the bylaws of the corporation. In addition, the CBC's independence from the federal government is guaranteed by subsection 46(5) of the act. Even the provisions of the act which affect the finances of the CBC are required, pursuant to subsection 52(1), to be interpreted in a manner that does not affect the CBC's freedom of expression and journalistic, creative and programming independence.
6193 We would note that no credible steps have been taken in this context by the Government of Saskatchewan, or by SaskTel, to ensure the crown corporation operates at arm's length from the provincial government.
6194 In order to comply with the definition of "independent carrier" set out in the direction, we believe that it would be necessary for the Saskatchewan government to enact legislative amendments, similar to those in the Broadcasting Act, that would guarantee SaskTel's independence.
6195 Based on the record of this proceeding, it's our view that the Commission should find SaskTel does not qualify as an independent carrier under the direction.
6196 Finally, with respect to SaskTel's request to distribute distant Canadian signals on a discretionary basis, we believe that it would be wholly inappropriate for the Commission to approve SaskTel's distribution of those signals. SaskTel has made no attempt to justify the distribution of those services.
6197 Moreover, no other Class 1 cable distributor operating in Saskatchewan has been granted the authority to distribute the range of distant Canadian signals that SaskTel proposes to carry on its systems.
6198 So, for all of the foregoing reasons, Access Communications Co-operative submits that it would not be in the public interest, or in the interests of the communications industry that is developing in Saskatchewan, to license SaskTel as a broadcasting distributor.
6199 Further, we do not believe that SaskTel qualifies as an independent carrier under the direction and, therefore, is not eligible to hold a broadcasting licence.
6200 Thank you for the opportunity to appear before you this evening. We would be pleased to answer any questions that you might have, but before we do, our legal counsel would like to address SaskTel's introduction of the order in council earlier this morning.
6201 MR. PRESCOTT: Good evening, Commissioners.
6202 We want to note our objection to the introduction of the order in council of the Saskatchewan government which was introduced at such a late stage in this proceeding.
6203 As the Commission is aware, Section 8 of the CRTC Rules of Procedure prohibits the introduction of new documents without the express permission of the Commission once the application has been gazetted.
6204 We think it's unfair that this was introduced here today without the opportunity for interested parties to comment and we think that it should be struck from the record.
6205 In the event that the Commission permits the order in council to be entered into evidence, we request that the intervenors be allowed to have a seven-to-ten-day-period to file written comments to identify the impact that this order in council has on their eligibility to comply with the direction.
6206 THE CHAIRPERSON: SaskTel, do you have an objection?
6207 MR. CHING: We have no objection.
6208 THE CHAIRPERSON: Okay. So the record states that SaskTel has no objection, Commissioners.
--- Pause / Pause
6209 THE CHAIRPERSON: Based on consultation with the Commissioners and our legal counsel, we deny the request that this new information be struck. However, we will give you seven days for a written response in order to prepare your reply.
6210 MR. PRESCOTT: Thank you very much.
6211 THE CHAIRPERSON: I will now begin questions.
6212 MR. BATSTONE: Excuse me, Commissioner. If I could just add at this point.
6213 Could you please just ensure when you do file your reply that you also copy SaskTel.
6214 MR. PRESCOTT: Yes. Absolutely.
6215 MR. BATSTONE: Thanks.
6216 THE CHAIRPERSON: Okay, Mr. Deane, I will begin with the questions. I just have a few different areas to look at.
6217 I guess areas of concern on the ownership has been dealt with extensively in earlier questioning so I am not going to spend much time there since we have your written interventions in that area.
6218 Head start. Has your organization, your cable firm, considered getting into the telephone business?
6219 MR. DEANE: We are watching with some interest the experience I guess of some cable operators within the country, particularly in the maritimes with their entry into the business, and also with some interest cable labs, the industry laboratories, and their recommendations.
6220 To date we haven't seen any credible business case for our entry into local telephony, but we are watching with some interest.
6221 THE CHAIRPERSON: And Access, formerly known as Cable Regina, would be considered one of the leaders, I guess, in the cable television industry in Canada.
