TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

                      SUBJECT / SUJET:

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

Révision des cadres de réglementation des entreprises de

distribution de radiodiffusion et des services de

programmation facultatifs

HELD AT:                              TENUE À:

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

April 18, 2008                        Le 18 avril 2008

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

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

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

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

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

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

                 Transcript / Transcription

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

Révision des cadres de réglementation des entreprises de

distribution de radiodiffusion et des services de

programmation facultatifs

BEFORE / DEVANT:

Konrad von Finckenstein           Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Leonard Katz                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Michel Morin                      Commissioner / Conseiller

Ronald Williams                   Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTS:

Cindy Ventura                     Secretary / Secretaire

Cynthia Stockley                  Hearing Manager /

                                  Gérante de l'audience

Martine Vallée                    Director, English-Language

                                  Pay, Specialty TV and

                                  Social Policy / Directrice,

                                  TV payante et spécialisée

                                  de langue française

Annie Laflamme                    Director, French Language

                                  TV Policy and Applications/

                                  Directrice, Politiques et

                                  demandes télévision langue

                                  française

Shari Fisher                      Legal Counsel /

Raj Shoan                         Conseillers juridiques

HELD AT:                          TENUE À:

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

April 18, 2008                    Le 18 avril 2008

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PRESENTATION BY / PRÉSENTATION PAR:

Astral Media Inc.                                1855 /10656

Coalition of Canadian Audio-visual Unions (CCAU) 1990 /11560

Alliance of Canadian Cinema Television and       2027 /11789

  Radio Artists (ACTRA)

Directors Guild of Canada                        2039 /11857

Writers Guild of Canada                          2049 /11904

L'Union des artistes et SARTEC                   2060 /11973

Only Imagine Inc.                                2117 /12372

Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Friday, April 18, 2008 at 0900 /

    L'audience débute le vendredi 18 avril 2008 à 0900

10649            THE CHAIRPERSON : Good morning.

10650            Madame Secretary?

10651            LA SECRÉTAIRE : Merci, Monsieur le Président, et boujour à tous.

10652            J'inviterais maintenant Astral Media Inc. à faire sa présentation.

10653            Monsieur André Bureau comparaît pour Astral et nous présentera ses collègues.

10654            Après quoi, vous aurez 15 minutes pour votre présentation.

10655            Monsieur Bureau?

PRÉSENTATION / PRESENTATION

10656            M. BUREAU : Monsieur le Président,

10657            Messieurs les Vice‑présidents, Madame (congratulations for your reappointment), Messieurs les Conseillers,

10658            Membres du personnel, pour les fins du procès‑verbal, je suis André Bureau.

10659            I am probably one of those obsolete elements of the system that some would like to change.

‑‑‑ Laughter / Rires

10660            M. BUREAU : Et je suis aussi président du conseil d'administration d'Astral Media.

10661            M'accompagnent aujourd'hui à ma droite, John Riley, président d'Astral Televison Networks, à sa droite Pierre Roy, président des Chaînes Télé Astral ainsi que Johanne Saint‑Laurent, vice‑présidente principale, Affaires commerciales, Les Chaînes Télé Astral.

10662            À ma gauche, Sophie Émond, vice‑présidente, Affaires réglementaires et gouvernementales, Astral Media.

10663            Et à sa gauche, Nathalie Dorval, conseillère principale, Affaires réglementaires et propriété intellectuelle, Astral Media.

10664            Derrière moi, au centre, Ian Greenberg, président et chef de la direction d'Astral Media.

10665            À sa droite,  Michel Houle, consultant, Industries culturelles et communications.

10666            Et à sa gauche, Me Hank Intven, auteur de l'étude que nous avons soumise au sujet des mécanismes de règlement des différends.

10667            Monsieur le Président, la présente audience est sûrement la plus importante depuis l'audience sur la structure de l'industrie en 1993.

10668            Elle est particulièrement importante pour un groupe comme Astral qui n'exploite que des services de télévision facultatifs et indépendants, c'est à dire sans lien avec un réseau de télévision en direct ou avec une entreprise de distribution de radiodiffusion.

10669            Cette révision du cadre réglementaire des entreprises de distribution et des services facultatifs arrive à point donné.

10670            Il est en effet souhaitable de procéder à une mise à jour de la réglementation, pour la délester de ses composantes non‑essentielles et la rendre plus équilibrée et pertinente.

10671            De plus, cette révision peut se dérouler dans un climat serein, puisque il n'y a ni crise, ni urgence.

10672            En effet, le système canadien de radiodiffusion dans son ensemble est en bonne santé financière et l'évolution des nouveaux médias n'entraîne pas de bouleversements imminents du système d'une nature et d'une ampleur telles qu'ils en menacent la viabilité.

10673            Et ce qu'il faut retenir, c'est que les consommateurs canadiens sont globalement satisfaits du prix, de l'étendue et de la diversité des services qui leur sont offerts.

10674            Le modèle que nous vous soumettons prend en compte ces réalités et tente de répondre à vos questions et d'atteindre trois objectifs qui nous paraissent essentiels.

10675            Le premier objectif, c'est d'assurer que le public canadien ait accès à un très vaste choix de services canadiens, tout en disposant de la plus grande autonomie dans la sélection des services qu'il veut recevoir.

10676            Cet objectif peut‑être atteint, il nous semble, à travers les mesures simples suivantes...

10677            L'établissement d'un service de base restreint, entièrement canadien et accessible au plus bas coût possible.

10678            La suppression des règles de distribution et d'assemblage et l'offre obligatoire dans les marchés francophones d'un volet comprenant tous les services spécialisés canadiens de langue française.

10679            Et troisièmement, le maintien du droit d'accès des services facultatifs canadiens au système de télédistribution.

10680            Par l'adoption de ces mesures, le Conseil conférerait par ailleurs aux EDR une plus grande flexibilité dans l'assemblage et la mise en marché des services qu'elles offrent.

10681            Le deuxième objectif est de conserver un éventail de services canadiens variés et distincts, en mesure d'offrir aux auditoires canadiens la plus grande diversité de programmation possible.

10682            Cet objectif peut‑être atteint de la façon suivante...

10683            En maintenant la nature des services existants ainsi que leurs conditions de licence relatives au contenu et dépenses d'émissions canadiennes.

10684            Deuxièmement, en maintenant les règles relatives à la non‑autorisation de services étrangers concurrentiels.

10685            Troisièmement, en rétablissant un système d'attribution de licence pour les nouveaux services facultatifs qui soit significatif et efficace.

10686            Le troisième objectif est d'encadrer, au moindre fardeau réglementaire possible, les relations entre EDR et services facultatifs, de manière à s'assurer qu'elles soient le mieux équilibrées possibles.

