TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

                      SUBJECT / SUJET:

Review of the regulatory frameworks for broadcasting distribution undertakings and discretionary programming services /

Révision des cadres de réglementation des entreprises de

distribution de radiodiffusion et des services de

programmation facultatifs

HELD AT:                              TENUE À:

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

April 16, 2008                        Le 16 avril 2008

Transcripts

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

Contents.

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.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

                 Transcript / Transcription

Review of the regulatory frameworks for broadcasting distribution undertakings and discretionary programming services /

Révision des cadres de réglementation des entreprises de

distribution de radiodiffusion et des services de

programmation facultatifs

BEFORE / DEVANT:

Konrad von Finckenstein           Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Leonard Katz                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Michel Morin                      Commissioner / Conseiller

Ronald Williams                   Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTS:

Jade Roy                          Secretary / Secretaire

Cynthia Stockley                  Hearing Manager /

                                  Gérante de l'audience

Martine Vallée                    Director, English-Language

                                  Pay, Specialty TV and

                                  Social Policy / Directrice,

                                  TV payante et spécialisée

                                  de langue française

Annie Laflamme                    Director, French Language

                                  TV Policy and Applications/

                                  Directrice, Politiques et

                                  demandes télévision langue

                                  française

Shari Fisher                      Legal Counsel /

Raj Shoan                         Conseillers juridiques

HELD AT:                          TENUE À:

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

April 16, 2008                    Le 16 avril 2008

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PRESENTATION BY / PRÉSENTATION PAR:

TELUS Communications Company                     1376 / 7690

Lee Weston                                       1464 / 8250

Bragg Communications Inc.                        1483 / 8396

Torstar Media Group Television                   1548 / 8773

Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Wednesday, April 16, 2008

    at 0859 / L'audience débute le mercredi 16 avril

    2008 à 0859

7684             THE CHAIRPERSON:  Madame Secretary?

7685             THE SECRETARY: Thank you, Mr. Chairman.

7686             We will now hear the presentation of Telus Communications Company.

7687             Mr. Hennessy is appearing for Telus.

7688             Please introduce your colleagues, after which you will then have 15 minutes for your presentation.

7689             Thank you.

PRESENTATION / PRÉSENTATION

7690             M. HENNESSY:  Merci M. le Président.

7691             TELUS appreciates the opportunity to appear before the Commission and provide its views on the challenges of how to streamline regulation in order to better respond to consumer demand.

7692             My name is Michael Hennessy, Vice‑President, Wireless, Broadband and Content Policy for Telus.

7693             Let me start by presenting the other members of the Telus panel.

7694             On my immediate left is Maria Hale, Vice‑President of Content, and our key business partner for the broadcast community.

7695             And on her left is Sean Ruzicka, our Manager of Product Development and our technology guru for the panel.

7696             And to my right is Ann Mainville‑Neeson, Director, Broadcast Regulation.

7697             As the Commission notes in its Public Notice, the consumer is now in charge.

7698             As a new and fully digital distribution undertaking, Telus is building a content business anchored by interactivity and on‑demand services.

7699             In order to compete with cable, we need to be more innovative and flexible in responding to a multiplicity of demands from the public.

7700             In a digital future, every consumer will have multiple options for accessing the types of content they prefer.

7701             Distributors and broadcasters will both face challenges in attempting to ensure demand is served from within the Canadian system.

7702             Partnership and compromise must guide us forward.

7703             We agree that the Commission has a responsibility under the Broadcasting Act to ensure a strong Canadian broadcasting system.

7704             However, we note that detailed regulation will become increasingly difficult to sustain in an environment where the public has more options available for them for their content consumption.

7705             And we are encouraged that the CRTC intends to streamline regulation, but we have become concerned that false assumptions are now leading the Commission into a rabbit hole of new regulatory "fixes" for problems which simply don't exist and where the "fixes" merely create more problems.

7706             Fee for carriage is one such fix to a non‑existent problem.  A fix that is simply not in the public interest.

7707             The minimal basic package is another intervention that is a step back from the future.

7708             There is no evidence that consumers are clamoring for the CRTC to pick a small number of mandatory services for them.

7709             More content à la carte perhaps, but a smaller basic is not a solution to any problem we are aware of.

7710             Indeed many of the "fixes" on the table in this proceeding would have the effect of reducing competition by making it more difficult for a new entrant like Telus to win customers.

7711             Accordingly, while Telus supports the maintenance of key regulatory requirements related to the current linear television environment, Telus firmly opposes adding any layer of regulation to new, developing platforms such as video‑on‑demand.

7712             These new television platforms must be given a chance to flourish without additional regulatory constraints in order to provide a viable Canadian alternative to other platforms ranging from the black market to the Internet.

7713             MS HALE:  At Telus we are investing hundreds of millions of dollars in a television platform that integrates the best elements of broadcast distribution in terms of capacity and quality of service and the best elements of the Internet in terms of search capabilities.

7714             We are doing this to gain competitive advantage by better responding to consumer demand.

7715             We have prepared a short video to give you a flavor of what consumers are asking for and just how innovative this new technology can be.

‑‑‑ Video presentation / Présentation vidéo

7716             MS HALE:  At Telus we foster and respect the existing TV value chain and will continue to work with broadcasters and Canadian rights holders to keep this platform robust and relevant for the audiences of the future.

7717             As you just saw, our energy is focused on improving the content experience on the television platform, by integrating Internet‑esque experiences like on‑demand content and deep search capability.

7718             Because we are investing in platforms that will allow a richer and deeper search experience than ever before, our VOD and SVOD platforms can become very powerful alternatives to over the top internet services and extend known Canadian brands into the interactive space.

7719             Our technology can also support highly targeted ads including promotional opportunities that can drive incremental revenues and increase the value of the programming rights broadcasters hold.

7720             Perhaps most exciting is the concept of a Network PVR that would allow audiences to access on‑demand programming from existing branded linear channels.

7721             That means that on‑demand becomes part of the overall broadcaster experience.

7722             NPVR is not a pipe‑dream; distributors like Comcast in the U.S. are already creating business models for this strategy.

7723             In order to ensure that the future of TV is TV, we all need to do our part.

7724             BDUs need to innovate and make the necessary investments in technology that will improve the distribution platform and attract and retain subscribers.

7725             Broadcasters need to further their efforts to acquire cross platform rights, providing the best content to viewers when and where they want, and delivering the highest audiences to advertisers.

7726             The CRTC needs to provide the right regulatory framework to incent both parties to do just that.

7727             MS MAINVILLE‑NEESON:  Merci, Maria.

7728             Assurer le maintien d'un système de radiodiffusion canadien vigoureux requiert que l'on trouve le bon équilibre entre la protection de la contribution importante qu'apportent les plans d'affaires existants et les façons d'augmenter le choix et la diversité pour le public auditoire dans l'avenir.

7729             Les recommandations de Telus dans le cadre de cet examen de réforme réglementaire présentent justement une telle approche mesurée.

7730             We submit that the Commission shouldn't look to make changes where there aren't problems and that many of the proposed changes to the regulatory environment on the table in this proceeding should be rejected.

7731             Specifically, Telus submits the following recommendations...

7732             First, fee for carriage and the ancillary desire to reduce the size of the basic package must be rejected because these are solutions to non‑existent problems.  They are anti‑consumer, and bad for the system.

7733             Second, no change should be made to the current distant signals regime.

7734             There is no need to introduce an element of consent from broadcasters for the importation of distant signals into local markets when there is already a compensatory regime in place that has worked well and can at any time be renegotiated between the parties.

7735             In our view there is no evidence to support arguments that broadcasters are suffering harm and are not sufficiently compensated by the current negotiated agreement with the CAB.

7736             Third and fourth, we support maintaining the current access rules for analog and Catetory 1 specialty services and maintaining the current rules governing genre protection and authorization of foreign services.

7737             Fifth, there should be no increased regulation of VOD services.

7738             The current contribution and exhibition requirements of these services are in keeping with the nascent state of the platform.

7739             Telus considers that change is only necessary in the following two key areas.

7740             First, the distribution and linkage rules should be eliminated in favour of a simple preponderance rule based on services received by each subscriber.

7741             Second, the advertising framework needs to be changed to allow for new incremental revenue for Canadian rights holders and distributors.

7742             Telus proposes a model whereby new advertising opportunities can only stem from content sourced from Canadian rights holders, with their explicit consent.

7743             This provides incentives for distributors to pursue rights through Canadian broadcasters and for Canadian broadcasters to make their content available on demand.

7744             This model also provides an incentive‑based solution to the concern expressed by broadcasters with respect to the sourcing of programming by VOD operators.

7745             Nous croyons que nos propositions pour la réforme permettent aux meilleurs éléments du système de radiodiffusion d'aujourd'hui d'évoluer et de trouver leur place dans les systèmes de radiodiffusion de demain.

7746             MR. HENNESSEY:  Mr. Chairman, Commissioners, let me be clear about our position.

7747             We believe that the future of the Canadian broadcasting system has to be based on the consumer.

7748             Serving consumer demand is central to the achievement of Broadcasting Act objectives:  the "public" in "public interest" is the audience and the audience is the consumer.

7749             At Telus we believe that we will best serve consumers by partnering with Canadian broadcasters to unleash the full potential of TV, whether through creative packaging or exploiting on‑demand platforms.

7750             However, we do not support any regulatory reform if it adds fee for carriage or consent for distant signals as a quid pro quo.

7751             We submit that, fee for carriage is not in the public interest no matter how the public is defined.

7752             It is a fix to a problem the Commission has already addressed at great cost in terms of diversity of voices with the exit of Alliance Atlantis and Chum from the system.

7753             As a result of consolidation, the conventional ownership groups are now stronger and more profitable than ever.

7754             Accordingly, there is simply no need to force consumers to finance these billion‑dollar consolidations through higher fees for basic service.

7755             If that is the deal, we say "no thanks".

7756             We would much rather settle for the freedoms we already have under the status quo than proceed down a rabbit hole of new regulation that creates more complexity and uncertainty precisely at the time we need more flexibility, more innovation and more choice.

7757             We think the CRTC was on the right track when it launched this proceeding, and we ask you not to lose sight of the principles you set out in Notice of Public Hearing 2007‑10.

7758             In particular may we end by quoting the Commission's observation in that notice last July:

"More and more in Canadian broadcasting, the consumer is in charge.  BDUs and programmers must be able to respond to the evolving expectations, tastes and demographics of Canadian viewers.  In order to meet the challenges in the years ahead, above all, licensees will need to have the flexibility to react quickly and creatively to the opportunities and challenges they encounter, and not be burdened by detailed or unnecessary regulations." (As read)

7759             That was the right approach in July and it's even more correct today.

7760             Thank you Mr. Chair and Commissioners.

7761             We are now ready to answer your questions.

7762             THE CHAIRPERSON: Thank you very much for your presentation.

7763             It is certainly very clear and to the point.

7764             Let me walk you through some of the points you make.

7765             You said "Do not add new fixes" and you think one of those fixes would be prescribing a minimum basic fee.  And you go one step further and you say that would make it more difficult for new entrants like Telus to win customers.

7766             Explain that to me.

7767             You heard the CBC, for instance, suggesting you should have a bare‑bone minimum basic package, being basically the over the air, the 9(1)(h), the educational broadcasters and the community channels, and that should be offered as a must.

7768             Obviously, you can offer more.  You can offer an enhanced basic, etc.

7769             But the consumer should have the ability to have access to a minimum package like this.

7770             Some people suggested there should be one 4(1)(h), four plus one in there.

7771             And others say "No, you don't have to."

7772             You suggest "No, we shouldn't have such a minimum basic."  You actually go further and say it makes it more difficult for entrants like you.

7773             Please explain that to me.

7774             MR. HENNESSY:  Okay.  Just to be clear, to start with, all of the Canadian services that you identified, we would suggest, should remain in basic.

7775             So, point number one.

7776             Point number two, which deals with your question about competition, I think is pretty simple.

7777             We have to compete by differentiating our product.  And to do that today we offer what we think is a very attractive essentials package for about $22 that includes all the services you described and many other Canadian and foreign services.

7778             If we reduced the basic package with likely very little decrease in the kind of price we offer today, we are essentially offering consumers less for, you know, fundamentally nothing.

7779             And that makes it, from our perspective, a lot more difficult to compete with other suppliers who now offer exactly the same basic package that we offer in the market.