6222 MR. DEANE: I think that we are -- given the convergence, we are one of the bigger companies now. All things being relative, though, I think we still consider ourselves a small to medium size operator.
6223 Whether or not a company of our size can continue to swim upstream and do things differently than the rest of the industry, frankly, no, we can't. There are economies of scale, and obviously there are limits on the amount of investment that we can put into the business. But, no, I think we are going to be followers rather than leaders going forward, is an honest answer.
6224 THE CHAIRPERSON: We talked to the applicant, SaskTel, and requested some suggestions on safeguards. I'm sure you have heard their reply.
6225 Do you have any ideas on the types of safeguards, should they be approved -- is there some ways that you feel the Commission, say, can fence them in to deal with some of the interventions you have raised?
6226 MR. DEANE: I think in the oral presentation here we have suggested that, apart from legislation by the Saskatchewan government that would bring the Telecommunications Act provisions closer to, I would say, the act governing the CBC, you know, the francophone --
6227 THE CHAIRPERSON: Yes. It's a little out of our jurisdiction. That's the problem.
6228 I was wondering more along the lines of what the CRTC could do.
6229 MR. PRESCOTT: I'm not sure we can identify much that can be done. I mean, I think that it has to be done at the provincial level and it should have been done prior to this application if they wanted to actually comply with the direction and actually wanted to meet the safeguards even that were suggested by the Commission in the convergence report in 1995. I know that the Commission was concerned with safeguards at that time, but we haven't been able to really come up with anything that we think at this stage would be an appropriate safeguard.
6230 I guess having said that, there is the -- I mean, we have talked about cross-subsidization and the potential for that. If SaskTel does get licensed, we would much prefer that their licensing is delayed for a period of time until the Commission has had time to examine completely the financial situation of the company.
6231 Also, just to get a history of regulating the entity, with NB Tel and with MT&T, and I guess with Bell and Telus as well, the Commission had a history of regulating them on the telecom side. When they entered the broadcasting field, you understood the nuances of those entities and how they act and the behaviour that they engaged in out there in the field and their relationships with the cable companies. So I think just to have that on your side would improve your ability to regulate them under the Broadcasting Act.
6232 THE CHAIRPERSON: Are you familiar with the interventions that have been put forward by the CCTA and Shaw Communications?
6233 MR. DEANE: Yes, we are.
6234 THE CHAIRPERSON: Are you generally in support of those?
6235 MR. DEANE: Yes.
6236 THE CHAIRPERSON: Okay. Thank you, Mr. Deane. I have no further questions.
6239 Okay. Thank you very much.
6240 Mr. Secretary.
6241 MR. BURNSIDE: I would like to now call Battlefords Community Cablevision, Mr. Charles Day.
--- Pause / Pause
6242 THE CHAIRPERSON: We are just confirming that this document is the same as that which was filed earlier. We are coming to the consensus that it is.
6243 MR. DAY: Yes. The only thing I did was assure Michael that we wouldn't take very long to do it.
INTERVENTION / INTERVENTION
6244 MR. DAY: Good afternoon -- evening, I guess.
6245 Mr. Chairman, Members of the Commission, my name is Charles Day and Ray Wiebe is with me here from Gowling(ph) and Company. I am going to ask him to do the first part of our presentation.
6246 MR. WIEBE Thank you for the opportunity to present our intervention. I am going to focus my comments on the eligibility requirements issue that a considerable amount of time has been spent on already before this Commission today.
6247 It is our position that SaskTel does not meet the requirements of the direction that the CRTC is under in granting a broadcasting licence.
6248 The definition of "independent carrier", which is the critical definition, requires two things. It requires that the Crown corporation not be directly controlled by Her Majesty in right of any province; and, secondly, that the Crown enjoy freedom of expression and journalistic, creative and programming independence.
6249 It is our submission that these are separate requirements. They don't tie together in such a fashion that if you meet the journalistic, creative and programming independence requirement that you are then over the other requirement.
6250 The mischief, I would suggest, that these requirements are aimed at are twofold: first, the programming independence, which is the second part of the definition; but, secondly, and I think more importantly in this case, the aspect of control.
