ARCHIVED - Transcript, Hearing 2 February 2011
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Volume 2, 2 February 2011
TRANSCRIPT OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
To consider the broadcasting application by BCE Inc., on behalf of CTVglobemedia Inc. and its licensed broadcasting subsidaries, listed in Broadcasting Notice of Consultation CRTC 2010-926, 2010-926-1, 2010-926-2 and 2010-926-3
140 Promenade du Portage
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.
Canadian Radio-television and Telecommunications Commission
To consider the broadcasting application by BCE Inc., on behalf of CTVglobemedia Inc. and its licensed broadcasting subsidaries, listed in Broadcasting Notice of Consultation CRTC 2010-926, 2010-926-1, 2010-926-2 and 2010-926-3
Konrad von Finckenstein Chairperson
Leonard Katz Commissioner
Elizabeth Duncan Commissioner
Rita Cugini Commissioner
Louise Poirier Commissioner
Stephen Simpson Commissioner
Lynda Roy Secretary
Stephen Millington Legal Counsel
Rachel Marleau Hearing Manager and Manager of Corporate Analysis and Ownership
140 Promenade du Portage
February 2, 2011
- iv -
TABLE OF CONTENTS
PAGE / PARA
Telus Communications Company 275 / 1626
The Canadian Media Production Association (CMPA) 305 / 1790
Cogeco Cable Inc. 341 / 2003
Public Interest Advocacy Centre (PIAC) 376 / 2171
Media Access Canada (MAC), on behalf of the Access 2020 Coalition 390 / 2242
Patrick Brown, Member of Parliament, Barrie 418 / 2420
MTS Allstream Inc. 426 / 2466
Alliance for Equality of Blind Canadians 442 / 2554
Peter Lowry 454 / 2617
Canadian Association of Community Television Users and Stations (CACTUS) 471 / 2727
- v -
PAGE / PARA
Undertaking 406 / 2355
- vi -
PAGE / PARA
"...about non-applicable programming..."
"...about non-replicable programming..." 51 / 270
"...and so they must have programming and make..."
"...and so it is "must have" programming and
they make..." 51 / 271
"...terms; non-applicable must have programming,
really most of it is applicable."
"...terms; non-replicable "must have" programming,
really most of it is replicable." 51 / 272
--- Upon commencing on Wednesday, February 2, 2011 at 0903
1622 THE SECRETARY: Order, please. À l'ordre, s'il vous plaît.
1623 THE CHAIRPERSON: Okay, commençons.
1624 LA SECRÉTAIRE: Merci, Monsieur le Président.
1625 We will begin today with a presentation of TELUS Communications Company. Please introduce yourselves for the record and you may proceed with your 10-minute presentation.
1626 MR. HENNESSY: Thank you, Madam Secretary.
1627 Good morning, Mr. Chairman. Before we start I will, as requested, introduce our panel.
1628 On my left, your right Ann Mainville-Neeson, our Director of Regulatory Policy who you all know well; on my far right, your left is Richard Stursberg, our Senior Advisor on Media and Entertainment; and to my direct right is Blair Miller, our Vide-President of Content for TELUS.
1629 Mr. Chairman, Commissioners, thank you for the opportunity to comment on Bell's application to acquire control of some of the most attractive broadcasting properties in Canada.
1630 TELUS does not oppose the transaction, but we do consider that safeguards to protect competition and consumer choice are essential when allowing increased vertical integration in the industry.
1631 The need for safeguards to prevent anti-competitive behaviour stemming from vertical integration is not unique to Canada. Most recently in the U.S., with respect to the Comcast/NBC Universal deal, safeguards were put in place by the Federal Communications Commission and by the Department of Justice to ensure fair competition on both traditional and emerging distribution platforms.
1632 Yesterday we listened with interest to the discussion between the Commission and BCE about content exclusives. The BCE executives were clear that they wanted exclusives and said as much in their opening comments.
1633 Now, the Commission has a long history of prohibiting exclusive carriage of content on traditional platforms. It's considered an undue preference. Consumers have never had to choose between taking a satellite or a cable service simply to get access to all the programming services available in Canada.
1634 Exclusives are also prohibited on video-on-demand platforms because these services form an integral part of the distribution service. The recent CRTC decision in favour of TELUS, and ironically Bell, over access to content for the VOD platform was very clear that the exclusive offering of TVA programming on Videotron's VOD service conferred an undue preference on Videotron. The Commission noted in its decision:
"...the emerging role of VOD in the BDU business model..."
1635 And that:
"...healthy and viable competition between BDUs is an effective and appropriate means of promoting greater choice for subscribers and spurring innovation with a view to achieving a number of the policy objectives..."
1636 Including affordable rates.
1637 Now, while that decision dealt directly with access to content on the VOD platform, the rationale behind the decision is equally applicable, in our view, to other emerging platforms like wireless and the Internet.
1638 Access to content on "new media" platforms is increasingly important. Mr. Cope himself, in his opening comments yesterday, noted that:
"With major advances in technology, we moved to a three screen world, with the addition of online and mobile viewing of content. And last year we added a fourth screen, the tablet."
1639 We agree wholeheartedly with this statement. That is why TELUS has been attempting to negotiate access to content from CTV for some time, including the BNN content that Mr. Cope was proud to note they had launched.
1640 He went on to say that BCE/CTV would be open to supplying this content on a commercial basis, but at this point it is completely exclusive to Bell Mobile TV.
1641 Bell launched BNN on mobile on September 6th, a full five months ago, and yet they continue to drag their feet regarding any negotiations to offer this same content to us. They stall by saying they haven't fully developed their business plan for these mobile content rights, and yet their alleged absence of a business plan regarding the mobile rights hasn't prevented Bell from launching the content on their own mobile service.
1642 The restriction on carrier exclusives has always extended beyond vertical integration. Exclusive content arrangements concluded between a third party and a carrier -- which is not always a licensed broadcasting undertaking -- have always been considered contrary to the public interest.
1643 Accordingly, TELUS has filed a complaint against Bell concerning its exclusive distribution of marquee sports programming from the NHL and the NFL on its Mobile TV services.
1644 Our discussions with the leagues indicated that they would be open to providing sublicensing rights to Bell so that the content could be available to all. Exclusives regarding such marquee programming are harmful to competition and they are also contrary to the public interest because they restrict consumer choice by potentially tying access to the content to subscriptions to new platforms, like a wireless contract. Consumers should not have to sign multiple wireless contracts to obtain all the programming they want on these new emerging platforms or, alternatively, have to forego the content.
1645 There will undoubtedly be much discussion on the issue of exclusives in the upcoming vertical integration hearing, but in the interim the Commission should institute a moratorium on carriage of content exclusives by BCE and all of its affiliates, similar to the expectation placed on Shaw in approving its acquisition of the Canwest Global properties. In that proceeding:
"Shaw committed to the principle of programming non-exclusivity and, accordingly, to making available to its competitors in the Canadian broadcasting system, on negotiated commercial terms, mobile and broadband rights to television programming from Shaw's OTA and specialty services".
1646 The Commission stated in its decision approving that transaction that it expected Shaw to fulfil its commitments to the principle of programming non-exclusivity.
1647 Given the undue preference we believe Bell is granting itself with respect to BNN, NHL and NFL content on their mobile platform, and their oft stated intent to use exclusives to leverage their content acquisition, TELUS agrees with the Chairman that the commitment to no exclusives should perhaps be "volunteered" upon BCE.
1648 In fact, stronger action is warranted in the circumstances than in the case of Shaw. More than merely setting an expectation, TELUS submits that the Commission must not approve this transaction without a condition prohibiting BCE and all its affiliates from continuing to enter into exclusive "carriage of content" arrangements which have the effect of withholding content from consumers who choose another carrier.
1649 It will be critical to ensure safeguards are put in place which are effective and apply equally to all parts of the vertically integrated entity, avoiding loopholes which would enable by-pass of the intent of the safeguards. The issue of which of the BCE/CTV entities has entered into the exclusive arrangement is an issue of pure semantics given their vertical integration.
1650 By putting a condition on Bell concerning the use of carriage of content exclusives, the Commission will have given itself the tools to deal with any non-compliance in the event that enforcement is required. For example, a condition set out in a Commission decision makes it possible to use the mandatory power under section 12(2) of the Broadcasting Act.
1651 We consider that establishing a moratorium on carriage of content exclusivities pending the upcoming hearing on vertical integration will go a long way towards limiting the potential harm resulting from vertical integration prior to the June hearing.
1652 In conclusion, we submit that the Commission must not hesitate to take appropriate measures now in approving this transaction. At a minimum, we submit the Commission should impose the following conditions to approving BCE's acquisition of CTV.
1653 First, BCE/CTV, or any of its affiliates, shall not enter into any arrangements for exclusive "carriage of content" on any platform, including mobile and online.
1654 Second, we propose BCE/CTV will immediately make available to competitors all the CTV content it currently provides on its mobile and online platforms and, within 30 days, will negotiate commercial terms that are not worse than it provides to itself for providing this content.
1655 Third, BCE/CTV must file with the Commission all current affiliation agreements between Bell and CTV to serve as a baseline to determine allegations of undue preference in the future.
1656 Finally, the Commission should also rule expeditiously on TELUS' complaint regarding the undue preference that Bell is conferring to itself regarding its exclusive provision of the NHL and NFL content on its mobile platform and require the provision of this content as a condition of approving this transaction.
1657 Already Bell will be benefitting from the exclusive offering of the Superbowl on mobile, TELUS would like to see its complaint resolved in time to offer the NHL playoffs to its subscribers long before baseball season begins.
1658 Mr. Chairman, Commissioners, we would now be pleased to respond to your questions.
1659 THE CHAIRPERSON: Thank you for your submission.
1660 You were undoubtedly here yesterday and heard my discussion with Mr. Cope where I asked him to explain paragraph 19 of his opening statement, which I just couldn't understand.
1661 He says basically:
"We foresee ourselves, for example, generally adopting a subscription based wireless distribution model, much like the one currently used by specialty services in the linear broadcasting world.
There may be some cases where we choose to offer content that is exclusive to our services, but of course in whatever we do we will always respect the Commission's rules against undue preference."
1662 I said explain that to me. I mean at one point he's talking about exclusive and on the other he is talking about respecting the rules of undue preference.
1663 He then said: Well, you can't equate the two. Otherwise, why do you have the word "undue" there?
1664 You can't have an exclusive without undue preference.
1665 It seems to me that you are saying exactly the opposite this morning, you are saying automatically exclusive -- by virtue of being exclusive gives the holder an undue preference over competitors.
1666 MR. HENNESSY: Yes, absolutely correct.
1667 And, I think, to Mr. Cope's point, if we start from the traditional business, where the rules are crystal clear, in both the linear broadcast and in the case of VOD, there is absolute certainty that exclusivities are undue preference. There has never been any doubt. It has nothing to do with vertical integration; it has everything to do with consumer choice, competition in the system, so that rates are affordable, and there is innovation, and the development of innovative and emerging distribution platforms.
1668 In our view, when the Commission instituted its undue preference rule and stated, "Our undue preference rule applies not only in the traditional space, but also in the mobile and broadband space," in your New Media Decision, you set the framework for applying a consistent policy across all distribution platforms, which, as we move through a convergence environment, are becoming very much the same.
1669 THE CHAIRPERSON: You do not foresee -- you can't think of an example where you would have an exclusive which would not be an undue preference?
1670 MR. HENNESSY: Yes, I would say that should be the general policy of the Commission, and it should be considered an undue preference on a prima facie basis, and it should be up to somebody to actually have to come before you, if they think there is some type of application that would meet the public interest and void that test.
1671 I am not saying that nobody could ever come before you and say: I have this thing. It is exclusive. We don't think it's an undue preference. Could you give us approval?
1672 But as a general principle, just as it clearly applies in all of the markets that you explicitly regulate today, you start from the premise that exclusives are not permitted.
1673 THE CHAIRPERSON: But don't you have to bring in the idea of replicability, whether this can be replicated or not?
1674 I can see how you would make that argument in sports. Like you say, an NHL game is an NHL game, and it can't be replicated.
1675 BNN is a business news service with some interesting discussion. There is no reason why somebody else couldn't replicate that, besides their other ones, et cetera.
1676 In order to determine whether the exclusive is undue or not, don't you have to take into account, in effect, the ease and the cost of replicating the program?
1677 MR. HENNESSY: No, I don't think that has ever been the test. I have heard --
1678 THE CHAIRPERSON: I know that it hasn't been, but now --
1679 MR. HENNESSY: No, because I think you work backwards in terms of the system. The number one principle is: Can consumers get access to all the broadcast content, distributed through the Canadian broadcasting system --
1680 Whether it's on the regulated or exempt side, it's still part of the system.
1681 Can consumers get access to that in an easy fashion, without being forced into making decisions as to which carrier they subscribe to?
1682 The reason for that is, one, to maximize consumer choice; two, as you have said, to promote competition, particularly on emerging platforms; and three, to ensure that all content in the Canadian broadcasting system is accessible to all Canadians.
1683 THE CHAIRPERSON: Okay. Rita, do you have some questions?
1684 COMMISSIONER CUGINI: Yes, thank you.
1685 Good morning. I do have a few follow-up questions and, true to form, your oral remarks this morning were concise and to the point. So, for the most part, I am going to ask you to react to some of the things that the Bell group said to us yesterday.
1686 On the issue of exclusivity, Mr. Cope said that it is oftentimes, or sometimes, the content provider who demands exclusivity.
1687 Has that been your experience with TELUS?
1688 MR. HENNESSY: No.
1689 Mr. Miller has actually spoken in the case of the two sports issues before you, the NHL and the NFL. He has talked to both suppliers in this matter.
1690 MR. MILLER: Thank you.
1691 In this case, not having spoken with the leagues directly about the deal with Bell, obviously, our experience has been that deals are typically done on a non-exclusive basis.
1692 In this deal, with the NFL and NHL in particular, there may have been those requirements, but I am unsure if they were sought by Bell, so I feel somewhat uncomfortable making that statement.
1693 However, we asked the leagues whether they would entertain sub-licensing, and they said, in a discussion with Bell, that they would entertain such discussions.
1694 COMMISSIONER CUGINI: But outside of those two examples, you have not had the experience that any other content providers have come to TELUS and said, "We can offer you exclusive content on your mobile platform," for example?
1695 MR. MILLER: That's correct.
1696 COMMISSIONER CUGINI: Independent producers or any such content provider -- no one.
1697 MR. MILLER: That's correct.
1698 COMMISSIONER CUGINI: Okay. Thank you.
1699 Another thing that Mr. Cope talked about quite emphatically yesterday was the issue of reciprocity, and I suppose it's understandable when you are talking about other BDU and mobile platform providers who also own content, but that certainly isn't the case with TELUS. You don't own any specialty services or conventional television operators.
1700 Do you see an opportunity for reciprocity with Bell?
1701 MR. HENNESSY: Yes, I don't think that they had us in mind, in particular, when they made that comment.
1702 As I understood Mr. Cope's point, it was very much the point that the Shaw panel made in Calgary: Why should I agree to these rules, at this point in time, if my competitors are not also subject to these rules?
1703 And the Commission, in the case of Shaw, said: When we get to Bell, we will deal with them.
1704 I would say that Mr. Cope's point was: Well, what about Videotron and Rogers?
1705 And here is, maybe, a simple proposition to help answer his question.
1706 You have both Videotron and Rogers appearing before you tomorrow, so the opportunity is there to say: Do you have any objections to non-exclusivity? Do you have any objections to confidentiality?
1707 I think it's quite possible that the answer will be no. But if the answer is, "Yes, we do object," then I think it would be useful for the Commission to take what they did to Shaw and to apply it as a condition to Bell, but to also say: We believe that both exclusivity on mobile and broadband is a preference, and that confidentiality is a requirement for the industry, and, on a prima facie basis, we consider not to conform with that, no matter who you are, is an undue preference.
1708 COMMISSIONER CUGINI: You summarized, a little bit, one of the conditions of licence in your oral presentation that you also included in your written, and that is the first one: Shall not enter into any arrangements for exclusive carriage of content on any platform, including mobile and online.
1709 But in your written submission you said, "nor any content ancillary to this content. For example, related interviews or additional promotional content."
1710 Again, from the Bell panel we heard that perhaps it would be add-ons that would be exclusive, and you are saying that add-ons, also, should not be exclusive.
1711 MR. HENNESSY: I think the simplest line to draw is between broadcast and non-broadcast content, because that is where your jurisdiction lies. So applications that you may wrap around content, internet-type applications that provide you a certain look, brand, be a way to interact, should not be regulated, it's non-broadcast.
1712 But if it's broadcasting, and if it's being used by the enterprise to its own benefit, then we think, yes, it should be available to everybody.
1713 COMMISSIONER CUGINI: When you say broadcast, you are referring specifically to linear broadcasting?
1714 MR. HENNESSY: To anything that is defined as broadcasting under the Act. Video out-takes or an extra half-hour of footage for the show that was produced for a different platform, at the end of the day, it's still broadcasting. It's still related to -- it's programming related and it's programming.
1715 COMMISSIONER CUGINI: Thank you.
1716 Your second condition says that you will negotiate commercial terms that are not worse than it provides itself for providing this content to competitors.
1717 Again, we asked the Bell group yesterday, "What assurances do we have that these negotiations will be conducted in a timely and fair manner," and the answer was: The market will decide that. The market will take care of that.
1718 You don't agree with that statement, you want it to be enshrined in a COL?
1719 MR. HENNESSY: Yes, I think, absolutely, that one of the easiest ways is to ensure, while the negotiations are going on, that the programming is available, or that it's available, say, within 30 days of request.
1720 Mr. Miller, I think, could give a classic example of the BNN situation, which has been left to the market, and even though we have been negotiating for that content, it is still not available.
1722 MR. MILLER: Thank you, Michael.
1723 We have been pursuing, starting back in September, carriage of BNN mobile, and we have experienced numerous delays in getting to the table and seeing commercial terms for BNN mobile. Along with that, we were entering into general renewal discussions with CTV for carriage of the specialty channels. Both of those discussions have been, sequentially, pushed out.
1724 As Michael noted in the opening comments, we are now five-plus months before seeing commercial terms of BNN mobile, and we are still pursuing specialty carriage renewal discussions.
1725 COMMISSIONER CUGINI: I'm sorry, I have read a few of these now. Were you one of the parties that suggested that we ask Bell to file affiliation agreements in confidence with us, just to talk about these issues?
1726 MR. MILLER: Yes, that's correct.
1727 COMMISSIONER CUGINI: Thank you.
1728 My last question, which is another point that is common between your oral presentation and your written, is that the Commission adopt explicit timeframes for resolving disputes relating to access and undue preference.
1729 What is your recommendation in terms of what that timeframe should be?
1730 MR. HENNESSY: I will let Ann answer that question.
1731 MS MAINVILLE-NEESON: In order to be effective, we need to be able to have access to the content and resolve these negotiations on a timely basis, and timely may vary from case to case; however, it is a function of whether or not we have access to the content.
1732 So if there were an interim measure where we were able to get access to the content, negotiations could go on slightly longer, but it shouldn't take more than 30 to 60 days to negotiate any content.
1733 Certainly, when there are specific timelines due to the events, per se -- for example, we have been negotiating to get the Super Bowl. Now it's too late, it's coming up on Sunday.
1734 So it will be case-by-case, I believe, but timeliness should be measured in days, not in months.
1735 COMMISSIONER CUGINI: Thank you very much.
1736 MR. HENNESSY: I think, Commissioner Gugini, that you gave a great example of how to deal with timeliness in the decision you put out on Quebecor/TVA/Videotron last week, where you basically said: Make the content available now. You have 30 days to sit down and negotiate. If you are not able to, or are unwilling to come to terms within that period, then we will step in and mediate.
1737 I think that is the type of thing that really, really helps address the issue, and it's the same sort of thing that we have seen recently in the decisions around Comcast, we well. It makes a lot of sense.
1738 COMMISSIONER CUGINI: Thank you very much. Those are my questions.
1739 THE CHAIRPERSON: This point is obviously going to be a big issue in June. I would suggest that you reflect on it a bit more, and don't give me wishy-washy answers, but case-by-case. Give me what should be the general rule, and then, obviously, we would have the authority to override that, in case of urgency or specific events.
1740 I think it would be most helpful if you would give us a well-thought-out piece suggesting what the timeline should be, because I can see that these problems will become more in the future, not less.
1741 MR. HENNESSY: Yes, Mr. Chairman, our goal will be to be simple, explicit and categorical.
1742 THE CHAIRPERSON: Thank you. I love those words.
1744 COMMISSIONER KATZ: Thank you, Mr. Chairman.
1745 Good morning. I have two questions. One, you mentioned the NFL, the NHL and baseball, but the one you didn't mention is the CFL. And somewhere in the back of my mind I seem to recall, I think it was at the Shaw proceeding, where Shaw alleged that TELUS had entered into an exclusive arrangement with the CFL for the Grey Cup or some other game, I am not sure what.
1746 Can you just elaborate on what was and what is and could be in the future?
1747 MR. HENNESSY: Yes. Shaw was wrong, it happens. But Blair will clarify that.
1748 MR. MILLER: Commissioner, the deal that we have on a marketing basis with the CFL we are an exclusive category sponsor, we are not the only sponsor that the CFL has or marketing partner.
1749 With respect to the content and the broadcast of the games, absolutely not exclusive. In fact, Bell launched the content prior to TELUS introducing the content.
1750 COMMISSIONER KATZ: So what was it that TELUS had? Was it the add-ons that were proprietary to you and your customers?
1751 MR. MILLER: I am not sure where the assertion regarding exclusivity came from. We had a differentiated application which we branded, not different than Bell branding their own Bell Mobile TV application. We happened to call ours the TELUS CFL Mobile App.
1752 MS MAINVILLE-NEESON: The contract did allow us to use the logo, the CFL logo, on an exclusive basis. But the content itself was absolutely available to all providers, so that we were able to market it as being CFL football as opposed to whatever games and, you know, football. So it was just marketing exclusivity and not a content exclusivity. The games were available to all Canadians who wanted them.
1753 MR. MILLER: In fact, we licensed the content from CTV, who was very clear that they would not do deals on an exclusive basis, nor did we seek such a deal.
1754 COMMISSIONER KATZ: My last question refers to the future. We are all familiar with the fact that in Europe today on the wireless side people have multiple subscriptions, which is why penetration is greater than 100 per cent. And it is in order for pricing flexibility and other benefits I guess that we are seeing in Europe.
1755 Do you folks envision a day when people will have multiple subscriptions to wireless in Canada for the purpose of accessing content from different providers? And, if so, can you just expand upon the implications of that to Canadians? Because I think, technologically, it is probably possible.
1756 MR. HENNESSY: I think in Europe there has always been the ability to switch SIM cards on your phone because they are on the same standards. We are now on the same standards in Canada with the networks we built last year. And we have also announced that we are unlocking those phones so the consumers can switch. So that does increase the facility to do that.
1757 Whether, you know, the consumers necessarily want to switch cards, depending on what particular content they are watching or not, I don't know if that is an attractive proposition. But, you know, certainly the openness in the wireless business has shifted considerably.
1758 So does the unlocking of a phone mean that Canadians will be able to access the content no matter who the supplier is? Not necessarily or it may still require you to pay more because you have to get multiple subscriptions just for content than you would if you were getting it from one provider. I don't know that, so I wouldn't count on that being a panacea.