10687            Pour ce faire, nous proposons l'établissement d'un mécanisme de règlement de différends rapide, équilibré et efficace.

10688            Et, compte tenu de l'importance que la plateforme de vidéo sur demande est appelée à prendre, nous proposons...

10689            De lever les restrictions relatives à la diffusion de publicité dans les émissions offertes en VSD.

10690            Et d'autoriser les services canadiens à offrir des blocs d'émissions en VSD, par l'abonnement, provenant de leur programmation linéaire.

10691            Mes collègues vont maintenant vous exposer plus en détail les tenants et aboutissants de ces mesures, tout en répondant, évidemment, aux questions du Conseil.

10692            Pierre Roy ?

10693            M. ROY : Astral souscrit à l'hypothèse d'un service de base restreint au plus faible coût possible pour l'usager.

10694            Il serait composé exclusivement des stations locales de télévision en direct, y compris celles des diffuseurs éducatifs dans leur province d'origine, et des services 9(1)h).

10695            Les seuls services auxquels un consommateur serait contraint de s'abonner seraient donc ceux qui composent ce service de base entièrement canadien.

10696            Certaines EDR voudront sans doute offrir également un service de base étendu, auquel le consommateur serait cependant libre de s'abonner ou non.

10697            Tout comme il sera libre de s'abonner à des volets préétablis de services regroupés sur une base thématique, linguistique ou autre, le consommateur pourra également composer des volets,  en sélectionnant lui‑même les services qu'il désire y inclure, sous réserve de la seule règle de prépondérance.

10698            Cette règle de prépondérance  (50 % + 1) devrait s'appliquer uniquement aux services optionnels à l'abonné ‑‑ à l'exclusion de ceux composant le service de base restreint ‑‑ et se retrouver tant au niveau des services offerts par l'EDR qu'au niveau de ceux reçus par l'abonné.

10699            Par ailleurs, notre modèle propose la suppression des règles de distribution et d'assemblage qui peuvent actuellement limiter l'autonomie de sélection de services des consommateurs.

10700            À titre exceptionnel, et en reconnaissance du caractère particulier de la radiodiffusion de langue française, nous suggérons l'adoption d'une règle obligeant les EDR opérant dans ces marchés francophones à offrir un volet comprenant tous les services spécialisés canadiens de langue française.

10701            Aucun consommateur ne serait obligé de s'abonner à un tel volet, mais tous les francophones qui le désirent en auraient la possibilité.

10702            Ainsi, tant les consommateurs que les EDR bénéficieront d'une autonomie et d'une flexibilité considérablement accrues.

10703            Tous les services canadiens de télévision spécialisée et payante analogiques et de catégorie 1 devraient avoir un droit d'accès au système de télédistribution.

10704            Et ce, pour de nombreuses raisons.

10705            Premièrement, parce qu'en retirant à ces services leur droit d'accès, le Conseil enlèverait du même coup aux consommateurs canadiens leur capacité de s'abonner à ces services.

10706            Chaque consommateur serait alors contraint d'exercer son choix à l'intérieur des limites que son EDR lui imposerait, ou de s'abonner à plusieurs EDR différentes pour espérer retrouver l'accès à l'ensemble des services canadiens qui lui sont actuellement offerts.

10707            Deuxièmement, parce que tous les services analogiques et de catégorie 1 ont été autorisés aux termes de processus compétitifs au cours desquels ils ont dû démontrer, à la satisfaction du Conseil, qu'il existait une demande pour leurs services, que celui‑ci allait contribuer de façon probante à la diversité de programmation offerte au public canadien, que les engagements proposés en matière de diffusion et de dépenses d'émissions étaient d'une ampleur appropriée eu égard à la nature du service, et finalement, que le respect de ces engagements était directement dépendant d'un accès garanti.

10708            Troisièmement, parce qu'à l'intérieur de la radiodiffusion privée canadienne, ce sont les services de télévision spécialisée et payante qui apportent la plus forte contribution à la programmation canadienne, aussi bien en termes de financement que d'auditoires rejoints.

10709            Ils fournissent, par exemple...

10710            En dramatiques, 70 pour cent des dépenses totales d'émissions canadiennes et 75 pour cent des heures totales d'écoute de ces émissions.

10711            En musique et variétés, 65 pour cent des dépenses et 80 pour cent des heures d'écoute.

10712            En documentaires, 75 pour cent des dépenses et 80 pour cent des heures d'écoute.

10713            Et en émissions pour enfants, 99 pour cent des dépenses du secteur privé.

10714            Quatrièmement, parce que la suppression de leur droit d'accès à la distribution aurait des conséquences économiques potentiellement désastreuses pour ces services, qui réduiraient d'autant l'importante contribution à la programmation canadienne que nous venons d'évoquer.

10715            Actuellement, plusieurs titulaires de services indépendants ‑‑ dont Pelmorex et Allarco, qui possèdent respectivement l'un des plus anciens et le plus récent des services avec garantie d'accès ‑‑ vous ont exposé les énormes difficultés qu'ils rencontrent dans leurs négociations avec les EDR.

10716            Une situation à laquelle tous nos services sont également confrontés, quel que soit la notoriété de leur marque, leur date d'entrée en service ou leur succès auprès du public.

10717            Nous n'osons pas imaginer ce qu'il en serait sans droit d'accès.

10718            À cet égard, il est important de prendre en compte la disparité de situation entre EDR et services facultatifs.

10719            Pour une EDR, supprimer un service individuel, même populaire, de sa liste  de quelques 400 services n'est pas susceptible d'entraîner une baisse considérable de ses revenus ou de sa clientèle.

10720            En revanche, pour un service de langue anglaise, la perte d'un seul des 5 grands distributeurs aurait pour effet de réduire sa base d'abonnés potentiels d'entre 900 000 et 2,3 millions de foyers.

10721            Et la perte de deux distributeurs se traduirait par une réduction de sa base d'abonnés d'entre 2,5 et 4,5 millions de foyers canadiens. Soit entre  23% et 42% de la base totale d'abonnés.

10722            Pour un service de langue française, la perte d'un seul distributeur, Vidéotron, entraînerait une réduction de sa base d'abonnés potentiels de 58 pour cent.

10723            C'est dire l'extraordinaire impact économique que la suppression du droit d'accès est susceptible d'avoir sur les services analogiques et de catégorie 1, avec toutes les conséquences que cela va entraîner sur la qualité du service et sa capacité de continuer de répondre aux attentes de ses abonnés.

10724            C'est dire aussi l'ampleur du déséquilibre que créerait le Conseil dans les rapports de négociation entre EDR et services de programmation.

10725            Les EDR pourront utiliser la menace du retrait pour obtenir un large éventail de concessions, allant de la réduction du tarif à la négation du droit de vérification des comptes en passant par la cession de minutes de publicité.