7780             That is my point.

7781             THE CHAIRPERSON:  I guess I don't follow that because the logic that CBC said, that there is a certain amount of indigent Canadians who just want a basic package and that, really, we should allow them to have that basic package.  Then everybody is going to offer, in effect, an enriched basic package ‑‑ or whatever you call it, "enhanced basic package", et cetera ‑‑ and the competition would be between you and others what is in this enhanced basic.

7782             You may have all sorts of gadgets in there that Shaw doesn't have, et cetera, and the consumers would, in effect, compare one enhanced basic to another.  But the fact that everybody is obligated to service a minimum basic package which contains whatever is the regulation, and presumably they would be more or less at the same price, and the competition would be on the enhanced basics.

7783             Why doesn't that work?

7784             MR. HENNESSY:  Okay. Well, I fundamentally disagree with the CBC on that point.  As we said in our opening comments, consumers are not looking for that particular type of basic package.  They may be looking for the ability to choose more programs à la carte, and that raises its own problems, but that's not what they're looking for.

7785             They're not looking for the CRTC to determine what it is they need, limited only to Canadian services, at a price which, if not regulated, is certainly pushed in that direction.  And I think there's ‑‑ we still believe that if that's the only must‑buy service ‑‑ because we're talking about must‑buy, you are forced to buy this.  So we're saying to the consumer today, "We're going to give you what we think is the essential service you require and charge you X price for it."

7786             I don't think that that's consumer‑friendly, I don't think there's a demand for it and I think, you know, putting aside the issue of competition, I think it's also a great way to reignite the black market, because if I can now go and, say, spend $15 for a limited package of local Canadian channels, and then steal the rest, I have the best of both worlds, and that's something we spent the last few years working to avoid.

7787             THE CHAIRPERSON:  You were here yesterday when Videotron testified, or you heard it.  They offer, actually, such a stripped‑down basic, without even American channels and ‑‑ what was the number, Michel, they said?  The uptick?

7788             COMMISSIONER ARPIN:  They were talking from, in the Montréal market, up to 12, and in some other markets 10 signals.

7789             THE CHAIRPERSON:  There is actually a demand for it.  You suggested that consumers do not want that.

7790             MR. HENNESSY:  I think it is very difficult for a television distributor from Alberta and British Columbia to be compared to one in the Quebec market.  I think everybody would agree that in the Francophone market, in the Quebec market, there is a much higher demand for programming because that is really the language of the province.

7791             It's an apples and oranges comparison.

7792             THE CHAIRPERSON:  But you would have no problem with the Commission saying there is a must buy.  It must contain as a basic package at least the following, whatever that list is: every BDU is‑‑

7793             MR. HENNESSY:  Yes, we continue to support that principle.

7794             MS MAINVILLE‑NEESON:  Mr. Chairman, may I also add something?

7795             THE CHAIRPERSON:  Yes.

7796             MS MAINVILLE‑NEESON:  I believe there is a misconception that by limiting the size of basic, by limiting the basic package to only the priority carriage services, that somehow the price of basic will go down.

7797             In fact, that's not true.  It is not the cost of programming that comprises the biggest part of the cost of offering a basic services.  What goes into the cost, or determination of the cost of a basic service, is our network and just the whole infrastructure back office elements of running our business.

7798             Therefore, adding additional services for a price that makes that cost that we cannot bring down just makes it that much more tenable for consumers to pay for it.

7799             So adding additional services, for example, sometimes they are very low cost services.  The U.S. four‑plus‑ones do not cost anything to add to the basic service.  So why not leave them?  Why not offer that to consumers since they are going to pay the same price anyways?

7800             THE CHAIRPERSON:  Okay.  Now going on to access, you basically suggest we maintain the present system, both the mandatory access and guaranteed access, if I understood you correctly.

7801             MR. HENNESSY:  That's correct.  Given that all these services are carried today, we don't see the harm to anybody in maintaining that carriage.  We accept there is a risk of taking them down.  We are not interested in making tradeoffs to have more flexibility in our negotiations with those services.

7802             It just seems like for us, what we are trying to do here is achieve a compromise.

7803             There are probably things that, you know, if you asked us where we personally stood, we might not be there.  But that's what compromise is about.

7804             This seems to us pretty simple.  If everybody says well, we're not really going to drop them, then the only reason the people want to get rid of the access rule seems to me is because they believe that will give them more leverage in terms of negotiating affiliation agreements.

7805             To us, that's not how to build a partnership.

7806             THE CHAIRPERSON:  Is that access frozen at its present level or can it be increased?

7807             You've heard various intervenors suggesting‑‑ obviously it can be increased through the 9(1)(h) process but also some people said a process similar to 9(1)(h) should be invoked to identify services or niches of national importance and after hearing, in effect we could add them on as a way of increasing the Category 1 channel tirade there right now.

7808             Where do you stand?

7809             MR. HENNESSY:  Well, as long as we are not talking about mandatory basic, I don't see a huge problem with that.

7810             I think realistically it's hard to believe that we haven't, with the number of proceedings we've had looking at 9(1)(h) and basic, that we haven't kind of gone through and found all the niches today.

7811             Certainly within the Commission's power, again as long as that power is not used all the time, I don't think it creates huge problems in terms of ensuring that there is capacity.

7812             Maybe just‑‑ no, I think that's fine.

7813             Do you have anything to say on that?

7814             MS MAINVILLE‑NEESON:  I was just going to add that we believe that there should be a very high threshold.  So when you mention 9(1)(h) as a test for adding access to any new licensed service, I think that would be the appropriate concept rather than simply any new service.

7815             Of the services that currently have access, I don't think they would meet the 9(1)(h) test per se and yet they are very important.  And because of their historical importance, we have agreed to carry them.

7816             But for any new services, the threshold should be very high.

7817             MR. HENNESSY:  It is not a hill for us to die on.

7818             THE CHAIRPERSON:  Good.

7819             Genre protection.  You were here on Monday, no doubt, when Rogers was here and basically gave what is usually called the infant industry argument.  It's time for people to grow up.  You had a leg‑up.  You had nine years or 12 years, whatever, to establish your brand, to find your place in the market, et cetera, but now you either sink or swim.  There's no need for having the genre protection any more.

7820             You are a Canadian channel.  You have your brand.  You have your loyalty.  You have your customers.  It's time to sink or swim.  And we should, as they suggested, at least take the first step and rather than individual genres have buckets of genres, whole categories of lifestyles, sports, news, religion, whatever.  And you can argue what they are.

7821             And in effect in those allow genres to compete and allow others to come in into that genre, because having the advantage of being there ten years in the market and branding yourself, et cetera, you should be able to maintain that.

7822             What do you think of that suggestion?

7823             MR. HENNESSY:  We gave it a lot of thought.  If you wanted to go back a couple of years, you could probably find copious amounts of speeches I gave as the President of the Cable Association and things we wrote in our annual report.

7824             THE CHAIRPERSON:  We won't quote them against you.

‑‑‑ Laughter / Rires

7825             MR. HENNESSY:  That's okay.  I mean, that was a position we took.  It's a position that I think has a lot of merit.

7826             But again, a real point here is the future of the system is going to be increasingly on demand.  Maybe Maria can talk a bit to this.

7827             So if you did it, we don't mind.  It certainly wouldn't hurt us.  Some of the broadcasters feel it would hurt them, and there are probably are issues of scale.

7828             I think it's fair to say, if you're looking at it from the broadcaster position, that you can't simply say because there are a lot of genres that exist in the United States without this kind of regulation, they would exist in Canada.  The market is a tenth of the size and broadcasters would tend to move first to the centre and then out.

7829             I'm not so sure that some of the genres that exist today could be supported in an open market or that the end result of that might not just be to significantly increase program acquisition costs.

7830             I think, as Maria said earlier‑‑ and you may want to comment on it‑‑ let's focus more on VOD.

7831             Again, it's like let's compromise.  I've been sitting around listening to these debates for more years than I want to think about at this point, and nobody has moved forward from their positions.  It's all as hard and fast as it was ten years ago, as it was 15 years ago.

7832             Unless we have some kind of movement to the centre, we are not going to be able to build a system in the future.

7833             Again, for us it's not the hill to die on.  We think the future is just to increase the flexibility that we see on demand and partner with Canadian broadcasters to do that.

7834             THE CHAIRPERSON:  But given the fact that you don't have any specialty channels and given your personal background, I'm interested in your views on this.

7835             You heard, for instance, Score saying that's very fine but that really benefits the big boys.  I who are the small, little headline news, I can be very easily duplicated by TSN but I can't duplicate TSN.  So if you create these buckets, you are only going to create more consolidation and force out the small guys.

7836             MR. HENNESSY:  We came up with this proposal at CCTA a few years ago, and that's why I say you go back.  And I think there is a lot of merit to it.

7837             I still believe in competition and choice, and clearly if you have more competition between Canadian services, the odds are that you are going to end up with a reduced number of channels but maybe they will be better channels.

7838             I'm just not sure that totally restructuring the linear environment in a world that is increasingly on demand, whether it's the Internet or the kind of TV that we can deliver today, is the way to go.

7839             So for sure, I think Rogers made a lot of very good points.  And I think Glenn O'Farrell made a lot of very good points.

7840             So the issue, it gets back to you're stuck probably with making more decisions about consumer choice than you really want.  But there is a saw‑off there.

7841             I would say absolutely you would end up with less channels if you had genre competition, but that's not necessarily a bad thing if you end up with better channels.  Just think that there are ways to serve that same demand in a more efficient fashion on the on demand platform.

7842             THE CHAIRPERSON:  In terms of foreign services, the existing test doesn't require any modification?  You think we should just‑‑ in effect, program overlap is sort of the key determination?

7843             MR. HENNESSY:  I think it works.  Again, you are talking to the person that spearheaded the application to bring HBO and the big U.S. channels into Canada.

7844             I hate to go back to video on demand, but I really believe in VOD.

7845             THE CHAIRPERSON:  We are coming there.

7846             MR. HENNESSY:  I know you are coming there, but let me explain.

7847             When we applied for HBO, the Commission was much more restrictive than it is today.  You could get very little out of the Commission in terms of any competitive programming.

7848             You know, since that point in time, if you look at what that application to bring in more U.S. channels did, it led TMN and Chorus and others to start looking seriously at the on‑demand platform, to offer those kind of HBO programs and other things that people wanted.  I think those Canadian companies found a way to create the kind of model of choice that we were looking for as distributors within the Canadian system.

7849             If you ask me today personally or representing TELUS whether we should bring in an HBO or anything else, it doesn't matter any more, no.  We are better off to work with our Canadian partners and protect the Canadian rights market.

7850             THE CHAIRPERSON:  Okay.  Video on demand, your favourite subject.

7851             First of all, you suggested that you should have the right to advertise on it.  Is this an unrestricted right, or should it be restricted to advertising ‑‑ dynamic advertising, or targeted advertising?

7852             I had a long discussion with Rogers about the fact that one way to keep advertising dollars in the broadcasting system and not have them migrating to the internet is to ensure that, through the data that BDUs have, you can actually target advertising, and you can hit, specifically, the person you want.

7853             You could have the same Canada GM ad on one program, but in different households they would receive a different ad.  In one they would have a truck ad, and in another a sports car ad or something, so that you can promise the advertiser, obviously, a much greater targeting of the advertising ‑‑ return for the advertising, and therefore charge more, and, in effect, increase the advertising pie, rather than taking away what is right now the domain of the broadcasters.

7854             Do you see it going that way, too?

7855             MR. HENNESSY:  Yes, and I am going to pass it ‑‑ if you like, you can start asking questions of Maria and Sean, because they are going to have the expertise.

7856             In terms of a restricted right, we think it should be any type of advertising, but the restriction we would put on it is, really, much more of an incentive.

7857             What we are saying is that the restriction should be limited to the Canadian broadcaster, and that provides an incentive for VOD providers to go to Canadians for the rights.

7858             And because you are doing it on a consent regime, it is with the consent of the Canadian broadcaster.

7859             So limit it to the Canadian broadcaster.  With their consent, you are ensuring ‑‑ you don't have to make the determination as to whether or not it is incremental, because if the broadcaster believes that that kind of advertising is going to undermine the system, they are not going to give their consent.

7860             THE CHAIRPERSON:  You say Canadian broadcaster.  What if it is not a Canadian program but a foreign program?