1759 COMMISSIONER KATZ: But with the unlocking of phones it is technically possible?
1760 MR. HENNESSY: Oh, yes. No, I said I think it is technically possible to be able to switch providers. I think it is probably technically possible to substitute a Bell card.
1761 And the issue is, you know, does the additional card come at a -- you know, multiple cards come at a higher cost which is, you know, part of the test, than it would if you were getting everything through a single supplier. And I think the answer to that is it is clearly, at this point, unknown and so I think whatever it is, it is not likely to be prevalent in the marketplace in the next couple of years.
1762 COMMISSIONER KATZ: Okay, thank you.
1763 MS MAINVILLE-NEESON: If I could also just add. What has developed in Europe is very much a function of small countries and roaming, you know, as people travel. Whereas if we are talking about accessing content, changing the SIM card, if that were possible, which I am sure it is or will be shortly, is quite consumer unfriendly. You have to pop out the battery, change the card, it is difficult.
1764 MR. HENNESSY: To your question, I think there is a technical possibility there.
1765 THE CHAIRPERSON: Steve?
1766 COMMISSIONER SIMPSON: Good morning, ladies and gentlemen. Mr. Stursberg, nice to see you again.
1767 Two quick questions just for clarification, anyone on the panel can answer. On third-party productions you have indicated the strong position that third-party production services would be the desirable direction to see productions funds flow.
1768 Is this exclusive in your mind of CTV being a partner in any third-party productions or would you want to see these be totally arms-length?
1769 MR. HENNESSY: Why don't I give that to Richard?
1770 MR. STURSBERG: Generally speaking, I think that they are going to be public benefits and they have to be available to people other than the people who are actually paying the benefit.
1771 Otherwise, they are private benefits and not public benefits and so, to the maximum extent possible, you want to make sure that the money is going to third-party producers that all the different television companies can in fact apply, could use the money.
1772 COMMISSIONER SIMPSON: Thank you.
1773 I think this one will probably go to you, Mr. Hennessy. With respect to undue preference, there is an arbitration process that is available. In your mind does arbitration work, given past performance and negotiating, you know, between BDUs and broadcasters? Is it something you have any faith in or would you like to comment?
1774 MR. HENNESSY: Well, I would be hard pressed to say it doesn't work, given the quality decision that came out of the Commission last week. I think the real issue is, and as I promised the Chairman in terms of clarity, is really the timing. While we sometimes joke, you know, it is important to ensure you get access to the NFL before the start of the baseball season. You know, that really is the issue, timeliness. Timeliness is critical. And I think enforcement is a critical issue as well.
1775 You know, so clear rules, the more clear the rules are the less you need arbitration. Where you have arbitration, timeliness is critical. And then enforcement to ensure that, you know, the appropriate incentives are there to comply. You know, in simple terms that is probably the model.
1776 COMMISSIONER SIMPSON: Thank you very much.
1777 THE CHAIRPERSON: Just before I let you go, one clarification. When you talk about content exclusivity, in especially the spots where it is obviously the most important aspect, you are only talking about the game, you are not talking about the game, you re not talking about the add-ons?
1778 If you want to have access to the content you mean, in effect, to the coverage of the game? If Bell or CTV puts all sorts of hoopla around special content to phone in all of these so-called add-ons, that's not what you want? You want to be able to put that game on your program and put on your own add-ons if I understand that correctly?
1779 MR. HENNESSY: I will give that to Blair. As I said, I think the answer is you do want some of the add-ons if they are part of the broadcasting content.
1780 MR. MILLER: My presumption, if Bell is going to pursue production and indeed to merchandise said content, that there is value, that they believe it is something that their clients will find compelling. And so I would be challenged to say that we wouldn't want access to it and that we would want to deny access to that content to, you know, over 70 per cent of Canadians.
1781 So I would say that we would want access to that content as well. Maybe there are rule sets that can be defined, but the general answer is we believe there is value there.
1782 MR. HENNESSY: If you asked, Mr. Chairman, where would I put the priority? Clearly, on the core content.
1783 MR. STURSBERG: Just a suggestion.
1784 No doubt that some of these subtler issues will arise in the course of the June hearing. But I think, as Michael was saying, at the very beginning of the presentation, the important thing is as we run through June and up until you make these decisions that we be very clear that there should be no exclusives at all until such time as we can clarify whatever exceptions there might be.
1785 THE CHAIRPERSON: Okay, thank you very much.
1786 Let's take a five-minute break and then we will hear our next intervener.
--- Upon recessing at 0940
--- Upon resuming at 0950
1787 THE SECRETARY: Thank you.
1788 We will now hear the intervention of the Canadian Media Production Association (CMPA). Appearing for the Canadian Media Production Association is Norm Bolen.
1789 Please introduce your colleagues for the record and you then have 10 minutes to make your presentation.
1790 MR. BOLEN: Good morning, Mr. Chairman, Vice-Chairs, Commissioners and CRTC staff. My name is Norm Bolen and I'm the President and CEO of the Canadian Media Production Association.
1791 I am pleased to have with me here today, to my left, John Barrack, CMPA's Chief Operating Officer and Chief Legal Officer; and to my right, who just joined our team, Jay Thomson, our Vice-President Broadcasting Policy and Regulatory Affairs.
1792 Mr. Chairman, yesterday you stated that the BCE acquisition of CTV is the biggest communications transaction in Canadian history. I am sure that you would agree with us, Mr. Chairman, when we say that the size of BCE's benefits package should reflect the size and scale of the transaction before you.
1793 We are pleased that BCE has accepted that this transaction is a change of control and benefits are payable. We are also pleased that BCE has abandoned some of their earlier proposals and has redirected those funds towards on-screen initiatives.
1794 BCE's latest proposals in the aggregate, however, remain significantly at odds with the Commission's tangible benefits policy. BCE is asking you to revise the policy to exclude assets, to reinterpret terms. We are asking you to apply the policy as it was written and as it was intended.
1795 Mr. Chairman, the benefits policy works. It works because it emphasizes funding for incremental programming initiatives, not funding for infrastructure or capital projects. The policy ensures that there's new money to put new Canadian programs on our screens, money that would not otherwise be available in the system and Canadian programs that would not otherwise be made.
1796 The policy works because it ensures most of those new Canadian programs are made by independent producers. This means that those new programs reflect and embrace a diversity of ideas and voices, it means those new programs come from across this country, and it means those new programs get produced by lean, entrepreneurial companies, companies that operate with more creativity and diversity and more efficiently than could ever be the case with in-house productions.
1797 And the policy is linked directly to the Commission's mandate under the Broadcasting Act to ensure that the programming provided by the Canadian broadcasting system includes a significant contribution from the independent production sector.
1798 This focus on funding independent productions serves the system as a whole and the public interest, instead of just the self-interests of a single broadcaster.
1799 Mr. Chairman and Commissioners, it can cost up to $25 million or more a year to produce one high-quality one-hour Canadian drama series. But recognize that independent producers leverage licence fees from other sources. This transaction should generate at least $138 million for independently produced programming and that amount of new spending could leverage up to $400 million of new Canadian program production going forward. That's money that goes on the screen.
1800 Contrary to what BCE says, the system is not flush with new funding to support programming. Past unpaid benefits don't count. And the group licensing policy will not eliminate or even lessen the need to fund programs of national interest. It will keep Canadian program spending at an historical level, not necessarily increase it.
1801 Contrary to what BCE says, the structural changes facing broadcasters do not justify directing benefits funding away from programming. The exact opposite is true. Now is the time to put more money into Canadian programming, not less. As BCE said yesterday, it is the quality of their Canadian programming that will help them compete against over-the-top unregulated Internet services.
1802 Mr. Chairman, there is nothing unique about this transaction. There is nothing about this transaction that justifies any special treatment for BCE. They are not rescuing distressed assets. There is no justification or precedent for many of the discounts or exclusions that BCE seeks. We ask you to not create a new precedent simply because BCE has taken a revisionist approach to the policy.
1803 This BCE-CTV transaction presents the Commission with an opportunity to support the Broadcasting Act's programming objectives in a substantial and meaningful way. It is an opportunity we say should not be missed.
1805 MR. THOMSON: The Joint Report which we filed with the guilds identified various questions we share about the real value of this transaction. We were glad to see that yesterday the Commission raised with BCE a number of the same questions we had raised in the Joint Report, and like the Commission, we too were not satisfied with many of BCE's responses. Nevertheless, the Commission is the expert in assessing BCE's valuation claims and so we leave that task to you.
1806 Establishing the real value of the transaction overall and of the broadcasting assets is, of course, the basis for determining the appropriate size of the corresponding benefits package.
1807 Based on the figures in the valuation document you reviewed with BCE yesterday, this transaction should generate at least $236 million in total benefits, of which at least $217 million would be TV benefits. However, if you ultimately determine that the values in this deal are even higher, then the benefits too will be higher.
1808 Consistent with the Commission's policy as reconfirmed in the recent ZoomerMedia decision, we calculate that at least $184 million, representing 85 percent of the TV benefits, should go to programming. And because the Commission's policy calls for programming benefits to flow predominantly to third parties, 75 percent of that $184 million should go to independent productions. That amount is $138 million.
1809 BCE's revised benefits package as tabled yesterday would allocate less than 34 percent of TV benefits to incremental on-screen programming initiatives. That amount is a long way from 85 percent.
1810 No reason exists to discount the benefits payable for CTV's conventional TV stations below the standard 10 percent rate.
1811 There is no reason to exclude the highly profitable TSN or CTV's other Category Cs from the benefits policy either. BCE contends that the Commission's 1996 decision to exempt BDUs from the policy should apply to Category Cs. We disagree. The Commission has always maintained that that narrow BDU decision does not extend to programming services, whatever category they are. In any event, it may be time to reapply that policy to BDUs.
1812 BCE must be required to recast its benefits proposals so that they clearly contribute to the public interest.
1813 This means requiring BCE to direct its benefits to independently produced Canadian programming to serve Canadian audiences, rather than to cover its own costs of doing business.
1814 Specifically, this means rejecting BCE's proposals to direct benefits:
1815 - to increase capacity for its Bell TV service, which would give it a competitive edge over the other DTH providers; or
1816 - to upgrade its own studios to help it compete with other Canadian broadcasters; or
1817 - to convert its signals to meet its digital transition obligations.
1818 No doubt BCE's benefits proposals will help BCE, but that is not the test.
1820 MR. BARRACK: Thanks, Jay.
1821 Mr. Chairman, we appreciated your comments at the Shaw-Canwest hearing in Calgary that you expect Shaw to take a leadership role in the Terms of Trade negotiations as well as the direction you provided to the private broadcasters to reach a deal in time for the April group licence renewal hearing. We also appreciate your reiterating this expectation yesterday.
1822 We were also very pleased to hear CTV's comments yesterday that the revised and simplified proposal that we tabled with them and the other broadcasters has broken the impasse between the parties and created positive momentum. We also thank CTV for the leadership that they are showing in publicly recognizing the significance of our move.
1823 That being said, we are taking nothing for granted. Negotiations must not be allowed to break down now. In order to do a deal, we need the other side to stay at the table and to work diligently and in good faith.
1824 To help ensure that all parties capitalize on this new momentum, we would ask that the Commission provide BCE a clear direction that they continue to take a leadership role in the Terms of Trade negotiations, to negotiate in good faith and to get the deal done.
1825 So that we all have one less thing on our plates at the group licence renewals, we would further request that the Commission remind all broadcasters that you expect the Terms of Trade agreements to be concluded in time for the April hearings.
1826 As we all know, nothing clarifies the mind like a firm deadline.
1827 MR. BOLEN: We are all reminded daily that this is a fragmented, new media world. As a result, the need is greater than ever to use every opportunity to inject funding into the creation of high-quality, compelling Canadian programming.
1828 Money for infrastructure and capital projects to make broadcasters and BDUs more competitive with each other will always be available as a market and business imperative. Finding funding to ensure Canadian programs get made and aired will always be a struggle.
1829 Therefore, the CMPA will always be a struggle.
1830 Therefore, the CMPA urges the Commission to apply the letter and the spirit of your longstanding tangible benefits policy to this transaction. That means a fair valuation and 85 percent of the benefits ending up on the screen.
1831 Thank you for the opportunity to be here today. We would be pleased to answer any questions.
1832 THE CHAIRPERSON: Thank you very much for your presentation.
1833 You were here yesterday I presume and you heard. Let's deal with these things as you put them up.
1834 Valuation. I saw your valuation, you saw our valuation which we tabled yesterday. Our valuation, I should have said our tentative valuation based on staff work.
1835 Do you have any problem with the figures that we came up with?
1836 MR. BOLEN: We generally thought your figures were fine, we thought the questions we heard about synergies and tax losses were also valid questions and however you determine on that might actually increase the valuation, but the number that you put on the table is a number that works for us.
1837 THE CHAIRPERSON: You noticed that our number was $15 million higher in terms of benefits than what Bell put on the table?
1838 MR. BOLEN: Yes. Jay might want to comment further on that.
1839 MR. THOMSON: In our written submission we had also proposed that the benefits should be higher than what BCE had proposed and we were looking primarily at imposing a 10 percent rate on the conventional TV services instead of the proposed 5 percent rate, but in the end our numbers are very close to what your numbers ended up being yesterday.
1840 THE CHAIRPERSON: But we did put a 10 percent in our --
1841 MR. THOMSON: That's all we did in our number.
1842 THE CHAIRPERSON: Oh, that's all you did. I see. Okay.
1843 MR. THOMSON: You did a number of other changes that we support.
1844 THE CHAIRPERSON: Then the second point that you make, you say 85 percent should go to on-screen production and you are referring to the Zoomer transaction. Of course the Zoomer transaction was a very simple, straightforward one, it just involved one television enterprise. Here you really have all sorts of aspects of the transaction and as a result the purchaser has a whole network, not just one station.
1845 Mr. Stursberg this morning said this very nicely, they should be public benefits, not private benefits. If they flow to CTV's benefit then obviously they are private benefits. I think that's the test.
1846 But the 85 percent rule that we have put on, as you know, is sort of a rule of thumb, if you want, et cetera, it's not absolute.
1847 I'm surprised that you really took objection to the whole issue of converting from MPEG-2 to MPEG-4 because that means that all local stations that have local programming, Canadian local programming, LPIF-eligible funding in our jargon, would be on the satellite and Canadians would have access to it and it would benefit those stations and it certainly would benefit the distribution of Canadian content, local Canadian content which Canadians are very keen on.
1848 Why would that not qualify, according to you?
1849 MR. BOLEN: Thank you for that question.
1850 We are not saying that something like that doesn't have value, but we think it is a normal cost of doing business, even if BCE is saying they are not going to do it.
1851 As other intervenors such as Shaw pointed out, they consider this to be anti-competitive to subsidize something like that.
1852 Also, you know, let's say you put 85 percent on the screen, that still leaves 15 percent for other initiatives and that money could be allocated towards initiatives like DTH.
1853 I also think that we need to remember that there is ancillary value to BCE if they were to do the MPEG-4 project. It would not only allow for the distribution of these local signals, it would also allow them to offer other services.
1854 So there are incremental ancillary value in that to them, no matter what.
1855 THE CHAIRPERSON: Okay. Actually, that is the second point I was going to. That is the amount, but --
1856 MR. BOLEN: Yes. I'm not saying it doesn't have value, but I pose it against the alternative.
1857 The intention of the benefits policy always was to create new Canadian content to go on the screen and that's where the need is greatest. So it's what is the greater good.
1858 In our view, the greater good is using the leverage factor of independent producers along with public benefits money to create more high quality content. It's more important than ever right now with all this competition increasing from foreign services. As we heard yesterday, we need strong Canadian programming. The only way we are going to get stronger Canadian programming is by investing in it.
1859 So it's a question of this opportunity to invest in Canadian programming.
1860 THE CHAIRPERSON: But let me tell you, you know, we are comparing what value is greater because in these hearings I have heard over and over again Canadians want local programming, they want to see their local world reflected on a TV station. That's why we created the LPIF, it was singularly received as a claim by everybody and has actually resulted in more local programming. But if you are a DTH customer and it is not on your screen, then all of that is lost.
1861 We can argue about the amount and the spin-off benefits and all of that, but per se saying this doesn't qualify, I have difficulty with that.
1862 MR. BOLEN: I'm not saying it wouldn't qualify for some benefits funding, it does have value, but it's not putting new content on the screen for the most number of Canadians.
1863 I would like Jay to comment on it briefly, if you don't mind.
1864 MR. THOMSON: Once again referring back to the distinction made in the previous panel between the private benefits and the public benefits, if this was really a public benefit, then BCE would have offered to put that money into some kind of fun that could be accessible by all DTH providers in order to help all of them put LPIF stations on the air.
1865 The way that they have structured it, it is clearly to their benefit, not only because of the ancillary benefits, but the LPIF stations themselves, if that is a policy obligation put on all DTH providers and BCE gets a leg up in funding that, then that's unfair.
1866 THE CHAIRPERSON: Yes, but I mean how altruistic do you want them to be? You expect them to finance their competitors?
1867 I mean, when we had the Shaw solution, which we accepted, regarding the people who lose their signal in non-mandatory areas, those people will be Shaw customers. They will be Shaw customers, they won't be Bell customers. As always you mix the public goal with a private incentive.
1868 MR. BOLEN: Well, there is still room if you put 85 percent of the dollars on the screen to fund other initiatives like this one to some extent.
1869 THE CHAIRPERSON: Right. Okay.
1870 The other one, enhanced local news production in HD and HD conversion. You say that doesn't qualify at all. That's just a cost of doing business.
1871 MR. BOLEN: It seems to me that's a cost of doing business and I wonder about the actual cost of it.
1872 You know, in the production world we are all converting to HD, we have to, it's just de rigueur, and the costs of going to HD are coming down significantly and it has reached the point where really there is not much difference.
1873 So in the normal course of business they are going to have to replace their existing infrastructure, their existing capital equipment, and when they do they will replace it with HD. Nobody is buying SD equipment of any kind any more and hasn't been for years.
1874 THE CHAIRPERSON: And stating local programming on 'A' channel markets another $25 million, that falls in the same category in your view?
1875 MR. BOLEN: For us, whether you direct some of the benefits towards those kinds of initiatives is fine, as long as the vast majority of the money goes on-screen in new content which, in our view, has always been the main intention and purpose of the benefits policy.
1876 And keep in mind you are talking about, in some cases here, taking benefits that are really directly related to the broadcasting sector and the acquisition of broadcasting assets and you are talking about redirecting them towards what are essentially BDU initiatives, which is kind of the new world of vertically integrated companies, but that doesn't really contribute to the broadcasting system in our view, to the extent that content does.
1877 THE CHAIRPERSON: Just simple mathematics, you say don't do the HD conversion, don't do the 'A' channels, we are $15 million too low if you use our evaluation figures, that's $65 million that is there, which is really either not allocated or attributed to self-serving goals, and I haven't even touched the $84 million for MPEG-4.
1878 You say commission those $65 million should all go to on-screen productions?
1879 MR. BOLEN: That is our view.
1880 THE CHAIRPERSON: Which then would -- right now there is $68 million for you, so 30 percent would go to 60 percent, by my very rough calculations, using the sheet I handed out yesterday.
1881 MR. THOMSON: Yes. So the sheet that you handed out yesterday which is the valuation or the comparison between --
1882 THE CHAIRPERSON: The Shaw proposition and BCE's --
1883 MR. THOMSON: The Shaw proposition.
1884 THE CHAIRPERSON: -- proposal, too.
1885 MR. THOMSON: Yes. Yes.
1886 So right now the proposition with the $68.2 million going to on-screen --
1887 THE CHAIRPERSON: Yes.
1888 MR. THOMSON: -- represents just under 34 percent of the total TV benefits of $201.7 million.
1889 THE CHAIRPERSON: My sheet says 30.9 percent here.
1890 MR. THOMSON: That is a figure where the denominator is the entire package which includes the radio benefits.
1891 THE CHAIRPERSON: Right. So if you take out the radio benefits --
1892 MR. THOMSON: We would take the radio benefits out.
1893 THE CHAIRPERSON: Okay. So just follow my train of thought.
1894 MR. THOMSON: Yes.
1895 THE CHAIRPERSON: You have $68 million here and I say the $24 million for enhanced local HD, $25 million for Channel 'A', that's $50 million, and then there is $15 million missing because the total is -- all of this is based on Bell's proposal rather than our figures, which was $15 million more. So that's $65 million, if you add that to the $68 million you come to roughly 60 percent or 65 percent.
1896 MR. THOMSON: Well, our number ultimately is 85 percent, which is $138 million. You can take --
1897 THE CHAIRPERSON: Okay. I know you want 85 percent, I'm just telling you by what I just went through, you would get something like 60 percent, et cetera, and you feel all of that should be given to you and not to anybody else?
1898 MR. THOMSON: As well as a portion of the money that would go to the MPEG-4 capacity build.
1899 THE CHAIRPERSON: Okay. On the MPEG-4 obviously we will have to look. I asked them, as you heard me yesterday very clearly saying I would like to see first of all how it's constituted and, secondly, the proportionality, the added benefit that Mr. Bolen referred to.
1900 But I just find it -- I'm trying to see where -- I have a list of other people here who want benefits and you are basically saying, you know, ignore all of them and put all of this with us. I'm trying to understand.
1901 MR. BOLEN: Well, I think it just goes back to first principles, what is the most -- what is the greatest good to be achieved from these social benefits derived from a broadcasting transaction. In our view the greatest good and the greatest need is for more competitive, more compelling, better funded on-screen Canadian content that is delivered into the homes of the largest number of people. That is the key, in our view, and it's the thing that is most in the public good.
1902 There are always many other things that have value. We are not saying they don't have value, they do have value obviously, but which of them are normal course of business expenditures? Which of them are anti-competitive and which of them provide ancillary benefits to BCE? Which of them are self-serving more than a public benefit?
1903 That is the difficult task you have in front of you obviously, but in our view what is clear and absolutely clear is that content is of huge benefit and there is no question about that. It's very straightforward.
1904 THE CHAIRPERSON: On the $84 million for MPEG-4, you say the number, if I understood you, is (a) too high, and (b) it will so offer secondary and tertiary benefits besides --
1905 MR. BOLEN: Yes, we agree with that and other intervenors have said --
1906 THE CHAIRPERSON: Have you got any handle on this? Have you got any handle on this of what proportion of these benefits are or something?
1907 MR. BOLEN: I think it's a complex matrix there. You have the ancillary benefits, you have the whole issue of what it costs, what is normal course of business, what is incremental. I don't think we have the capacity to do that kind of analysis. We don't have access to the numbers.
1908 But our overall sense would be that the vast majority of that expenditure really needs to be questioned by the Commission.
1909 THE CHAIRPERSON: Mr. Thomson, on page 5 you say:
"In any event, it's time to reapply the policy to BDUs."
1910 What leads you to that -- obviously the benefits policy to BDUs?
1911 MR. THOMSON: Well, that policy is now some -- I can't do the math, but it's from '96 so it's been a long time. The industry has changed substantially since then.
1912 We are just concerned that that's money that is being lost from the system now. To the extent that there are transactions in the future that aren't subject to benefits, that means that we will go without the potential contributions to the system.
1913 In addition, with vertical integration the BDUs and the broadcasters are now becoming one entity, what happens in the next transaction, how do you separate one from the other. They are arguing that there are synergies there, that they are the same thing, but they need each other so therefore we feel that they should be considered together in the next benefits package assessment.