6251 If we look at what has happened in terms of SaskTel's current governance structure, we know that amendments have been made recently to their legislation which did effect some changes, but I think we have to look carefully at what those changes were.
6252 The changes were to remove the requirement that a cabinet minister be the chairperson of the board.
6253 That change didn't have the effect of preventing cabinet ministers being on the board. It doesn't have the effect of creating a board that no longer has what I would call a direct relationship to the government. The board in fact will continue to be appointed by the cabinet.
6254 There are no safeguards in the changes that were effected to tenure. Board members have no security that their position might not be terminated on the strength of any particular decision that is made, unlike the provision in the Broadcasting Act which permits or which requires that the board members of the CBC have tenure and be dismissed only for cause within that tenure.
6255 The effect of the legislative changes, therefore, is not to create an independent board. If we compare the status of the SaskTel board with that of the board of the CBC, we find some stark differences.
6256 Section 35(2) of the Broadcasting Act says that the interpretation of that part of the Act dealing with the CBC is to be interpreted and applied:
"...so as to protect and enhance freedom of expression and the journalistic creative and programming independence enjoyed by the Corporation." (As read)
6257 Section 36(3) directs that:
"Directors hold office during good behaviour for a term and may be removed for cause." (As read)
6258 Section 46(5) of the Broadcasting Act further reinforces these requirements in stating:
"The Corporation shall, in the pursuit of its objectives and in the exercise of its powers, enjoy freedom of expression and journalistic creative and programming independence." (As read)
6259 Similarly, section 52 again reinforces the requirement of independence for the corporation.
6260 We have nothing remotely similar in any of the legislative framework that SaskTel is under. That, I would submit, is fatal in terms of meeting the definition of "independent carrier".
6261 Governments act through legislation. A corporate entity such as a Crown corporation looks, for its structure and its governance model, to its legislative framework. We have a legislative framework here that provides no assurances of independence, no assurances of involvement, and direct interference, if you will, in the decision-making of the entity.
6262 So the legislative framework, I would submit, has to reflect the model that this Commission is satisfied will meet the definition of independent carrier and, if it doesn't, I urge the Commission not to grant a licence in the circumstances.
6263 Just briefly, in comparing SaskTel with SCN -- and this comparison has been made in the material -- I would urge the Commission to consider that SCN is a very different animal, so to speak. It doesn't have, as its motivation, a profit agenda. It is a non-profit organization. We are not going to be concerned with that entity about a level playing field and the competition issues that obviously we are with a Crown corporation.
6264 Accordingly, it is our submission that SaskTel has not gone far enough in the steps required to remove the control, or a sufficient degree of control -- and that is what it amounts to, it is a question of degree -- from the Government of Saskatchewan and, therefore, does not meet the definition of "independent carrier".
6265 Those are my comments and I will turn it over to Mr. Day now.
6266 MR. DAY: Thank you, Ray.
6267 I would just like to make a few additional comments. This session has been long, but I would like to add these things again. They have been brought up by the Commissioners, and we appreciate that.
6268 We are a licensee of small communities and we are trying to connect all these communities by fibre optics so we can give them a common service from one location, reduced costs in terms of headends, provide them with high-speed Internet access and, incidently, a couple of the communities we are looking at are no bigger than Good Soil and we still intend to try to provide service there.
6269 The thing that I object to -- or one of the things I object to most about a SaskTel licence is that it is simply addressing or going to provide additional service to people who already have access to their high-speed services. It is not looking to expand the service area but it is simply looking at cherry-picking revenue, if you want, out of that community.
6270 That is revenue that we certainly could use when we look at trying to provide the same kind of service to an individual who is in a town as small as Lashburn, would give them the same service as, for example, essentially the communication services that he could enjoy in Toronto.
6271 I certainly don't see anything the matter with that and we are committed to that. It will just be a lot more difficult to do it, in fact it may mean that we are not able to do it at all. So that, depending on the revenue that we lost there, the effect could be very significant.
6272 We don't have huge budgets. Our total revenue for the year would be approximately $4 million. That is a long way from $1 billion which is enjoyed in the two arms that SaskTel have. It is certainly a long way from the $700-and-some million that are there.