7861             MR. HENNESSY:  If the Canadian broadcaster has the rights, let's say, to "Desperate Housewives", a show that probably you and I don't watch, but many people do ‑‑

‑‑‑ Laughter / Rires

7862             THE CHAIRPERSON:  Correct.

7863             MR. HENNESSY:  If the broadcaster has the rights to "Desperate Housewives", they could sell commercials on that because ‑‑ I mean, that's how the whole broadcasting system works today.

7864             You allow the conventional broadcaster to import a preponderance or a majority of U.S. programming, because that's what attracts advertising, and you flow the advertising into the Canadian system.

7865             It would work the same on the on‑demand platform.

7866             THE CHAIRPERSON:  Why the reluctance to restrict it to what I see as sort of the future of broadcasting advertising ‑‑ much more targeted?

7867             We, the Commission, had a presentation by this company INVIDI, who suggests that the technology is there.  Rogers, in their opening statement, said that they have the capability; then, under questioning, they took a little bit of a retreat and said:  Well, not exactly today, but in the near future.

7868             It strikes me that that is, surely, where the broadcasting industry wants to go.  They want to retain ‑‑

7869             MR. HENNESSY:  Yes, we think it's a super idea.

7870             I'm sorry, I didn't want to leave you with that impression.

7871             It's a super idea.  We just said consent ‑‑

7872             But maybe Maria ‑‑ because we paid a lot for her to fly down, maybe she could ‑‑

‑‑‑ Laughter / Rires

7873             MS HALE:  On the VOD side, really, coming from the broadcast environment most recently, being at TELUS for only eight months, we were looking at how it practically can work and, I think, sort of dispelling a lot of the myth and a lot of the fear around what is the role of the BDU, and do they want to take over everything.

7874             We are coming at it from the perspective of:  We have enough to do.

7875             Our role in all of this would be facilitating dynamic ad insertion ‑‑ and Sean can talk about that technology and where we are at in our position, because we are not there today either, but we can be ‑‑ and investing in and growing this overall advertising pie for everyone in the value chain.

7876             We are approaching it from the perspective that broadcasters hold these brands in the marketplace.  They are the ones promoting these brands in Canada.  Let's put it on the VOD platform and make it part of the overall audience experience.  Allow them to sell those ads and generate a higher CPM.  Because the ads would therefore be targeted to a consumer   , you could charge a higher CPM.

7877             We would share in that process for our role, but I think it would just be a simple way to move this forward and really uninhibit what is now a constrained platform.

7878             Because, really, the consumer and the audience is moving to on‑demand.  Broadcasters are investing millions of dollars in on‑demand platforms.  I built many of them myself ‑‑ well, not personally, but under my leadership ‑‑ and as I look at it more and more, it is really about trying to make TV sustainable into the future.  It's not about pushing it to the web.

7879             So, I think, whatever we can do to free up the constraints around VOD will help grow the market.

7880             MS MAINVILLE‑NEESON:  If I may add, it is not a question of wanting to restrict it only to technologies, so that we would only have incremental new advertising if it was using a new technological platform.  Rather, we see the ability to advertise on VOD as being a partnership with the broadcaster, looking at different business models.

7881             Perhaps sponsored programming.  Someone who wants to watch "Desperate Housewives" on demand may not want to pay $5.99 or $1.99 ‑‑ I have no idea how much we would charge for that, that would be Maria's role, but maybe we could reduce that price through a bit of advertising, some bumper ads on either side.

7882             I think that what we really need to look at are any restrictions ‑‑ the one that we have proposed has to do with partnering.  As long as we are partnering with the Canadian broadcaster to bring both Canadian and foreign programming to the platform, and then let us innovate on both technology and business models.

7883             THE CHAIRPERSON:  This partnering with Canadian broadcasters, obviously, presupposes that you reach a mutually satisfactory agreement.  Should there be an inability to do that, what happens?

7884             You just can't put anything on, or do you see a dispute settlement ‑‑ do you see a role for the Commission in that?

7885             MR. HENNESSY:  I am going to ask Maria to talk to that, because that really gets to the point of how she wants to approach the negotiations.

7886             MS HALE:  I think that with this model everyone is incented to participate, and it is opt‑in, so there is no mandate in which you participate.

7887             But the reality is, broadcasters are very aware of where their audiences are going and what they are asking for, and this is just a way to allow that to happen.

7888             THE CHAIRPERSON:  So, basically, we stand back until ‑‑

7889             MS HALE:  Yes.

7890             THE CHAIRPERSON:  You two have to work it out.

7891             MS HALE:  Absolutely.

7892             MR. HENNESSY:  We are asking for a change to the rules, because the rules prohibit that today.

7893             We are saying:  Make the rules so that anything is allowed, as long as it is limited to the rights held by Canadians, and as long as it is with the consent of the broadcaster.

7894             THE CHAIRPERSON:  This takes me into the whole subject of SVOD.

7895             A lot of BDUs are very excited about SVOD and how far you can stretch it.  But, I mean, if you take it to its logical extension, subscription media could become a complete duplicate of existing channels.

7896             I presume, in your model, because it is based on consent and partnership with the broadcaster, that the broadcaster, therefore, has the handle on determining to what extent it sees this as an incremental source of revenue, and to what extent it sees this as cannibalizing its existing service and, therefore, wouldn't agree to it.

7897             MR. HENNESSY:  Yes.  To be clear, we are saying that only the Canadian broadcaster, or the rights holder ‑‑ the Canadian broadcast rights holder ‑‑ can avail themselves of this, but we are not saying that the VOD platform should be controlled through the broadcaster.

7898             THE CHAIRPERSON:  No ‑‑

7899             MR. HENNESSY:  They are two separate ‑‑

7900             THE CHAIRPERSON:  You have the platform, but you may actually negotiate with five or six different broadcasters and put together a video‑on‑demand which has the genre of "Desperate Housewives", that kind of show, and just put them one after the other, with their consent.

7901             MR. HENNESSY:  You know what?  I don't think so.

7902             Again, I will ask Maria to explain.  It goes back to what she was talking about in terms of extending brand, and why that is probably a better way.

7903             MS HALE:  A lot of what we are talking about, or what I find we are talking about ‑‑ the hearing, distant signals, all of these things ‑‑ are answers to getting content when you want it.

7904             THE CHAIRPERSON:  Yes.

7905             MS HALE:  VOD, today, is an answer to that.  I don't think it is the correct ‑‑ or the end state of what that product is going to look like.

7906             We talked about NPVR ‑‑ network PVR ‑‑ where we are hoping to bring into the marketplace a product off the linear channel.

7907             So, again, if you are watching CTV and you happen to want to watch "Desperate Housewives", and you come home at 8:15, you could still start that show, from its beginning, from the linear channel itself.

7908             So you are not having to actually go down to another channel to access VOD as a separate experience from the brand of linear channel.

7909             Longer term, it is a more coherent experience for the audience.  It is a more coherent experience for the advertiser and for the broadcaster.

7910             So, at the end of the day, it is good for consumers.

7911             That is sort of the end state of where we are at.  A lot of what we are talking about in the middle is kind of noise, and that's why we say, much like new media exemptions and those kinds of things, don't restrict it, because it will inhibit the end state, which is really, probably, a better place than where we are at in the middle.

7912             THE CHAIRPERSON:  How is NPVR different from PVR right now?

7913             MS HALE:  I am going to toss it over to Sean for that one.

7914             MR. RUZICKA:  NPVR has always been, I think, the Holy Grail for the service providers, because you have a network‑based recording and storage mechanism, which means that you don't have to deploy a lot of expensive equipment in consumers' homes.

7915             Now, there are different business models around how NPVR can work.  You could have it so that the customer sets some future‑dated recording, or you could have it so that the service provider actually records everything that comes into its network, and makes all of the programs recorded in a defined period of time, let's say, the past 24 hours, the past week, perhaps the past several months, on an individual channel basis, available to the customer, so they would be able to go back and review.

7916             That's what we are working toward today.  We are preparing to launch PVR.  I think everybody is probably fairly well aware of how PVR works, whereby the customer actually has to choose a specific program, to either record it once or record it for a few weeks.

7917             THE CHAIRPERSON:  Is there any NPVR in existence right now?

7918             MR. RUZICKA:  Yes.  There are a number of NPVR deployments in Europe.  They actually do it similar to how we actually ‑‑ we have what is called "Look Back", where you can actually watch anything within the past 24 hours, or "Replay TV", where you can watch anything in the past week, up to ‑‑ some folks actually will record everything, and make persistent recordings of anything that has been available on your service for a significant period of time.

7919             Probably the leading example in the U.S. is AT&T.  They have contracts, I believe, with about 80 providers.

7920             I think what has happened down there ‑‑ not to take you through a lot of the history, but cablevision tried to do it without any broadcaster agreements.  They are subject, still, I believe, to a class action suit.

7921             I think that AT&T tried that first, and then figured out that that wasn't going to work, so they actually struck individual contracts with the broadcasters, whereby I think the broadcasters recognized that it was a better reach, more eyeballs for their content and advertising.

7922             So I think it is actually a solution that is friendly all the way around.  It prevents higher CapX investments for the service provider.  It is cheaper for the consumer, because they don't have to buy more boxes, and it actually adds more value to the broadcasting system.

7923             THE CHAIRPERSON:  But, then, from what Mr. Hennessy has said so far, I presume it is a logical extension that we would see NPVR developing in this country on a partnership basis with the broadcasters, too.

7924             MS HALE:  Absolutely.

7925             THE CHAIRPERSON:  Now we come to the last subject, fee for carriage, which you describe as another fix.

7926             You have heard the various submissions here and, essentially, I think that the case for fee‑for‑carriage service is based on the fact that we have chosen to use OTA as the cornerstone of our system, to ensure that there is local content and drama content.  Really, the OTA is the primary vehicle for that, and they have been funded, traditionally, through advertising, and substitution, and the C‑58 taxes.

7927             The traditional ones say that those sources have eroded.  They are fragmented.  They have gone partially to the specialty channels, partially to the internet, but our obligations remain, so you have to find new sources of revenue for us.

7928             And asking us to cross‑subsidize, as you suggest here ‑‑ et cetera ‑‑ is asking us to follow an illogical economic model.  No businessman in their right mind cross‑subsidizes.  You don't do that.  You get out of the business if it doesn't make sense, et cetera.

7929             But we have to be in this business and so therefore one way of dealing with it for the lack of advertising is to set a fee for service or, to put it differently as some have suggested, you know, adopt the U.S. system that we have the ability to deny consent to retransmit by the BDUs, et cetera, which then will engender obviously negotiations.

7930             I gather you don't buy this argument at all and tell me why.

7931             MR. HENNESSY:  All right.

7932             You know, I won't get into the whole issue of retransmission consent and the fact that, you know, in some respects there is a better retransmission rate that doesn't exist.  And let's get to the meat of the issue.

7933             The fundamental concern of the over‑the‑air broadcaster recently has been an erosion of the growth of their advertising and a shift of those revenues to the specialty sector.  There is a concern about the internet but I don't think yet we are seeing a one‑to‑one relationship in terms of advertising on the internet going towards programming like we see on the television environment.  So it's primarily going to the specialty sectors.

7934             The Commission, as I said at the beginning, at a significant cost in diversity and one that, you know, we supported at the time of the hearing because we believed consolidation was necessary to make broadcasters stronger, the Commission allowed Canada's largest broadcasters to end up owning the majority of Canada's best specialty network.  In other words, they through the marketplace chose a price that they believe would make them better off by owning an integrated offering that contained all the advertising revenues that they said they were losing to specialty.  They own the specialty today.

7935             So it's a bit ‑‑ I find, you know, when I go back to our business it's a bit like saying we are losing a lot of customers to Shaw.  So all across our heritage business, our long distance our local business revenues are down.  And they continue to go down and it's a big concern.  So we spend billions of dollars investing in a wireless platform.  Revenues go up.

7936             The street, the market doesn't value our stock just by what happens in one business segment.  They say is Telus or in this case, you know they look at the broadcasters like CTV or Global, "Have they made the right decisions and are they on a growth trajectory?"  And I think everybody would agree that CTV, CanWest because of the acquisitions they have made in the last couple of years, are much better off than they were and have a huge growth potential.