1914 THE CHAIRPERSON: Well, I look forward to your arguments in greater detail because, as you know, that's part of the June hearing. The terms of reference are clearly wide enough to encompass this issue and if you have any thoughts on it, please let's hear it then.
1915 Now, there is no reference here at all, it's all to independent producers. There is nothing about independent channels.
1916 If this deal goes through, et cetera, they have a 5 to 1 rule which later on has to be a 3 to 1 rule in terms of distribution of their own channel and other channels.
1917 The independent channels have made a strong -- a few of them, they may get squeezed out and that may be just to sort of -- an agreement between the big integrated companies in order to meet those ratios, but they are falling off the table.
1918 Do you share that concern? Are the independent channels of great interest to you? What is your position on this?
1919 MR. BOLEN: Jay might want to add to this.
1920 As independent producers, in general, we support diversity of customers and diversity of opportunities to produce programming. So we do have empathy for the smaller players, and it is troubling to us that we are seeing more and more doors closing, as we see vertical integration increase.
1921 It seems inevitable, and anything that would help bolster those smaller players and give them the wherewithal to ultimately make more Canadian content, original content, rather than just doing repeat content, would be a good initiative.
1922 We are generally supportive. I don't know if Jay would like to add to that.
1923 MR. THOMSON: It may be more of a carriage issue for those services than a programming dollars issue, which is where our focus is. But it may very well be something we will want to address in the vertical integration proceeding.
1924 THE CHAIRPERSON: In terms of trade, what exactly would you like from us?
1925 As you know, we are very sympathetic to the terms of trade, and repeatedly reiterated that the last time, in the Shaw decision.
1926 You say here that it should be concluded in time for the April hearing, and to actually continue to take leadership in the role in terms of trade negotiations, to negotiate in good faith and get the deal done.
1927 Other than that exhortation, what exactly do you expect from us?
1928 MR. BARRACK: I think that exhortation is very important.
1929 When we came out of the Shaw proceedings, lo and behold, we had a negotiation date, when we hadn't had one before, and Mr. Robertson showed up at the table.
1930 I think you cannot underestimate the effect of that admonition.
1931 I think that if that is reiterated in the same strong terms here, we will see that momentum continue, and reiterating again in your decision that clear expectation, I think, is key.
1932 But, obviously, given the timing issues, in terms of when these things are coming out, just making it very clear that you have this firm expectation --
1933 If there is any wiggle room perceived, as I mentioned to you in Shaw, it will be exploited.
1934 So we thank you for what you have done, and I guess it's about keeping the pressure on.
1935 THE CHAIRPERSON: Your Quebec counterparts yesterday made -- in terms of trade agreements, I believe it's the first in the Canadian industry -- which was Astral. To what extent is that agreement a model for your negotiations?
1936 MR. BARRACK: It's not, really, because the relationship between Quebec producers and Astral is extraordinarily positive. There hasn't been the same level of concerns between the APFTQ and Astral that we would have had with English-language broadcasters.
1937 In fact, even the APFTQ would take the position that its agreement with Astral would not serve as a precedent in its negotiations with the CBC or Quebecor. It's very clear about that.
1938 It is also only a one-year deal. It is a place-marker deal, in that sense.
1939 What was most significant, as you heard Ms Coe say yesterday, was that the simplified proposal that we put on the table served as a breakthrough and will likely bring us there.
1940 I think we are moving in a different direction, but in a positive one.
1941 THE CHAIRPERSON: Thank you.
1942 Rita, do you have some questions?
1943 COMMISSIONER CUGINI: Yes, I have just a couple of follow-up questions.
1944 Leaving the quantity of dollars available aside, you did have an opportunity to view what Bell filed yesterday in terms of its revised benefits package, and I just wanted to go through the individual elements that will form part of the on-screen programming and multiplatform content initiative.
1945 I am just wondering if you have any comments regarding their point that all PNI shows would be 8 to 10 points, with at least 50 percent of the moneys to be allocated to 10-point shows.
1946 Do you agree with that?
1947 MR. BOLEN: We have no issue with that.
1948 COMMISSIONER CUGINI: What about the element of the new media content that is also included in that initiative?
1949 MR. BOLEN: Our concern is the ambiguity and lack of transparency around the differentiation between the online content and the broadcast content.
1950 We would hope that the Commission would ask for more specificity on that. Exactly what is the mix?
1951 We saw, generally, a lack of transparency on a number of issues yesterday, and we think that we need transparency on that. There should be differentiation.
1952 John, do you want to add something to that?
1953 MR. BARRACK: I just think it is equally important that we recognize that at this point -- and you saw this in the way they attempted to value the transaction -- there is not, at present, what I would call a 1:1 or even close to 1:1 TV for online.
1954 Obviously, we don't want to ignore the evolution of that online presence, but we need to be mindful that this is still very much a television world, and I think that needs to be, in your considerations, considered.
1955 Also, we would ask, to the extent that there is anything directed there, that it, again, be directed to independent third parties.
1956 COMMISSIONER CUGINI: They also say that the multiplatform content benefits would be directed to incremental programming for CTV's conventional television stations and specialty services.
1957 Do you have a comment regarding the fact that the programming would be for both conventional TV and specialty?
1958 MR. BOLEN: In keeping with the philosophy of the group licensing framework, we agree that broadcasters should have increasing flexibility in how they move their content around on their various properties, so we think that is consistent with the group licensing policy.
1959 COMMISSIONER CUGINI: Thank you very much. Those are my questions.
1960 THE CHAIRPERSON: Louise?
1961 CONSEILLERE POIRIER : Oui, je vais parler en français, Monsieur Bolen.
1962 MR. BOLEN: Thank you. Merci.
1963 CONSEILLERE POIRIER : La première question, c'est : Vous faites toujours référence à une politique, à une politique qui dit qu'on doit accorder 85 pour cent du contenu... qu'on doit accorder 85 pour cent des avantages tangibles à de la programmation.
1964 Je ne connais pas une politique, je sais juste qu'il y a une pratique qui fait que, règle générale, c'est de 70 à 90 pour cent des argents qui ont été, dans la majorité des cas, alloués lors de transactions.
1965 Quelle est votre réaction à cette avancée que je vous fais?
1966 MR. THOMSON: I guess you can call it what you want. It's a practice that has been followed consistently by the Commission for a number of years. To the extent that it is consistent in that way, it is almost the same as a policy, and we are supportive of that consistency going forward. That is the best we can say.
1967 CONSEILLERE POIRIER : Alors, sur quel cas vous basez-vous pour dire que c'est consistant avec notre approche habituelle pour affirmer que c'est 85 pour cent?
1968 MR. THOMSON: Well, I have mentioned the ZoomerMedia decision. The same kind of numbers were used in the BCE-CHUM decision, in the Canwest-Alliance Atlantis decision and in the CHUM-Craig decision. Those are the major ones that I am familiar with.
1969 CONSEILLERE POIRIER : Alors, si jamais vous avez plein de cas, ça serait intéressant de nous présenter votre point de vue si vous avez d'autres cas d'ici la fin de l'audience.
1970 Ma deuxième chose. Un des arguments qui a été présenté hier par Bell était à l'effet que suite à la décision 2008-100, qui ferait en sorte que 5 pour cent des revenus des actifs de la télédiffusion irait maintenant dans de la production, suite aux dernières transactions qui ont été acceptées, comme celle de Shaw, où 79 millions iraient aussi à la programmation d'intérêt national, et ils ont nommé dans leur document plein d'autres cas, et ils disent, il y a assez d'argent maintenant dans le système pour faire des émissions canadiennes de qualité.
1971 Qu'est-ce que vous en pensez de cet argument-là, qui leur sert, en fait, pour défendre le 84 millions qui pourrait aller à la distribution de la TV locale sur satellite?
1972 MR. BOLEN: We are certainly not of the view that the system is flush with cash and there is a big pipeline of money flowing into on-screen content. On the contrary, what we have seen over recent years, consistently, is a plateau or a decline in Canadian spending, generally, in the industry, with massive increases in spending on foreign programming.
1973 So we think that, increasingly, Canadian programming is put in a disadvantageous position regarding its competition on our airwaves with foreign programming, which gets the lion's share of the money and the biggest increases.
1974 It is just not true -- the assertion is made somehow that the group licensing framework is going to generate tonnes of new money. Our analysis of that framework, which we very much support, and think it was very wise on the Commission's part, is that it is basically going to take the status quo in Canadian expenditures and make it a floor, effectively. That was our interpretation of the numbers, based on our analysis.
1975 In fact, if anything, it gives the broadcasters more flexibility and more opportunity to run their businesses in different ways, more than it does putting any new money on the screen.
1976 There is a demand for money, and there is opportunity. Our members come to us and tell us regularly that they have Canadian shows for which there is an international market, where international broadcasters are prepared to pay up to 55 or 60 percent, even, of the budget, and the Canadian broadcasting system, the broadcasters, say that they don't have the money in the system in order to finance those shows.
1977 So we are in the situation where we could be importing jobs into this country, where we could be bringing revenue into this country's broadcasting system from foreign sources, and the domestic market is not able to finance its component of those programs.
1978 All the evidence we get is that there is a need for more, and let's not forget, with the over-the-top services, like Netflix, and now Amazon possibly coming in with an online offering, more American content -- and even as BCE stated yesterday, we need highly competitive Canadian content -- the budgets in Canadian shows are still a pittance compared to the budgets on those American shows that are coming into our marketplace.
1979 And the spending is much greater on American programming by the broadcasters today than it was a year ago, two years ago or three years ago.
1980 So we don't see any merit in this argument at all, none.
1981 CONSEILLERE POIRIER : Et ma dernière question. Oh! Je suis en train de l'oublier parce que je pensais que, monsieur Barrack, vous étiez pour ajouter des choses. Elle me revient.
1982 Est-ce que le fait d'ajouter beaucoup d'argent sur la programmation permet aussi d'être plus présent sur les nouveaux médias et toutes les nouvelles plateformes, là où il y a tendance à voir de plus en plus de production étrangère et américaine? Est-ce qu'il y a un lien à faire entre votre demande et la présence canadienne dans les nouveaux médias?
1983 MR. BARRACK: Absolutely. Absolutely, because one of the cornerstones when we get into our terms of trade negotiations, for example, is that we are not trying to withhold the ability to take Canadian content across to all Canadians via new platforms, and to the world generally.
1984 The idea is, if the quality is there -- Degrassi is a perfect example, it's in 127 countries. But what is really exciting about a program like that is that its online presence is well beyond that.
1985 So money spent on Canadian programming, which is then repurposed and inversioned in that new space, multiplies many times over across Canada and around the world.
1986 MR. BOLEN: I would just add that I was thinking around this issue, which led us this year to change our name. We used to be the Film and Television Production Association. We are now the Media Production Association because, increasingly, our members, who have made film and television, are now branching out into various forms of online content.
1987 Some of our companies are making as much as 20 to 25 percent of their revenue from non-traditional content.
1988 So there is an absolute link between the two. The Canada Media Fund is reinforcing that, and, incrementally, we are all moving forward into the digital world, but television content is still the driver. It is television that leads to new media. Only in rare cases is new media leading into new television production.
1989 The TV system has to be well funded, the Canadian content has to be well financed, and from that will grow innovation in the new media space.
1990 CONSEILLERE POIRIER : Et ma dernière question, Monsieur le Président, concerne l'exclusivité, dont on a beaucoup parlé ce matin.
1991 Est-ce que c'est un débat dans lequel vous avez une position claire? Etes-vous en faveur de l'exclusivité ou contre l'exclusivité, et souhaitez-vous que le Conseil, dans cette décision, intervienne avec un ajout à la réglementation ou quelque chose de particulier?
1992 MR. BOLEN: In general, our view is that Canadian content, particularly -- particularly since it has public money in it -- should be available to the widest number of people, on whatever platform they choose to use.
1993 If you are talking about mobile, we don't think that there should be exclusivity, particularly on Canadian content. As a producer, you want your content to be available to the largest number of people. You want it to be available easily to the largest number of people. You don't want obstacles to that. You don't want anti-consumer behaviour that requires consumers to have multiple mobile contracts, or multiple BDU services.
1994 Obviously, the preference rules deal with that on the BDUs, but we need to have something similar in the mobile space.
1995 John will speak briefly to that, because it is a big issue in our terms of trade discussion, too.
1996 MR. BARRACK: I couldn't agree more with what Norm is saying. The concern that we have is, if there is a sub-licensing arrangement that is taking place between the broadcaster who has commissioned the programming and another, that there is an equitable share in revenue with the independent producer, which allows them to create more great Canadian programming.
1997 COMMISSIONER POIRIER: Thank you. I am finished, Mr. Chair.
1998 THE CHAIRPERSON: Okay. I don't believe there are any more questions. Thank you for your submission and your presentation today.
1999 Let's take a 10-minute break before we hear the next intervenors.
--- Upon recessing at 1030
--- Upon resuming at 1053
2000 THE SECRETARY: Order, please. A l'ordre, s'il vous plait.
2001 We are now ready to hear the intervention from Cogeco Cable Inc. Mr. Louis Audet is appearing for Cogeco Cable Inc.
2002 Please introduce your colleagues for the record, then you have 10 minutes for your presentation.
2003 MR. AUDET: Thank you, Madam.
2004 Good morning, Chairman and Commissioners, and thank you for giving us this opportunity to present Cogeco Cable's position on the occasion of this very important acquisition.
2005 I am Louis Audet, President and Chief Executive Officer of Cogeco Cable. To my right is Yves Mayrand, Vice-President, Corporate Affairs. And to my left is Suzanne Blackwell of Giganomics Consulting, who has helped us with our intervention.
2006 Let me start by stating three very fundamental facts about this proposed major ownership transaction. First, it involves an inherent conflict of interest. BCE, the largest Canadian electronic distributor of content across all platforms is seeking to control CTVglobemedia, the largest Canadian private broadcasting group in Canada.
2007 BCE is involved in the electronic distribution of basically all competing television programming services throughout Canada while CTVglobemedia is involved in providing the widest selection of popular television programming services that are essential to the survival of all competing electronic distributors in the Canadian marketplace.
2008 Second, it is healthy to remember that this transaction does not involve any economic or financial necessity arising out of the insolvency or likely demise of the purchased broadcasting group.
2009 Third, with its unprecedented level of concentration and vertical integration the transaction will very clearly have a material and lasting consequence for the Canadian broadcasting system since the entry of new players, whether in television programming or in electronic distribution, will effectively be constrained by ownership and other restrictions. So in other words, what is decided today or as a result of this hearing is going to be with us for a very long period of time, for many years.
2010 The combination of BCE and CTVglobemedia would create a conglomerate with a greater share of the overall communications market than the next two largest firms combined, namely Rogers and Shaw. And this was largely obliterated in Bell's presentation yesterday.
2011 The overwhelming market power of the resulting conglomerate would allow it to extract unreasonable rents from the other players in the Canadian broadcasting system and ultimately of course from Canadian consumers.
2012 In spite of the extraordinary privileges that it is asking for, BCE has demonstrated throughout this proceeding a complete lack of concern for the impact of the proposed transaction on the Canadian broadcasting system and a continuing unwillingness to cooperate in mitigating the impact through appropriate regulatory safeguards. This is most regrettable.
2013 When the proposed transaction was announced the seller stated that this was a great bargain for the purchaser, and the purchaser stated this deal would give it exclusive content advantage over its competitors and, hence, generate much value for the shareholders. BCE has therefore clearly announced that its colours.
2014 On the other hand, CTVglobemedia, now managed by a former key executive of the purchaser, against all established rules and practices, has also clearly announced its colours to us. It will not renegotiate renewals for expired affiliation agreements until it chooses to do so, and it will claim retroactive payments once it does decide to do so.
2015 The agenda is clear. Should the proposed transaction be approved, the new BCE-CTVglobemedia conglomerate will have the market power to extract unreasonable affiliation fees from its competitors for some 30 specialty programming services, as well as additional carriage fees for CTV and A Channel conventional television signals if value for signal regime is implemented.
2016 In our written intervention we pointed out that the BCE-CTVglobemedia conglomerate could very well charge the same unreasonable non-transitory increases in affiliation fees to itself and to its competitors, that this would hurt its competitors, and have no impact on its own consolidated bottom line. But Canadian consumers would have to pay a lot more for the same television services.
2017 BCE-CTVglobemedia could transfer the proceeds of these increases at will between its programming pocket and its distribution pocket with no adverse financial or economic consequence to its shareholders while competitors and Canadian consumers would be the ones taking the hit.
2018 To illustrate this, perhaps in a more graphic way, if you are going to have a big beast in your back yard, you had better be ready to have the proper fences and restraints or else you will lose control and there will be considerable damage in the neighbourhood.
2019 We urge you to put in place the requisite regulatory safeguards and avail yourselves of the requisite resources before the beast is out of the yard and on a rampage. And to discuss the safeguards further, I will turn it over now to Yves Mayrand.
2020 MR. MAYRAND: So let me summarize the regulatory safeguards and conditions of approval that we have put forward in our written intervention which the applicant has curtly dismissed so far in this proceeding.
2021 First, the regulatory safeguards. One, a prohibition on the exclusive distribution of programs by BCE and members of its group for all television services, whether controlled by BCE or not, consistent with the Commission's determination in the Shaw-Canwest transaction.
2022 Second, an extension of the reverse onus provisions to all broadcasting programming services.
2023 Third, an extension of undue preference or disadvantage safeguards to all distribution platforms and swift enforcement in case of breach of the rules.
2024 Fourth, new structural safeguards to ensure competitively sensitive information that competing distributors provide to CTVglobemedia or other members of the BCE group is kept confidential and is not disclosed to BCE's competitive distribution operations.
2025 Fifth, a strengthening of the dispute resolution provisions including ensuring the complainant is not disadvantaged during a dispute and a short timeline for final determination.
2026 Sixth, new reporting and disclosure provisions coupled with keeping CTVglobemedia as the licensee and reporting entity for its licensed programming undertakings following the upcoming group licence renewal.
2027 BCE has argued that the Commission's current regulatory safeguards are sufficient and nothing more is needed. This is simply not true. With its newfound market power BCE would have every incentive to use its 100 per cent ownership of CTVglobemedia to gain an advantage over Cogeco Cable and other competing distributors.
2028 This includes anticompetitive tactics, knowledge of privileged information, and bargaining leverage that existing safeguards could not effectively discipline. Specific additional safeguards cannot wait until the Commission concludes its separate policy proceeding on vertical integration.
2029 Our demands for more specific and improved regulatory safeguards in connection with this transaction are perfectly reasonable and legitimate. As you know, the FCC in the U.S. has just recently released a 279 page memorandum of opinion and order on the Comcast-NBCU transaction, which involves a similar case of ownership concentration and vertical integration between television services and their distribution.
2030 The order provides for a number of specific safeguards, including safeguards against the abuse of market power, whether through the exclusivity of programming content distribution, the threat of excessive price increases, or other tactics that could undermine fair access to programming.
2031 As we pointed out in our written intervention, given the respective size and characteristics of the markets and the players, the BCE-CTVglobemedia transaction involves an even higher level of concentration and vertical integration than the Comcast-NBCU transaction south of the border.
2032 Now, we have left with the Secretary a comparison of the safeguards that we have proposed and the safeguards or some of the safeguards have been mentioned in the FCC order for the Commission and other parties' information, should you allow that to be filed.
2033 We have firsthand experience in Portugal with the effects of massive vertical integration and the potential for abuse of dominance. The dominant cable and satellite television service distributor in that market also controls key programming services, including premium sports programming. It had every incentive to abuse its market power, and it did.
2034 The competition authority in Portugal is now looking into the problem, but considerable damage has already been suffered by the competition.
2035 With respect to tangible benefits, allowing BCE to recycle money to be spent on tangible benefits for its own commercial operations and advantage would create a further major distortion in the market and hurt competition, both for programming and for its distribution in Canada.
2036 We are also very concerned that the proposed transaction, if approved, would provide an opportunity and the incentive to abuse the value-for-signal regime should such a regime be considered valid by the courts and be implemented by the Commission.
2037 It would interfere with the very market forces that the Commission expected would allow to set a fair value for the programming services before such massive vertical integration within the industry had emerged.
2038 Bell has taken a very outspoken and completely unequivocal position against value-for-signal or any other form of compensation for the distribution by BDUs of free, over-the-air television signals. The BCE group should not be given the opportunity to change its tune now that it proposes to acquire CTVglobemedia, the main advocate of such a regime.
2039 We therefore request that BCE and CTVglobemedia be required, as a condition of approval, to forego any compensation whether under the VFS regime, if it becomes applicable, or under any other scheme for the distribution of their free over-the-air television signals by BDUs.
2040 Finally, we wish to point out that the Commission should not shield BCE and CTVglobemedia from the application of any further or more detailed safeguards or conditions arising from a new policy on vertical integration that would follow the conclusion of the policy hearing scheduled later this year. It should be a condition of approval that BCE and CTVglobemedia be subject to any such further or more detailed safeguards or conditions as the case may arise.
2041 MR. AUDET: Thank you, Yves.
2042 The emergence of the BCE-CTVglobemedia conglomerate requires, therefore, very careful regulatory scrutiny. Should the Commission find it desirable on balance to approve its creation you must, in our opinion, ensure that in addition to having the necessary safeguards in place the Commission itself is prepared and has the necessary resources to effectively supervise this new conglomerate and act quickly to enforce the rules.
2043 Furthermore, if the buyer is not forthcoming and cooperating with you fully, you are not obliged to approve of this transaction.
2044 We thank you and are ready to answer your questions.
2045 THE CHAIRPERSON: Well, thank you for your presentation and your submission. I read it very carefully over the weekend and it was my view it was one of the most thoughtful and well-argued. And you noticed and used many of the points that were raised yesterday in my cross-examination of Bell.
2046 But I am not quite sure -- we have all varied well-developed rules against undue preference and reverse onus, and actually handed out a chart yesterday showing it to Bell, et cetera. And it seems to me all of the issues that you are raising can be addressed under those rules. It begs the question that we have the resources and the speed to do it with which you want us to deal with it.
2047 But to just purely conceptually, aren't the rules the way we have them right now large enough to address these issues?
2048 MR. AUDET: That is a very good question, Mr. Chairman. Yves Mayrand will respond to this question in more detail in a second.
2049 What I would like to say is that the current rules really apply to a benign environment: one where players are of more or less human dimension; one where the rule of do not do to others what you would not want them to do to you, still by and large apply.
2050 But what you have here now is something very different. You have before you a purchaser that not only is the dominating phone company in this country, but it is a company that is in the very unique and rare position, if you look throughout the industrial world, of also having been authorized to own a coast-to-coast direct-to-home satellite service, which it has exploited very successfully.
2051 And having that, it now wants to own the largest provider of programming across the country. So you are no longer dealing with your run-of-the-mill intervener, you are now dealing with the biggest economic force in communications in Canada, far bigger, proportionally speaking, than the creation that resulted from the merger of Comcast and NBCU. And keep in mind that NBCU is still 49 per cent owned by a third party, General Electric.
2052 So there will be inherent safeguards to the rights of that minority shareholder which do not exist -- no longer will exist if CTVglobemedia is 100 per cent owned by Bell.
2053 So my introduction to the answer to your question is you are dealing with a different and more powerful beast. Now, that being said, Yves can address in more detail why the existing safeguards do not meet the test against this new reality.