10726            Cinquièmement, parce que la suppression d'un droit d'accès rendrait inopérant tout processus de règlement de différends.

10727            Pour toutes ces raisons, nous sommes absolument convaincus que le droit d'accès des services canadiens au système de distribution canadien est essentiel à l'atteinte des objectifs de la Loi.

10728            MR. RILEY:  In its notice of public hearing, the Commission noted that one of its three primary objectives was to:

"... ensure a strong Canadian presence in the broadcasting system in the form of distinct and diverse Canadian programming and services."  (As read)

10729            MR. RILEY:  To this end, we strongly recommend maintaining the concept of a defined nature of service for Canadian services, and Canadian content and programming expenditure obligations specific to a given service, not a broad category.

10730            Astral fails to see how the proposals that suggest broad categories to and in which services might hopscotch could attain this objective of diversity.

10731            For example, each of the existing 30 specialty services that broadcast primarily dramatic programming are dedicated to a specific theme, genre, period or defined target audience such as science‑fiction, horror, romantic comedies, classic films, and what not.

10732            That is what creates diversity.

10733            On the other hand, sanctioning services to offer programming within every theme, genre, sub‑genre, category and sub‑category of dramatic programming in an attempt to reach a broad audience would only lead to redundancy and consumer confusion.

10734            Furthermore, this proposal would clearly benefit large broadcast groups that would be able to target high‑potential and popular niches in an effort to create similar services.

10735            Not only would this create a homogenization of services as a result of the inevitable gravitational pole to the middle, but it would be sure to result in skyrocketing of prices for high‑profile, foreign programming with absolutely no guarantees of diversity, and would most likely result in no more than a game of "musical chairs" amongst existing players vying for content.

10736            In addition, without a defined nature of service for Canadian channels, it becomes virtually impossible to authorize new foreign services.

10737            It is arguable that no foreign dramatic programming services could be authorized, since they would inevitably be in competition with over 30 Canadian services, each of which would be authorized to operate in every conceivable corner of this broad category.

10738            We also propose to maintain the current policy that restricts the authorization of foreign services that are, in whole or in part, competitive with a Canadian service.

10739            Moreover, the licensing process needs to be efficient but meaningful, and any new Canadian service resulting therefrom must have demonstrated that it will make a tangible and significant contribution to increasing the diversity of programming currently offered to Canadians.

10740            In return, they would be granted an access right.

10741            Johanne?

10742            MME SAINT‑LAURENT : Dans un univers de distribution extrêmement concentré et intégré verticalement, Astral considère essentiel que le Conseil adopte quelques mesures simples pour assurer des relations commerciales équilibrées.

10743            À cet effet, Astral propose que, en cas d'impasse dans les négociations, que les parties puissent accéder à un mécanisme de règlement de différends prévisible et efficace.

10744            Compte tenu de l'importance qu'est appelée à prendre la vidéo sur demande dans les habitudes de consommation des téléspectateurs, Astral considère également essentiel que le nouveau cadre de réglementation favorise l'accès des services canadiens de télévision conventionnelle, spécialisée et payante à la plateforme de VSD, tout en protégeant les droits de diffusion qu'ils ont acquis en mode linéaire.

10745            Le nouveau cadre devrait aussi pouvoir empêcher les services de VSD de devenir de facto des * services de programmation par abonnement +, canadiens ou étrangers, non autorisés, tout en reconnaissant que le modèle économique de développement de la VSD passe par l'accès à la publicité, y compris à la publicité dynamique insérée à l'étape de la distribution.

10746            Enfin, il devrait reconnaître que les EDR devront encourir des coûts significatifs pour assurer le plein déploiement de la VSD et des technologies d'insertion de publicité dynamique.

10747            Pour ce faire, le modèle que nous préconisons est le suivant...

10748            Lever les restrictions relatives à la diffusion de publicité dans les émissions offertes en VSD et autoriser les services canadiens de programmation à offrir des blocs d'émissions en VSD par abonnement provenant de leur programmation linéaire.

10749            Ainsi, les EDR titulaires des services de VSD devront négocier avec les diffuseurs linéaires canadiens pour obtenir les droits de diffusion de leurs émissions en VSD.

10750            En contrepartie, les diffuseurs devront négocier avec les EDR des ententes de partage de recettes générées par la VSD, de façon à ce que ces dernières puissent tirer des bénéfices de leurs investissements technologiques.

10751            Les témoignages que nous avons entendus plus tôt de Rogers, Telus et Cogeco semblent indiquer que ces EDR partagent notre vision et sont prêtes à ouvrer dans un tel cadre.

10752            André ?

10753            M. BUREAU : En terminant, nous répondrons aux deux questions du Conseil qui n'ont pas été abordées précédemment ce matin.

10754            Est‑ce que les entreprises de radiodiffusion en direct devraient payer un tarif de distribution ?

10755            Astral a pris connaissance des nombreux documents parfois contradictoires déposés par l'ensemble des parties à l'égard de la redevance de distribution pour les services conventionnels.

10756            Nous croyons que le Conseil détient toute l'information qui lui est nécessaire pour se prononcer sur la question.

10757            Nous demeurons toutefois préoccupés de l'impact économique que pourrait provoquer l'imposition d'une telle redevance sur le secteur des services discrétionnaires.

10758            Nous demandons donc au Conseil d'en tenir compte s'il devait décider qu'une telle redevance était requise.

10759            Finalement, quant à savoir si les EDR devraient avoir accès aux revenus publicitaires provenant des disponibilités locales, nous endossons la position que l'Association canadienne des radiodiffuseurs a présentée à cet égard.

10760            Monsieur le Président, nous croyons que le modèle que nous avons présenté permettra au système de radiodiffusion de continuer à se développer dans le meilleur intérêt de tous.

10761            Nous vous remercions de votre attention et nous serons évidemment heureux de répondre à vos questions.

10762            THE CHAIRPERSON:  Thank you very much for your presentation.

10763            On the last point that you made, Mr. Bureau, on the fee for services, essentially you take a neutral position just telling us to be leery of the fact of the effect that such a fee may have on the specialty services.

10764            You were here yesterday.  You heard me cross‑examine both Global and CTV, and there was quite a bit of talk about tying such a fee for service, should there be one, specifically to local services because local services, according to them, is where it hurts most.  They have an obligation to do it.  They are really the only part of the whole broadcasting system that has the obligation to provide local services, yet local services obviously, according to them, don't pay for themselves.

10765            If we made such linkage, do you think it would be beneficial to partially address your concern that a fee for service does not impact negatively on the subscription rate that specialty services obtain?

10766            MR. BUREAU:  I can see in your question the link that you are putting with our position on the caution we are suggesting here.