7937             So in terms of ‑‑ you know it's a specious argument in my mind, a specious argument, just in case that wasn't clear ‑‑

‑‑‑ Laughter / Rires

7938             MR. HENNESSY:  ‑‑ you know, to suggest that they need the money.  And you know make no mistake, those charges, that fee‑for‑carriage will be passed on directly to the consumer.

7939             And I believe, and I totally believe that it is fundamentally wrong to have approved the kind of consolidation that the Commission did and then allow the broadcasters to put a portion of that debt on the backs of consumers.  That is exactly what they want to do and that's just wrong.

7940             THE CHAIRPERSON:  Except you leave out of your equation, I mean we are talking here about ‑‑ if we were talking about a free market then, yes, sure I buy everything you say.  But then you also say, "I'm losing money on the OTA and I'm going to cut down, strip it down and bring it down so that it is profitable."  However, they can't do that because we impose a Canadian content requirement and local content, drama requirement, whatever you call it, on them.  So that's a conundrum that they are facing.

7941             They say, you know, "You want us to do that."  You have chosen this as the main ‑‑ the Canadian Broadcasting Act requires that Canadians see themselves reflected in the Act.  That means they should see what happens in their local community.  How do we do that through over‑the‑air?  You are responsible to deliver that and, yet, the source of revenue with which it was financed in the past is no longer there.  That's the argument they make.

7942             MR. HENNESSY:  No, the source of revenue that was financed in the past and is still there; it's still growing.  It's just not growing very well and it's threatened.

7943             THE CHAIRPERSON:  Yes.

7944             MR. HENNESSY:  The source of revenue to the broadcaster ‑‑ I find it remarkable that the broadcasters go, "Well, the specialties don't count.  Now, all the program rights that we acquire, you know, we replay on all those specialty channels but don't worry about that.  Don't look at the, you know, 35‑40 percent PBIT on the specialty channels.  Don't look at the fact that we now control most of the market and can cross‑promote.  Those revenues don't count, only the small thing is the only thing that matters."

7945             And that to me I mean is ‑‑ you know a simple fix for you is to look at whether their revenues from broadcast licenses collectively are contributing in the proper fashion to the achievement of all of the objectives of the Act.  I think it's just ‑‑ to limit it to say, you know, that the local channels are standalone they are not standalone.  It might have ‑‑ in an age when there were a lot of independent local broadcasters in different communities across the country that may have been an issue we could debate today, but that's not the way the market is.

7946             THE CHAIRPERSON:  But if I follow that logic then we have to redo the whole broadcasting system when you look at broadcast group rather than individual licences.  And you would really have to total up not only the revenues as you are doing but also the obligations and the requirements, et cetera.

7947             MR. HENNESSY:  You could.  You know, when last the Commission ruled on fee‑for‑carriage they said you know, "Denied but come back if you can make a case".  So I have seen nothing in this proceeding that suggests that they have made a case.  Tomorrow, I'm sure, they will say that's a bunch of garbage and of course they are going to make the case and the room will be full once again with everybody they flew into town.

7948             But you know there is not a problem here.  I have heard no one suggest to me that there is a significant problem facing the Canadian broadcaster today that will be fixed by fee‑for‑carriage.  And even, I think, as the Commission has expressed throughout this hearing, you know, you are not going to flow the money through to the bottom line like they would like.  You are going to flow it through to local production which is not what they want because if you actually did a proper accounting they would be, you know, still unhappy.

7949             So I think maybe you do have to look at, you know, broadcast groups as a whole.  Maybe you do have to look at their licence conditions.  Maybe you do have to listen to producers and, you know, talk about exhibition requirements in primetime or examine what the Dunbar Report said about the problem with simultaneous substitution.

7950             I just don't think that's the way of the future.  I think the local broadcaster can grow their business by sitting down with Maria as CTV does today and look at ways to extend the brand to maximize the advertising opportunities that aren't here today.  And when their revenues stop growing, because they are still growing, then it's time for them to come back and beg for more money.

7951             THE CHAIRPERSON:  Well, I see an old question.  I mean, we look at it prospectively.  Do you cover the well before the child drowns or do you wait till a child drowns before you put the cover on it, you know?

7952             MR. HENNESSY:  You gave them an economic future, a profitable economic future gift wrapped with the deals that went down around Alliance Atlantis and CHUM.   These guys are super profitable today as companies.  They have all the elements throughout the system to package, to cross‑promote.  They control most of the value chain when it comes to content today.  They are well off.  They are not hurting.

7953             THE CHAIRPERSON:  Follow my thought for argument sake.  All of this is obviously hypothetical but if notwithstanding your persuasive logic we say, "No, there will be a fee‑for‑carriage" as Quebecor for instance yesterday said, should that fee‑for‑carriage be earmarked?  Should we say, "Yes, you get this but it can only be spent on local content or it can only be spent on local content and drama" for instance, et cetera?

7954             And secondly, would it be going to the network or will it go to individual OTA stations?  How would you suggest we do it?

7955             I know you don't like the concept but just follow my thoughts.  Yes, you lost that battle.  You are now fighting a rearguard battle.

7956             MR. HENNESSY:  M'hm.

7957             THE CHAIRPERSON:  That concept that you don't like, what would be the most intelligent way of administering it?

7958             MR. HENNESSY:  You know I ‑‑ have you got an answer for that?

‑‑‑ Laughter / Rires

7959             MS HALE:  I have got something.

7960             I think if the issue is, you know, a high cost of news production, we saw CTV ‑‑ congratulations on 50 years, by the way ‑‑ talking about the high cost of news and those kinds of things.  I think when you are looking at it you have really got to figure out if there is a problem with the system where is the problem, and if it is at the local level then make sure that's addressed.  If it is Canadian drama that we want a solution for, and maybe this is part of that whole solution, then allocate the money accordingly that way.

7961             But you know this is a local station issue so in my view, then, it should go to support.

7962             MR. HENNESSY:  I guess it is kind of interesting, you know, because not all over‑the‑air channels obviously are local, except in the physical sense of broadcasting.  I mean, a good example, I guess, would be Global in Ottawa.

7963             THE CHAIRPERSON:  Yes.

7964             MR. HENNESSY:  They don't do anything local.  So you might say if you still want to be carried on the Ottawa system as a ‑‑ you know in terms of basic choice, then you have to be a local channel; otherwise, no fee‑for‑carriage for you because you are not really a local broadcaster.  You are just a retransmission stick.

7965             THE CHAIRPERSON:  Okay, thank you.

7966             Michel, you have some questions?

7967             COMMISSIONER ARPIN:  Well, I have a few questions because obviously throughout your presentation you referred to the situation of CTV and Global but I understand Telus is providing telephony services throughout a portion of Quebec, the eastern part of Quebec.

7968             Have you implemented your television service in that portion of the country?

7969             MR. HENNESSY:  C'est correct.

7970             Ann.

7971             MS MAINVILLE‑NEESON:  Oui, effectivement.  We have launched our service in Rimouski and other areas in Quebec.

7972             COMMISSIONER ARPIN:  So taking ‑‑ well, going back to the discussion that you just had with the Chair regarding some of the issues and particularly the fee‑for‑carriage in the Quebec market, you said that obviously the answer for you regarding fee‑for‑carriage is a consolidation that both CTV and Global did but what about the French broadcasters?  What are your answers to Quebecor and particularly TQS in regards to fee‑for‑carriage?

7973             MR. HENNESSY:  Is there something Quebecor doesn't own today in terms of the broadcasting?

‑‑‑ Laughter / Rires

7974             COMMISSIONER ARPIN:  Yes, TQS.

7975             MR. HENNESSY:  They do need help.

‑‑‑ Laughter / Rires

7976             COMMISSIONER ARPIN:  Yes, and also what they also said yesterday is that obviously Quebecers are watching a lot of the Canadian programming but they need more financial support to do better and more Canadian content, particularly the high cost dramas that are very hard to finance today and because of their loss ‑‑ not the loss of viewership.  They still have a lot of viewership, but the loss of value of advertising.  So that's for them, so that's why they are making the claim that they need the fee‑for‑carriage.

7977             MR. HENNESSY:  Ann, feel free to jump in.

7978             But I think that the drama issue ‑‑ I am not sure if you can really separate what Quebecor is saying in terms of need from their position on the, you know, Canadian Television Fund and a sense that it would be better if they just kept that money to begin with.  So I guess, you know, if you look at their total position, they seem to want to keep the money they contribute to the fund so they can put it into their own production choices and then they want to also raise prices or not.  It is kind of hard to tell with Quebecor since they own all the key pieces where the money will flow but there does seem to be a certain sense of double‑dipping here.

7979             MS MAINVILLE‑NEESON:  And certainly the Quebec market is very different, obviously, in two very important ways.  Obviously, it is a lot smaller than the rest of Canada and already Canada is so small compared to the North American market.

7980             COMMISSIONER ARPIN:  Every time the CAB appears before us they remind us that Canada is California and Quebec is San Francisco.

7981             MS MAINVILLE‑NEESON:  Yes, and I think that is an apt analogy except that it is a whole different language and a different culture, so it is not the same way in that sense.  And yet, because of that they have succeeded and drama does extremely well.  So the dollars that you do invest in French‑language drama go a long way because you actually get the viewers.

7982             However, can the small Quebec market, French‑language market, support the four networks that they have with Télé‑Québec, with TVA, with TQS and with Radio‑Canada?  That is a really hefty ‑‑ it is almost more than we have in English Canada.

7983             So one would really wonder:  Will fee‑for‑carriage fix that kind of problem or was it just something that needed to take its natural course and there is a maximum of networks that can serve that small market?  And do so very well.  As I indicated, the viewership to those networks in that market is significant.

7984             COMMISSIONER ARPIN:  Yes.  Could the Commission arrive at different conclusions regarding the English market and the French market, in your own mind?

7985             MR. HENNESSY:  Absolutely!

7986             MS MAINVILLE‑NEESON:  In fact, the Broadcasting Act does require you to look at them to ‑‑

7987             COMMISSIONER ARPIN:  Not require, it says we could.  Not we should but we could.

7988             MS MAINVILLE‑NEESON:  Well certainly, I believe you are right that it does say that you should and that it is an important aspect of our Canadian diversity.

7989             COMMISSIONER ARPIN:  So what ‑‑

7990             MS MAINVILLE‑NEESON:  So you certainly ‑‑

7991             COMMISSIONER ARPIN:  Have all the flexibility to come to a different conclusion, that is what ‑‑

7992             MS MAINVILLE‑NEESON:  Absolutely!

7993             MR. HENNESSY:  If Steven Harper can get there, you know, anybody can.

‑‑‑ Laughter / Rires

7994             MR. HENNESSY:  Definitely.  Definitely.  It has always been that way and I think it always should be.

7995             COMMISSIONER ARPIN:  In the early stage of the interrogatory made by the Chair, you talk about your current basic service, to which you said it generally costs $22 for the subscriber.

7996             How many specialty services do you have on that basic service?

7997             MR. HENNESSY:  Sean.

7998             MR. RUZICKA:  We have approximately 32 channels in our basic package.  Unfortunately, I am not prepared to speak to how many specialty channels but I would say there is a handful.

7999             MS MAINVILLE‑NEESON:  There are at least 10 specialty channels and that would include APTN as being a specialty.  We have Vision, APTN, many services in fact.

8000             COMMISSIONER ARPIN:  Obviously, The Weather Channel, which ‑‑

8001             MS MAINVILLE‑NEESON:  The Weather Channel.

8002             COMMISSIONER ARPIN:  ‑‑ and the 9(1)(h) that are ‑‑

8003             MS MAINVILLE‑NEESON:  The 9(1)(h) but also we have MuchMusic, for example, and we also have some Category 2s that wanted a broader distribution and we have decided to launch them on our basic so that everyone can have a taste of what they are like.

8004             COMMISSIONER ARPIN:  I see.  Now in your discussion regarding VOD, you are restricting it only to those who have the Canadian broadcasting rights system.

8005             What about feature films?  What about their content for VOD?  That is not attractive for you?

8006             MR. HENNESSY:  In terms of advertising?

8007             COMMISSIONER ARPIN:  No, in terms of the offering.

8008             MR. HENNESSY:  No, no.  We are only restricting advertising to ‑‑

8009             COMMISSIONER ARPIN:  So your comments were only restricted to advertising content on VOD but not the total VOD platform?