2054 MR. MAYRAND: So Mr. Chairman, in terms of the specific rules, you will find in paragraph 19 of our written intervention a recitation of the existing framework, which essentially is referred to in Appendix 1A of the BCE application.
2055 Now, what that recitation fails to indicate is that, for example, in terms of the obligation of must-carry specialty services to continue to provide a BDU with a programming service during the dispute, it is my understanding and my reading of the specialty services regulation that this requirement would not apply to Category B services.
2056 And there are going to be a number of Category B services increasingly as vertically integrated services develop programming offerings, which they are sure of distributing on a wide variety of platforms with very large distribution across Canada.
2057 There is no reciprocal rights of a BDU to audit and/or obtain privileged confidential information on the subscription numbers of other BDUs or the performance of programming undertakings other than the general statistics provided by the Commission in its annual statistical report.
2058 And I note that you have distributed yesterday a summary sheet on undue preference and reverse onus rules. And of course the interesting part there is the right-hand column on reverse onus provisions. And I see that there are a number of nos in that column right now, meaning that reverse onus provisions do not apply in a number of situations, particularly conventional television, pay television and specialty. And of course, the status is changing in VOD.
2059 And that is precisely, Mr. Chairman, what we have tried to address.
2060 We were saying there are issues that are not covered by the framework as it is. There is, in terms of a timeline, going to be a de facto situation if you approve the BCE-CTV transaction where this vertically integrated behemoth will operate under the existing framework.
2061 And there is a need as a stopgap, until such time as you conclude your full review of the consequences of vertical integration and the detailed rules that should be required, there is a need for a stopgap and that need should be addressed through proper conditions of approval and other requirements, which we list in detail in our written submission.
2062 Now, one last comment, if you might allow me. I was somewhat stunned to hear BCE, the main proponent of across-the-board rigid absolute symmetrical application of rules between telecom and broadcasting, say that carrier services groups are okay on the telecom side, but there is absolutely no need for them in a vertically integrated environment on the broadcasting side.
2063 Frankly, I was amazed, and that issue is not addressed in the current framework and it is a big issue for us, particularly as we are heading towards a renewal of a number of affiliation agreements and we have pointed out the problem that creates for us.
2064 And another issue that is not addressed in your rules is whether a group with considerable bargaining power arising out of its vertical integration position is at liberty to choose its own timing for renewal of affiliation agreements and charge a balloon retroactive payment for those services once the agreement is finally concluded.
2065 We beg to say that it should not be the case, but your rules don't provide for that.
2066 THE CHAIRPERSON: Okay. Well, thank you for that answer. As you are, of course, aware, that is one of the reasons why we called the vertical integration hearing, and hopefully we can fix a lot of those things there, which begs the question of the interim, which you point out.
2067 But you also raised, Mr. Audet, this morning an issue which I am very well aware of, but you didn't provide an answer.
2068 On page 3, second paragraph, you say being vertically integrated, you can shift the profit from where it is most suitable. So you will have your own programmers pay extra for carriage so that you can exact the same amount from Cogeco and so that just means the profit goes over to Bell, but in a consolidated enterprise that makes no difference.
2069 What is the remedy against this? This is obviously one of the great advantages of vertical integration, but I am not aware that there is any remedy either in competition law or in broadcasting law against this.
2070 MR. AUDET: This, Chairman, is a very interesting and fundamental question which I will attempt to answer as best I can, but to do so, please allow me to make a detour.
2071 The statement in this paragraph is sort of the first elementary statement about what can happen, but surely, if you have looked at the dynamics of who has programming and who sells programming to whom, you will have seen that eventually the payments move from one integrated distributor/programmer/owner to another, such that the final result of this in the case of BCE-CTV is blatant but it will also become generalized across the industry, such that in the end it is the distributors that don't own programming that will pay the brunt for everybody else.
2072 So this paragraph which you are pointing to is only the tip of the iceberg. There is more to come, and in June, I guess we will have more ample discussions about this problem.
2073 So then your question is what do you do about this problem, and this is where some of the conditions that my associate Yves Mayrand has referred to become critical, i.e. the filing by the distributor BCE and by the programmer CTV of all past affiliation agreements, whether as between them or with outsiders, before the transaction and going forward in the future after the transaction in order that when you are called on to arbitrate a situation in what would then have become a new reverse onus applying to BCE-CTV that you are then in a position to judge as to whether the required or the increases being forced onto the distributor are reasonable or not, and hence, our reference during our presentation to the fact that you will need more resources because this is going to be, in our opinion, very complicated.
2074 Now, this is not unique to Canada. You have seen, and my associate has referred to, what has been happening with the Comcast-NBCU transaction, where similar concerns have emerged and are being dealt with in somewhat comparable ways, but we are also faced with exactly the same situation in Portugal, where there it is in fact worse.
2075 The regulatory authority allowed the dominant cable provider to acquire the dominant specialty program provider in the Portuguese language for -- mainly for films and sport properties, put around it what you would expect to be normal course reasonable requirements in terms of behaviour but with no strict enforcement rules.
2076 So what happened? What you would expect would happen, and which we are asking respectfully that you ensure not happen this time around in Canada, happened in Portugal, which you could expect. The dominant player started imposing all sorts of conditions on everyone, including ourselves, our subsidiary Cabovisao, televisiao por cabo, where we have minimum guarantees, unreasonable prices, ranges that unreasonably favour large numbers of customers, which, of course, only the owner of the program has and that we don't have. So you have a series of distortions in the market.
2077 We finally came to grips with this and filed -- we an outsider -- a formal complaint to the competition authority, the Autoridad de la Concurrencia, and finally, after a year and a half, they agreed that there were grounds, there were merits to our complaint.
2078 The industry in Portugal then joined us and produced a study, which I have here, to show what distortions there were in the market. It was a broad canvas of all other distributors in the market, including the culprit, and came out with an analysis.
2079 So this analysis contemplates pretty much the same remedies as the ones we are proposing today, as the ones -- everyone is essentially coming to the same kinds of conclusions because they are, you know, reasonable. When you think it through, they are reasonable conclusions to arrive to.
2080 But this study goes even further. It contemplates a cost-plus kind of regulation of programming costs.
2081 Now, we have not gone in that direction in this presentation because we could not effectively recommend a specific cost-plus method of dealing with the problem, but it shows you that this is a contemporary problem, there are people thinking about it in many different areas of the world, and an array of possible ways to deal with it are emerging.
2082 THE CHAIRPERSON: Thank you very much.
2084 COMMISSIONER CUGINI: Yes, thank you. Just a few questions.
2085 If I understand your presentation correctly, unless we are prepared to impose the conditions for approval that you have prescribed and if Bell in its reply comments doesn't accept the conditions as you have proposed, we should deny this transaction?
2086 MR. AUDET: Allow me to be more flexible.
2087 COMMISSIONER CUGINI: Because up until Mr. Mayrand spoke, I almost thought the conclusion was going to be deny.
2088 MR. AUDET: No, that is not really what I am saying. What I am saying is more at the level of principles than at the level of compare this list and if this list is not there, deny it. That is not really what I am saying.
2089 I think this goes more to character, expected behaviour. When you have an applicant come to you requesting an immense privilege, the purchaser should be showing a willingness to cooperate towards the well-being of the Canadian broadcasting system, but what you have seen in the last few months is basically an uncooperative purchaser who is not being responsive to your questions and other interveners' questions.
2090 So mine is not a checklist approach, it is more a -- you should normally expect an applicant to be cooperative, not be reticent about what happens to other actors in the Canadian broadcasting system. So if the applicant does not cooperate with you, then you are fully entitled to not approve the transaction. But it is not a checklist approach.
2091 COMMISSIONER CUGINI: And you didn't -- I assume you were in the room yesterday. You didn't see any cooperation from Bell?
2092 MR. MAYRAND: I will certainly answer that question.
2093 I was in the hearing room throughout the presentation and the question period, and the only "compromise" that I can think of is Bell finally agreeing to filing arm's-length affiliation agreements between itself and CTV as they are, which was a requirement in your approval of the Shaw-Canwest transaction. That is a very big compromise indeed.
2094 I didn't hear anything else that addressed any of the other concerns and requests for safeguards that we put into our intervention. In fact, they have deliberately chosen in their written reply not to address them.
2095 So let me just go back to the whole discussion about whether this is about approval or non-approval. That is not what we said.
2096 What we are saying here and what I heard BCE say at the hearing yesterday was: Let us have a dominant position in this communications market and then let the market decide.
2097 Well, that doesn't work. Why? Very simple. Competition 101. You know, you either have a workable, truly competitive market with no regulations and no constraints imposed or if you don't have a fully workable competitive market because, for example, of very high levels of vertical integration and incentives for preferences and discrimination, then you need to consider regulatory safeguards and that includes considering ex ante regulatory safeguards.
2098 That is common practice, common basic competition law around the developed world. So it is nothing exceptional here. You can't have it both ways.
2099 COMMISSIONER CUGINI: In your written presentation -- and it goes to the issue of competition -- in paragraph 23, you say:
"...Bell-CTVgm would cumulate wireless, wireline and satellite distribution essentially throughout Cogeco's distribution footprint in the provinces of Ontario and Québec..."
2100 There are two issues here -- of course:
"...while also controlling a major part of Cogeco's programming line-up with some 30 programming services..."
2101 We understand that the safeguards as well include the provisioning of these programming services, but what are you telling us with that first half of that paragraph -- of that statement that I just read to you: "would cumulate wireless, wireline and satellite distribution essentially throughout Cogeco's cable distribution"? What are you warning us of?
2102 MR. MAYRAND: Well, very simply that this vertically integrated conglomerate has at its disposal throughout our footprint, which is strictly a terrestrial cable footprint, multiple platforms on which all this key programming that we distribute, and that in fact in some cases we are required to distribute, can be offered in any number of combinations to our customer base throughout our footprint. I think that says it all.
2103 COMMISSIONER CUGINI: And those offerings cannot be duplicated or Cogeco can't compete with those offerings with the BDU Regs that we currently have?
2104 MR. MAYRAND: Certainly not when one thinks of the key specialty properties that CTV has. Asking the question, I think, begs the answer.
2105 Is there a real opportunity to bring here American sports programming directly? The answer is no.
2106 Is there a competitive offering of sports properties? Yes, there are two.
2107 Is that sufficient to create tension when we negotiate affiliation renewal agreements, as is presently the case? We are trying to negotiate. We don't have even the opportunity of truly negotiating. The answer there again is no.
2108 There is no leverage and there is no place for non-vertically integrated players in that leverage game of quid pro quo that Bell is proposing to you.
2109 There may be with groups such as Rogers and such as Videotron. There may be. You will hear them. I am not sure that either one has the same kind of leverage that this group would have if the transaction is approved, but it is for them to answer that.
2110 Certainly not in our case.
2111 And by the way, when I read the presentation of Bell saying that the cable industry has 70 percent of the video distribution market, well I beg to tell you there are a number of companies in that figure, it's not just one company, and we compete with some of them as well.
2112 COMMISSIONER CUGINI: One of the safeguards that you talk about is the reverse onus on programming services should be applied.
2113 Is it your position that that reverse onus should be applied today as a result of this transaction or is that a subject to be discussed at the vertical integration hearing?
2114 MR. MAYRAND: It is certainly a subject for discussion as far as the policy proceeding. We wanted to bring it forward right away because there may well be situations in the interim where there would be issues arising with some or possibly all of the 30-odd specialty services that the Bell/CTV group would control and we would have to come and see you possibly on a dispute.
2115 It may be very appropriate indeed as an interim stopgap measure to ensure that we are not placed in the double jeopardy situation where we don't have access to the relevant information from the side of the party that applies the preference or the discrimination and that we are facing protracted negotiations and that certain services which are not must-carrys can be denied or new services be denied, and we are facing the possibility of unreasonable request for a huge retroactive payments due to the passage of time.
2116 That is our predicament, Commissioner Cugini.
2117 COMMISSIONER CUGINI: I'm sure that the people from Bell are listening or those who are in the room would now say "Yes, but that would be a condition imposed on Bell that was not imposed on Shaw when it came to us and purchased Canwest and that is simply a competitive disadvantage to have the stopgap measure imposed on them when it wasn't imposed on Shaw and it's not imposed on Rogers or Videotron at this point."
2118 MR. AUDET: Our viewpoint on that is very explicit and very clear. We did not intervene in the Shaw purchase of Canwest because Canwest was, much to the chagrin of everyone in the Canadian broadcasting system, a bankrupt company --
2119 COMMISSIONER CUGINI: But their specialty services weren't.
2120 MR. AUDET: -- a company, overall a company in difficulty. We did not intervene. We considered that the Shaw family was in fact displaying a lot of courage, salvaging a sinking boat, and therefore we did not intervene and we did not ask for conditions.
2121 The combination that this transaction creates is one that is many, many times more significant than the one that has been approved by the Commission on the Shaw/Canwest transaction.
2122 So the safeguards we have here are, we think, absolutely necessary for the orderly functioning of the system until such time as you make a decision about a framework sometime in June, with a decision to come out -- I couldn't predict when, but assume this will take maybe a year -- and you may choose to impose other conditions on Shaw as a result of that hearing.
2123 But clearly these two deals are not comparable in our book.
2124 COMMISSIONER CUGINI: Mr. Audet, based on what you have just said, and something that you have included in your oral presentation:
"This transaction does not involve any economic or financial necessity arising from the insolvency or likely demise of the purchase broadcasting group."
2125 Are you saying that this Commission should only consider ownership transactions when something is in economic or financial ruin? That certainly hasn't been our practice.
2126 MR. MAYRAND: No, Commissioner Cugini, we are not at all saying that. All we are saying is that if you are facing a situation where the parties to the transaction will derive extraordinary privileges, it is a very different proposition than in the case where the salvaging of a bankrupt undertaking is involved and it goes to the whole debate as to whether you should apply the same standards in that type of transaction than you apply when a salvage operation is involved and whether Bell should have a discount, for example, on its benefits, as others have, and all of these sorts of discussions. I won't delve into them.
2127 If you allow me, let me answer specifically the question of the competitive landscape and why Bell would be competitively disadvantaged if there were safeguards.
2128 Well, I think you and I would agree that there is not the slightest competitive disadvantage risk between Bell and Cogeco Cable or indeed between Bell and any other Canadian licensed distributor that does not own content. I think we would agree on that. So your question was presumably in relation to Rogers and Shaw and Videotron.
2129 Well, we submit to you that you have the flexibility and the ability to apply appropriate rules that are effective in making sure that the interim is protected for non-vertically integrated distributors and that you let the situation lie, as it is right now, as between integrated distributors, until you come out with your full policy.
2130 You are certainly not prevented from addressing specifically what the real problem is.
2131 COMMISSIONER CUGINI: I will move on to another area and that is tangible benefits, because you do also address it in your oral presentation.
2132 I'm sure you were sitting here in the room when the CMPA presented their position just an hour or so ago and you heard Bell and their revised benefits proposition, as they put it forward yesterday, and I want to give you the opportunity to comment firstly on its revised benefits package and, secondly, on the position of the CMPA.
2133 MR. AUDET: Thank you, Commissioner Cugini.
2134 I will ask Yves Mayrand to answer this question in depth, but before he does so I would like to, in reference to your question, at the same answer a question that Chairman von Finckenstein has addressed the preceding intervenor on the subject of eligibility of benefits.
2135 There once was a time where we owned regional television stations that were not carried on the Bell satellite and that was a huge economic penalty to us in terms of having local advertisers unwilling to commit funds to us because the audience was being fragmented. In those days we thought -- and we still think today -- that it should have been a normal obligation of someone who has the privilege of operating a direct-to-home satellite service across the country, while being at the same time the dominant phone company in that country, it should have been a moral obligation of theirs to offer that coverage.
2136 So when we see this presented as a tangible benefit we smile and we say: This is an obligation you had even before this transaction which you never delivered on. So this MPEG-4 transition is simply not an acceptable tangible benefit.
2137 Now, my answer is a little too specific, I will pass it on to Yves, who can give you a more general view of the benefits question.
2138 MR. MAYRAND: So, yes, Commissioner Cugini, we have looked at the revised Bell tangible benefits package proposal. We were somewhat disappointed that it was produced on the first day of this hearing. We had requested that should Bell revise its package that it should be provided ahead of the hearing so that we could comment aptly on it.
2139 However, that being said, we are pleased to see that certain of the contentious elements of the package were removed. There still remains the issue that Louis was referring to as to the real consequences and the true downstream benefits of the MPEG-4 conversion benefits element.
2140 You have rightly picked up on the fact that this will free up a large quantity of capacity for satellite distribution to the detriment of other satellite distributors, and of course to the potential detriment of other terrestrial distributors as well.
2141 I am not aware that Bell has filed that capacity comparison that was referred to yesterday, so I can't comment precisely on what is involved and it's a bit of a jeopardy because our time will be over once we are through with this intervention.
2142 It may be appropriate for the Commission to allow for a reply stage in writing at the conclusion of this hearing, but I leave that to you.
2143 So short of that comment on the particular MPEG-4 conversion element, our points were points of principle.
2144 All we said is we think it's important that the valuation be the right one, we have faced a number of transactions where valuation was applied to the letter, and we have paid up our benefits accordingly and we think that's only fair.
2145 On the elements that get into the final benefits package, well, you know, we think that they ought to be consistent with normal policy unless there is a clear demonstration that some particular element deserves consideration, which they are always open to try and demonstrate.
2146 Now, on the CMPA position --
2147 THE CHAIRPERSON: Mr. Mayrand --
2148 MR. MAYRAND: Yes...?
2149 THE CHAIRPERSON: -- can you be a bit more succinct, we are really running out of time, unfortunately.
2150 MR. MAYRAND: Yes, okay.
2151 Well, briefly on CMPA, we will not comment on what allocation should or should not go to independent producers. We don't think it's our role and you will have to decide that based on other parties' submissions.
2152 COMMISSIONER CUGINI: Well, thank you.
2153 Those are all my questions, Mr. Chairman. Thank you.
2154 THE CHAIRPERSON: Right. Two answers.
2155 We are not going to take one year to make a decision after June, Mr. Audet, rest assured we will do it as quickly as possible.
2156 Second, in terms of procedure, Bell will make their final submission on Friday, we will then give everybody next week to comment on the final position of Bell, so you will have a chance to come back.
2157 Len, you had a question?
2158 COMMISSIONER KATZ: Yes, one question. Thank you.
2159 Good morning. I want to focus on your last paragraph, your summation of this morning where you suggest that:
"If the Commission does approve this we should effectively supervise this new conglomerate and act quickly to enforce the rules." (As read)
2160 Do you believe the CRTC today has meaningful enforcement tools in order to enforce rules?
2161 MR. MAYRAND: We believe that the fundamentals are present in the dispute resolution process, however we have I think the same concerns that TELUS voiced earlier in terms of the time line to reach conclusive decision-making in those disputes.
2162 We have made, I think, a very clear case on the reverse onus need that should apply in our view across the board to programming undertakings as well.
2163 We just look at the time line that was involved in a dispute that received its final outcome a short while ago in a complaint by Bell and TELUS against Videotron. Well, that took more than half a year. So we are looking for shorter time lines.
2164 COMMISSIONER KATZ: Let me ask the question more pointedly: Do you believe having AMPS would facilitate the resolution of issues where in fact there are breaches?
2165 MR. MAYRAND: We certainly believe that that is a very promising avenue. We didn't want to address that in our submission for the simple reason that we think that would require a statutory authority and you would probably have told us that it may not be possible in the near to medium term.
2166 COMMISSIONER KATZ: Thank you.
2167 THE CHAIRPERSON: Okay, thank you very much for your very clear presentation. As I said, you will have a chance to respond in writing to anything that further comes from Bell.
2168 Thank you.
2169 MR. AUDET: Thank you for taking the time to hear us out.
2170 THE CHAIRPERSON: We are somewhat behind schedule and I believe our next intervenor Mr. Janigan has to go and teach, so Mr. Janigan, come forward and let's hear you.
2171 MR. JANIGAN: Thank you very much, Mr. Chairman and Members of the Hearing Panel, for accommodating me today. My name is Michael Janigan. My student, Eden Maher, was supposed to be with me today, but is under the weather, in a couple of different senses of that word.
2172 I am here to speak to the proposal of the Public Interest Advocacy Centre to amend the plan of benefits put forward by the Applicant, BCE, to provide a requirement for funding of a Canadian Broadcasting Participation Fund, which I will later refer to either as CBPF or the Fund.
2173 We intend to direct our comments exclusively to this issue, with the exception of also indicating our support for the proposal put forward by CACTUS, associated with the creation of a Community Access Media Fund, which will be addressed later in this proceeding.
2174 PIAC proposes that the Fund be created to further the participation of non-commercial consumers of broadcasting services regulated by the Commission, such that the fund moneys could be used to assist in the representation, research and advocacy on behalf of those interests.
2175 The Fund would be independent of commercial broadcasting interests, as well as representatives of consumer and public interest stakeholders with an interest in broadcasting issues.
2176 The Fund would be accountable to both contributing industry stakeholders and users for whom its representation, research and advocacy is being provided.
2177 We believe that the proposal is within the scope of the objectives of providing tangible benefits associated with the transfer of control, namely, the safeguarding, enriching and strengthening the cultural, political, social and economic fabric of Canada, spoken of in section 3(1)(d)(i) of the Broadcasting Act.
2178 While the Commission has taken an approach that analyzes particular benefits on their own merits, it is clear, in accordance with Public Notice 1993-68, that those research and development initiatives that advance benefits to the public that they serve, and the broadcasting system as a whole, will be considered.
2179 In PIAC's view, the linchpin that supports this proposal is the concept that the decisions made by the Commission and the government on broadcasting issues, and pursuant to the terms of the Broadcasting Act, matter to Canadians.
2180 As well, these decisions are dependent on the evidence placed before the decision-maker and the advocacy of the position of stakeholders based on that evidence.
2181 This proposal is directed at creating circumstances wherein the Commission's important decisions can be influenced by the interplay of evidence and ideas that emanate from not only the regulated industry, but also from ordinary user interests that are currently without the resources to make themselves heard.
2182 This proposal has been crafted to deliver the necessary resources to accomplish the goals of both helping to level the playing field and to ensure that an appropriate record is placed before decision-makers to enable a better decision to be made.
2183 The Fund Mechanism: Given PIAC's relatively lengthy history in representing consumers in both telecommunications and broadcasting proceedings, and its non-profitable/charitable status, the most expedient mechanism might have been a direct transfer of benefits in a far lesser amount. However, we note that the Fund is meant to advance an important general public purpose, and is an attempt to accommodate the necessity of public interest intervention on behalf of all users of broadcasting services who would otherwise be unable to participate in proceedings or consultations.
2184 As well, because an objective of the establishment of the Fund is its continuance on an indefinite basis, it appeared that the wisest course was to proceed in the way which we have recommended.
2185 PIAC submits that the Fund should be established pursuant to the following principles.
2186 One, independence: The Fund should be an independent organization, with appropriate financial and administrative competence, featuring a board of directors that is independent of commercial broadcasting interests or direct interests in the broadcasting decisions of the Commission and the government.
2187 Expertise: A respected, impartial coordinator, with experience in governance and public policy, such as the Public Policy Forum -- which has indicated a willingness to take part in the initial organization -- would be tasked with an initial facilitation and coordination role. The coordinator would ensure that Fund directors were knowledgeable about broadcasting issues, as well as the importance of consumer and public interest participation in broadcasting proceedings.