10767            I would have to ask permission to Sophie Émond to answer that question.  I promised I would not make a comment on the fee for carriage.

‑‑‑ Laughter / Rires

10768            MR. BUREAU:  She will stop me if I do something that she is not fully in agreement with.

10769            Mr. Chairman, I think that the question of the caution that we are proposing here has to do more with the position that has been taken by Quebecor in their initial filing where they suggested that they should give a fee for carriage but that that money should come out of the redevance that they are already paying to specialty services.

10770            We say we don't understand that.  We think that it is totally unfair to propose something like that.

10771            Of course, if they wanted to take it away from the margins that they are taking on the retail price of our services ‑‑ because, as you know, they charge 100 per cent of our wholesale rate to the subscribers.  If they want to take it from there, we don't care.

10772            But if they were to take it away from our wholesale price, we don't think it's fair.

10773            Now, if indeed there was a possibility that you could really measure how the fee that would be given to the conventional broadcasters would translate to a betterment of their local programming, maybe it would not affect us.  It is not the impact that we are mentioning here.

10774            The impact we are mentioning here is if they take the money away from us to give it to the conventional broadcasters.

10775            THE CHAIRPERSON:  Okay.  I take that as meaning as long as grosso modo you could live with this fee for services tied to local services, assuming we can assure ourselves that it indeed leads to an improvement of local services?

‑‑‑ Laughter / Rires

10776            THE CHAIRPERSON:  I'm not trying to put you on the spot; I'm trying to interpret what you said.

10777            MR. BUREAU:  I don't know, but I still have the feeling I am on the spot.

10778            Frankly, we have heard so many arguments in favour or against this fee for carriage that we feel we have enough to decide.  It was pretty smart yesterday to come up with that proposal that they would use that money to put it on the local side of their services.

10779            We are in favour of a better Canadian system, there is no question about that.  So whatever the means, we would gladly support something like that.

10780            Is it the right way to do it?  That is for you to decide.

10781            THE CHAIRPERSON:  Okay.  The other point I am not quite clear on ‑‑ and I read your submission last night.  In your original submission you made it that the present analog in Category 1 essentially covers the waterfront, and you suggested there would be a moratorium and we should not allow any further guaranteed access entry into that class.

10782            Is that still part of your submission?

10783            MR. BUREAU:  Well, I think that, Mr. Chairman, we have evolved in our thinking during the course of the proceedings here, because we have heard a number of proposals coming before you.  So we are trying to propose a model today that is slightly different from the one that we have filed earlier.

10784            I will ask Sophie to give a little bit more precision on that.

10785            THE CHAIRPERSON:  Okay.

10786            MS ÉMOND:  Our model, Mr. Chair, actually it was in looking forward for a new model.  We are not changing the fact that ‑‑ it is just actually naming the categories.  We are saying going forward in a new framework, you only have a single category of discretionary services.  So we are not calling them analog, Cat 1 or Cat 2 any more.  That was the only reason.

10787            But we are not changing, for example, the fact that these services obviously would still have access rights as we have presented in our oral this morning.

10788            THE CHAIRPERSON:  That I understand, but can there be additions to that category or not?

10789            MS ÉMOND:  Definitely.  We could license new services.  What we have proposed in our model was a streamline or a revised framework for licensing of new services, discretionary services, that what all each have to file an application and propose a distinctive nature of service to the existing ones.

10790            THE CHAIRPERSON:  So essentially the old Category 1, if you meet the old Category 1 criteria, you can get guaranteed access in the future for a new service?

10791            MS ÉMOND:  That's correct.  We suggested that the licensing criteria for these services could be similar to the ones that the Commission has used when licensing Category 1 services, but that obviously could be subject to discussion as to what exactly those criteria would be.

10792            Essentially our main preoccupation with the licensing was in light with the objectives we have mentioned in the oral presentation; that we think that the focus should be on having new services that do contribute and bring diversity and have some specific expenditures and Cancon requirements linked to that distinct nature of service.

10793            THE CHAIRPERSON:  Okay.  Thank you.

10794            MR. BUREAU:  To be clear, Chairman, we suggest that Category 2 be abandoned in terms of a possibility of access to the system and that we come to this new type of approach that would ensure diversity and ensure that whenever somebody has been licensed, they have a guaranteed access to the system.

10795            THE CHAIRPERSON:  Thank you.

10796            Len, I believe you have a host of questions for the panel.

10797            COMMISSIONER KATZ:  Thank you, Mr. Chairman.

10798            I want to come back and start I guess with your opening remarks this morning on page 3, where up on top you say, and I will read it:

"... en effet, le système de radiodiffusion dans son ensemble est en bonne santé financière..."

10799            MR. BUREAU:  Yes.

10800            COMMISSIONER KATZ:  I don't think we are disputing the fact that there is a strong and successful broadcasting system, but when you look at the components ‑‑ and one of the components obviously is the over the air marketplace ‑‑ we heard yesterday from both CanWest and CTV Globemedia that the over the air marketplace financial situation is somewhat impaired.

10801            You are a publicly traded company.  The results of the CRTC have indicated in the last two years that the return on investment, the PBIT for that component of the industry, is in the single digits, 4, 5, 6 per cent.

10802            If you took that business plan to a bank, would it be financeable today?

10803            MR. BUREAU:  Well, I don't know what would be the answer from the banks.  It is for them to answer.  I think that they have tested it by doing the acquisitions they have done.  They must have proven to the banks that they were a solid type and robust type of company to be able to borrow the kind of money they borrowed to acquire the services they just acquired.

10804            COMMISSIONER KATZ:  And presumably they made certain commitments on those commitments as well?

10805            MR. BUREAU:  I would imagine.  I would imagine, unless they bluffed with their bankers that they seriously convinced them that they were capable of doing what they were planning to do.

10806            So I think that they are ‑‑ we can say that other than TQS, who is in a separate situation, a more difficult situation, the others are in a position where we were a few years ago and where a number of entities were a few years ago.

10807            So I have a little bit of difficulty to look at them and find them in a difficult position ‑‑ I am trying to choose my words very carefully ‑‑ because I think they have shown that they have a vision for the future, that they believe in the future, that they are prepared to commit everything they have in fact for the future.  So great.

10808            COMMISSIONER KATZ:  Which in fact presumably they have in order to get the financing that they did.

10809            MR. BUREAU:  Yes.

10810            COMMISSIONER KATZ:  Okay.

10811            I want to come back to the issue you raised with the Chairman with regard to your concern that any decision that we make on fee for carriage does not impact the wholesale rates for your business.

10812            I guess coupled with that would be the impact on the consumer as well.

10813            MR. BUREAU:  Of course.

10814            COMMISSIONER KATZ:  That if in fact the BDU passes this thing through, it raises the cost to the consumer, all else being equal.  As a result, they may have a propensity to spend less on discretionary services.