8010             MR. HENNESSY:  Oh, no, no.

8011             COMMISSIONER ARPIN:  All right.

8012             MR. HENNESSY:  We are a programming undertaking when it comes to VOD and we have done a number of major deals with the studios.

8013             But we think in terms of, as Maria said, the future of television, so linear conventional television on video‑on‑demand, is to extend the Canadian broadcaster brand into that space rather than worrying about running down to the States and trying to cut one‑offs with all the different production houses.

8014             COMMISSIONER ARPIN:  Now down the road, don't you think that it will be attractive for producers to start producing VOD, exclusively VOD programs which could support ad insertion?

8015             MR. HENNESSY:  I think Maria ‑‑

8016             COMMISSIONER ARPIN:  I know that Quebecor is already doing that in Montreal, having some ‑‑ that is what they claim.

8017             MS HALE:  Yes.  I think it is really hard to build brands on VOD.  I think a lot of the success you have even seen on the internet from on‑demand programming is based off of existing brands in the television space, and the same thing for mobile.

8018             Independent producers approach us all the time about a great mobile show.  We are great, how is anyone going to know it is there?

8019             So I think creating content specifically for VOD in the nascent market might be a bit of a challenge.  It might be different in Quebec.

8020             COMMISSIONER ARPIN:  But the thing is the one program that Quebecor is doing, it is an extension of existing programming that they have already on TVA.

8021             MS HALE:  And they will promote it off of TVA?

8022             COMMISSIONER ARPIN:  Sure, yes.

8023             MS HALE:  Yes.  So that whole linkage is really key.

8024             COMMISSIONER ARPIN:  But the only place you could consume it is on the VOD platform.  It will never happen to be on the air.

8025             MS HALE:  Absolutely, and again, as long as there is a broadcast linkage to that so that the consumer and the audience gets the message.

8026             COMMISSIONER ARPIN:  Okay.  So you are extending your proposal to include genuine VOD programming ‑‑

8027             MS HALE:  Absolutely.

8028             COMMISSIONER ARPIN:  ‑‑ as long as it is related to broadcasting rights ‑‑

8029             MS HALE:  Well ‑‑

8030             COMMISSIONER ARPIN:  ‑‑ or rights that belong to a broadcaster?

8031             MS HALE:  Vis‑à‑vis how we are going to support it with advertising, outside of ad‑supported content ‑‑

8032             COMMISSIONER ARPIN:  Yes.

8033             MS HALE:  ‑‑ that the platform itself ‑‑

8034             COMMISSIONER ARPIN:  Obviously, it is easy to understand.  If there is no support, how will you know and why would you produce it as well?

8035             I am sure that you are aware of the dynamic insertion, the project of INVIDI.  Is it something that you are contemplating, offering targeted advertising according to some demographic or some other ‑‑

8036             MR. RUZICKA:  Well, TELUS doesn't have that capability today.  The technology certainly exists and it is compatible with our platform.  So we could invest in the hardware and we could invest in building the middleware capabilities that would allow us to do that.

8037             It is actually a fairly complex undertaking in terms of being able to have a repository of advertising and be able to index that to the appropriate consumer.  So it is something that would be complex for us to build but we are contemplating it if the right business terms and framework can be put in place to support it.

8038             But again, I think it is going to be a complement to what we would, I think, rely on with linear broadcast for the foreseeable future.

8039             Maria, would you agree?

8040             COMMISSIONER ARPIN:  I guess that you are operating your own VOD platform?

8041             MR. RUZICKA:  Correct.

8042             COMMISSIONER ARPIN:  I don't know if you have any comments.  In the A&E submission to this proceeding they are talking about content aggregators for VOD and they are saying they are relying on third parties that they call content aggregators in the U.S. to provide their VOD material.

8043             I don't know if you have any views about making use of content aggregators rather than doing it yourself.

8044             MR. HENNESSY:  Maria?

8045             MS HALE:  I have no views.

8046             MS MAINVILLE‑NEESON:  If I may say something, actually the concept that A&E put forward is one that works very well in the U.S. but here in Canada we have had no difficulty with our VOD operators to get our own content, and because of the partnerships that we have with broadcasters, more and more as we go beyond the feature film business we are dealing with broadcasters who have that knowledge and essentially the broadcaster become the aggregator.

8047             I think in the Canadian model we have just made our broadcasters so strong that that is where we are going, that is where we are building relationships for our VOD platform.

8048             COMMISSIONER ARPIN:  I see.  I want to get back ‑‑

8049             MR. HENNESSY:  Just ‑‑

8050             COMMISSIONER ARPIN:  Yes?

8051             MR. HENNESSY:  ‑‑ to be clear on that, the broadcaster is one partner.  The studios, as you pointed out, for feature films are other partners.  I am sure there are lots of third‑language service providers that you could look at as being yet other partners.

8052             So I don't want to leave the impression that we are saying that everything we source through our VOD platform should come from the Canadian broadcaster or should be limited to that or that we could have a vibrant VOD platform if we only work with the Canadian broadcaster.  But certainly, to extend the television brand there is no better way than to work with the Canadian broadcaster.

8053             COMMISSIONER ARPIN:  Mr. Chair, those were my questions.

8054             THE CHAIRPERSON:  Just one clarification.  In your answer to Vice‑Chairman Arpin, you said that you also have an offering of feature films on VOD.

8055             Are you asking for the right to advertise on those, in agreement with the people who supply the feature films for you or are you just saying keep it as it is right now, just on a fee basis?

8056             MR. HENNESSY:  No, we are not asking at this point to advertise on that.  If we see the models developing in the future, maybe but that is not part of what we are putting on the table today.

8057             At the same time, you will get something like TMN on demand or I should ‑‑ we have TMN, I guess, in Rimouski but Corus in the rest of the country.  To the extent that we are sourcing anything through them, then you could do that model.

8058             THE CHAIRPERSON:  Okay.

8059             Len, you have some questions?

8060             COMMISSIONER KATZ:  Thank you, Mr. Chairman.

8061             I want to come back to the issue of the consolidating industry.  Some would say that the reason consolidation has happened is because of fragmentation.

8062             Do you have any comments on that?

8063             MR. HENNESSY:  Yes.  I think that is clearly ‑‑ and we put this in our submission in the diversity of voices proceeding, is that all Canadian media companies need to achieve a certain level of scale if they are to have the capacity both to acquire program rights and the underlying technology to deliver it in a variety of fashions.  So absolutely.

8064             COMMISSIONER KATZ:  So this consolidation happened last year and you cited two big consolidators, CTV ‑‑

8065             MR. HENNESSY:  Or actually three, right, because some of the properties split out to Rogers.

8066             COMMISSIONER KATZ:  Right, absolutely.

8067             The Commission then had a proceeding on diversity of voices where we basically identified it will become likely increasingly more difficult to consolidate without creating the diversity or retaining the diversity of voices out there.

8068             So if you overlay that onto the fact that there was consolidation as a solution to the challenge of fragmentation, if you look out in another period of time, whatever that is, and the Commission is faced with another situation where fragmentation has hit the market and people are finding it more difficult to run their businesses and meet the obligations that are inherent in the Broadcasting Act, what then?

8069             MR. HENNESSY:  You know, the what then could always be a proceeding but I would say that ‑‑ and one of the points we tried to make in that proceeding is that there really isn't a significant loss of diversity in the system if you look at it from the ability of the public, and I use the word "public" more than "consumer" here because we are talking of sort of long tail thought.

8070             If I was to look at anywhere over the last 25 years in terms of the Canadian broadcasting system and increasing the internet and everything else that is available in terms of digital media, there has never been more choice available from more producers and more countries anywhere in the world.

8071             The issue, I guess, at the end ‑‑ and I don't want to put words in the Commission's mouth, so please correct me.  I think the issue that the Commission struggled with was, given the nature of television today, was there a potential loss of local expression through the television system that maybe could not immediately be made up by new digital platforms?

8072             COMMISSIONER KATZ:  I was coming to that issue of local.  That was my next point.

8073             If you start to narrow it down, yes, there is diversity in terms of multi‑lingual, multi‑ethnic programming of all sorts and genres.  When you get to local, there's fewer and fewer as the major broadcasters in Canada have consolidated.

8074             The question is:  How do we continue to offer local programming where fragmentation has resulted in either a revisiting of the obligations that are inherent under the Broadcasting Act for some of the local broadcasters?

8075             MR. HENNESSY:  I would start by focusing on the Community Channel that will be provided by us, I guess, whenever we get our licence and is provided by the cable companies today and I guess regional variations that could be provided by DTH.

8076             If you look at the Community Channel across Canada today ‑‑ and I know ultimately this is yet another proceeding ‑‑ there is tremendous local expression from the grassroots up that reflects an incredible diversity, particularly in terms of some of the multicultural aspects of our communities: sports, local politics.

8077             I think that that medium has filled a tremendous void that was probably lost 20 years ago when local broadcasters or local over the air broadcasters ceased to be really local focused and became national in their orientation, Max Keeping aside.  CTV I think still does a pretty good job of that and should be commended for it.

8078             That to me is ‑‑ you know, you can get in the questions about do you allow advertising on the Community Channel to even encourage more of that.

8079             I think if you combine say the Community Channel with what you are seeing evolving in community expression on the Internet, then there is a pretty solid base there.

8080             And the real question then becomes ‑‑ and one I haven't heard the answer to here:  For the local broadcaster, the over the air broadcaster, what is it that the Commission thinks they should be producing in terms of local content that isn't produced today?

8081             They do news, do a fairly good job at news, I think; again CTV probably by a mile, but I tend to watch the CBC.

8082             I've heard lots of things like we need to put more money into local expression.  But what is that?  I don't think the scale is there to do local drama, so is it going back to the seventies and eighties where we had more talent shows?  That is what the local broadcaster did.

8083             I don't know, more talk shows?  Clearly some of the specialty channels have sort of taken up that format.

8084             COMMISSIONER KATZ:  The issue of community broadcasting programming will be the focus of another proceeding, as you mentioned.

8085             You do see then community programming being an adjunct to the localness that the system ‑‑

8086             MR. HENNESSY:  I don't think it is necessarily an adjunct.  If you think why is local important, why if we really go back into the bowels of the Broadcasting Act, '68 Act and what it was all about, local broadcasting was supposed to ultimately provide some kind of democratic expression for the people in a community to speak and to share ideas.

8087             Is a large scale broadcaster the best way to do that any more when we do have things like the Community Channel and increasingly Internet?

8088             You know, really I'm not sure that that is the case.  I think local broadcasters have become much more national; community channels have become much more local.

8089             So I would be careful at this point to assume that the Community Channel has to remain an adjunct.  It may become your solution.

8090             COMMISSIONER KATZ:  I want to move on to the issue of VOD, SVOD and some of the discussions you had earlier with both the Vice‑Chair and the Chair as well.

8091             It dawned on me, as I read your brief this morning on network PVR and discussions you have been having in the past with other folks on dynamic ad insertion, that these two are an obvious complement to each other.

8092             When I push a button on my computer saying download for me "Desperate Housewives" or something, you know I've just asked for that as well.  You know what the demographics are of the people that are watching that program.  You have some information as to who I am as well.  It's a lot easier then to feed into that system coming back to me the ads that are targeted at myself personally.

8093             Is that an obvious logical relationship?

8094             MR. HENNESSY:  Yes, I think so.

8095             Sean...?

8096             MR. RUZICKA:  Yes, I think that when we build up a forum, it can be extended to feed into even linear broadcasts at a Community Channel's request through to what we want to do with video on demand or network PVR.  Ultimately that's how I think, as we pointed out in the video, we help make it more relevant to the customer, and we add value back into the broadcasting system by allowing or I should say increasing marketing effectiveness for the actual advertisers.

8097             I think that we ultimately expand that opportunity to advertise, because it doesn't have to be Coke and Ford any more.  It can be the pizza place down the street maybe, you know, based on the consumer's past behaviour.

8098             That is the level of granularity that it is conceivably possible we could get down to if the industry wanted to go there.

8099             MR. HENNESSY:  I think Sean makes a good point.  You can really start to tailor the ads.  I think Ted Rogers missed that point at the hearing when he was batting Mike Lee over the head, because, you know, it's been a long time since he ordered a pizza.