2188 Continuity: The Fund is expected to be able to function over the long term, with possible further contributions from tangible benefits accruing as a result of transfer of control of broadcasting undertakings, subject to the review of performance that is also contemplated. This also means that the management of the Fund would be cognizant of the need to maintain capacity for future public interest participation, and that, ideally, future participation assistance would not be sole sourced to the benefits paid herein.
2189 Adherence to Objectives: Funding would be limited to organizations, groups or individuals representing non-commercial interests without the resources to effectively participate in Broadcasting Act proceedings. Funded work would be in furtherance of the objectives of the Broadcasting Act, with particular emphasis on concerns associated with access to broadcasting services, affordability, and value.
2190 While it is understood that the funding priority would involve existing or contemplated Broadcasting Act proceedings, the Fund may provide assistance for research from the consumer perspective on important potential and ongoing issues.
2191 Oversight and Accountability: It would be anticipated that the Commission would review and approve the progress of the Fund at key junctures of its development. Upon approval in principle of the establishment and provision of tangible benefits for the Fund, it is suggested that the following represent possible appropriate points for progress review that comprehends appropriate release of relevant amounts of approved funds with a positive result:
2192 One, upon the impartial coordinator's assumption of its task and the filing of a plan and budget for initial organization;
2193 Two, upon the organization and assumption of office of the Fund's board and its filing of a three-year plan for funding of participation;
2194 Three, upon the completion of the three-year period contemplated in two, and the filing of an evaluative review.
2195 Quantum of Funding and Continuance: The $5 million that is being earmarked as the funds required as part of the tangible benefits required to be paid by the applicant has been estimated through the use of the following assumptions and considerations.
2196 First, cost awards payable to public interest groups and organizations for participation in proceedings convened by the Commission under the authority of the Telecommunications Act have ranged in annual amounts, over a 15-year period, from under $100,000 to more than $750,000. While it is likely that funding would be available for only a small fraction of CRTC broadcasting proceedings, it is also probable that the number of those proceedings considered for funding would be greater than the total associated with the payment of cost awards in telecom.
2197 Second, while telecom proceedings primarily feature consumer and public interest participation that is largely lawyer-driven and reactive to the content of the applications under consideration, participation enabled by the Fund would likely include more primary source research and analysis that would engage the public interest and consumer objectives of the Broadcasting Act. In other words, the participation funded is likely to be more comprehensive than simply poking holes in a particular applicant's case.
2198 That is not to imply that that is the only thing we do in telecom.
2199 Third, while it is anticipated that additional funding may be provided by the payment of tangible benefits by other applicants for transfers of control in the future, it is essential that sufficient funds exist to ensure the successful completion of a three-year plan of participation.
2200 Fourth, the size of the transaction and the total of tangible benefits that may be required to be paid appear to indicate that the amount requested for the Fund is not disproportionate to amounts allocated for other broadcasting needs.
2201 Conclusions: Both PIAC and the CRTC have been supporters of enabling public interest participation in broadcasting proceedings in the past, with the vehicle of choice being a model based on the cost award procedure under the Telecommunications Act. The need for such participation remains, but the model has yet to take root. This proposal provides an alternative to the model, in an effort to attain the objectives of levelling the regulatory playing field and providing a more comprehensive record for decision-makers.
2202 I would be happy to answer your questions.
2203 THE CHAIRPERSON: Thank you.
2204 What stops you from setting the Fund up right now?
2205 You want us to allocate $5 million toward the Fund, but at this point in time the Fund is a figment of your imagination. It is well thought out, but it's not there.
2206 Why could you not have come to us with a fund already set up, with a board of directors, et cetera, so that there would be an entity?
2207 MR. JANIGAN: I think, in reality, what we needed was some kind of imprimatur, or signal, or approval in principal by the Commission before we could go out and engage an impartial coordinator, like the Public Policy Forum, set up the board of directors, do all of the administrative tasks that are required to put this thing in motion, without any guarantee that this thing was going to go forward.
2208 That requires time and resources, and that's the reason why we came, first, to try to secure approval, contingent upon a staged set of further approvals, which would, presumably, satisfy the Commission as to the bona fides of the Fund.
2209 THE CHAIRPERSON: Len, do you have some questions?
2210 COMMISSIONER KATZ: Thank you.
2211 Good morning. You said in your comments this morning that the funding would not be available for all of the broadcasting proceedings. How and who would decide when you would intervene and when you would not intervene?
2212 MR. JANIGAN: I think that would be a decision of the board of directors, upon application to the directors for funding for a particular proceeding, or for a particular issue arising in a proceeding.
2213 Ergo the necessity to make sure that the directors themselves are well versed in Broadcasting Act proceedings and what can or can't be accomplished under that.
2214 There is, obviously, a wide range of very technical and -- I don't like to say routine, but proceedings wherein participation by public interest or consumer groups may not be of any value at all, and we want to make sure that that's not part of this.
2215 COMMISSIONER KATZ: Would it be PIAC that would make an application to the Fund for funding, a certain amount of funding, a budget obviously, and then they would either get approval or not get approval?
2216 MR. JANIGAN: That's correct.
2217 COMMISSIONER KATZ: And then they would proceed?
2218 MR. JANIGAN: That's correct.
2219 This is our baby, but we are putting it up for adoption. As soon as the Fund obtains a board of directors, it will make the decisions, subject to performance review by the CRTC.
2220 COMMISSIONER KATZ: The $5 million that you came up with, is that a number that you are comfortable with?
2221 You know, if you invested 4 percent, that would be -- whatever it's going to be -- $200,000. That's not a lot of money in the overall scheme of things, so obviously you won't be able to invest in very many proceedings, if there are major material proceedings going on in one year.
2222 I guess the question is: How did you come up with $5 million, as opposed to 3 or 10?
2223 MR. JANIGAN: I think that I used some of the assumptions that are associated with the telecom proceedings themselves, assuming that, possibly, the proceedings are twice as numerous and would require somewhat more engagement.
2224 If we are looking over a three-year period, that amount should be sufficient, at least to get over the initial period of funding representation during that three years.
2225 Plus, it is contemplated, once the performance review is done, that, potentially, additional amounts might be added, in terms of tangible benefits involving other transfer of control proceedings, dependent upon the success of the Fund and the participation that is funded therein.
2226 COMMISSIONER KATZ: Okay. Those are my questions.
2227 LE PRÉSIDENT : Louise?
2228 CONSEILLERE POIRIER : Et, Monsieur Janigan, je suppose que votre organisation va regrouper l'ensemble des citoyens canadiens -- anglophones, francophones, minorités, communautés autochtones, tout le monde -- dans les faits aussi ou va représenter seulement une partie de la population canadienne?
2229 MR. JANIGAN: We are hopeful, for example, if it is the Public Policy Forum that organizes the Fund itself and the board of directors, that it choose wisely with respect to the directors of that particular fund.
2230 After that fund is empowered and given the authority to dispense the money, our role is limited in terms of any degree of control or authority over that fund. We would become another applicant, and we would certainly wish to ensure that the fund itself is available to all public interest and non-commercial users of broadcasting that may be interested in making representation before decision-makers under Broadcasting Act proceedings.
2231 We certainly would publicize that fact, but we would not be the ones making the decisions as to how the money would be allocated. That would be the Fund's directors themselves, who would be chosen through the process of having an impartial coordinator, like the Public Policy Forum, who would deal with that.
2232 THE CHAIRPERSON: Thank you very much for your presentation. Those are our questions.
2233 We have one more presentation before lunch. We are a bit behind in the schedule.
2234 THE SECRETARY: We would need to take a quick break, Mr. Chairman.
2235 THE CHAIRPERSON: We will break now for five minutes, so that the next panel can set up.
2236 Let's keep in mind that we have several people who want to appear before us, and they have all asked for a specific time, so we have to do this quickly.
2237 Thank you.
--- Upon recessing at 1200
--- Upon resuming at 1209
2238 THE CHAIRPERSON: Okay, Madame la Secrétaire, commençons.
2239 THE SECRETARY: Merci, Monsieur le Président.
2240 We will now hear the presentations -- I'm sorry -- from Media Access Canada (MAC), on behalf of the Access 2020 Coalition. And appearing for them is Mrs. Beverley Milligan.
2241 Please introduce your colleagues for the record and you will then have 15 minutes for your presentation.
2242 MS MILLIGAN: Merci. Thank you, Madam Secretary.
2243 For the record, my name is Beverley Milligan and I am the Executive Director of Media Access Canada
2244 To my immediate right is Philippe Ramsay, Regional Director of the Canadian Hearing Society, and to Philippe's right is Professor Charles Laszlo of the Canadian Hard of Hearing Association.
2245 To my immediate left is Cathy Moore, CNIB's National Director of Consumer and Government Relations, and to Cathy's left is Mike Potvin, the Program and Communications Director of the Canadian Council of the Blind.
2246 Commissioners, Commission staff and members of the audience, good morning.
2247 The Access 2020 Coalition is honoured to appear before you today, on behalf of millions of people with disabilities who live in Canada.
2248 We begin by asking you to imagine exclusion from the leading sources of information, entertainment and enlightenment for decades.
2249 This is the experience of more than one million deaf and hard of hearing Canadians, and more than 800,000 blind and low-vision Canadians. They are excluded from Canada's social, political, cultural and economic discourse by decisions and policies that place their reasonable expectation of inclusion at the bottom of the priority list.
2251 MS MOORE: Thank you, Bev.
2252 I would like to thank you for the opportunity to be speaking this morning. I represent Access 2020 in this conversation but I work for the CNIB and the CNIB is an organization of and for persons who are blind, partially sighted or deaf/blind. One of our mandates is to work with people who are blind, partially sighted or deaf/blind and increasing our national voice around areas of accessibility. So therefore, we are here.
2253 So I just want to say before I go on that we are not an esoteric tiny group over in some corner but that we are actually here to talk about something that has impact on everybody in this room. And I will tell you why.
2254 If you live long enough you are going to have vision loss and because we are healthy, because we are well looked after and we have a reasonably good health system, we are all going to live long enough to have that happen. If not vision loss, it's going to be hearing loss and if not hearing loss, it's going to be mobility and dexterity loss.
2255 So what we are talking about this morning in terms of accessibility is not for a small group.
2256 It's for all of us.
2257 It's for our parents who are the most affected right now.
2258 It's for ourselves.
2259 It's for our children.
2260 It's for our children's grandchildren.
2261 So it's a big group. It's not a small group.
2262 If I may just put a human face on what we are talking about here again, because I think that it's very important to boil it down to the essence of what the result needs to be. The result needs to be that when someone turns on, in this case their television, if they have vision loss they are able to access the content.
2263 THE SECRETARY: Excuse me, Madam Moore.
2264 I'm sorry. This is the Hearing Secretary. Can you please slow down a little bit for the court interpreter?
2265 MME MOORE : Je m'excuse. Parce que j'ai juste une minute, j'essaie de...
2266 Okay. I will be much slower.
2267 When someone turns on the television this is what we were looking for. This is the result. They are able to access content with an audio channel in the case of vision loss so that they can see when the SILECs' music swells, that the hero is kissing the heroine or they can see how their stocks did that day or they can see how to cook that recipe, et cetera, et cetera.
2268 That's what we are looking for. That's -- it's as simple as that.
2269 Now, how do we get there? This is the third time that we have appeared before the Commission, the first time in 2009 around the areas of accessibility and gaps.
2270 Then in 2010 there was a hearing that we intervened as Access 2020 when the Shaw Company had asked you to approve its purchase of Canwest. At the Shaw hearing our group asked you to set aside part of the Shaw benefits, tangible benefits to be used for accessibility.
2271 We wrote you to oppose Shaw's last-minute counteroffer to offer a few more hours a week of described video.
2272 We urged you to reject that offer in favour of a more long term robust systemic solution.
2273 We asked you to accept our proposal for accessibility initiatives that would benefit everyone.
2274 But your decision at that time was that you would accept Shaw's last-minute offer. It did not mention in your decision that every major disability organization in the country had opposed the acceptance of that offer.
2275 But c'est la vie. We are here today.
2276 So this hearing is another opportunity to ensure that all of us in this room will be able to turn on whatever iterative phase of broadcasting equipment is available at that time, be it today or 20 years from now and actually use it, access its full content. This is another opportunity.
2277 We aren't going away. There are many people with disabilities in this country. We are here again. We will continue to come.
2278 But what we are asking for is to use the avenues that are available to address the issues of accessibility in a way that will benefit everyone and make it possible for everyone, all broadcasters, to move forward in a timely fashion, not 70 years from now but today.
2279 Thank you.
2280 MR. LASZLO: Thank you. I would like to start by --
2281 THE SECRETARY: Can I ask you to turn on your mike, please?
2282 MR. LASZLO: All right. Sorry.
2283 I would like to start by re-emphasizing the point that Cathy made; namely, that we are here representing millions of people with our condition.
2284 Someone once remarked that there are only two types of people in this world, the hard of hearing and the not yet hard of hearing. And we remember that.
2285 Our Coalition is again appearing before you today, speaking with one voice and representing millions of people.
2286 BCE is showing the same troubling disregard for the needs and interests of persons with disabilities as Shaw does. Whatever else BCE has said since filing its application last fall the simple fact is that the application to buy one of Canada's largest English-language broadcasting companies did not even mention the issue of disability.
2287 BCE's silence could be understood if Canadian broadcasting were fully accessible. But it has never been fully accessible. How long should persons with disabilities wait?
2288 BCE's silence is why you must speak on our behalf. We ask again that you set aside part of the tangible benefits to fund an Accessibility Initiative that will serve millions of Canadians, including broadcasters, producers and distributors.
2289 Every member of this Coalition asks you to adopt its Accessibility Initiative proposal. The Canadian Hard of Hearing Association would like very much to inform the millions of deaf and hard of hearing Canadians that the CRTC is serving their interests by endorsing plans for 100 percent accessibility by the year of 2020.
2290 MR. POTVIN: Thank you.
2291 The Access 2020 Coalition is here today because our cause is just.
2292 We do not know why BCE ignored our intervention or why they excluded us from the replies to the other interveners.
2293 We do know that they cannot continue to ignore us and we know that Canadians with vision loss, well, like myself -- you know I represent -- I'm here representing the Canadian Council of the Blind and there is 800,000 of us with vision loss across the country and we would like to have full access to our communications systems.
2294 We would like you to help enforce that. We would like to be able to tell all of our constituents that this will move ahead.
2295 Thank you.
2296 MS MILLIGAN: I would like to, if I could, build on what Mike has just said to say that what we do know is that BCE did not challenge our evidence. We also know that under Canadian law you cannot ignore us. You cannot exclude us. You bear a responsibility to serve the interests of all Canadians however abled or disabled they may be.
2297 This duty requires you to act when the companies you regulate hesitate. It requires you to lead when those you regulate lag.
2298 We ask you to accept our proposal for an Accessibility Initiative.
2300 MR. RAMSAY: Our request is very clear. We ask that 1 percent of BCE's purchase of CTV be invested in a trust fund governed by the accessibility community, to generate annual income for projects to make Canada's electronic communications system 100 percent accessible by the year 2020.
2301 Why should the CRTC accept this proposal? Quite simply because times have changed. A hundred years ago disabled Canadians had few rights. Paternalistic government programs labeled them as dependent, unemployable welfare recipients incapable of managing on their own.
2302 The 1982 Charter of Rights and Freedoms has changed that view. We all have rights. As independent participants in programs that affect their interests, persons with disabilities expect to share responsibility with governments for decisions affecting them.
2303 Changing laws have changed attitudes. Where people in wheelchairs were once denied employment because their wheelchairs were not small enough to fit through doorways, architects now design doors that are large enough for everyone.
2304 Persons with disabilities have the right to be included. We experience daily life much the same as anyone else when barriers are replaced with bridges.
2305 MS MILLIGAN: Mr. Chairman, the 2009 accessibility policy was a good start, but what Canadians with disabilities want is clear, measurable goals for 100 percent accessibility across the communications system by 2020.
2306 Take descriptive video: The CRTC first required TV stations to broadcast two hours of described video a week in 2002. You now require four. The regulated broadcast week has 126 hours. At this rate, blind and low-vision people will obtain full access to TV programming in 2051, 100 years after TV was introduced in Canada.
2307 But the solution is not for BCE to offer a few more hours a week of described video because that will not make all four of their screens accessible. This transaction must do more.
2308 The entire communications system must become fully accessible. That will tangibly benefit everyone including broadcasters, who would reach a new, under-served audience.
2309 Broadcasters, however, simply tell us they cannot afford accessibility. They do not discuss the revenue that broadcasters have made and are making from the "closed captioning brought to you by" business model. They don't mention that their total and hourly captioning costs have decreased since 2003.
2310 Our evidence is that full accessibility will not drain the communications system. Costs will go down. Revenues will go up. Neither Shaw nor BCE has presented evidence to contradict these facts.
2311 Our panel has lived with the old-fashioned approach to regulating accessibility for decades: Where you require broadcasters to act, broadcasters agree to consult with "user" groups; demand we prove that change is possible, deny our requests for necessary technical research, conclude that standards cannot change without data and then report regretfully back to you that Canadians with disabilities expect too much and are difficult to work with.
2312 This approach has worked for broadcasters for decades. It has not worked for us. It is not working for you.
2313 Where Canada could lead, we are lagging. Worse, denying persons with disabilities access to the communications system contravenes our legal rights.
2314 We would all prefer change that is not driven by complaints, the courts or legal challenges of this or that regulatory decision.
2315 We therefore ask you to remove the barriers that are preventing us from working with you, and with the broadcasters, telecommunications companies, ISPs and content producers to achieve 100 percent accessibility by 2020.
2316 Please adopt our accessibility initiative.
2317 It will fund innovation in accessible communications technologies across the content spectrum from user interface to production and harmonization.
2318 It will fund the engineering and empirical research needed to design enforceable digital standards and best practices guides, for described video, closed captioning and inclusive design.
2319 It will monitor the concerns of persons with disabilities and will act as a clearinghouse for complaints.
2320 It will develop educational materials for use in schools and workplaces, creating expertise in broadcasting and accessibility.
2321 It will report progress regularly.
2322 It is a winning strategy.
2323 Let us work together. Enable meaningful and active participation by the accessibility community. We know where the problems are. We can fix them. We can help you, and help broadcasters.
2324 Our evidence from the last 30 years is that the marketplace will not achieve 100 percent accessibility in our lifetimes unless you empower us to participate as equal participants in planning and implementing.
2325 We ask as your first step that you direct BCE to set aside 1 percent of the value of its purchase of CTV for the Access 2020 Coalition Accessibility Initiative.
2326 Then, invite our Coalition to submit a proposal for creating a trust fund to direct accessibility initiatives and invite comment about its governance. We undertake to provide you with this proposal within two working days of your decision in this hearing.
2327 Third; after issuing a determination about this fund, direct BCE to transfer the 1 percent set aside to the trust fund to enable it to begin its work.
2328 Not doing this requires those who are the victims of inaccessible programming, to keep paying for the work needed to achieve full accessibility or to ask that this work be done for free. BCE does not work for free. Why should persons with disabilities?
2329 Within eight weeks of the start of funding, the Accessibility Initiative trust fund will submit a timetable to the CRTC for the development, testing, validation and submission of multi-platform standards for accessibility. It will launch subcommittees focused on technological innovation, research and archiving issues. It will issue its first annual report, including financial statements prepared by an independent auditor, on August 31, 2012.
2330 In brief, persons with disabilities know where the problems are. We can fix them. We can help you and help broadcasters.
2331 To conclude, Mr. Chairman, Canada's broadcasting and telecommunications systems need a bridge to the future. So do we.
2332 We have already mentioned the millions of people who are deaf, hard of hearing, blind or low-vision, but ability is a very fluid concept. It changes with age. One in three of the hearing and sighted people in this room will have lost their vision or hearing by the time they retire. By the time they reach 80 more than half the people in this room will have a disability.
2333 Millions of Canadians need full accessibility now. Even those who don't will want accessibility in the future.
2334 Please help us build a bridge to the future for persons with disabilities now and for everyone else who will develop disabilities in the future.
2335 Thank you, and we welcome your questions.
2336 THE CHAIRPERSON: Thank you.
2337 And here is a question. Like you, I am somewhat surprised that Bell did not make any reference to accessibility, neither in its initial proposal nor in its reply to intervenors. I guess they will explain that to us.
2338 I just want to make sure I understand the details of your proposal. You say 1 percent of the assets. If you use the valuation that the CRTC put on the table yesterday that's $23.6 million.
2339 MS MILLIGAN: Yes.
2340 THE CHAIRPERSON: That's what you are thinking about, right.
2341 And if I understand it, you want us to (a) order BCE to set it aside.
2342 MS MILLIGAN: M'hmm.
2343 THE CHAIRPERSON: And you will organize yourself into a trust or form a committee, et cetera and then call for proposals on how that should be best spent to advance the issues of accessibility?
2344 MS MILLIGAN: Yes.
2345 THE CHAIRPERSON: Okay, thank you.
2346 Elizabeth, you have some questions?
2347 COMMISSIONER DUNCAN: Yes, I have a few.
2348 Good afternoon.
2349 MS MILLIGAN: Good afternoon.
2350 COMMISSIONER DUNCAN: And welcome.
2351 I read your submission and your comments again this morning. I think that it's an excellent and compelling presentation.
2352 I have a few questions. As the Chair has just questioned, in this transaction you are looking at $26 million. In your written submission you refer to the fact that your suggestion that the Commission continue the fund by adding to it 1 percent of all similar transactions to the year 2016.
2353 So just following along on that, first, I am just wondering how much -- it is difficult to predict that those monies would be, what the flow of income would be on that basis over that next period of time. So I am wondering, working at it from the cost side, what your projections are for your needs by projects.
2354 Like, you do mention in your written and you mentioned here again this morning a number of deliverables. Can you give us an idea of how that money would breakdown over those..? Because you are using this money as a fund, you are going to operate from the proceeds?
2355 MS MILLIGAN: Yes, absolutely. We have put a lot of thought into cost and we would actually like to provide that to you following this presentation, within the next say 48 hours, if we could provide that to you. We have done a lot of work in that area.
2356 COMMISSIONER DUNCAN: I think that would be useful to have.
2357 MS MILLIGAN: Thank you.
2358 COMMISSIONER DUNCAN: Yes, thank you, okay.
2359 So if then, assuming then that is going to obviously add up to at least the money that you are requesting here, if you had shortfalls, if there were no other similar transactions in that period out to 2016, where would the funding come from?
2360 MS MILLIGAN: That is a very interesting question and it has come up -- I will answer and then Cathy has some ideas as well.
2361 COMMISSIONER DUNCAN: Sure.
2362 MS MILLIGAN: It has come up and we have looked at a number of different things that could happen. One of the first issues is we don't know. Technological innovation is of course very fluid and it is happening faster and faster daily. So that is a challenge and it is also an indication, clearly, that it is likely that we will need these funds on an ongoing basis, which is why we want the trust in the first place.
2363 If there were a surplus, that would of course remain with the people in charge of the trust. We would of course consult with the CRTC in these types of things to come to a solution. But at this point, we wouldn't necessarily anticipate that that would happen, but we would consult with everyone if in fact that was the case.