10815            MR. BUREAU:  Yes, of course.  We have said that in our filings earlier.  We believed that there is some elasticity.  We have seen that over the years.  We have added so many new services, Canadian and foreign services.  They have added to the cable bill, the Internet, the telephony, everything, and it doesn't seem that we have reached the point where we cannot add anything more.

10816            So we are not saying that there won't be an impact.  We are saying there could be some impact; that people will try to say well, that's enough, I will choose a little bit less packages to be able to maintain my monthly bill at the same level.

10817            So there is that risk obviously.  But you have had before you so many studies to show you what is the potential elasticity or not in those situations to make the decision.

10818            COMMISSIONER KATZ:  One of your proposals is to have a unique Francophone package as well.  I think you are also in favour of having a smaller basic, if I understand you correctly as well.

10819            MR. BUREAU:  Yes.

10820            COMMISSIONER KATZ:  Would that not give those consumers that are price‑sensitive an opportunity to buy a smaller basic package and continue to maintain the discretionary services that they value rather than seeing their overall price go up as well?

10821            MR. BUREAU:  Obviously we believe that this is a way of ensuring that those people who would be interested in some local news and local services would get it through their small basic service and that if they want after that to go for sports programming in particular, or children's programming, they could buy either in a package or separately those services.

10822            So yes, the small basic will encourage people to continue maintaining their access to the specialty services.

10823            We say that in the French language market we believe that there should be the option to buy the entire Canadian programming services in French for the French market consumers.

10824            COMMISSIONER KATZ:  You also talk about preponderance on page 7 of your opening remarks this morning.

10825            Is that a single preponderance or is that a double preponderance scheme?

10826            MR. BUREAU:  Double.  So I will ask Sophie to be more precise.

10827            MS ÉMOND:  We followed yesterday some of the exchange about the fact, the discussions about the need; that if you have access, do you still need a double preponderance at the level of the subscribers and at the level of the services offered?

10828            In our case, first of all, as we indicated, access is key and obviously the preponderance as well at the level of the subscriber.

10829            What we maintain is the importance of also having a preponderance at the level of the BDU we believe is more compatible with the obligations or the Canadian policy that says that there should be a priority of distribution to Canadians.

10830            In addition, at the subscriber level, if suddenly you offer ‑‑ you have a menu of 500 foreign services and let's say you have 200 Canadian and because of the preponderance of the subscriber level, you could have some frustration not to be able to access, to be limited in your ability to choose.

10831            So we think it is better to work together with those double preponderance.

10832            COMMISSIONER KATZ:  Okay.

10833            I want to go back to your model.  I must commend Astral because they are one of the few players who appeared before us with a very comprehensive complete model that sort of covers everything off in a very succinct way.  So I commend you for that.

10834            You talked about the Cat 2s and the fact that you feel in the future going forward it may not be in Canada's best interest to continue with a Cat 2 model but allow the Cat 1s to come in.

10835            It raises a couple of issues from my perspective.

10836            The first one is stifling innovation and allowing a new player to come into the market as a Cat 2 and earn his stripes and work his way up as well.  You sort of have to come into the club at the same time as everybody else coming into the club, so to speak, and if you don't have the financial support and the wherewithal to meet all the obligations at a Cat 1 level, you can't enter the system.

10837            Do you have a comment on that?

10838            MR. BUREAU:  Well, yes.  I will ask John to make the comments on that.

10839            MR. RILEY:  Mr. Vice‑Chair, we started I guess with the overarching principle that what the ultimate goal for all of us should be is what we want to accomplish is to maximize incremental diversity in the most efficient and effective way.

10840            By the Commission's own admission the system that exists now with the Cat 2 doesn't seem to be achieving that goal.  If I recall correctly, there are some 200 applications per year almost, one per business day, and many of them, most of them for that matter, don't see the light of day.

10841            So in terms of generating innovation under those circumstances, it doesn't seem to be necessarily productive and we are all looking for what would be that way.

10842            In our view, the best way to do that would be to ‑‑ and as you said yesterday, sometimes you have to do a little bit of work up front for long‑term benefit.

10843            Our view would be that on a periodic basis the Commission would review applications.  It could be established what that periodic basis is.  It's not a question of somebody missing the boat at a particular time.

10844            On a periodic basis the Commission would review applications and those seen to provide incremental diversity to the system would be authorized.  In no way does that stifle innovation in any way.  It just better ensures ‑‑ that coupled with that access right, it better ensures that the hit rate, if you will, of the applications and those applications becoming services, which is the ultimate goal, it increases the probability of that happening as opposed to the existing system or the other model that has been discussed as well.

10845            COMMISSIONER KATZ:  But the hurdle just one up.  The entry‑level ante has just gone up to meeting that Cat 1 obligation, which is a far more serious and financially committed obligation than a Cat 2.

10846            MR. RILEY:  Well, in our view, that remains to be seen.  I don't think we were specifying that the precise rules that apply to a Cat 1 today are the levels.  The Commission could have the latitude in these cases to decide what is the appropriate rate at which that service, new service depending on availability of programming and on the level of commitment ‑‑ the Commission would have the flexibility to set those.

10847            We are not arguing that there is just one test and that's it and it's a high test, and if you don't need it then that's it.  The fact of the matter is that could be determined.

10848            In fact, in our view it might be appropriate, whether it is another process or part of this process, is to consider well what would be those tests.  How would we set those.

10849            I think it would be a misnomer to say that the it's the Cat 1 test today and that's it, and if you don't meet that test you can't get there.

10850            MR. BUREAU:  I think that the Commission and the industry at the time thought that it was a good opportunity to try and encourage people to come up with solutions with less burden of regulation, less heavy commitments and everything.  But when you see that of the 390 licences that have been given for Category 2, only 5 per cent of them are carried by the major distributors.

10851            We have to look at that and say what have we accomplished?

10852            And considering that we have in mind that we want to continue having the fantastic diversity that we have in the system, why not try and focus on that and make sure that those who will be licensed by the Commission will get access and will be carried by the distributors with a guaranteed access like the ones that exist for Category 1 in analog services.

10853            So then we will be able to measure the real improvement of the system instead of spending all the time that you and your colleagues at the staff level have had to spend to license these 390 licences that go nowhere.

10854            We believe that it is unfortunately a waste and it does not translate into the objective of having a real diversity, additional diversity in the system.

10855            So we are proposing a different model.

10856            MR. RILEY:  I guess the two points would be:  would probably maximize your time in a better fashion; and, number two, would likely result in a higher probability of diversity than what exists now.