6273 So we feel that loss of that revenue is significant and we would ask you to seriously consider that when you make those decisions.
6274 I think that people in those communities have every right to expect those services if they can possibly be given.
6275 Second, in regards to community programming, they propose to provide no community programming, but rather to take that money out of our community and give it to the programming fund.
6276 We currently do a lot of community programming in North Battleford and one of the things we want to do when we connect these communities is to put in one channel that we would offer community programming on. It could come from these various centres. So that if a licensing is provided, we would seriously ask you to look at where that 5 per cent would go.
6277 In their application in regards to programming, Sasktel claim that they will expand content and culture in terms of Saskatchewan. Well, I think putting money into the programming fund is going to have very little to do with expanding content and culture in Saskatchewan. I just don't think they go hand-in-hand.
6278 In terms of competition, we already have extensive competition in our marketplace. We have Star Choice, we have ExpressVu, we have Image Wireless. We have a lot of competition already. SaskTel would be an additional competition.
6279 At least three of the four have incredible resources. SaskTel can cross-subsidize and do whatever it wishes, and I am assuming that if they are going to fire this up in a year that basically they have already put a huge amount of that infrastructure in place and that, I'm sure, will fall back largely, in many cases, onto its phone business because it can use it for one and the same and how do you start to pull those costs out of there.
6280 So that I think the competition is very unfair and it is just not needed in that case. I could understand it a lot better if we were talking about affecting our whole marketplace, but when you look at competition as affecting only what is convenient to you, I have a problem with that.
6281 In terms of the overall affect on Saskatchewan in our area of the market, I think that the monies that we are talking about here could be better spent improving access all around the province. There are not many communities that enjoy access to the high-speed services.
6282 When we talk about SaskTel indicating in their presentation -- when they were asked, for example: "Where would you expand to or how long would it take you to expand to all of the communities you are in, taking a Saskatoon, for example, and a Prince Albert, for example, or wherever else?" "Well, we will have to look at that portion of the community and see if it is viable or not."
6283 I would suggest that if that is going to happen with a service we are talking about here, I hate think what is possible in terms of the other services over the long haul.
6284 For the legal parts and for the parts that we are attempting to expand service to communities that could never get it -- they are simply talking about providing more service to people who already have access to them -- we would to ask that you deny this application.
6285 I thank you for hearing us and having us here today.
6286 THE CHAIRPERSON: Thank you, Mr. Day.
6287 You raised a lot of good points in the intervention by your organization.
6288 I am interested a little bit about this capital expansion that you are doing in these variety of communities such as Wilkie, Rosetown, Meadow Lake, et cetera.
6289 You talk in some of your information that has been provided to us about a recent rebuild including fibre that is almost completed. Would that be the linking of these communities?
6290 MR. DAY: No, that is simply getting fibre into Battleford, North Battleford and West Park, which West Park is kind of a satellite of Battleford, a community of that. We have been working on all the crossing routes and things and next year we will connect fibre to Kindersley, Rosetown and Biggar. That will happen next year.
6291 THE CHAIRPERSON: That is the $4 million project?
6292 MR. DAY: That will only be one part of it. Thereafter we will do Unity, Wilkie, and then we have to connect Maidstone and Lashburn. So next year -- that is all that we will be able to do next year is --
6293 THE CHAIRPERSON: What is your total capital investment?
6294 MR. DAY: The total capital investment will be right around $6 million.
6295 THE CHAIRPERSON: $6 million?
6296 MR. DAY: Yes.
6297 THE CHAIRPERSON: And how much have you deployed so far?
6298 MR. DAY: We have deployed only in Battleford, North Battleford and West Park. We would have deployed more last year, but we couldn't get fibre.
6299 THE CHAIRPERSON: There has been a shortage we understand.
6300 MR. DAY: Yes. That's all the fibre we can get for this coming year which is 150 kilometres.
6301 THE CHAIRPERSON: So should SaskTel get a licence would you continue on with this initiative?
6302 MR. DAY: Yes, I think we would. At some point in time we may not be able to continue doing what we are doing. Mr. Ching raised the scenario that in fact there may be less cable companies in Saskatchewan, maybe there would be, but we are trying to do things better and more efficient. We would hope to be able to complete it.