2364 Cathy, you have some ideas?
2365 MS MOORE: There is a real opportunity for exchange back and forth with private industry. One of the beauties of this, if we actually are able to go forward, is that we are able to provide some of the seed money that will end up in R&D results that are applicable across the private sector.
2366 So some of the revenue generation, and I think it might increase, it would be part of the business model I think that we put forward, would be that some of the innovation that is developed or adapted would be then sold back to the private companies so that they can incorporate that.
2367 And I will just give you a very quick example and not the details. But we are all familiar with the immense popularity of the iPad and the iPad has an actual screen reader in it that allows a blind person to hear everything that is on the screen. The originator of that technology that allows Apple to put that in their mainstream device began as a development of a screen reader program for people who are blind so they could actually read their computer screen.
2368 So it is not always going to be that kind of fairytale story if we start here and end up with this hugely ubiquitous software. But there is plenty of potential, because what is required of any R&D for accessibility is innovation. And it is the one thing that is going to help every company in this room survive the next 10 years, is the ability to innovate so we can feed that.
2369 COMMISSIONER DUNCAN: Thank you for that explanation. First of all, I was considering what if there was a shortfall? And so what I hear you saying then is that a revenue source would be the technology that might develop as a result of your research, which could be sold and would be revenue generating. Okay.
2370 So then you have no concern that you would generate enough or have enough funds to accomplish your goal?
2371 MS MILLIGAN: No, we don't have that concern. We would of course budget accordingly, and we are able to budget accordingly because there is a substantial amount there and it would depend on the revenues coming from the trust and so on and so forth. But we would come up with some areas that would allow us to receive back and leverage, we would always leverage.
2372 COMMISSIONER DUNCAN: Okay. I am wondering what role, because Bell in this instance would be a significant contributor, what role would you see them playing in the trust fund?
2373 MS MILLIGAN: Yes, thank you. We are open to proposals in terms of their role in the trust fund. But this is the intention of this trust fund, is in fact to allow organizations and people with disabilities to be empowered to make decisions in this area. And that is going to be pretty important to us because this is a new way of achieving 100 per cent accessibility by 2020.
2374 Again, Cathy also has something to add to that.
2375 So we would be open of course to proposals and to hearing what they had to say about that, and then we would submit that to you.
2377 MS MOORE: One of the issues in this type of fund is that we want to ensure that no one company acquires a competitive advantage by being a part of it.
2378 So that means that the governance would have to be, and I think ideally, that the governance decision-making bodies would rest with the disability community and other partners, so the seniors' community, et cetera. Because there is a lot of stakeholders here, not just the narrow sort of focus of disability.
2379 But having said that, I think it is absolutely essential that this fund is also populated by private companies, and in the case of CBC obviously public. Because the only way to make any of this useful and applicable at the end is that it is something that is going to benefit those companies, that is doable, that is useable. Another way to leverage the dollars of course is with their existing engineering structures, et cetera, instead of regulatory structures.
2380 So the idea is that it would not be controlled by any one private company, because that would give them a competitive advantage, but that all companies -- obviously something to be negotiated with them, we can't speak on their behalf. I am sorry, I am talking very fast. Everyone has to be at that table.
2381 MS MILLIGAN: And in that spirit, we would of course collaborate and consult with the broadcasting industry and all of the stakeholders on an ongoing basis with respect to what we were doing. We have set precedent in this area. We have a number of subcommittees working on a volunteer basis currently, and on those subcommittees are in fact CTV and Research In Motion and others.
2382 So we have set the precedence that we are absolutely willing to collaborate and consult with them. What we are asking for is to be empowered to make the decision.
2383 COMMISSIONER DUNCAN: I appreciate that.
2384 Did I understand from your remarks today that your governance structure would be submitted to the CRTC for its concurrence, is that what you are suggesting?
2385 MS MILLIGAN: Absolutely.
2386 COMMISSIONER DUNCAN: And I am just wondering on the reporting aspect of it. Is that something that you would intend to report in a fashion that would be of use to the Commission to monitor as well?
2387 MS MILLIGAN: Yes. We absolutely intend to report regularly. And more so than that, we intend to leverage all of the research that is done to communicate and report and educate in such a way that every single piece of information, solution, business model that works will be not only reported on but circulated to make sure that everybody knows about it.
2388 So, yes, we will report regularly, we will report on the research, we will report on the numbers and would of course be happy to report quarterly, yearly, whatever works for the CRTC.
2389 COMMISSIONER DUNCAN: One last question and I am sure my colleagues might have some questions. But I am just interested in how you would achieve consensus. Do you think that might be an issue with diverse needs, prioritizing, for example?
2390 MS MILLIGAN: It is a very good question. And, as Cathy mentioned, it is the third time that we have appeared before the CRTC. In any industry there are priorities.
2391 But what I can say, having sort of led this coalition, is that we all share one objective and that is 100 per cent by 2020 and it has been extraordinary how all of the organizations have worked together, how those who would benefit from descriptive video have said let's do this for captioning and so on and so forth.
2392 This is about 100 per cent and it is about harmonization. Harmonization means both descriptive video and captioning together. And that is one of the solutions that we will be looking at in terms of the production process, and that is how we are conducting ourselves.
2393 So it is about, you know, leaving the immediate company issues at the door and getting on with 100 per cent up to 2020, and we are doing pretty good.
2394 COMMISSIONER DUNCAN: So the long list of members and parties listed as party to your initiative, is it 100 per cent inclusive of all the organizations? Is there anybody not on the list or it is pretty well inclusive?
2395 MS MILLIGAN: I will answer that, and then Cathy wanted to top-up my answer to the previous question.
2396 It is ongoing. We have got the largest organizations that are umbrella organizations to other organizations, provincial organizations and so on and so forth. And I will let some of the organizations here talk about their membership and how they operate across the country. But we will continue to be even more inclusive to the grassroots and to the regional levels and so on and so forth.
2397 Cathy, and Charles maybe.
2398 MS MOORE: I just want to say that the inclusive nature or the developing consensus, one of the approaches that is the most effective is to look at systemic change. Because systemic change, be it in engineering, innovation or be it a policy innovation, tends to cover all disabilities.
2399 I will just give you an example. Bandwidth, availability of bandwidth for accessibility means that allows the end user to somehow, with their handheld whatever it is, change and go for, you know, increased volume or increased font or that sort of thing. It is bandwidth that is the issue. So if you deal with the bandwidth that is the systemic issue to deal with, the availability of that, that will create the accessibility at the other end.
2400 If we went disability by disability, then that would be a very ineffective and absolutely mindboggling approach. The approach is systemic change, systemic innovation, systemic policy and dare I say regulation that allows for the broader -- that is how you solve that.
2401 Now the consensus, again, we would be very remiss if we said that that was an easy thing to achieve. However, it is essential because the consensus about what comes first is going to be potentially disability-specific. But in the past, for example, we reached consensus around the availability of video relay service for the deaf even though there was a broad range of disabilities in that room in those organizations in 2006/2007.
2402 So we have done it before, we have had experience doing it, we can do it again.
2403 COMMISSIONER DUNCAN: Thank you very much.
2404 THE CHAIRPERSON: Okay, well thank you for your presentation. We will see what Bell comes back with. I just don't want to raise expectations. You talk about $23 million. I think it is unlikely that they will come forward with anything like -- we will see.
2405 So you know yesterday, for instance, there was talk about $7 million from one previous benefit, which was regenerated, which is presently unassigned, et cetera. And they may do something with that, et cetera. We will see what they come up with and what we impose upon them.
2406 We appreciate your problems but, you know, as you appreciate, you are not the only group before us, et cetera. And our approach generally is let the company propose and then we modify or add onto it, et cetera, rather than impose, and hopefully that will be the case here.
2407 In light of your intervention Bell will feel that it is incumbent on them to address this very important issue.
2408 Thank you for your intervention.
2409 MS MILLIGAN: Thank you.
2410 THE CHAIRPERSON: Okay, we will take a break now. We have to be back at 1:30 because we have somebody appearing who has to go to the House of Commons afterwards.
2411 THE SECRETARY: Excuse me, Mr. Chairman, I would like to make an announcement before we break for lunch.
2412 I would like to indicate, for the record, that Mr. Patrick Brown, MP, from Barrie, he is item 19 on the agenda, will be appearing immediately after lunch. That is going to be preceding the Alliance for Equality of Blind Canadians.
2413 And I would also like to announce that tomorrow morning the hearing will begin at 8:30 rather than 9:00 a.m.
2414 Thank you.
2415 THE CHAIRPERSON: Okay.
--- Upon recessing at 1244
--- Upon resuming at 1335
2416 LE PRÉSIDENT: Commençons, Madame la Secrétaire.
2417 THE SECRETARY: Thank you, Mr. Chairman.
2418 I will now invite Mr. Patrick Brown, Member of Parliament for Barrie, to please proceed with your presentation.
2419 Mr. Brown, you have 10 minutes.
2420 HON. PATRICK BROWN: Thank you very much for giving me the opportunity to say a few words in front of this distinguished committee today. Mr. Chairman and Commissioners, it is an honour to be here.
2421 The reason I have asked to say a few words is the plight of local TV has been something of the utmost importance in Simcoe County and in the City of Barrie and I believe what the CRTC is looking at now in terms of acquisition of CTV and the benefits package proposed will be of a real benefit to local TV.
2422 I can tell you unequivocally that local TV in my region is part of our DNA as our community. I think of what the 'A' channel has meant in Barrie since 1955. I think of my own grandparents who watched it every single night. You know, I actually knew there was a problem with my grandmother years ago when she got diagnosed with dementia because that was the first time she stopped calling me to tell me what went wrong on City Council the night before when I was on City Council.
2423 Whether it's a local high school football game, whether it's a municipal decision, whether it's a local charity event, local TV is at the heart of who we are. I believe there is nothing that helps us enhance local culture as much as local TV.
2424 And we are very lucky in Simcoe County to have the 'A' channel and I know many communities across Canada, they have that similar benefit and it really scared us as a community a few years ago when there was talk that they may not survive. There was trepidation when we heard about the failure of stations in Brandon, where there was the failure of the station in Wingham near Windsor and when they actually cancelled the morning program at 'A' channel Barrie. They had a successful morning program and they let off those staff because they said the 'A' channels were losing money.
2425 That is why I have taken a keen interest in this in hopes that it can continue to operate, that local TV will continue to be a force within Canada because it does so much good for our community.
2426 You know, I think of our local station where we have the local manager, Peggy Hebden who is intricately involved in the local Rotary club and all their fund-raising, whether it's Chris Lesage who helps us raise money for the Cancer Centre or Jane Pritchard who is just serving pancakes at a local school, all the personalities on local TV are intricately involved with our community and it is such a force for good that it would be a tremendous devastation if that ever fell apart, if we started to lose local TV and people were forced to only watch the big city television, or only watch American television, I think it would be a tremendous setback for Canadian culture.
2427 I realize that there are some aspects of the benefits package that I think will be a big boost to local TV. The $25 million proposed by Bell for sustaining local programming with 'A' Channel I think is a wonderful thing.
2428 With the recession hopefully ending it's been a difficult period and I think that funding in the next two years can't come at a time that is as important as it is now. I think local TV is rebounding strong, they are getting more ad sales, but that money right now I think will be a tremendous boost to the 'A' channels. I thought that was very wise to propose and I hope that the CRTC will see that same wisdom that Bell did when they proposed this.
2429 I also think there is a real benefit for local TV in terms of the $84 million proposed for the MPEG-4 initiative.
2430 Now, that doesn't necessarily help the station in Barrie, but I realize a lot of 'A' channels around the country that will help. I think of the one in Brandon, maybe if they had that and they were able to expand their reach, their closure might not have happened.
2431 So I believe when you look at the benefits package, having investments directed towards local TV is a very important component.
2432 I know historically obviously the importance of local producers or innovation is something that is helpful for on-screen programming, but at the end of the day I think the most important force for Canadian culture is having that local TV station and that's why I realize that it is part of the benefits package, I think it is part of the benefits package that certainly should be protected, enhanced and supported because at the end of the day it's those stations that are at risk.
2433 I think that if you look at parts of Canadian culture and Canadian TV stations that need our guidance, need our observation, it's certainly them. You may say "Why 'A' Channel?" Well, I am here specifically because I believe so much in 'A' Channel, I think Canadians believe in 'A' Channel.
2434 When they had a rally to save local TV in my community, normally you go to a rally in a small town you might expect 100 or 200 people to come. When they had a rally in the middle of summer, in August when people are usually busy with going to their cottages, we had 5,000 people come out in Barrie. 5,000 people spread out through the waterfront on Lake Simcoe to say this is important to them. Despite everything else going on, they were willing to take the time and express that support.
2435 When the local City Council passed a motion to say they believed in local TV and embarked on a petition, I have never seen a petition grow as fast as that one did throughout Simcoe County and for me that sent a very strong message that I should do whatever I could to express that perspective in Ottawa and if there is ever any opportunity to portray that message before the CRTC I said I would do my best and that's why I'm here today, because I know our community counts on it, our community believes in it and I believe this benefit package will assist in protecting local TV in Canada.
2436 That's all I had to say and I really appreciate you giving me the opportunity to express how much I believe this helps 'A' channel in Barrie.
2437 THE CHAIRPERSON: Thank you for your intervention.
2438 You made a reference to Brandon and you were absolutely dead on, there was a purchaser for Brandon but he wouldn't buy unless we could guarantee access to the satellite. So it is very important to the survival of the 'A' stations and other stations across the country.
2439 Rita, you have some questions?
2440 COMMISSIONER CUGINI: Yes, just a couple. We don't want to keep you too much longer, you do have another commitment.
2441 'A' Channel is the only local station in Barrie; is that correct?
2442 HON. PATRICK BROWN: There is also a Rogers cable station, but only one that sort of has an active staff and an active daily telecast is the 'A' channel.
2443 COMMISSIONER CUGINI: Part of the benefits package, as you so rightly have identified, is earmarked for the 'A' channels, but the specifics of the package only outline sustaining local programming.
2444 Do you feel that the level of local programming in terms of number of hours is sufficient?
2445 HON. PATRICK BROWN: Well, yes, in a sense that -- well, I would love to see the morning show back, but I realize that financially there is only so much support you can give it.
2446 It's the evening news, it's the 6 o'clock news and the late night news that I don't want to see go away. I realize that you can't have Canadian culture 24 hours a day, because that may not sell enough ads, but having that local news is what is most important.
2447 COMMISSIONER CUGINI: Do you feel that those two newscasts adequately reflect what is happening in Barrie and in Simcoe County?
2448 HON. PATRICK BROWN: Absolutely. And usually the first half an hour you get the big stories, but usually near the end of the newscast it's much smaller stories that you can tell that they have probably covered everything possible.
2449 COMMISSIONER CUGINI: Are there a lot of stories from Toronto for example in that newscast?
2450 HON. PATRICK BROWN: No, no.
2451 COMMISSIONER CUGINI: There might be tonight, but who knows.
2452 HON. PATRICK BROWN: The sense I get is it's very much locally focused.
2453 Actually, a favourite memory I have was, I remember watching the 'A' Channel news during the olympics a few years back and we had a local charity hockey game to raise money for the Cancer Centre and that was the number one story and the Olympics was number two and I said only in a small town will a local charity event trump the Olympics and I think on many occasions stuff like that happens, where we have local news that trumps everything else. Because that's why you turn on the local TV.
2454 If you want to watch the national news you can watch CBC. If you want to hear about what's happening in Washington you can watch CNN, but people go and watch the 'A' Channel news because they want to hear what happened at council or the local high school football game, or whatever local community event just took place.
2455 COMMISSIONER CUGINI: Well, thank you very much, Mr. Brown, for your intervention and your appearance here today.
2456 Those are all my questions.
2457 HON. PATRICK BROWN: Thank you.
2458 THE CHAIRPERSON: Thank you very much for coming. I know you have Question Period waiting for you, we won't hold you up any longer. Thank you.
2459 HON. PATRICK BROWN: Thank you very much.
2460 THE CHAIRPERSON: Okay, Madame la Secrétaire...?
2461 THE SECRETARY: Mr. Chairman, I don't think out next presenter which is appearing from Toronto by video conference has made it there yet. He's on his way, so if you wouldn't mind I would invite the next presenter, MTS Allstream.
2462 THE CHAIRPERSON: Absolutely. I see MTS Allstream is here so let's go.
2463 THE SECRETARY: All set?
2464 So appearing for MTS Allstream will be Ms Teresa Griffin-Muir.
2465 Please introduce your colleague for the record, and you have 10 minutes for your presentation.
2466 MS GRIFFIN-MUIR: Thank you.
2467 Good afternoon, Mr. Chairman, Commissioners. With me today is Pauline Jessome. Pauline is the Senior Regulatory Analyst Responsible for Broadcast, among other things.
2468 We appreciate the opportunity to appear before you today to highlight our concerns with the massive consolidation of carriage and content resulting from transactions such as the one between BCE and CTV.
2469 Our concerns fall into three main areas.
2470 First, since BCE is also the parent company of Bell, which through the Bell TV direct to home satellite distribution undertaking and the Bell Mobility wireless arm competes with BDUs and wireless service providers across Canada, we are concerned that BCE will have the ability to control access to broadcast content, in both traditional and new media to the detriment of providers such as MTS Allstream.
2471 Second, we are concerned about the increasing subsidization of large vertically integrated BDUs by smaller competitors, currently through our contributions to funds such as the Local Programming Improvement Fund or the Canadian Media Fund.
2472 Finally, we are concerned with the increased risk, absent clear safeguards, of a cartel or cartel-like behaviour between CTV and other large BDU-controlled broadcasters and the consequent market distortions to the detriment of smaller industry players, the Canadian broadcast system and Canadian consumers.
2473 MTS Allstream is not alone in these concerns. Other BDUs have also articulated similar concerns with regards to the content exclusivity, tied selling practices and subsidization of large vertically integrated BDU/broadcast groups.
2474 Even Rogers, a vertically integrated BDU/broadcaster, cautions the Commission that it must get assurances from senior BCE representatives that the CTV and 'A' networks will not seek to participate in any future over-the-air value-for-signal regime. As Rogers pointed out with its written comments:
"If this [the BCE] application is approved, the OTA television stations of the three largest commercial television networks in Canada (CTV, TVA and Global Television), as well as Rogers' Citytv stations, will be owned and controlled by large, well-financed public companies that also own and control Canada's largest broadcasting distribution networks. These are not corporate interests that require subsidies from ordinary Canadian consumers."
2475 Like Rogers and others, we are fundamentally opposed to any value-for-signal regime, whether the fee is set and imposed by the Commission or is arrived at through negotiations.
2476 The Commission must make approval of BCE's acquisition of control over CTV dependent on its OTA stations not being eligible to participate in any value-for-signal or similar regime that may be approved at a future date.
2477 Safeguards must also be put in place to protect smaller BDUs, like MTS Allstream, from being dominated by BCE/CTV in traditional and new media broadcasting distribution. Negotiations between a large broadcaster and a smaller BDU like MTS Allstream are already skewed in the broadcaster's favour. Vertical integration is making this advantage an overwhelming one, especially where the BDU/broadcasters and smaller BDUs are in direct competition with one another. This is the case with Bell TV's direct-to-home satellite distribution service right across Canada.
2478 CTV is the leading broadcaster in the English-language market, with 30 conventional television stations, accounting for about a 17 percent share of total viewing during 2008-2009. It also has roughly the same number of specialty services, which again led the category with a 16 percent of the total viewing hours. No BDU in Canada could possibly survive without access to CTV programming.
2479 While access to local conventional stations is not currently an issue for BDUs, the same cannot be said with respect to consent for distant conventional signals, for access to CTV specialty services, nor for access to CTV broadcast content for Internet and wireless platforms.
2480 BCE has cited the acquisition of exclusive content as a major impetus behind its bid to gain control of CTV. In documentation provided to analysts, BCE stated:
"Today's regulatory and technological environment allows integrated players to leverage content ownership for differentiated offers across all three screens".
2481 Bell has already demonstrated its willingness to restrict access to premium content when, during the 2010 Winter Olympics it offered exclusive access to Olympic programming and related content over its Internet and mobile wireless platforms.
2482 Bell is currently the second largest wireless service provider in Canada, with more than 7 million subscribers across the country. Bell credited the availability of exclusive NHL and Olympic coverage on Bell Mobility for helping deliver "record first quarter gross activations and postpaid net activations" and it has continued to lead in this category throughout 2010.
2483 Bell is also one of the top five Internet service providers across Canada, with more than 2 million subscribers in Ontario and Québec. While Bell's Internet access services are only available within its geographic network footprint, the availability of exclusive content can drive consumers from across Canada to Bell's Internet portal services, giving itself an added advantage in attracting advertising dollars.
2484 As a Vancouver Sun columnist noted following the announcement of BCE's planned acquisition of CTV:
"Bell now has an iron grip on the way Canadians can access and view their favourite music videos, sports highlights and news headlines."
2485 Although a Bell-affiliated CTV cannot grant Bell TV exclusive access to its content, it can set the prices of its discretionary programming at a sufficiently high levels that other BDUs would not be unable to afford to carry that programming. As a result, Bell could end up with exclusivity by default on its TV platform or with premium pricing for CTV content -- a win-win proposition for BCE, but a lose-lose situation for other distributors.
2486 Moreover, absent Commission safeguards, CTV does not have any obligation to make its content available for new media distribution over other service providers' Internet or wireless platforms.
2487 One of our fears is that the large BDU-controlled broadcasters will have the ability, as well as the incentive, to act as a cartel to gain access to each other's content while shutting out smaller players -- "horse trading" among themselves, as the CCSA puts it. This behaviour need not be overt, and may take the form of negotiating more favourably with one another than with smaller independent BDUs with whom they can use their market power to set wholesale rates on a take it or leave it basis.
2488 We believe that the Commission needs to set in place safeguards that will ensure transparency regarding how wholesale rates are set to prevent any opportunity for cartel-like behaviour. We also believe there is a need for a cap on the wholesale rates that large vertically integrated broadcasters can charge for their programming.
2489 We are currently facing a demand from one of the CTV specialty services for a wholesale rate more than triple what we are currently paying. As a small BDU, one that is relatively new to the industry, we cannot afford to absorb major cost increases and would be forced to pass them on to our subscribers.
2490 The CCSA and EastLink have both echoed our concerns that CTV will try to force smaller BDUs to change the way they offer services. This could take the form of pressure to include certain services in basic or a requirement to distribute less successful programming services as a condition of obtaining access to high demand services, even to the extent of demanding that the BDU's customers must subscribe to certain less popular specialty services in order to subscribe to more popular ones.
2491 Such tactics not only increase smaller BDU's costs, but also limit customer choice by forcing subscribers to take services they don't want in order to get ones that they do.
2492 Since its inception, MTS TV has tried to maximize customer choice by allowing customers to choose from relatively small theme groups, but we are experiencing increasing pressure from broadcasters demanding higher penetration rates than the market is willing to support in the absence of such tactics.
2493 We find a striking resemblance between the state of the Canadian broadcast industry and the state of the wireless industry prior to the 2008 AWS auction and the entry of several new wireless players into the market. Once BCE's acquisition of CTV is complete, the English-language broadcasting market will be dominated by three vertically integrated entities that control both Canadian broadcast content and the means to distribute them.