10857            COMMISSIONER KATZ:  The fact that so many aren't licensed begs the question whether it is all within the realm of the person who has applied for the licence or is there an access bottleneck there as well?

10858            Are people being given the opportunity to put their programming on, or is there an opportunity for a better way of creating an access environment for them as well?

10859            MR. BUREAU:  I think that first of all the question of access is fundamental, because you have heard people that have guaranteed access and how difficult it is for them to materialize, to get there.

10860            We had one Category 2, Cinépop, that we had to negotiate for, I don't know how many months ‑‑

10861            MR. RILEY:  Two years.

10862            MR. BUREAU:  Two years to get access on the major Francophone distribution system.  Well, we may have had the strength of waiting for two years to get there, but even when we got there with a written contract, everything was agreed upon, and a few weeks before the launch we were told we don't have the capacity to take you on and the conditions we have accepted with you, we won't respect.

10863            So we had to threaten them that we would come to the Commission, and finally we got what had been agreed after two years of negotiation.

10864            So we feel that this is not an efficient way of bringing to the system the services that have been licensed by the Commission.  We believe that having a process that will ensure that it is bringing diversity, after that they should have guaranteed access.

10865            Guaranteed access is fundamental.  If they don't get that, look at the results at the present time.  Even those that have it, like Pelmorex, like Allarco, like us, have had so much difficulty having it respected.

10866            MR. RILEY:  If I may just add one thing, quite often the issue of access is wrapped in the notion that that this ‑‑ or the lack thereof; in other words, no guarantee of access is quite often wrapped in the cloth that this is the best way to ensure that one can respond to consumer interest.

10867            Recall that we are advocating the tiering and linkage rules disappear.  So if you look at the tools that a BDU has today or will have in the future, especially with the move now to digital ‑‑ before in an analog world there were certain technological restrictions on someone's ability to rendering package changes, but that is virtually gone in this stage.

10868            And with the absence of the tiering and linkage rules, the ability or tools available to a BDU to address consumer need, demands, shifts in interest, packaging, pricing, are ample; the complete freedom.

10869            So number one, those tools are and will be available more so, given that no one seems to dispute the notion of relaxing or disappearance of the tiering and linkage rules.

10870            As André pointed out, our own experience and what we would expect is the issue of lack of access is less about responding to consumer needs.  The tool will be there.  If the service is not popular, it can be shifted to a different package.

10871            If the service, frankly, is that bad, nature will take care of it.  No broadcaster can operate a service that only has two viewers.  There doesn't need to be a right to have no access.  It will effectively die on its own in any event.

10872            So our experience and our thinking is that a lack of access has nothing to do with responding to consumers but more so with respect to having absolute complete leverage in negotiations between the service provider and the BDU.

10873            COMMISSIONER KATZ:  After hearing what you said, a corporation with the brand and the experience and knowledge of an Astral having two years of difficulty to get on with the Cat 2, one can only imagine what other players are going through.

10874            MR. BUREAU:  Absolutely.  Absolutely.  And that is why we are saying at least let's be realistic and try to ‑‑ that whenever the Commission has spent time and effort to increase the number of services to be offered to Canadians, that they have a chance to be seen, to be watched.

10875            So let's look at the way to do it.

10876            Maybe they need to have a guaranteed access, and it will take a little bit less than two years probably; I don't know.  Allarco spent how many months before getting access and they are not there with many of the distributors yet.

10877            MR. RILEY:  I would like to add just one other thing, if I may, on access.  It is something we addressed as well.

10878            It seems that a lack of access would effectively render any dispute resolution mechanism, which it would seem from my reading that all parties agree that, depending on the fashion of that, there should be in existence some mechanism to do that.

10879            It would render it, in our view, completely meaningless.

10880            You asked the question, if a service doesn't have access, what right does it have to have a dispute mediated.

10881            For example, let's say there is a service ‑‑ whether it wants to launch or it is launched ‑‑ and the service says, "We need 35 cents for this to work, and we need to be in a package that has at least X number of subscribers."

10882            And the BDU says, "We will give you a nickel, and you will be on a standalone basis.  That's the best we can possibly do."

10883            Assume for a moment that those are the final positions, pending any final offer dispute resolution.  Likely they would be closer, but let's say that is the case.

10884            If one were to go to an arbitrator, and the arbitrator said, "You know what?  On balance, I see that the 40 cents" ‑‑ and whatever other material issues are at play ‑‑ "I rule in favour of the position of the programmer."

10885            The BDU would be free to say, "That's fine, but there is no right to carry.  There is no right to access.  There is no Commission policy that you must be carried, so you won, but I'm not going to carry you."

10886            To me, it completely disables the dispute resolution system.

10887            And if you don't have the standing, if you will, or the right to even get to your market, to let the market decide, you have frustrated the entire process.

10888            So it strikes us that, at a minimum, if a service is going to be licensed, especially under the model that we suggest, where there is a meaningful review, and where there are targets set on certain assumptions, there has to be a basic right to be carried.

10889            And it doesn't, in any way, frustrate or cripple the BDU or the public's ability to say no to that service, ultimately, so that it doesn't succeed.

10890            COMMISSIONER KATZ:  Let me take you to the next step then.

10891            The proposal is that there be a Cat 1 category, but we grandfather the Cat 2s for a period of time, either until the next licence renewal or until they migrate up to a Cat 1.

10892            Is there a risk of creating a secondary market for Cat 2s?

10893            Notwithstanding the fact that there are regulations in the CRTC that you can't sell an ongoing concern or a licence if it hasn't been activated, is there not a risk of suddenly creating a gold rush of Cat 2s that have been licensed out there, that people may want to get their hands on?

10894            MR. BUREAU:  I don't know about the English‑language market.  In the French language there are three Cat 2s.  One of them is Avis de Recherche, the other one is Cinépop.  It's not for sale.  It won't be for sale, now that we have access.

‑‑‑ Laughter / Rires

10895            MR. BUREAU:  And there are two in the hands of Videotron.

10896            So I would take away the Avis de Recherche, which is a special one, but the other two are in the hands of Videotron.  I don't think that they are susceptible to being acquired by anybody.

10897            So I don't think that this is a possibility, at least in the French‑language market.

10898            In the English‑language market, when you see that only a few of them have access to the five major distributors, it is a pretty little situation there.

10899            I think that I would suggest, in our minds, that the Category 2s that have been licensed remain licensed, so they go on like that.  Otherwise, if they were to be transformed, they would have to come back and meet different types of criteria.

10900            But we say that, for the future, looking at the future, we would stop this proceeding and we would probably, once a year, have a date for filing new applications for these new services, which would have to bring some diversity to the existing system.

10901            It could be done, possibly, once a year, and the Commission would come out with decisions and license those new services, and then they would have guaranteed access.