‑‑‑ Laughter / Rires

8100             MR. HENNESSY:  You know, it is something.

8101             But here is the really neat thing about NPVR.  One of the concerns of the broadcasters is that today technology is allowing people to avoid ads.  If you the broadcaster put your programming on an NPVR platform ‑‑ and we are talking again about the consent of the broadcaster ‑‑ you can't skip through the ads.  The broadcaster can control that functionality or we can control that functionality for the broadcaster.

8102             Again, concern about the loss of control to technology is actually resolved by technological solutions.

8103             So it's like what Mr. Reaume said earlier in the proceeding by the Canadian Association of Advertisers, not only do you have the opportunity here to enhance the value of the ad but to protect it from erosion that exists today from other technologies.

8104             COMMISSIONER KATZ:  Unless people get frustrated and then just go to the Internet where they can actually avoid some of these ads.

8105             MR. HENNESSY:  I think the best way to stop people from going to the Internet is to ensure that they get to watch what they want when they want.

8106             I think particularly if you tailor the ads, you will see a lot less incentive to go to the Internet; maybe into the black market.

8107             COMMISSIONER KATZ:  Back to the MPVRs.  So the MPVRs are around today.  They are being utilized in various countries around the world.

8108             MR. RUZICKA:  Yes.  Europe again is most progressive in that and then a couple of the American operators are doing kind of various strengths of I think a full suite of capabilities that could be expressed with MPVR.

8109             COMMISSIONER KATZ:  Have the Europeans looked at dynamic ad insertion in that context as well?

8110             MR. RUZICKA:  They have but I'm not sure how far they have advanced on that front.

8111             COMMISSIONER KATZ:  You have said repeatedly now that the future of the system is increasingly on demand, and we are hearing the opportunities and the benefits of the on‑demand system.

8112             It begs the question:  What happens to linear programming?

8113             I think I heard you say that you can use linear programming and intertwine the two of them as well.

8114             I think I heard you, Mr. Hennessy, also say you are negotiating with the feature film industry in the U.S. and elsewhere, as well, to put all this on your platform essentially.

8115             The platform, as I understand it, the  BDUs and TELUS specifically, want to control your own VOD.  If someone else came to you tomorrow and said "I've got a VOD platform and I want to interconnect it into your system", what would your response be?

8116             MR. HENNESSY:  No, because we are talking ‑‑ we are starting to get, I think, into telecom language here.

8117             But jump in if you want.

8118             You are suggesting to me ‑‑ well, you can't interconnect.  I think the proper fashion, assuming that ‑‑ and it's never been tested that VOD is actually a programming service which we hold a licence for.  We assumed that at the time.

8119             Assuming that, you would have to first get a licence.  So I think somebody wouldn't come to us and say I want to interconnect.  They would come to the Commission and say I want a licence, because they wouldn't be able to do it any other way.

8120             I'm not sure.  Could you add a lot of value with a separate VOD licence?  It would be pretty tough because then you're going to have to get into all kinds of battles about shared capacity and how much capacity do you take from say the linear system to support another VOD channel?  And should broadcasters have the right to give their programming to only one VOD provider per system or to many?

8121             I don't know.  I'm not sure there is a business model here.

8122             I think what we are seeing more of is that people are putting together packages of content on demand that you can watch anywhere any time and bringing the packages to the VOD provider and saying we would like to it.

8123             Is that more how it works, Maria?

8124             MS HALE:  Absolutely.

8125             COMMISSIONER KATZ:  I guess I'm thinking out loud here, and it's always dangerous when I think out loud.

8126             MR. HENNESSY:  That's okay.  I do it all the time and I pay the price.

‑‑‑ Laughter / Rires

8127             COMMISSIONER KATZ:  The opportunity that the BDUs have for VOD and SVOD also has a risk of I guess I will use the word disintermediating the linear broadcasters of today because you can basically work around them by getting your own rights to various programs and then putting them on yourself, unless you work with them in packages, which is an alternative obviously as well.

8128             But to the extent that the BDUs right now have the sole and exclusive access to the VOD platform as you have it today, and what you are looking at doing is broadening that out into a retail marketplace with advertising and everything else, doesn't that give you an awful lot of power?

8129             MR. HENNESSY:  No.  I will answer the question why not, and then Maria can explain.

8130             There is certainly a lot of paranoia that the BDUs will do that and somehow control the whole universe.

8131             As programmers we have certainly ‑‑ and I've always been allowed and there was an expectation that we would deal with the studios directly for the feature film rights and the big sports events.

8132             You have to remember that content on VOD is not exclusive.

8133             Number one, TELUS cannot go out, or Rogers or anybody else, and sign up TV or movie rights to something that they can only show on their VOD platform.  In terms of competitive advantage, you get no competitive advantage from exclusivity.  So the issue becomes:  If you had that exclusivity as distributors, your question is do you disintermediate, do you reduce the middle man?

8134             And I think I will let Maria answer the rest of the question.

8135             You go back to it's a very, very cumbersome task to deal with this.  The only way I think that you are really going to push programming on demand, broader programming than just feature films, is by brand extension.

8136             MS HALE:  Yes.  Ann is probably going to follow up as well and jump in here.

8137             I think the reality of VOD is that it is so nascent; it's so early days.  Is there potential for this or that?  Ideally, at the end of the statement, we don't know what the answer to that is.

8138             What we are saying is that at this point where we are at, we see better value in working with the broadcasters and creating an incentive‑based environment whereby if there is advertising allowed and only through Canadian broadcasters, we are incented to focus our energy there because there is increased revenue for everyone in the pie.

8139             VOD is not a cheap alternative.  There are lots of expenses attached to VOD.  Encoding alone is quite pricey among operating expenses.

8140             So for us right now, it's really about innovating on the platform and serving the consumer.  So it's all about:  How are we going to keep them with us on the Canadian broadcasting system as a whole and how are we going to satisfy their demand for content in whatever format they are looking for?

8141             So we are going to be innovating and doing different things.  We have done a few things already.  Our focus is really to work with the broadcasters on the system and see what we can really do with the platform.

8142             I think we had also discussed that if at some point down the road where we started seeing some crossover on these lines, there is an opportunity obviously to come back before you and address those concerns when they are actually reality instead of now when they are not.

8143             Ann...?

8144             MS MAINVILLE‑NEESON:  Yes.  Essentially that is why we proposed the model that we did.  We think that VOD isn't going to grow just on its own without additional revenue sources and other opportunities, which is why in our proposal for advertising we ensured that there was an incentive for us to go through the Canadian broadcaster.  That's our way of ensuring that the whole system works.

8145             We did try to present in all of our proposals a very holistic approach and one that both safeguards the existing system and the contribution, the important contributions that the current system offers for the objectives of the Broadcasting Act, but also for the ability to innovate that our current proposal ensures that the broadcasters don't get disintermediated to your concern.

8146             COMMISSIONER KATZ:  Thank you.

8147             My last set of questions is regarding capacity.

8148             Do you have a capacity constraint today on access?

8149             MR. HENNESSY:  Yes.

8150             COMMISSIONER KATZ:  So when people approach you right now, you are not at liberty to carry them, given the limitations you have?

8151             MR. HENNESSY:  Yes.

8152             COMMISSIONER KATZ:  Maybe I should know the answer to this question.  Is Allarco being carried right now by you folks?

8153             MR. HENNESSY:  I will give you the answer to that question.  The answer is no because we have been unable to reach an agreement with them over the last few months.

8154             We have offered to come before the Commission through the Dispute Resolution Program to deal with the issues of capacity or price, if they wish.  I think because we are a small player, I don't think that was very attractive to them during the period of time they were negotiating with the big guys who don't want to set a precedent in the wrong court at the wrong time.

8155             We have explained our problems to them.  We have explained our capacity constraints to them, and we have discussed with them our views of what comparable means.

8156             I guess to answer your follow‑up question, no, we have not added any channels since we carried on these discussions with them.

8157             COMMISSIONER KATZ:  When do you see yourselves getting over the hump on capacity, so to speak?

8158             MR. RUZICKA:  Well, today an IPTV service is subject to the laws of physics and the enhancement of technology and how we can deal with it.

8159             So really, what that amounts to is that we have to use the latest IPTV equipment for encoders and because we need to ensure that we can achieve and ensure video quality that is on par with what consumers have come to expect from existing TV service providers, that means that we also go out and, wherever possible, we actually build a fibre connection to the actual broadcaster so that we can pick up a pristine source signal.

8160             We have seen a big difference in quality from what we could pick up off of the satellite, which is rather cheaper, versus what we can produce when we pick it up off of a terrestrial fibre‑based connection.

8161             Consequently, that means that it is a fairly laborious and equipment intensive process.  Adding a new channel to TELUS TV, it amounts to a fairly costly process.

8162             MR. HENNESSY:  And Ann makes sure that our technical and business people understand that being mandatory channel under the Commission's rules means what the word "mandatory" means and that has to be the priority.

8163             MS MAINVILLE‑NEESON:  And let's be clear about the Allarco situation.  It was very interesting to listen to their presentation to you a few days ago; different versions of the facts.

8164             The point is that while we believe in mandatory carriage ‑‑ in fact, we agree with the access rules; we are not fighting those rules.

8165             What Allarco is pushing, though, is for carriage of six multiplex channels: so two HD and four SD channels.  They are saying that that is what we were entitled to with our mandatory carriage licence.

8166             And that's not what we considered to be the carriage requirement.  It certainly can't be up to the programming service who has received a licence for mandatory carriage to then determine we would like to have a hundred channels.  It just doesn't make sense.

8167             I believe that we do need a resolution from the Commission on the issue of multiplexes.  We did ask Allarco to continue to pursue the current complaints that they had but also to resolve the issues with respect to the number of stations that we were required to carry.

8168             In any event, we are more than willing to go to Dispute Resolution and we have indicated that to them and to Commission staff.

8169             COMMISSIONER KATZ:  Thank you very much.  Those are my questions.

8170             THE CHAIRPERSON:  Rita...?

8171             COMMISSIONER CUGINI:  Thank you.

8172             I have just a couple of follow‑up questions.  I will start with VOD.

8173             Currently the rules allow for TELUS subscribers to access only VOD and not have to subscribe to essential services package, for example.  Correct?

8174             MR. RUZICKA:  No.  They must actually subscribe to the essential service before we will install VOD and make any of the other services available to them.

8175             COMMISSIONER CUGINI:  Okay.  So they can subscribe to essential services and then go to VOD.

8176             MR. RUZICKA:  Correct.

8177             COMMISSIONER CUGINI:  Do you know what percentage of your subscribers have chosen that option?

8178             MR. RUZICKA:  Well, 100 per cent of the subscribers obviously have it.  But unfortunately I don't know what percentage only have the essentials.

8179             We could actually determine that and give that to you in a future submission.

8180             COMMISSIONER CUGINI:  That would be great; thank you.

8181             Again, it goes to the impact of VOD and that platform on linear broadcasting, just as a follow‑up to Vice‑Chairman Katz's question earlier.

8182             In terms of access ‑‑ and obviously I acknowledge that you are saying keep the access rules as they are ‑‑ do you think they should stay in place for both standard definition and high definition services or should we opt for, for example, the requirement that you carry either/or and you satisfy the access rules?

8183             MR. HENNESSY:  This may show sometimes that I answer the questions before I know the answer to them, but I wasn't aware that there are access rules for high def specialties.  So I should have probably thrown this to Ann immediately.

8184             MS MAINVILLE‑NEESON:  Yes.  Certainly we believe that the access rules should apply to either/or, and that will incent broadcasters to provide more high definition programming on their high def services.

8185             As you have seen from the video we have presented, we do have a lot of customers who want HD and only HD.  The more HD services we can offer, we do feel that that is where the world is going.

8186             As for carrying both, that is a significant burden.  It's not so much a capacity issue, as Sean was trying to explain.  It's just the cost of adding each new channel:  new encoders, transforming the signals in a format that we can actually distribute.  Requiring duplicate services to be carried is not ultimately in the best interests of Canadians.

8187             COMMISSIONER CUGINI:  If we were to go along the road of either/or, do you think that that would have the potential of causing some disputes with specialty services where they say I want you to carry my HD version and you say no, I don't have the capacity?

8188             MR. HENNESSY:  I think in the last year, as I've learned, are technology because the future of IPTV promised to be unlimited.  As Sean says, some of the laws of physics and vendors suggest otherwise.  So I think all of us, as you've heard in this proceeding, face in the short run capacity issues, probably none more so than as you were discussing with Telesat and the satellite guys, what's going to happen to that business as there is more HD and people asking them to carry more.