2494 In setting out the rules for the AWS auction the government recognized the need for more consumer choice in the mobile wireless market. In this instance it is incumbent on the Commission to safeguard customer choice by ensuring that the rules that will apply to CTV post-acquisition do not allow the large vertically integrated BDU to marginalize smaller non-integrated players in both traditional and new media broadcasting markets.
2495 Thank you.
2496 THE CHAIRPERSON: Thank you.
2497 You talk a lot about safeguards in here, especially paragraph 7 there. You feel that you are at a disadvantage, et cetera. But you are very thin on specifics.
2498 There are only two specific safeguards that I can detect in here. One is more transparency in terms of negotiation and a cap on wholesale rate.
2499 Is that the whole array or what do you have in mind?
2500 MS GRIFFIN-MUIR: All of them --
2501 THE CHAIRPERSON: I mean, these are very difficult issues. What you suggest in paragraph 7 nobody disputes there is an issue, but when you say provide a safeguard, how do you do that without regulating the whole industry?
2502 MS GRIFFIN-MUIR: Well, certainly we would support the safeguards that Cogeco enunciated this morning.
2503 They had a number, no exclusivity being one of them; and then a number of others, a reverse onus; no value for signal.
2504 One thing we would like to have in place as well would be in addition to a cap, if they are negotiated -- which I believe there will continue to be negotiated wholesale arrangements -- to have some very specific time frames around those negotiations as well as a little more transparency in terms of what is negotiated with others, so disclosure of agreements or at least disclosure of the conclusion.
2505 Because what we face today often is -- in negotiating for specialty TV, we face a dilemma of having the broadcaster tell us, well, this is what everybody's paying or no, it's not exactly what a larger distributor is paying, because, you know, we have a whole different kind of relationship with them. So we have actually no visibility into that and no leverage in the negotiation.
2506 THE CHAIRPERSON: And you say:
"We also believe there is a need for a cap on the wholesale rates."
2507 How would we set a cap for wholesale rates? I mean surely the rate depends very much on the program services, its popularity and all of this.
2508 MS GRIFFIN-MUIR: Well, today -- I mean up until recently certain rates were actually specified on a per sub basis.
2509 THE CHAIRPERSON: But that is only Category A's you are talking about?
2510 MS GRIFFIN-MUIR: Yes.
2511 THE CHAIRPERSON: But I presume your issue is non-Category A ones?
2512 MS GRIFFIN-MUIR: That is right, yes.
2513 THE CHAIRPERSON: Right. And how -- let's say, for instance, TSN right now is no longer Category A and you want us to set a cap, how would you go about setting a cap for it?
2514 MS GRIFFIN-MUIR: Well, some of that would have to be cost-based, I suppose. Like there is a legitimate reason for raising the rate and then what you are suggesting is there is a commercial reason just based on the popularity of the station.
2515 THE CHAIRPERSON: So borrowing from telecom and going on a cost-plus basis is what you are suggesting?
2516 MS GRIFFIN-MUIR: In some manner. There would have to be some recognition that, of course, programming costs are going up, but it is not really just a question of purely extracting everything you could or actually excluding certain distributors from that market.
2517 THE CHAIRPERSON: Okay.
2518 Rita, you have some questions?
2519 COMMISSIONER CUGINI: Thank you. Only a few because you did answer a couple. I was going to go through the Cogeco proposed safeguards and ask you if you agreed with them, but I see that you do. So that is a good thing.
2520 But I am curious to know more about your proposal that smaller BDUs no longer be required to contribute to either LPIF or the CMF.
2521 Let's start with the CMF because, as you know, broadcasters are not the direct beneficiaries of CMF funding. In fact, it is funding that goes to the producers.
2522 MS JESSOME: Right now though, CTV is -- sorry, not CTV -- CTV, Shaw -- the vertically integrated broadcasters receive 49 percent or like they are responsible for taking up 49 percent of what funding comes out of the CMF from the -- there are two envelopes and it is from the one envelope and then they have a significant portion of the other as well.
2523 And we are being capped on our community services that provide like truly local services, while we are funding the CMF.
2524 So that is our proposal, is that we would -- we should be allowed to contribute more towards our own community local programming.
2525 COMMISSIONER CUGINI: Because I mean I could -- you know, I understand your argument about the LPIF because that is a cheque that each of the stations that qualify for LPIF monies actually cash and put towards local programming.
2526 MS JESSOME: Yes.
2527 COMMISSIONER CUGINI: I am having a little bit more trouble understanding your rationale for eliminating the CMF contribution, other than -- unless you are going to say to me that all of that which you contribute to both CMF and LPIF you would rather contribute to your own community channel. Then that is a discussion we can have.
2528 MS JESSOME: Yes. That is what we were arguing, is that that should go -- we should be allowed to use that money to fund our community channel and provide, you know, additional local content.
2529 I guess at the community hearing last year, Greg McLaren, who was appearing for us, our Manager of TV Content, he was giving some ideas about what he could do with additional money going towards our community programming.
2530 COMMISSIONER CUGINI: Is this the position of MTS Allstream absent vertical integration? That is to say if this transaction had not occurred, if the Shaw-Canwest transaction had not occurred, would this still be your position?
2531 MS JESSOME: Well, we had -- in the community programming hearing we had said that we thought we should increase the amount we were allowed to retain from the contribution -- we were saying we should be allowed to retain 3 percent as opposed to the 2 percent that it was at the time.
2532 And now we are saying -- you know, given the vertical integration that has happened since then, we are saying the smaller players should be able to take their entire amount of contribution to Canadian programming and use it for community channels.
2533 COMMISSIONER CUGINI: Because of vertical integration that has occurred?
2534 MS JESSOME: Yes.
2535 COMMISSIONER CUGINI: Okay. Well, thank you, those are all my questions.
2536 THE CHAIRPERSON: Louise?
2537 CONSEILLERE POIRIER : J'ai une question en français.
2538 Hier, monsieur Cope nous a dit que, bien sûr, il ne veut pas se faire imposer des règles que ses compétiteurs n'ont pas, et il parlait d'exclusivité et d'accès à des contenus.
2539 Par contre, ce matin, monsieur Audet de Cogeco, lui, nous a dit qu'il faudrait peut-être des règles pour protéger les plus petits distributeurs, pas les gros comme Shaw, comme Rogers, comme Vidéotron, parce que les plus petits ne sont pas intégrés, eux. Alors, c'est l'approche qu'il semblait préconiser.
2540 Qu'est-ce que vous en pensez, parce que vous êtes, d'une certaine façon, assez semblable à Cogeco?
2541 Alors, est-ce qu'on peut dire que les gros n'ont pas besoin d'être protégés parce que les forces du marché sont là, nos règles de préférence indue sont là aussi pour s'appliquer? Par contre, les plus petits, eux, ne disposent pas tout à fait de la même situation de pouvoir dans ce marché-là.
2542 MS GRIFFIN-MUIR: Overall, we would agree with Cogeco simply because -- and what you heard yesterday from the BCE panel is a lot about reciprocity between other larger players.
2543 So it is possible for all those vertically integrated companies to actually offer each other certain rates reciprocally that the smaller players just can't participate in. So there needs to be safeguards really to make sure that doesn't happen.
2544 CONSEILLERE POIRIER : Merci. C'est tout, Monsieur le Président.
2545 THE CHAIRPERSON: Those are all our questions. Thank you very much for your presentation.
2546 Madame la Secrétaire, who is next?
2547 THE SECRETARY: Thank you, Mr. Chairman.
2548 I think we are now ready to hear Mr. John Rae from the Toronto Regional Office. He is by videoconference.
2549 Mr. Rae, can you hear me well?
2550 MR. RAE: I can hear you. Can you hear me in turn? It is very echo-y coming back here. Oh, that's better.
2551 THE SECRETARY: Yes. Yes, we can hear you well.
2552 MR. RAE: That is great.
2553 THE SECRETARY: All right, Mr. Rae, so whenever you are ready, you may proceed with your 10-minute presentation.
2554 MR. RAE: Thank you very much.
2555 Mr. Chairman, Commissioners, thank you for the opportunity to appear and I particularly thank the Commission for making it possible for me to present from here in Toronto. That helps me a lot, so I appreciate that very much.
2556 This is, I guess, a busy year for Commissioners and for us intervening. So I suspect we will get to know each other fairly well this year. Maybe next time I will be there in person. I hope so.
2557 Let me begin with, I think, a fairly simple and straightforward statement of why I wanted to be here and it is this.
2558 Disabled Canadians pay the same levy for cable service; yet, we do not get the same benefits as the rest of you. Some would call that disparate outcome, some would call that unequal treatment, and I am going to call it what it is, discrimination.
2559 Discrimination, that is what it amounts to, nothing more, nothing less, and that is why I am here, to seek your help in fixing that situation.
2560 At this point, I could simply say the prosecution rests and leave, but since you have given me 10 minutes, I am not going to do that.
2561 So let me try and explore four or five points.
2562 What does our history teach us? And yes, disabled people around the world, we have a history. Yes, we do. It is not as well documented as I wish it was, but I assure you we have a history.
2563 People with disabilities have been present among us from time immemorial and what demographics tell us is our numbers are growing. Despite medical research, our numbers are growing.
2564 And if it hasn't visited you yet, chances are at some point in your lifetime, either temporarily or permanently, disability will be part of your own reality or that of a family member, and if not you or your family, certainly among your friends. Thus, what we are seeking ought to be as important to you as it is to us.
2565 So we are told, let the marketplace solve our difficulties.
2566 And again, we look at history and what does history tell us?
2567 It tells us the marketplace has been an abject failure when it comes the needs of disabled Canadians.
2568 It also tells us that currently it continues to fail us. In fact, strange and surprising though it may sound, the marketplace is creating some new barriers. Yes, believe it or not, new barriers.
2569 In the area of household products, more and more are operated by touch screens which a blind person can't independently operate.
2570 And so unless I can coax an accessibility genie out of this bottle -- come on, come on, is there a genie in here? No, guess not. I tried. So since I can't coax an accessibility genie out of this bottle, here we are looking to you.
2571 If we look at the present, simply what we are looking for is faster redress and a plan for the future.
2572 As I participate in meetings with organizations that are regulated in various ways or in Ontario where the AODA will soon be rolling out additional accessibility standards, I hear representatives of obligated sectors whining that they have all of these new requirements being foisted upon them all at once, and that is just not true.
2573 The human rights codes in this country came into force in most provinces and at the federal level in the eighties. The Charter of Rights took effect in the eighties. And recently, of course, Canada became a full -- signed and more recently ratified the UN Convention on the Rights of Persons with Disabilities.
2574 So if obligated sectors think they have new obligations, it is not our fault. Stop blaming us. It is as a result of work that they have failed to do over the years. That is not our fault. Stop blaming us.
2575 So what are we looking for? Well, I think I stated it fairly simply in my opening. We want full access and the full benefit of, in this case, the broadcasting industry.
2576 I have always found it incredible that the Commission feels it has the power to regulate what goes on television, that it has power to regulate the television signal, but it won't do anything to regulate the equipment that I have in my house that makes it possible for me to receive that signal.
2577 That makes no sense to me at all. I realize that is a position the Commission has taken, but it just makes no sense to me.
2578 So in the current instance, we believe the Commission should, if it is going to approve this application, put some accessibility requirements into it, the accessibility areas that the applicant failed in its application to include, and that certainly should include greater access to DVS programming.
2579 We, of course, are working closely with Media Canada, who have talked a lot about both captioning and DVS. Given that I come from the blind community, I am focusing our needs on DVS programming. We believe it should be 100 percent. Of course, it will come incrementally, but even ten years is a long time. We can accept ten years, but nothing longer. Even ten years is a long time.
2580 We believe that through the tangible benefits idea some funds ought to be set aside to assist the community in working with the broadcasting sector, in this case with Bell, to be involved in helping them make all of their processes -- their website, their programming, everything -- more accessible to us, because we are rights holders. That may be a new term for you. We do not see ourselves as just one more group of stakeholders, which many are fond of lumping all together into one group.
2581 That may make your lives easier. I'm sorry, but we are rights holders. That is to say, we are consumers, we know best what we need, and we should have a pre-eminent role in participating in helping to make that happen.
2582 We want that opportunity. We believe that we deserve to have it.
2583 And, I guess, in closing, given that the marketplace has failed us, the trickle down concept of economics has failed us -- you know, the idea is that in good times the benefits of society will trickle down to all areas of society. Of course, in the area of economics, we find that the trickle down trickles up. It doesn't trickle up, it races up. There is a greater concentration by the rich than ever before, and this notion of a stream trickling down -- it does trickle down some. It has trickled down to some within the disabled community, but for the most part the stream and the trickle seem unable to find our community.
2584 That's why we come to regulatory bodies like the CRTC, believing that you have the power and the duty -- and recently, I notice, you have been flexing your regulatory muscles in other areas. As a result, we ask, we insist, that you assist us in making our lives better by making the broadcasting system totally accessible to all Canadians, including those who are blind, deaf/blind, partially sighted, and otherwise disabled.
2585 Thank you for this opportunity to appear, and I would be happy to answer your questions, if you have any.
2586 THE CHAIRPERSON: Thank you.
2587 Before lunch we heard from Media Access Canada, asking us to fund a Canadian accessibility initiative. I presume that you know about that and you support that request?
2588 MR. RAE: I am aware of it, and we fully support it. I had hoped to be able to hear their presentation this morning over the computer, but it didn't work for me.
2589 Absolutely, we support the content in their brief, and specifically that proposal, yes.
2590 THE CHAIRPERSON: Thank you.
2591 My colleague Len Katz has some questions for you.
2592 COMMISSIONER KATZ: Thank you, Mr. Chairman.
2593 Good afternoon. I read over the submission by -- I guess it was signed by Mr. East, on behalf of your group. It was filed on January 10th, a couple of weeks ago. You have identified a number of areas where you are looking for improvement, if I could use that word liberally.
2594 Many of these issues were dealt with during the accessibility hearing, which took place about 18 months ago now, I guess, if I recall, and there were an awful lot of commitments that were made by the licensees to deal with such things as accessible websites, accessible mobile telephone designs, which you identified, and some of the others, as well.
2595 Just to fill you in on the process, there is a licence renewal hearing coming up about two months from now, where all of the major parties will be appearing before us, and they will be held accountable for the outcome of the decision that was rendered as part of that accessibility, and we set expectations of them during that decision. We can only put in conditions of licence at licence renewal time, so it is our intent to follow up on the issues that you have identified here, and some of the other ones following another decision that, quite frankly, you didn't identify, and ask them where they stand on meeting those conditions, ultimately with the ability to impose upon their licence conditions their obligation, distinct and clear; rather than an expectation, but an actual mandate.
2596 That will all be coming up in about two months. I have not looked, but I would imagine that Media Access Canada has already registered for that proceeding, and you certainly are welcome to do that as well, either as part of their organization or separately.
2597 I have reviewed all eight of your recommendations and, with the exception of the trust fund, which was discussed this morning -- unfortunately you missed it -- all of the other items will be coming up for discussion. The reporting and the accountability will all be dealt with in that hearing.
2598 I am not sure if you were aware of that, but I wanted to make you aware of it.
2599 MR. RAE: We participated in the unresolved hearing process and appreciated what the Commission decided, but we don't think it went nearly far enough. That's why we now have to appear -- and we wish we didn't, because it is difficult for a group as small as ours to do this.
2600 We are now forced to intervene each time there is a licence renewal, and we would prefer the Commission to deal with some of these questions more forcibly, at one time, so that we could perhaps move on to new and emerging technological issues, but unfortunately --
2601 I hear what you say. We are aware of the upcoming licence renewals, and we anticipate participating, but this was an opportunity to remind the Commission of what we are looking for, so we took this opportunity.
2602 COMMISSIONER KATZ: I can tell you, as well, that in December I actually visited two large broadcasters in Toronto to discuss audio description with them, and where they stand on the expectation that they provide audio description.
2603 So things are happening. Clearly, they are not happening as fast as you and others would like, or as we would like, but they are moving in the right direction, I believe.
2604 The licence hearing in April will be a good indicator, publicly, as to what their obligations and commitments are, and their timelines, as well.
2605 MR. RAE: Excuse my scepticism, but in the disability field a lot of organizations talk a lot, and a lot of those same organizations are not nearly as good at walking the walk as they are at talking the talk.
2606 So we will look forward to way more substantive proposals, as you are suggesting we may see, and at the same time we hope and expect that the Commission will hold their feet to the fire. Otherwise, we are going to have to see them at the Human Rights Commission. They have failed to advance our circumstance either far enough or fast enough, and we are tired of being left on the margins.
2607 And I am not prepared to allow another generation of disabled Canadians to be left on the scrap heap of history.
2608 That's why we keep coming back to you, sir, and other commissioners, in the hopes that you will do more than you have before.
2609 We appreciate what you have done in the past, but we are looking to move further and faster toward what was promised to us through the motto of the International Year of Disabled Persons, and that, ladies and gentlemen, was full participation and equality.
2610 That was a good phrase. That still is a good phrase. That phrase was enunciated way back in 1981, and we are still waiting and fighting for it.
2611 So that, sir, and other commissioners, is why we keep knocking on your door, and we will keep knocking on your door.
2612 COMMISSIONER KATZ: Thank you for appearing at this hearing today.
2613 THE CHAIRPERSON: Thank you. Those are our questions.
2614 We will take a five-minute break before we start with the next intervenor.
--- Upon recessing at 1425
--- Upon resuming at 1437
2615 THE SECRETARY: We will now hear the intervention of Mr. Peter Lowry.
2616 Mr. Lowry, when you are ready, you may proceed with your 10-minute presentation.
2617 MR. LOWRY: Mr. Chairman, Madam Vice-Chair, and Commissioners, when I realized that I had to rewrite my talk for today, based on the benefits package that was introduced yesterday, I realized that I would also be remiss if I did not explain my background. I think you should know where people are coming from and why they are here.
2618 I was doing television production work back in the 1960s. I know that shows my age, but I have been around for a while. I have producer credits on some television programs, and a film that I am very proud of, but my first love was writing, and it led to a career in communications. I worked with large companies, mainly in the high technology and business fields. Clients such as Sony and Xerox were pleased to find that I could take their technologies and explain them to business experts and to business buyers.
2619 In communications work you also do assignments for charities. All TV stations appreciate a good story, a dramatic visual, and good promotion.
2620 I found that CTV, CBC, Global, the City stations, as well as independents, welcomed you if you thought your story through and understood the marrying of their objectives to yours.
2621 And while volunteer president of one of the large Canadian health agencies in the 1970s, I raised many millions of dollars for patient services and for research.
2622 I also, in this period, gave guest lectures at most Ontario universities on the subject of business ethics. I know this is a strange mix of expertise, but you learn a lot as a writer because you are constantly researching something new.
2623 It was also 25 years ago that I was president of the company that worked with Philips and Sony to develop the storage and retrieval of information on compact discs.
2624 I also have a fascination with politics, and that is why I am no stranger in Ottawa. That is why, when Madam Roy called to ask me to come today, she was so encouraging that I asked her if the CRTC now validated parking. She did not know what that meant.
2625 When I explained the concept of paying for your guest's parking, she responded very helpfully, by telling me about nearby open-air parking that is a lot less expensive. Luckily, today I found indoor parking.
2626 I was a bit despondent after that call, though, as I realized that in the past 50 years nothing much has changed in our National Capital Region. It is particularly disconcerting to realize that the same terminal disease that inflicted the old Board of Broadcast Governors 50 years ago might be the problem with today's CRTC.
2627 Back then the BBG was very much a creature of its main concern. The BBG actually belonged to the Canadian Broadcasting Corporation. We knew that this emphasis -- back then we said that this emphasis, this marriage, would stifle new and burgeoning private broadcasting in Canada, and an independent CRTC was born.
2628 I am very proud of what the CRTC has done. I think you have done a marvellous job over the years.
2629 I make this comment for just one reason. It is that you are the regulator. You have the ability to say no. You were created to regulate broadcast in Canada, on behalf of all Canadians. You hardly need a court to tell you what you can do. You can say no -- or yes, if you wish -- to fee for carriage. You can also stop this vertical integration of the broadcast industry.
2630 I will admit that Shaw/Canwest/Global -- that was an act of mercy. It had to be done, and somebody had to do it fast. So there was no objection from me.
2631 But it is a concern, and one that should be encouraged to be divested at a certain point in time. It's not good to have this integrated system, but that's another argument for another time.
2632 If you say yes to this question, you will have reduced television broadcasting in this country to four major companies -- oh, and for a while anyway, the CBC.
2633 You know you could then try for two if you like. You could probably work it down to two. Would that be appropriate for Canadians?
2634 People at this hearing are arguing about the value of this transaction. You know why can't we ask around and see if anyone else would like to buy CTV?
2635 I know it's simplistic but the value of something is best determined by a willing seller and a willing buyer.
2636 That brings up the benefits package, tangible benefits. They changed quite a bit there.
2637 I don't know how far I want to get into that confusion but I do want to comment on the $84 million for MPEG-4. Yes, it will increase their capacity. Each level increases capacity.
2638 The motion picture expert group has been doing some marvellous work over the years and I know what MPEG-4 is for. It's to bring three dimensions to satellite broadcast.
2639 I mean, are you kidding that you don't know that? I'm sorry. If I'm wrong I'm terribly wrong.
2640 But MPEG-4 has more than just capacity capabilities; far more. I mean if you allow Bell to put $84 million into set-top boxes so that they can have 3D broadcasts, well, that's fine. But understand who is the benefit for.
2641 I conclude with my basic opposition to BCE taking over Canada's largest English-language television network. Ivan Fecan said yesterday something very, very important and I listened carefully to what he said. But these companies are not compatible. CTV is a leader, a creator, a cultural icon and it helps hold much of this country together.
2642 If it needs deeper pockets there are other alternatives than Bell Canada Enterprises. It is a bad idea for one of the worst-run companies in this country of its size to spread its management virus throughout the CTV network.
2643 You know, the last intelligent and consistent decision of BCE was when Jean Monty dumped its Nortel stock. Monty was the one who saw the confluence of telecommunications and television technologies as the future of Bell Canada. It should not be the future of CTV.
2644 Thank you for your time and attention.
2645 THE CHAIRPERSON: Thank you for your submission.
2646 But isn't this a bit late in the day? I mean with the benefit of hindsight you could say they should never have allowed any BDUs or any distributors on broadcasting. That's where the mistake was once we did that and it's just been gathering momentum, et cetera. And this is just the last step or a further step.
2647 But I don't think you can suddenly at this point in time saying, "Thus far, no farther, there is no logic to it. Having allowed the previous ones, you know whichever one you want to take, whether you take Videotron or TVA, Rogers, City, Shaw, Canwest -- just take the most recent one -- that horse is out of the barn."
2648 MR. LOWRY: Mr. Chairman, you have the power. Your Commission has the power to ask them to divest, to ask them to come back to where it should be.
2649 It's not good for this vertical integration even at the Rogers level. Rogers, I think is a bad company to be running Sportsnet. I disagree with Sportsnet being a Rogers company.
2650 THE CHAIRPERSON: But you --
2651 MR. LOWRY: I don't tell Ted -- well, the late Ted Rogers what to do.
2652 THE CHAIRPERSON: But you know as well as I that we are in the age of conversion of technology. It makes no difference anymore in broadcasting and television. So this is just a logical reaction to that.