10902            COMMISSIONER KATZ:  You believe that those that have been licensed, but have yet to turn on, would still be grandfathered in this process.

10903            MR. BUREAU:  Those that have been licensed have a date of expiration.  If they don't launch before that date, that's it, they are gone.

10904            We have a few like that, and we know what is the date of expiration.

10905            So we assume that they will disappear from the list, that they will get to that date of expiration.

10906            COMMISSIONER KATZ:  I think, over the course of the period, we have extended licences for Cat 2s for one more term, as well.

10907            MR. BUREAU:  Yes.

10908            COMMISSIONER KATZ:  Would you see that being continued, as well, or just give them until the end of the first term, and that would be it?

10909            MR. BUREAU:  I think Sophie wants to say something.

10910            MS ÉMOND:  Just to be clear, I think we were grandfathering the Cat 2s because we don't want to create the situation where you cannot have a cut‑off date where you start everything from fresh.

10911            So, for practical reasons, we thought, there are Cat 2s that exist, so they should be able to continue under their licence, unless they prefer to change their status, with different Conditions of Licence for CPE and perhaps Cancon to be determined, and then they would move to what we would call the new Category 1 status.

10912            They would have, basically, the choice to decide.

10913            MR. BUREAU:  Mr. Vice‑Chair, we could possibly file some additional comments to your question in our written submissions.

10914            COMMISSIONER KATZ:  Certainly.

10915            MR. BUREAU:  Are we limited to 10 pages?

10916            THE CHAIRPERSON:  We will look at the rules at the end of the hearing.

‑‑‑ Laughter / Rires

10917            COMMISSIONER WILLIAMS:  We will take you to dispute resolution over this.

‑‑‑ Laughter / Rires

10918            CONSEILLER ARPIN:  Ce n'est pas moi qui préside.

10919            COMMISSIONER KATZ: ~~ There are certain decisions that I don't have the power to make, and that's probably one of them.

10920            I want to move on to the issue of VOD and SVOD and BVOD, which I found very instructive in reading your submission, because it clarified a number of issues for me.

10921            Before we actually get into those specific services, you mentioned in your opening remarks today that dynamic ad insertion is still some time off.  Can you provide us with some insight as to where that technology stands in your company?

10922            MR. BUREAU:  Yes.

10923            Pierre ?

10924            M. ROY : Je ne suis pas un spécialiste de la technologie, mais je crois que cette technologie‑là est plus ‑‑ elle réside plus chez les BDU, chez les entreprises de télédistribution, que chez les entreprises de programmation.

10925            Ce qu'on dit, c'est qu'on veut ouvrir la publicité au vidéo sur demande parce que c'est quelque chose qui va financer éventuellement cet accès‑là au consommateur, et éventuellement, la technologie se perfectionnant, permettre l'insertion dynamique de publicité.

10926            Je crois que Vidéotron ne semblait pas très chaud à l'idée parce que je crois que, d'un point de vue technologique, c'est assez dispendieux.

10927            Et donc, dans un petit marché, de rendre cette technologie‑là est peut‑être disproportionné par rapport aux revenus que ça pourrait générer.

10928            Donc, c'est une question ‑‑ une fois qu'on permet la publicité, de permettre cette chose‑là aussi, éventuellement, en fonction de l'évolution de la technologie, pour nous, c'est quelque chose qui devrait être naturel à permettre.

10929            COMMISSIONER KATZ:  Do you see it as an incremental revenue source or simply a displacement of existing revenues?

10930            M. ROY : On voit que le marché, la tarte publicitaire, l'ensemble des revenus publicitaires, en tous cas, dans le marché canadien et dans le marché québécois, entre autre, la tarte publicitaire n'augmente pas.

10931            Donc, c'est probablement plus un déplacement d'argent qu'un accroissement de ces revenus publicitaires‑là.

10932            Les gens qui écoutent moins la télévision linéaire vont écouter la télévision sur demande.

10933            Donc, ça n'affecte, d'une part, les cotes d'écoute et les parts de marché d'un côté. Ça déplace l'écoute du côté de la vidéo sur demande. Donc, les publicitaires suivent cette écoute‑là.

10934            COMMISSIONER KATZ:  So, the fact that you are going to have a more targeted sales offer to a customer would not necessarily increase the business at all?

10935            M. ROY : Moi, je pense que ça va plus répondre à des attentes des consommateurs qui veulent de plus en plus avoir accès à la programmation qu'ils veulent, quand ils le veulent, sur le média qu'ils le veulent.

10936            C'est vraiment pour répondre à des habitudes d'écoule de consommateurs qui sont en évolution, plus qu'une augmentation des revenus publicitaires.

10937            Évidemment, ce faisant, en donnant cette possibilité‑là, il y a des coûts technologiques qui sont encourus. Il y a des droits à payer pour ces utilisations‑là.

10938            Donc, les revenus publicitaires étant permis viendraient en partie amortir ces coûts et ces droits qui sont déclenchés.

10939            COMMISSIONER KATZ:  Okay.

10940            Astral is in the pay‑per‑view business, and I think I read that you were suggesting in part of your evidence that it is a transitory technology now, and you are moving on to VOD, and you are looking at VOD as a major business opportunity, as well.

10941            Can you spend a few minutes elaborating on where the Astral business plan is with regard to VOD today?

10942            MR. RILEY:  I would be happy to give you our experience.

10943            Our experiences in, I guess, utilizing the VOD platform have been very successful.  We have been leaders in that regard, and we think ‑‑ and I think there is general agreement within the industry ‑‑ that this is where, frankly, television is headed, in any event.  So it is a very appropriate discussion.

10944            We launched a number of years ago, with respect to The Movie Network, an on‑demand component of our offering.

10945            As you well know at this point, in any event, the VOD technology is something that cable can utilize.  It is problematic in satellite, but we have been working with our satellite BDU partners to have workarounds to that.

10946            Taking an example, let's say Rogers, we launched the service, and every TMN ‑‑ Movie Network subscriber had the ability, and does have the ability, to access a portion of our schedule at any given time.

10947            You could go on to The Movie Network, you could look at the five channels that are there and watch what is on the channel, or you could go into a menu and access some of our programming ‑‑ the same programming that is within our licence and within our window, you could go in and access it.

10948            So if you missed an episode or two of a favourite show that we are currently running, you could go in and see that, or you could pick one of our movies if you didn't see it on the linear service, or something on the linear service didn't appeal to you.

10949            That has been incredibly successful.  Over 75 percent of our subscribers have used the technology, notwithstanding that it is nascent, it is new, and there is always a period over which people must overcome hesitancy to use the technology.