6303 THE CHAIRPERSON: That completes my questions.
6304 Commissioner McKendry.
6305 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
6306 One of the things you pointed out is that there is already competition for the same customers with respect to BDU distribution, direct-to-home service, which I guess would be ExpressVU, Star Choice and there is a wireless cable provider as well.
6307 MR. DAY: Yes.
6308 COMMISSIONER McKENDRY: How have you done in the face of that competition? Has that had a significant impact on your ability to retain subscribers?
6309 MR. DAY: We would have lost about approximately 13 per cent of our revenue over the past three years would have gone to that. It looks like it is getting more stable in terms of what you are losing and not losing, like there are a lot of people coming back to cable. There is still a lot of people going. It's where you can provide the extra services that you are in the greatest risk.
6310 The headends become such a cost that there are so many things to trade off all the time in terms of getting the system up so that you can cutback on those things, but they are a very significant factor.
6311 The wireless is not really any factor at all. It is not a big factor like the dishes are.
6312 COMMISSIONER McKENDRY: SaskTel, if they are successful in their application, won't be providing a community channel. You do provide one and you can certainly clarify this, it's my impression that it's a significant community channel. You have put a fair bit of effort and resource into it. My question is: Is that a competitive advantage that you have that they won't have?
6313 MR. DAY: I think it's a competitive advantage. The only unfortunate thing is depending on the revenue you take out, depending on what you are going to have to scale back on, you will certainly have to look at that as well.
6314 We currently have three people involved full time in community programming and a number of volunteers and it will affect that too.
6315 I think it's a competitive advantage to the dish market and to the type of thing where you don't have it.
6316 The thing that I would object to is whatever portion of money they are taking out of there we would like to see that retained in the community if they are licensed, so that that money is in fact available for the community channel, it isn't going any place else.
6317 COMMISSIONER McKENDRY: I just want to make sure I understand that last point. The money that they are proposing to contribute to the fund, are you suggesting that it should go back to the cable systems for their community channels here?
6318 MR. DAY: Yes, I would suggest that very definitely.
6319 COMMISSIONER McKENDRY: Thanks very much.
6320 THE CHAIRPERSON: Legal counsel. Mr. Batstone.
6321 MR. BATSTONE: No questions.
6322 THE CHAIRPERSON: Thank you, Mr. Day. There are no further questions.
6323 MR. DAY: Thank you.
6324 THE CHAIRPERSON: Mr. Secretary.
6325 MR. BURNSIDE: I would now call the representatives from SaskTel for Phase III of this presentation.
6326 You may proceed when you are ready.
REPLY / RÉPLIQUE
6327 MR. CHING: Mr. Chairman and members of the Commission, I won't regurgitate everything that we went through earlier. I am sure that brings a sigh of relief to you perhaps.
6328 I do, however, want to urge upon you the suggestion that to the extent that the intervenors are really trying to fend off SaskTel as a competitor that the Commission, I would hope, would not accede to that. I think for better or for worse the decision has already been made that competition tends to expand the market. It tends to make those people who want to participate in the market better at what they do, offering better prices and more innovative solutions and ideas and product.
6329 To the extent that you heard from any one of the intervenors, the echo in their presentation that they simply didn't want SaskTel as a competitor I think I would ask the Commission to ignore that particular request.
6330 What we found when competition came visiting at our doorstep was that we really had to get better and the survivors within this industry are going to offer good service, good products and good prices.
6331 The issue of our independence, I would urge that you look at this from the point of view I think which was inherent in the questioning from Commissioner Cram. First of all, I think you have to judge what is the issue that this is trying to deal with. What is the mischief?
6332 I think we properly identified that as being this whole question of can the political arm of government interfere in the operation of a broadcast licence in such a manner as to undermine the democratic system that we all enjoy.
6333 Then I would ask you to move on and look at our request and try to estimate or examine exactly how much journalistic activity is inherent in what we are recommending that we be allowed to do.