8189             I think this starts to become not only an issue of dispute between distributors and specialty services but will be an issue of potentially some distributors using it, depending on their capacity requirements, to get a competitive advantage over other distributors, which is probably why Rogers was so happy to sort of say well, you know, local into local is okay for satellite.  We only really offer distant signals because we're competing.

8190             You are going to have some mess in the short run.

8191             I think, again, take distant signals, for instance, I think the long‑run solution is not to change the rules today but to serve the need the people are going to distant signals for, which is more flexibility in how they watch their programming.

8192             Again, it may be that for some services putting the rights they acquire through an on‑demand window may be better than using up a lot of linear capacity on the ‑‑

8193             COMMISSIONER CUGINI:  You put three subjects into one question.

8194             MR. HENNESSY:  Yes.  I know.  I know you are probably pressing for the break.

8195             COMMISSIONER CUGINI:  No, no.  My point is ‑‑

8196             MR. HENNESSY:  You could be franker and just say could you say that in a comprehensible fashion, please.

8197             COMMISSIONER CUGINI:  I just need an answer to which should be the obligation.

8198             MR. HENNESSY:  I would say that the obligation has to remain today on SD.  I don't think that you can move to an HD must carry requirement until all elements of the system demonstrate that there really is the capacity to carry all that without pushing things out, recognizing that at the end of the day the Commission still has the right to determine what gets carried.

8199             COMMISSIONER CUGINI:  Thank you.

8200             MS MAINVILLE‑NEESON:  If I might add with respect to the HD ‑‑ because of course I can understand that the broadcasters are very concerned that as they make that transition, they want to ensure carriage of the HD service.

8201             There may be an interest in the Commission establishing rules for a certain minimum amount of programming, and it would have to be significantly high.

8202             If you reach that threshold, perhaps there is mandatory carriage for the HD, at which point there is that swap.  We don't have to carry both.

8203             COMMISSIONER CUGINI:  Thank you.  I appreciate that.

8204             Preponderance.  And if I've missed it in your written submission, I do apologize.

8205             What is your position on preponderance?

8206             MS MAINVILLE‑NEESON:  Fifty per cent plus one on services received.

8207             COMMISSIONER CUGINI:  So you reject the CBC two‑thirds?

8208             MS MAINVILLE‑NEESON:  Absolutely.

8209             COMMISSIONER CUGINI:  Okay.

8210             One more question about the Network PVR, just so I understand.

8211             Whose responsibility is it to make the capital expenditure?  Is it the broadcaster or the distributor?

8212             MR. HENNESSY:  It's the distributor.  You share the recovery of that between all the people that benefit from it.

8213             COMMISSIONER CUGINI:  I'm at home.  How does it work for me as a TELUS subscriber and you have installed the network PVR?

8214             MR. HENNESSY:  Sean...?

8215             MR. RUZICKA:  There are two different ways it could work, but the primary way that we would envision it working is that you would have your on‑screen guide, just the prosaic grid guide, where you would be able to scroll either forward or backward in time to find a program and either set it for future recording or pull it back from a previously recorded episode that is stored in our network.

8216             The other way that it can also work is through a search and recommendation engine, where we would promote something that happens say within a predefined period of time, either future or post hoc.

8217             COMMISSIONER CUGINI:  And is there an opportunity for the broadcaster to brand its show?  Let's continue with the "Desperate Housewives".  On a network PVR, is there a way for CTV to brand the fact that it is CTV that is bringing you "Desperate Housewives"?

8218             MS HALE:  In two ways.  They brand it now even on the ‑‑

8219             COMMISSIONER CUGINI:  On linear, of course.

8220             MS HALE:  ‑‑ with their little logo on the bottom.  But the way network PVR would work is the main access point for getting the program is off the linear channel.  So off the guide that you see now, normally you would go to Channel 8 or CTV and you scroll along, so you will find ‑‑ we will continue with the "Desperate Housewives" analogy.  You would find "Desperate Housewives" off that linear CTV branded channel and access it from there.

8221             COMMISSIONER CUGINI:  All right; thank you.

8222             Thank you, Mr. Chairman.

8223             THE CHAIRPERSON:  I have a question.

8224             On this MPVR, you are the first person who mentioned it.  Have you let the cat out of the bag here or why has another BDU not even mentioned the concept?  Until today I've never heard of it and none of us ‑‑

8225             MR. HENNESSY:  You know, I think that ‑‑ and I'm sure if we listen to Mike Lee in other proceedings, we would probably find mention of that.

8226             I think one of the reasons is initially the distributors' strategies may not have been correct.  As Ann suggested, the first sort of cut cablevision took at it was just to say we're going to take all the programming other people have rights to off the TV and we're going to put it up there for free, or whatever, and it will all be great.  And that led to lawsuits.

8227             We spent the last couple of years saying okay, we looked at the broadcasters in a very traditional distributor fashion as our enemies, just as in a very traditional fashion they often do, as you have probably seen over the last couple of weeks.

8228             That was a huge mistake because what that led us to was to try to lobby for changes to the Copyright Act for fair use amendments that would allow us to do this because it was a reasonable extension of the consumers' rights to watch what they want, when they want.

8229             I think as more rational people like Maria Hale joined the company with experience at broadcasters like CHUM ‑‑ so there are benefits of less diversity; we get Maria working for us ‑‑ is that the logical model came along.

8230             If you want to promote the scenario, you use the broadcaster brand.  You get the rights through them because they have the rights.  You cut a deal with them and it becomes, rather than Copyright Act or asking the Commission for all kinds of permission, you do a deal.  And if you do a deal with enough broadcasters, then you have sufficient content on the thing.

8231             The big benefit for us is not only that it extends on demand and makes peoples stickier to the system, but then you don't have to invest a whole bunch of money in expensive set‑top boxes that include PVRs that you have to swap out all the time because technology changes.

8232             So it is a win‑win.  But like many things in this regulatory process, we all come to the table sort of with our old paradigms, old battles and somehow never get to the future because we think the other guy is going to somehow sneak one by us.

8233             THE CHAIRPERSON:  But there is no existing PVR system in Canada right now and there are no rules for MPVR either, as far as I understand it.

8234             MS HALE:  Yes.  I was going to jump in on that one too.

8235             You probably haven't heard about it because there is a lot of work to be done still.  I think again what we are talking about here is not too far in the distant future.  But the conversations and the real work still needs to go on to make it a reality.

8236             I think this is a good opportunity just to put some things like distant signals in perspective because a lot of that is trying to get us to where we want to be.

8237             THE CHAIRPERSON:  But listen to your colleagues.  There is a model in Europe.

8238             MS HALE:  Absolutely.

8239             THE CHAIRPERSON:  So the technology is there.

8240             MS HALE:  Yes, but we have to do the work here.

8241             MR. RUZICKA:  But I think the distinction is where the work is and the work is really on the business terms, in terms of making sure that a viable economic framework exists so that we can make the investment to actually build the technology.

8242             The technology is not exorbitantly expensive, nor is it actually platform‑specific.  I think that is probably a very important take‑away for the panel; is that shaw has looked at doing this before.  I believe Rogers would like to do this.

8243             THE CHAIRPERSON:  Yes.

8244             MR. RUZICKA:  It's a natural for an IPTV platform like TELUS.  The challenge is absolutely centred around the copyright for the actual content itself and striking reasonable contract terms to do so.

8245             THE CHAIRPERSON:  But regardless of that, the business model and the technology, et cetera, you have also put on the table a regulatory issue which until today we didn't even know about and which might have implications for this whole proceeding.

8246             Anyway, we will reflect on that.

8247             Thank you very much.  I think we will take a ten‑minute break, Madam Secretary.

‑‑‑ Upon recessing at 1048 / Suspension à 1048

‑‑‑ Upon resuming at 1106 / Reprise à 1106

8248             THE SECRETARY:  We will now hear the presentation of Mr. Lee Weston.

8249             You have 15 minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

8250             MR. WESTON:  I would like to thank you people for the opportunity to present today.

8251             Most of what I will be talking about relates to the independent community channels and the effects that some of these changes might have on them.

8252             I will start with BDU community channel advertising.

8253             The Dunbar‑Leblanc Report suggests that BDU community channel advertising rules be altered to match the commercial stations.  This is a horrible idea.  It will both reduce community access to those channels and wipe out the independent community channel class entirely.

8254             First, some misconceptions.

8255             BDU community channels are cute, cuddly things.  No, some are large networks.

8256             Community channels can't advertise.  They can and they do.  It is under rules designed for them, which are in some ways more restrictive, but in some ways more liberal than other stations.

8257             Last year Rogers had 2.3 million households, and its community network had a budget of $73 million.  This year it is up to 3.4 million households.

8258             Rogers wants some of its programming, such as "Enfamil Nine Months", on every single one of its English‑language community stations, spanning four provinces.

8259             Nor is it shy about exploiting commercial opportunities.  "Enfamil", the show's title, is the name of the sponsored brand of baby formula.

8260             If you make community networks larger operations, how many vice‑presidents of community programming do you get to before you start to exclude the community from community programming?

8261             How many dollar signs do you put in front of increasing ratings before you start excluding community and community programming?

8262             The BDU community channel regulations were never designed to withstand the stress of such large fiscal incentives to increase ratings.

8263             Dunbar‑Leblanc made no comment on the effect of their proposal on the independent community class.  It would wipe out that class before it really got started.

8264             The unlicensed incumbent BDUs enjoy so many benefits over the licensed independent stations ‑‑ use of local avails, no backhaul expenses, great channel placement and more ‑‑ that to let them compete directly with the independent stations for advertising is unfair in itself.  But ‑‑ and this is the most, I think, important point about this ‑‑ BDU channels already fund themselves from a percentage of subscriber fees alone, so they can always undercut the independent station's advertising rate, right down to zero dollars.

8265             Community OTA carriage fees.

8266             A licence‑classed, community‑based television programming undertaking contains two categories.

8267             These sub‑categories are all major licensing criteria with respect to ownership, programming, financing and licensing.  They differ only in the method of distribution.

8268             One category's carriage is basically the same as conventional OTA, including local analog carriage.  Or, if there is no analog available, digital.

8269             The other category's carriage is digital cable only, and no OTA.

8270             I will focus on the OTA one.

8271             I would like to suggest, rather than considering conventional OTA and community OTA as separate issues, that you consider them together, varying your decision only if there is a reason.

8272             How do they differ?

8273             Commercial OTA is affected by the cost of U.S. programming.  Community OTA isn't.

8274             Community OTA is so far in the front lines of the YouTube innovations that one really has to wonder if they are going to become cannon fodder.

8275             The resale value of commercial local programming is low.  The resale value of community local programming approaches zero.

8276             These differences don't seem to be significant enough to justify different approaches.

8277             I am not going to present arguments for the carriage fee, because others already have.  I can see from people that you have been here awhile hearing those.  But I will say that the Commission gets itself all tied up in knots about the type of carriage, at the cost of considering the station's role in the broadcast system, its responsibility under the Act, et cetera.

8278             I know you have this problem because last year the Commission scheduled its first hearing for the category of community channel whose carriage resembles a specialty channel, and, by mistake, it was heard as a specialty channel application.  I was involved in that, and I will stop there on that.

8279             The summary so far:  BDU community channels' advertising should be left as is.

8280             The Dunbar‑Leblanc proposal would harm local expression on the BDU channels, and it would wipe out the independent community channels.

8281             Carriage for OTA ‑‑ commercial and community OTA should be treated the same or similarly.

8282             OTA ‑‑ over‑the‑air broadcasting:  Industry Canada's official plan is to eliminate, as fully as possible, the spectrum that community OTA uses ‑‑ unallocated spectrum.  Inside Industry Canada is a strategic plan to eliminate all OTA ‑‑ all over‑the‑air broadcasting.

8283             I am not talking about converting analog to digital, I am talking about eliminating all OTA.

8284             Don't bother asking Industry Canada about it; you will get back a party line stating that it supports OTA.

8285             If you look in my intervention on this topic, you will find the quotes of the source documents.

8286             That will hurt OTA broadcasters' revenue, eliminate one of the distinctions between conventional and specialty broadcasters, and, thus, support a carriage fee for OTA.