2653 MR. LOWRY: Philosophically I have a problem.
2654 THE CHAIRPERSON: Yeah. No, I understand that.
2655 MR. LOWRY: But then maybe it would take much, much longer to come to a conclusion on that question.
2656 THE CHAIRPERSON: My colleague, Steve Simpson, has some questions for you.
2658 COMMISSIONER SIMPSON: Good afternoon, Mr. Lowry.
2659 I'm suitably impressed with the effort you have made in coming down here or up here from Barrie. I guess you go down and then you go up. But also, you know, on a day like today and, you know, I sense your passion and I appreciate your conviction.
2660 But my job is for the benefit of all, to question your conviction to determine -- to separate the passion from the potential and the reality that we are facing here, so if I may.
2661 The first question I have is to go back on your point about Shaw and Canwest essentially being an acquisition of some corporate mercy. I have known the Shaw organization a long time and I have never known them to do anything mercifully without having a very strong and compelling business case behind that organization.
2662 And that's why they are the success they are today. There was some logic to what they were doing and I think that, you know if you look beyond the financial distress of Canwest, that logic is apparent.
2663 Other organizations around North America are practicing the same kind of logic whether it's Comcast and NBC or going back to the industry that my family grew up in, which was motion pictures, and the consolidation between producers and distributors that was a normal course of action back in the forties and fifties. It's since gone the way where producers today are much more independent and seek distribution relationships.
2664 So there is always a cycle to business, is my point. And just because this is happening doesn't mean it can't un-happen at some point in the future when things don't make sense.
2665 So my first question is this: Is it Bell in particular, that really sticks in your throat or is it the concept of CTV funding being tucked into a larger organization and losing its voice as a broadcaster?
2666 MR. LOWRY: That is an excellent question. I do have a bias against Bell. I worked for them at one point.
2667 COMMISSIONER SIMPSON: No kidding.
2668 MR. LOWRY: But no, I have a lot of respect for Bell too, please.
2669 As a Canadian entity Bell is a very interesting one. But Bell has chosen a direction where all I can call it is a disconnect from its public. Have you tried to go to a phone booth and phone Bell Canada? All you can get is a very bureaucratic call centre. That's all they have.
2670 It always reminded me of a plant where they make ketchup. When the ketchup -- when the tomatoes first come in the plant there is a group of people cutting the green stuff off and let the red stuff go through. I think Bell hires their call centres on that basis, that if they get in enough trouble they rehire some Canadian call centres so that the foreign ones don't take the blame for everything.
2671 Bell doesn't want to deal with the public. Bell is rude to the public. Bell doesn't want the public.
2672 CTV has to have the public. CTV has to be able to read and feel the concerns of people and how they respond to their programming to give them the right programming, to give them the programming that people want, that people will watch and earn the audience for them. It's just a different world.
2673 COMMISSIONER SIMPSON: I asked that very question; the cultural question of Bell the other day. I think I received a fair answer. As to whether it's compelling and convincing, time will tell.
2674 The next question I have is to do with the benefits package. In preparation for your presentation today, which I take very seriously because I think, again, it's just great to see citizens coming forward into a forum like this and we feel honoured, you know, to have anyone take some interest and do what you have done.
2675 But when it comes to the benefits package, I found that you addressed -- you found that Bell addressed significant parts of the benefits package with their presentation yesterday. But I wanted to drill down into the MPEG-4 issue for a second and just talk technology with you.
2676 Television stations are having to do digital conversion because of a mandate by the Commission to do so. It's do with synchronization with the United States.
2677 But it's my understanding, not necessarily -- I'm not putting words in my fellow Commissioner's mouths -- but it's my understanding that the adoption of MPEG-4 is, granted, going to increase substantially the capacity of the satellites and potentially the ability to carry the bandwidth for 3D if that's what they choose to do. But it's also going to significantly expand the capacity of those same satellites to be able to deliver more local television into local markets.
2678 In Saskatchewan, for example, you have a city like, I believe Regina, getting the Saskatoon television station because there is no capacity on the bird. That will change with this innovation.
2679 Do you still feel that way about money being spent on MPEG-4?
2680 MR. LOWRY: I could receive my local A Channel station with a small receiver in my window. It would be no problem. I mean, Barrie isn't that large a city.
2681 But, quite honestly, I wouldn't waste my time on the A Channel right now. A Channel has been stripped of most of its people.
2682 Mr. Brown was here talking about A Channel but the things he was telling you about the wonderful local coverage we get are only Rogers' stations and it's pretty amateur.
2683 But the Colts, the Barrie Colts which are a great little hockey team, we watch them on Rogers.
2684 The city council, which I watch actually quite often, is on Rogers. But on --
2685 COMMISSIONER SIMPSON: But on the larger scale --
2686 MR. LOWRY: But A Channel is nice -- they are nice people, all three of them or all four. I'm sorry.
2687 COMMISSIONER SIMPSON: But on the larger scale though, you know across the nation, there will be benefits to more communities including Barrie to be able to receive all the stations.
2688 So the point I was trying to make is it still doesn't change your mind.
2689 MR. LOWRY: It makes it easier. It makes it easier for Bell to sell.
2690 COMMISSIONER SIMPSON: Okay. I know I am not going to convince you, but there is some merit to the logic.
2691 The last question I have for you, sir, is with respect to -- you led into it nicely for me with A Channel.
2692 It has to do with your asking the Commission to find other buyers for CTV and CTV is indeed looking to sell. That's not our job.
2693 MR. LOWRY: Can I volunteer?
2694 COMMISSIONER SIMPSON: Well, if you have got the chequebook, you know, I'm sure that I have Mr. Fecan's phone number.
2695 But the point is that no one else has come forward and this Commission -- in my first year on the Commission we ran smack into the "Save TV" -- "Save local television" issue and that was a very compelling argument that channels, local stations like Barrie were losing money and they were at threat of closing.
2696 This is a deal that perhaps is being done before the stations have to go dark, as was the threat with Canwest. So is there not a benefit to Canadians to seeing this deal go through from the standpoint that the local stations are going to stay on the air?
2697 MR. LOWRY: I don't know what the model is to have a sustainable television station with that size of transmitter, because that transmitter is designed to reach Toronto. We are a back door into the Toronto market, that is what we are. We don't carry the first-run programs, but we carry some of them where Toronto Channel 9 doesn't have the capacity.
2698 But there must be a model somewhere of a local station that could make money. I haven't really put my mind to it.
2699 COMMISSIONER SIMPSON: Those are my questions. And again, thank you very much for coming.
2700 MR. LOWRY: Thank you.
2701 THE CHAIRPERSON: Louise, you have some questions?
2702 COMMISSIONER POIRIER: Yes. Thank you for coming, Mr. Lowry.
2703 I have two questions, it depends how long you take to answer them, but I imagine your idea is quite clear about those two.
2704 The first one is related to the $84 million to support local television stations through satellite carriage. Are you against the principle or against the amount of money dedicated to that project?
2705 MR. LOWRY: Well, my concern yesterday was they almost, almost, didn't tell the truth, they left it out. But they were asked if there was another motive, and it was a very good question. And they almost said no and then they also said, yes. They had to, because it is not just a benefit they wouldn't spend the money on, they are going to have to if they want to sell three-dimensional television.
2706 I mean, I don't quite see the future of three-dimensional right now until the technology improves more. But the capability does exist and that is what they are looking at.
2707 COMMISSIONER POIRIER: So you are against the principle or the amount of money?
2708 MR. LOWRY: Well, I am against the concept of them saying this is a tangible benefit that we would not do unless you let us.
2709 COMMISSIONER POIRIER: Okay.
2710 MR. LOWRY: That was my point. I mean, is this a bribe, is it a benefit? Who benefits?
2711 COMMISSIONER POIRIER: So where would you have the money invested instead?
2712 MR. LOWRY: Well, I have a lot of sympathy for our Canadian independent producers, but don't forget who they work for. They work for the television networks. And so they have to be nice to the television networks, they have to cater to them. I don't complain about that.
2713 COMMISSIONER POIRIER: Finally, do you support all the other tangible benefits that were proposed by BCE? Do you remember them all or..? I don't want to get into too much detail about it, but in general?
2714 MR. LOWRY: Well, it is very nice that they want the benefits, the $24.5 million for enhanced local news production. I know what high-definition cameras cost.
2715 COMMISSIONER POIRIER: Are you talking about HD?
2716 MR. LOWRY: Yes, I am talking about HD. HD cameras cost a lot of money. HD control room costs a lot of money. They are asking you to let them spend the money on it.
2717 COMMISSIONER POIRIER: So you don't support that one?
2718 MR. LOWRY: I know it has to be done.
2719 COMMISSIONER POIRIER: Okay, thank you very much, sir.
2720 THE CHAIRPERSON: Okay, those are all our questions. Thank you for your intervention.
2721 MR. LOWRY: Thank you very much, Mr. Chairman.
2722 THE CHAIRPERSON: Madame la secrétaire.
2723 THE SECRETARY: Thank you, Mr. Chairman.
2724 I would now invite CACTUS to come forward to the presentation table please.
2725 THE SECRETARY: All right. So appearing for the Canadian Association of Community Television Users and Stations is Ms Catherine Edwards.
2726 Please proceed with your 10-minute presentation.
2727 MS EDWARDS: Hi, nice to see you all again and thanks for sticking out to the end of the day.
2728 CACTUS represents the views of individuals, independent community television channels, and producing groups that believe that participation in the broadcasting system by ordinary Canadians is fundamental to our democracy.
2729 We do not believe that broadcast distribution undertakings should produce content, and so in our view this sale represents another move in the wrong direction for the long-term health of Canadian broadcasting and Canadian democracy.
2730 The CEP's submission presents data that refutes the idea that bigger better financed media giants generate more Canadian content in expensive genres such as drama. With less competition such giants rather seem to lobby all the harder to be allowed to do less. For example, the CRTC's recent proposal to reduce CanCon exhibition from 60 to 55 per cent of the programming year.
2731 Moreover, as community programmers, it is not in our experience that the CRTC can adequately limit the potential abuse of power that this degree of consolidation enables. In the last dozen years, as you heard at the hearing into community TV last year, Canada's large cable BDUs have consistently abused their obligations with respect to community channels.
2732 These companies can't be all things to all people, there needs to be a diversity of players. This being said, if the CRTC approves the purchase of CTVglobemedia by BCE, we agree with the Canadian Conference of the Arts and other industry interveners that the benefits package should represent the full 10 per cent of the value of the transaction.
2733 And secondly, we agree with the CCA's analysis the majority of the benefits proposed benefit BCE rather than the public or third parties, which is our understanding of the intent of these packages.
2734 For example, Item 1 proposes on-screen and new media content for CTV's own channels; Item 4 concerns HD content on CTV; Item 5 concerns upgrades to A Channel services; and Item 6 also proposes public benefits that are in the company's own infrastructure.
2735 However, as at the Shaw-Canwest hearing, CACTUS does support BCE's proposal to upgrade A Channel transmitters to digital in non-mandatory markets. And we suggest that CTV's transmitters in non-mandatory markets be added and are puzzled why they are not included.
2736 And as we advocated at the Shaw-Canwest hearing, since these transmitters belong to BCE subsidiaries, to ensure the upgrades constitute a true public benefit, we ask that multiplex space be offered to all other existing local broadcasters and new entrants in the public and community sectors at no charge. Since Channels 52 to 69 are slated for auction, the fewer broadcast television channels that remain must and should be shared.
2737 The public benefit would be three-fold: assistance to either local services to upgrade to digital; continued free access by residents to all local OTA channels, not just A and CTV; and proof of concept for how multiplexing can contribute to more efficient spectrum usage and diversity.
2738 And second, that local community or pubic channels that want a separate licence, for example, a full HD channel rather than a multiplexed SD channel, should be given access to BCE's towers on a cost recovery basis. So essentially what happened in the Shaw-Canwest deal.
2739 Secondly, if the CRTC accepts BCE's proposals 2 and 3 concerning satellite carriage of local service, we ask that either over-the-air community channels, both existing and new licensees, be carried along with private and public channels since they almost always carry the highest percentage of local content as a condition of licence, that is over 60 per cent; or if there isn't space for that, the set-top box provided by BCE should have a pass-through function for viewers to switch to OTA channels with remote control and BCE should inform customers how to do so.
2740 We note that Bell intervened at the oral phase of the community television policy review last year for access to non-branded community channels, so this provision would fulfil their request.
2741 Since we do not endorse BCE's other proposals for public benefits, proposals number 1, 4, 6 and have given only conditional support for 2, 3, and 5, we suggest the following as alternatives. $30 million for the community access media fund we proposed at the community television policy review last year to support existing and new, non-profit, independent community television channels for six reasons.
2742 Mergers such as this one represent enormous consolidation of Canadian media, reducing the diversity of voices. Allocating money toward the independent community sector guarantees a grass-root safety valve for free speech outside this ownership group and all other ownership groups.
2743 Second, money directed toward the community sector, because of its reliance on volunteer labour, funds facilities and infrastructure that can be used over and over to produce between six to eight times the volume of local programming that can be produced by the public and private sectors.
2744 In other words, while money directed to the private and public sectors for programming is spent, viewed and gone, money direct to the community sector supports infrastructure that will balance the negative effects of market concentration over the long-term.
2745 Third, Bell itself at the oral phase of the community TV hearings proposed that 2 per cent of its gross revenues or 30.7 per cent of its total contribution toward Canadian content be allocated toward non-branded community channels that would be available on all platforms, not just cable. This would be the case for channels funded through CAMF, which would be over-the-air, on cable, satellite and the net.
2746 Fourth, the new community TV policy doesn't address the widespread closures of cable community channels over the last decade. We need these independent channels to fill the gap. Public benefits monies could bring back local broadcasting to towns and cities that have no other source of local media.
2747 Fifth, although an over-the-air community TV licence class, an independent class that is, outside the cable model was created in 2002 and which are equivalent to community radio licences, non-profit and community-administered, there is no funding formula for them.
2748 While public and private sector TV channels benefit from the Canadian Media Fund, the LPIF, value-for-signal payments, and benefits packages such as the one under discussion, independent community channels have thus far been excluded. And as a consequence, which was noted in the new community TV policy, only seven such over-the-air community channels exist in Canada.
2749 This exclusion seems particularly glaring, given the assignment of funds in this proceeding to the Community Radio Fund of Canada. This transaction primarily concerns TV assets. Surely, any transfer of ownership in the commercial television sector should trigger at least the same percentage of funding to the non-profit independent community television sector.
2750 And last, as CACTUS outlined during the community TV policy review and has done so in subsequent presentations before the Standing Committee on Canadian Heritage, multimedia access centres are crucial to stimulate the uptake of digital technologies and leverage the full potential of the digital transition. The importance of high tech and geographically distributed access media hubs is being advanced not just by us, but by other groups such as the Canadian Digital Media Network, host of Canada 3.0.
2751 $30 million distributed over five years or $6 million per year would enable, first of all, existing community channels to transition to a full-digital multiplatform model. They are not all there yet. And second, at least one new community access centre in each province as a model and training platform for the province.
2752 With our written submission we included a document entitled Goals and Operating Principles of the Community Access Media Fund, which describes the long-term goals of the fund, how we suggest it should be managed and who might apply to it.
2753 Second, for the public benefits package we suggest that $10 million be put aside for a national awareness campaign about the transition to digital OTA television. CRTC 2010-485 last July recommended that the government coordinate a national awareness campaign in advance of the transition to digital over-the-air television scheduled for August 31st of this year.
2754 The BCE public benefits package could finance such a campaign. We suggest that BCE contribute both financial support to staff a phone centre, for example, as well as in-kind contributions, such as technical infrastructure for the total value of $10 million.
2755 Such a campaign should be mounted immediately under the leadership of the CRTC with representation from public, private and community broadcasters, Heritage Canada, consumer groups and other stakeholders.
2756 Broad representation, rather than an industry-led approach, is crucial in light of transactions such as the current one in which another major broadcaster will soon be owned by a BDU with a clear financial incentive to push Canadians onto pay television platforms, such as cable and satellite.
2757 We included as Appendix C in our written submission a description of the proposed campaign and a rough breakdown of costs, which we developed with the Canadian Media Guild and other partners.
2758 Improved public awareness of the transition is necessary to ensure that individual Canadians as TV viewers know what to do to maintain their service so that municipalities and civil planning authorities are aware that there are more cost effective responses to the loss of free OTA service than residents switching en masse to paid platforms which are simply not affordable in some areas of the country.
2759 As an example, we point to the more than 100 community rebroadcasters that already distribute OTA service for a fraction of the cost of cable or satellite. For example, one of our members in Valemount, B.C. rebroads a half a dozen channels to its 1,400 residents, including a locally originated community channel for $40 per household per year.
2760 Finally, access to transmission infrastructure that might otherwise be decommissioned could open up a range of communication services to remote communities, many for the first time. Communities in the U.S. and other countries are using digital technologies to offer free wireless internet, emergency updates to mobile phones, and so on.
2761 Next, we support the proposal by the Public Interest Advocacy Centre for a Canadian Broadcasting Participation Fund that would enable intervenors such as ourselves to CRTC public consultations to be compensated for time and expenses as are intervenors to telecommunications proceedings.
2762 We also support the proposal by Media Access Canada for a fund that seeks to complete accessibility of Canada's television programming system by the year 2020.
2763 We support the CCA and the CMPA in requesting that the remainder of the public benefits be directed toward on-screen programming and under represented genres, especially dramas and documentaries that deal with overtly Canadian stories, settings and themes.
2764 The money should be directed toward independent producers via funds that are not controlled by BCE or its subsidiaries to counterbalance the consolidation of market power in editorial control that this sale represents.
2765 Thanks very much for the opportunity to comment.
2766 THE CHAIRPERSON: Thank you.
2767 I'm intrigued by your reference on page 3 to the set-top boxes and the switch through. So you suggest that if we accept the MPEG-4 proposal by Bell we should insist that they utilize set-top box or switch through so that the customer can receive over-the-air channels as well as the satellite channel, if I understand you correctly.
2768 MS EDWARDS: Right. Those boxes are already available, both in Canada and in other countries, so it's not a stretch. They don't have to develop anything new.
2769 We have been told, for example, by one of our members in Neepawa, Manitoba -- you heard from that community TV channel at the hearing last year -- that in their area the satellite providers don't. The boxes do have a passthrough function, but they are not telling people how to do it. So that goes with it. The boxes should have the passthrough and they need to be telling their customers that it's there.
2770 THE CHAIRPERSON: Wouldn't you need an antenna as well?
2771 MS EDWARDS: You do need an antenna, yes.
2772 THE CHAIRPERSON: Yes.
2773 MS EDWARDS: But the idea is that you don't have to get up each time you want to switch a channel and detach things at the back of your TV, because of course people won't do it. It needs to be in the remote control, seamless switching.
2774 THE CHAIRPERSON: Yes.
2775 The other thing is you want us to basically say, if I understand you correctly, as part of -- being allowed to use funds for MPEG-4, not only do you have to carry all LPIF-eligible stations, but also all community over-the-air stations, all seven of them. That's essentially what you are saying?
2776 MS EDWARDS: I should just preface this by saying that, as with Mr. Lowry before me I'm not endorsing that BCE be allowed to spend its public benefits money on upgrades to its own system, what I'm saying is that if you do approve that particular one that we would say, "Okay, but only with this provision".
2777 So preferably I think the community channels should be included because they almost always have more local content than public and private sector channels which, even though they are local, mostly are playing network programming produced outside the license area.
2778 So it's really important that satellite customers be able to get the community channel whether it's because it's in the satellite line-up as part of a local and local service, or at least that customers are well-informed how to get the OTA channels sitting in their chair with the remote controls.
2779 THE CHAIRPERSON: Yes, but I prefaced it "If we accept", so I understand your position.
2780 MS EDWARDS: Right.
2781 THE CHAIRPERSON: But you were talking about seven over-the-air community channels.
2782 MS EDWARDS: It's seven at the moment, but we are hoping to expand that number. If you take our recommendation to direct some of the funding towards CAMF it becomes much easier for other communities to consider undertaking community OTA broadcasting.
2783 THE CHAIRPERSON: Yes. We did provide funding under the community policy, as you know.
2784 MS EDWARDS: Not to independent non-profit OTA channels, no. The funding is still all for cable-run channels.
2785 THE CHAIRPERSON: Oh, that's your point. Okay. I understand. Thank you.
2786 Len, you have some questions.
2787 COMMISSIONER KATZ: Thank you, Mr. Chairman and good afternoon
2788 Just a couple of clean-up questions actually.
2789 You are suggesting in paragraph 6 that the benefit package represents a full 10 percent of the value of the transaction.
2790 You are aware, no doubt, that part of the transaction is radio-related-
2791 MS EDWARDS: Right.
2792 COMMISSIONER KATZ: -- and there is only 6 percent.
2793 You are not advocating that we change the benefits for radio from 6 percent to 10 percent, are you?
2794 MS EDWARDS: No. I was referring mainly to the television part of the transaction.
2795 COMMISSIONER KATZ: Okay.
2796 You talk in paragraph 7 about the benefits being more public and less BCE self-serving, as you allege. Yesterday BCE modified their proposal, did you get a chance to see that?
2797 MS EDWARDS: No. I'm afraid I haven't.
2798 COMMISSIONER KATZ: Okay. Because they made some changes, including things that you actually had asked to remain, they have basically removed. So they have removed the satellite delivery for local stations in non-mandatory markets and a couple of other ones as well.
2799 MS EDWARDS: Okay.
2800 COMMISSIONER KATZ: I think there is a handout in the back of the room on the table. If you are going to submit final comments next week you may want to get an updated copy of the benefits.
2801 MS EDWARDS: I certain will. I apologize.
2802 COMMISSIONER KATZ: Not a problem.
2803 I, like the Chairman, we are focused on the one area I guess. You are saying we were amiss or Shaw was remiss in not advocating back in the Shaw deal and that was setting aside money for independent community programming. Obviously you are still of that position as well.
2804 MS EDWARDS: Yes.
2805 COMMISSIONER KATZ: Okay.
2806 MS EDWARDS: The new community television policy -- when I say "you" I mean the panel that was sitting at that time, it's not the same time -- seemed to get the message loud and clear that there was lots of complaints about access across the country and also that there was a lack of accountability on how funds were being spent. But there was no recognition or action taken to address the fact that more than half of original cable community television channels have simply been closed. More than half the license areas for example that Shaw renewed in September, there isn't even an access studio in that area. They claim that they can serve those areas by mobiles, but it's just not adequate. And there are community groups across the country that are more than happy, ready, trained and able to step into these gaps, but there is still no method of funding them.
2807 COMMISSIONER KATZ: Okay. Those are my questions, Mr. Chairman.
2808 THE CHAIRPERSON: Okay. I think those are all our questions for you. Thank you very much.
2809 As my colleague said, you will have a chance to supplement your submission after we hear from Bell on Friday.
2810 MS EDWARDS: Thanks for your time, and good luck driving.
2811 THE CHAIRPERSON: Thanks.
2812 Madam Secretary, we will start at 8:30 tomorrow morning; right?
2813 THE SECRETARY: Yes, 8:30 tomorrow morning.
2814 THE CHAIRPERSON: Thank you.
2815 THE SECRETARY: For the record, I would like to indicate that intervenor number 32 on the agenda, the Canadian Conference of the Arts, they have indicated that they will not be appearing tomorrow.
2816 Thank you.
--- Whereupon the hearing adjourned at 1523, to resume on Thursday, February 3, 2011 at 0830
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