6334 Then I think you should worry about the issue of whether or not given what the mischief is and given the amount of journalistic activity that we will engage in, are the circumstances that you see before you sufficient to satisfy you that there isn't going to be something untoward in the way in which the Government of Saskatchewan deals with SaskTel as it operates a broadcast licence.
6335 I should say that in our estimation we believe that there is the requisite amount of independence, but certainly from our vantage point if you saw fit to issue a broadcast licence conditional upon the existence of the OC which is before you and its continued legal efficacy, we would have no difficulty with that condition attaching.
6336 There were certain other requests made with regard to whether we would be comfortable with them as conditions on the licence. The suggestion that we operated as a separate operational unit, we would request that the Commission not consider that as a solution to this problem.
6337 Bundling limitations. I think that was a specific item that we agreed to come back to you with our view on that. We do feel that if there is a restriction on us about how we could bundle that it would be, (a) out of step with what you have permitted in other similar applications such as this, (b) put us at a disadvantage with our competitors who would not have that restriction and, (c) would really not address the issue of independence.
6338 Lastly, we would ask that you not come to the conclusion that there should be a delay. It is SaskTel's position that the governance structure in place today is sufficient to provide that we are not directly controlled, that we have freedom, that we in fact are in a position where our dealings with the Commission has satisfied I believe the Commission and its staff, that we do have the adequate financial protections against undue and improper cross-subsidization, and hence on the basis of all of the foregoing we would ask that you issue a licence to us.
6339 Thank you very much for your time and your patience. We have had a long day.
6340 I want to say that in preparing for this hearing your staff was especially helpful in assisting us in trying to understand how we should deal with this process which, will you be aware, we are not particularly familiar with yet.
6341 Thank you very much.
6342 THE CHAIRPERSON: Thank you, Mr. Ching.
6343 Questions, Commissioners? Commissioner Cram...?
6344 COMMISSIONER CRAM: You were the guys that said you were only going to do the two, Internet and your BDU, together. But if we are then talking about no bundling restrictions, would you agree, when we are looking at it, in terms of market dominance and issues like that, would you agree with the assertions of Access, in terms of, as they call it, the size and scope of SaskTel's communications empire in their intervention, at paragraphs 7, 8 and 9? And they have actually reiterated them.
6345 MR. CHING: I can remember when competition in the telecommunications industry first came to Saskatchewan, there was a fair amount of discussion that if we had our druthers we would like to compete against small competitors, not AT&T or Sprint. Actually, it's turned out, I think, that, while they are fearsome competitors, the little guys can give you some real interesting headaches, too.
6346 In my mind, when you go into a competitive environment, pointing at the other guy and saying that they are big may be an indication that they have got an advantage on you; it may be an indication that they have a very severe disadvantage.
6347 The real issue, in my mind, is the extent to which a competitor is focused on customer service, trying to come up with innovative solutions and products and the degree to which they are prepared to have a sharp pencil when they are setting their prices. Their size, in many respects, is something which can either work for them or against them. But it can't solve the problem of good products, innovative products, good prices and excellence in customer service. The bigger you are, to some extent, the tougher those things are too.
6348 So, I heard a number of comments about the fact that we have this awesome power. Gosh, I wish that could be explained to us in some graphic detail because I have to tell you within SaskTel we don't sort of have an appreciation of that awesome power. From our vantage point, I think we try to work hard at giving good customer service. You can see from this application where, indeed, we come up with innovative solutions, and that's what gets us places. Our size is one of those issues which can cut both ways. Sometimes we stumble over our own size, and it can be just as much trouble as it is good.
6349 COMMISSIONER CRAM: Thank you, Mr. Ching.
6350 You answered the question I was going to ask next, but you didn't answer the first question. Because, first, we have to know your size, and we like to know that, and I like to know that, and so I want to know if the assertions of Access -- and they are 7, 8 and 9 -- are correct.
6351 MR. CHING: Could you briefly outline them.
6352 COMMISSIONER CRAM: They said the majority of it -- Mr. Deane said the majority of it: 1999 fiscal year revenues more than 737 million; assets worth more than 1.2 billion; serves 643 local cell phone subscribers; at least with revenues of more than 737 million SaskTel currently accounts for, at the very least; more than 52 per cent of all communications services offered in the province; only provider of local; dominant long distance provider with 93 per cent of the market; largest Internet service provider with more than 56,000 subscribers; mobility largest provider of PCS cellular with more than 188,000 subscribers; and largest employer in the communications industry.