8287             The general view seems to be that OTA is dead because it has to be dead.

8288             The U.K.'s conversion to digital was designed to address what the public wanted from OTA.  Canada's was not.

8289             A decade after Canada began its conversion of OTA to digital, viewership seems to be around 1 percent; while in the U.K., which started later, viewership is 35 percent of the market.

8290             OTA does not suck.  Canada's OTA policy does.  Both Industry Canada and this Commission have played a role.

8291             If Canada could approach the U.K. numbers, then OTA broadcasters would not need a carriage fee, and the Canadian public would save about $1.5 billion a year in subscription fees.

8292             If we are prepared to accept that Canada's over‑the‑air policies are as good as we are likely to get, then I support the carriage fee, and expect over‑the‑air broadcasting to become meaningless as a means of distribution.

8293             But if we think we can do a lot better, then don't grant the carriage fee.  Because, once you do, the OTA broadcasters will oppose anything that moves viewers back from the BDU to OTA.

8294             In summary ‑‑ and I am repeating some points ‑‑ BDU community channel advertising should be left as is.

8295             The Dunbar‑Leblanc proposal would harm community expression on the BDU channels, while wiping out the independent community channel class.

8296             Carriage for OTA ‑‑ commercial and community should be treated the same or similarly.

8297             And don't tunnel in on carriage mechanisms.

8298             Over‑the‑air broadcasting ‑‑ I think it's a choice between book the funeral or resuscitate it.

8299             Don't grant OTA broadcasters a carriage fee now if you plan to resuscitate OTA.

8300             Thank you very much.

8301             THE CHAIRPERSON:  Thank you.

8302             Let me pick up on the very last thing that you said:  Either book the funeral or resuscitate it.

8303             If I take your advice, what do I do to resuscitate it?

8304             MR. WESTON:  In Canada we made a choice with our over‑the‑air, and we decided to go for HD.  This was an important thing.

8305             The U.K. decided to go for quantity.

8306             I chose the U.K. example because it is about the most successful in the world.  Freeview offers 25 channels, standard definition, and this seems to be what gets the public's attention.

8307             If you think of it, why did people convert from OTA to cable in the first place, decades ago?  What were the big pushes?

8308             They wanted more selection, better reception, and to get rid of that big, huge antenna in their backyard.

8309             The last two points aren't really within the Commission's control, those are Industry Canada things, the reception and the big antenna ‑‑ and I think we may have a problem, because I believe that we have the world's worst digital transmission system ‑‑ but the first one, choice, is.

8310             Now, I don't know ‑‑ I mean, the BDUs would probably scream to hear me say it, but 25 channels, standard definition, got 35 percent market share in the U.K.

8311             Right now we have, typically, five over‑the‑air channels ‑‑ I believe that is the quoted number ‑‑ in communities in Canada running HD.  That could be switched to, say, five standard definition channels.

8312             The thing is, right now, with OTA viewership, no one is deciding what programming to produce on the basis of the people watching OTA.  It won't make any difference to how much HD or SD programming is produced.

8313             THE CHAIRPERSON:  But, I mean, we have mandated conversion to digital by 2011, so you are going to have your 25 HD channels in 2011 ‑‑ your 25 digital channels.

8314             MR. WESTON:  No, you are going to have ‑‑

8315             What I am suggesting is, right now you are going to have the same number as you have analog channels, which will typically be five or six, I think, across Canada.  Those channels, if run as multiplexes, could support 25 standard definition ‑‑

8316             THE CHAIRPERSON:  Okay.

8317             MR. WESTON:  That's what the U.K. is doing, they are running multiplexes.

8318             THE CHAIRPERSON:  All right.

8319             Ron, I believe you have some questions.

8320             COMMISSIONER WILLIAMS:  Yes, I do, Mr. Chair.  Thank you.

8321             Good morning, Mr. Weston.  In your presentation today, and in your written remarks, which are quite detailed, you spent quite a bit of time talking about a couple of Industry Canada documents that you believe are relevant to the current process.

8322             MR. WESTON:  Yes.

8323             COMMISSIONER WILLIAMS:  One of them being a strategic plan to eliminate all over‑the‑air public broadcasting.

8324             MR. WESTON:  Yes.

8325             COMMISSIONER WILLIAMS:  And the other, an official plan, already partially implemented, which would eliminate over‑the‑air community TV broadcasting.

8326             MR. WESTON:  Yes.

8327             COMMISSIONER WILLIAMS:  Keeping those two reports in mind, as I work my way through my questions, you can refer to them.

8328             How old are these reports, or how new are these reports?

8329             MR. WESTON:  The community channel one, which is an official plan, not a strategic plan, is dated September 26, 2006.

8330             COMMISSIONER WILLIAMS:  It is relatively recent.

8331             MR. WESTON:  Yes.  I remember the date because it's the day before my birthday.

8332             The other one is "Strategic Plan ‑ 2007‑2010".  It is not planning to implement the elimination in that period, but that's what it is called.

8333             COMMISSIONER WILLIAMS:  You also refer to the Dunbar‑Leblanc Report, which suggests that BDU community channel advertising rules be altered to match those of commercial stations.

8334             You talk a bit about that, also, in your written submission.

8335             Can you tell me why, specifically, it will reduce community access to these channels, and how you see it, in your words, wiping out the independent community licence class?

8336             MR. WESTON:  I would like to take them in the other order, if that's okay with you.

8337             COMMISSIONER WILLIAMS:  That's fine.

8338             MR. WESTON:  The first thing is to realize just how many benefits the cable companies have over an independent station to start with.  One of them TELUS was talking about, VOD.

8339             Rogers, in Toronto, now has permission to run its community channel programming on VOD, to create VOD community programming.

8340             And I did list some things, like use of local avails to promote it.

8341             We can't ignore the fact that these cable companies are incumbents.  I mean, they have been doing it for 30 years, they must have developed some skills ‑‑ the backhaul fees and stuff like this.

8342             The thing to also think about with some of these advantages is that a community station is dependent on people voluntarily contributing material, or contributing their time.

8343             A commercial broadcaster can go and get content from people by offering them more money, but usually, with community programming, what they want is to see more carriage.  That is what they are interested in.  So these are important.

8344             The big one, though, is ‑‑ let's say that you make that change tomorrow.  All of the community channels ‑‑ the BDU community channels know how to pay their bills, so any advertising sales they get would be a bonus.

8345             The independent channel is relying on that advertising sale to pay the light, the rent ‑‑ and, oh, yeah, for the programming.

8346             So the BDUs will be able to undercut their advertising rates and push them out of business, if they want to.

8347             I think that is going to be more of a problem in the smaller areas.  When I speak of Rogers and their things, I think they are so big that I don't think they are actually even going to sell down into that market.

8348             So I think that you will find that more of a problem elsewhere.

8349             COMMISSIONER WILLIAMS:  If I am to understand you, we would find the lack of success, or the threat to the independent community channels in the smaller communities, rather than the larger centres that have these other community channels run by the BDUs?

8350             MR. WESTON:  I would think so.

8351             I am thinking specifically of the Rogers' situation.  They are so big that I don't think they would actually end up selling local advertising.

8352             I did mention the more liberal rules.  I don't know what you were thinking of doing about this, but right now BDU community channels have no restrictions on local, regional or national advertising; whereas the independent ones are restricted solely to local advertising.

8353             COMMISSIONER WILLIAMS:  Do you view that as a bad thing, that you are restricted to local advertising and being a local community channel?

8354             MR. WESTON:  Personally I don't, with a caveat.  The Commission has no formal definition of what local advertising is, so it could be tricky.

8355             You also asked how it harms the content on the BDU community channels themselves.  You have to remember that these regulations for the BDU channels have evolved over time.  There have been many changes made to them.  They were never thought of from the beginning as selling commercial advertising.

8356             So those regulations aren't really appropriate for protecting community programming in that situation.

8357             You guys know the numbers better than I do.  How much would a minute of advertising on Rogers' English‑language community network be worth per rating point?

8358             If I said to you, "Instead of putting the local quilting society on, we will put this quasi‑community programming on and it will get us 4 more rating points," how many dollars is that worth across Rogers' entire community network?

8359             Because they are running programs across their entire community network.

8360             It seems to me that that is a really strong incentive to push the community out of community programming.

8361             COMMISSIONER WILLIAMS:  Since we have a future proceeding on community channels, I am going to try to pull our discussion back a little closer to the issues before us today.

8362             MR. WESTON:  Okay.

8363             COMMISSIONER WILLIAMS:  In terms of the basic cable package, should an independent community channel be part of that package?

8364             What are your views with respect to the content of the basic package?

8365             MR. WESTON:  Right now, my understanding is that it has mandatory carriage.  I think that it is vital that it does have mandatory carriage, and there are a couple of reasons for that.

8366             One is, it is the only case where ‑‑ pretty much every cable company has its own community channel, and an independent channel would be competing directly with it.

8367             So you can't really expect the cable companies to be putting these things on voluntarily.

8368             The second reason is 3.1(b) of the Broadcasting Act.

8369             Community programming is pretty much ‑‑ in the sense of the two together ‑‑ is pretty much a direct implementation of the Act, and it has to be there.

8370             I would compare this to, say, a specialty channel.  That is a very constructive interpretation of the Act.  If specialty channels disappeared tomorrow, you would still meet the primary objectives ‑‑ or the objectives in 3.1(b) of the Broadcasting Act.

8371             If community programming disappeared tomorrow, there would be no broadcasting system in Canada, technically, if you read the Act.

8372             So, yes, I think they should have mandatory carriage.  I can't see how it would work otherwise.

8373             Actually, I can tell you what the next one is.  We all know that community television's ratings are going to be terrible.  They always are.  I'm sorry, but if you have two attractive women having sex on TV, it will always outweigh community television.

8374             But if you look at the mandate of the Broadcasting Act, I think you will know which one should be there, or which one is more important.

8375             COMMISSIONER WILLIAMS:  I don't know if we could agree with that, but thank you for your point of view.

‑‑‑ Laughter / Rires

8376             MR. WESTON:  You are disagreeing with me that the community channel will always have really bad ratings?

8377             COMMISSIONER WILLIAMS:  In terms of fee for carriage, you said that point has been argued well by others, so you weren't going to make any comments.

8378             In your written presentation you suggested a 15‑cent fee.  Can you describe how you arrived at that number, and who would it be applied to, and where you would be spending the money?

8379             MR. WESTON:  First of all, rather than describe how I arrived at that fee, I would say that I am unqualified to actually determine a fee.

8380             I did the best I could, but I just made up the number.  It seemed like a nice number.

8381             It would apply to independent community channels who enjoy mandatory carriage within their mandatory carriage area.

8382             So when an independent community channel applies and says, "That's my carriage area" ‑‑ and there will be a big discussion about where the cable companies go.  "We don't want to carry it there," and stuff like that.

8383             When the Commission makes that decision, that would be, effectively, determining the people who get the carriage ‑‑ the number of people that the carriage fee would be applied to.

8384             COMMISSIONER WILLIAMS:  Mr. Weston, looking through the balance of your presentation, it seems to be dealing primarily with matters directed specifically toward the community channel.

8385             MR. WESTON:  Yes.

8386             COMMISSIONER WILLIAMS:  So those comments are probably best reserved for another proceeding, Mr. Chairman.

8387             MR. WESTON:  I would like to raise the point that the call specifically says OTA broadcasters, and community channels are OTA broadcasters.

8388             THE CHAIRPERSON:  You are absolutely right.

8389             You have made your submission, we heard your comments, and I think those are the questions we have.

8390             Thank you very much.

8391             MR. WESTON:  Thank you very much.

8392             THE CHAIRPERSON:  Let's take a five‑minute break before we hear the next presenter.

‑‑‑ Upon recessing at 1128 / Suspension à 1128

‑‑‑ Upon resuming at 1132 / Reprise à 1132

8393             THE CHAIRPERSON:  Madam Secretary, who will we hear from now?

8394             THE SECRETARY:  We will now hear the presentation of Bragg Communications.

8395             Please introduce yourselves.  You will have 15 minutes for your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

8396             MR. McKEEN:  Good morning, Mr. Chairman, Commissioners and Staff.  I am Dan McKeen, co‑CEO of Bragg Communications, also known as Eastlink, Persona and Amtelecom.  We have numbers of brands.

8397             THE CHAIRPERSON:  Make up your mind, which one is it?

‑‑‑ Laughter / Rires