6353 MR. MELDRUM: I think the one that we would take exception to would be the long distance market. Minutes would be about 85 per cent. They have been as low as 73 per cent -- and that was information that we would have filed with the Commission as part of our application for forbearance. It is currently at 85 per cent of the total number of minutes.
6354 I think the one other comment that I would make is that our largest competitor in the province is a cable operator, who isn't actually here today and is perhaps strangely absent, and that's Shaw, and I think that whatever the Commission thinks about what needs to be done in relation to smaller competitors also has to be thought of in terms of the large competitor that SaskTel has to go against. They have a market valuation that varies somewhere between 6 billion and 6.5 billion. Our market valuation would be somewhere about 1.5 billion. So we certainly have the same issue of dealing with a very large competitor who, undoubtedly, will be getting into the telephone business, will be, undoubtedly, bundling services across all of their various offerings, and I think that needs to be into account into this whole equation, as well.
6355 COMMISSIONER CRAM: Thank you.
6356 MS MOLNAR: If I could just add something as well.
6357 COMMISSIONER CRAM: Sure.
6358 MS MOLNAR: There is a (inaudible) saying about dominance but I think what is perhaps more relevant is the ability to exercise market power. Certainly since June 30th, 2000, any potential ability we have has, you know, been diminished with federal regulation coming to us. If we look in our competitive markets, we have looked at the competitive markets and there have been determinations made through the proceeding we went through that we don't have market power and cannot exercise market power in the competitive market, long distance terminal, Internet and so on.
6359 If we look at the market power that might come from us being the utility provider of local services, you know, there's certainly a lot of safeguards in place to take away any potential for us to exercise that power. And it's not just the split rate base and the costing methodology to ensure against cross-subsidy but there is the pricing regulations that are in place. The commitment we made, and that has now become part of our transitional framework that we cannot increase prices on any of our utility services, including, for example, optional services or others that, you know, can potentially be increased in other territories. All of those things together, I would say, help to -- well, don't help but certainly eliminate our ability to exercise market power in the local market.
6360 COMMISSIONER CRAM: Thank you.
6361 THE CHAIRPERSON: Mr. Ching, are you aware of the NorthwesTel and NorthwesTel Cable TV project? They were the first phone company to get into cable television.
6362 MR. CHING: No, I don't.
6363 MR. SHEPHERD: I guess we are generally aware of the situation. We certainly don't have any specific firsthand knowledge, but we are aware of it.
6364 THE CHAIRPERSON: Okay, you are aware of it.
6365 They are structurally separate -- you are aware that they are structurally separate so there's no opportunity for cross-subsidy?
6366 MR. SHEPHERD: Yes.
6367 THE CHAIRPERSON: Can I now get you to refer to page 7 of your slide presentation, please.
6368 Are there any final questions from legal counsel?
6369 Is that your final answer? I've waited a long time for this.
--- Laughter / Rires
6370 THE CHAIRPERSON: Mr. Secretary, are there any administrative matters?
6371 MR. BURNSIDE: Thank you, Mr. Chair.
6372 I would, just for the record, like to note that Items 9 to 22, the non-appearing applications listed at the back of this agenda form part of the official record of this hearing and that a decision will be taken and rendered on these applications in due course.
6373 Thank you, Mr. Chairman.
6374 THE CHAIRPERSON: Thank you, Mr. Secretary.
6375 This brings to close the October 30th, 2000, Calgary public hearing.
6376 I would like to take this opportunity to thank the applicants, intervenors, translators, court reporters, CRTC legal counsel, CRTC staff and, of course, our Hearing Manager/Secretary. You have all contributed positively to making the first public hearing under my chairmanship an enjoyable and successful event. I hope that you all believe that you have had a fair hearing and I wish the competitors luck and the applicants and intervenors happiness in the result.
6377 Thank you.
--- Whereupon the hearing concluded at 1900 /
L'audience se termine à 1700