10950            We have 3 million hits a month, on average.

10951            It has reduced churn for us.

10952            So it has been an entirely successful vehicle to add additional value to our subscription.

10953            I guess that is probably the best summation of where we are today and what the value of VOD is.

10954            We have also rolled that out with our mini‑pay service, Mpix, which shows older movies.  We have rolled that out, too, so subscribers to Mpix can do that.

10955            The underlying proposition is, if you become a Movie Network subscriber, or an Mpix subscriber, you have access, as a subscriber, to a portion of our titles at that time, as part of your subscription.

10956            And we see, frankly speaking, that that is the direction in which all services, and the industry will inevitably head.

10957            In fact, that is why we suggested in our oral presentation that it should be available to all services to move in that direction.

10958            And you can ask yourself the question, ultimately, at some point:  What happens to the linear channels?

10959            At a certain point people are paying the subscription, and we are finding, anecdotally, that people, once they become familiar with the use of the remote, will quite often go into our subscription basis.

10960            This is why we think it is essential that the issue of what is transactional VOD ‑‑ in other words, that provided by a cable operator ‑‑ and what is subscription video‑on‑demand ‑‑ in other words, what is an on‑demand element that comes with a programming service ‑‑ needs to be defined now.

10961            COMMISSIONER KATZ:  Yes, and I will come to that.  It is on my topics list, as well.

10962            MR. RILEY:  I'm sorry, I am trying to be efficient for the Commission.  If I answer all the questions, then we can go to lunch earlier.

10963            COMMISSIONER KATZ:  You are doing a good job.

‑‑‑ Laughter / Rires

10964            COMMISSIONER KATZ:  The good thing is, along the way, you are answering a lot of my questions, but I need some clarification.

10965            I think you mentioned that you are working with the satellite DTH folks on a VOD workaround, as well.

10966            I think we heard this week, or last week, that the BDUs see this as a strategic competitive advantage, because the satellite folks can't operate the service.

10967            Can you shed some light on what it is you are doing and where this thing is going?

10968            MR. RILEY:  You mean with respect to the workaround that I mentioned?

10969            COMMISSIONER KATZ:  Yes.

10970            MR. RILEY:  There are a number of workarounds ‑‑ the ultimate workaround I will get to in one second.  There are more, I guess, Band‑Aids, if you will, that could be used with the use of the PVR, et cetera.

10971            So there are ways to create I guess an on‑demand element, notwithstanding that you have I guess the situation with the cable.  Where we are really looking for it and it's not necessarily with respect to any particular kind of technology, frankly, is through broadband and that's where we think we can ultimately go.

10972            Another is if we can offer an SVOD element to our movie network subscription through a cable wire there is nothing stopping us from doing that through broadband and we have been in serious discussions with our suppliers and with all BDUs with respect to offering our service or a component or a facet of that in an online environment.  And that, in our view, is the ultimate work around so that virtually and literally every BDU will have the ability to do that.

10973            It is also why we think it is important that the model that we have given with respect to maintaining a strong system is essential.  I mean a number of the arguments that come forward with respect to why we need this hearing to produce changes are because the threat, if you will, of an unregulated or the broadband environment that the internet will render all of this meaningless.  We don't think that's the case.

10974            We think as we ‑‑ all of us in this industry have a strong foundation, then for us the broadband internet area is the logical extension for all of us.  And we are frankly working on that as we speak very diligently and quickly with all of our BDU partners.

10975            COMMISSIONER KATZ:  So it's no coincidence that all the BDUs are also ISPs in Canada?

10976            MR. RILEY:  Well, it's a happy circumstance, let's put it that way, because it allows the process to happen more efficiently.  But even if that weren't the case this is where everybody has to go.

10977            We have to claim ‑‑ the Canadian broadcasting system has to claim a part of that broadband territory and, you know, it's arguable the rule will be a little tougher in that environment.  And so to be able to do that you have to have a strong foundation.  If we have that then we can move in and get our piece of that.  Canada can get our piece of that.

10978            COMMISSIONER KATZ:  Okay.  I want to get right to that topic then about rights and SVOD rights.

10979            When you go in and buy programming in the States do you automatically negotiate rights for SVOD?

10980            MR. RILEY:  The answer is "yes".  I mean we have negotiated ‑‑ I mean rights come up all the time.  When we first ‑‑ when the opportunity to move into SVOD first presented itself of course many contracts didn't contemplate that.  And so we worked with our suppliers to say this is what we want to do, this is how it would work and we were able to make the suitable arrangements.

10981            COMMISSIONER KATZ:  Are there different rights carried with SVOD than with transactional VOD or do the rights come together?

10982            MR. RILEY:  No.  Any copyright holder ‑‑ it's in the best interests of any copyright holder to divide the copyright into every conceivable possible slice of a pie.  And so if you say we would like the right to do this the answer you always get is, "Well, that's a new right.  So you need to compensate me for that right."

10983            So for example today when we buy the pay television rights, when we buy the rights for the window or for a linear surface we also negotiate and acquire the SVOD rights, if you will or the right to show the programming that we are licensing on an on‑demand element.

10984            Quite separate from that BDUs are negotiating to acquire the transactional VOD rights.  So if you were to go to your local cable company you would ‑‑ in much the same way pay‑per‑view used to be VOD is obviously a logical evolution of pay‑per‑view and you have the BDU buying VOD rights and us buying, if you will, on‑demand rights to our window or linear rights.

10985            COMMISSIONER KATZ:  You are advocating as part of your submission here that the BDUs be allowed to negotiate TVOD, transactional VOD rights, but to not allow them to negotiate or to own SVOD rights as part of this proceeding.  Is that right?

10986            MR. RILEY:  Well, I guess before I answer that question you have to understand what ‑‑ the definition of SVOD rights.  Maybe I can put it the way we see it and you can tell me if that's correct.

10987            Right now the Commission licences services that have levels of ‑‑ certain levels of Cancon commitment ‑‑ well, every service has that and the logical progression for any programming service is to move them into more of an on‑demand environment.  So we need ‑‑ it's a logical extension of our service to acquire those rights.  So that's number one.

10988            Number two is we have no problem at all with transactional VOD, somebody buying the right to sell if you will souped up pay‑per‑view if you will that a person buys a movie, just sees it and buys it.  Where I think we think things are starting to go astray is that the ability to offer transactional VOD seems to be mutating into de facto specialty services, thematic services delivered on‑demand.  So if that's what you mean by the SVOD rights well, then yes, we don't think that's good for the system.

10989            COMMISSIONER KATZ:  Yes, what I was trying to say, I think, was if in fact SVOD is the future of linear broadcasting then what you're suggesting is we should look very carefully at the vertical integration that's taken place so far and recognize that it will be even more vertically integrated if we allow the BDUs to enter that space.

10990            MR. RILEY:  Yes, well ‑‑

10991            COMMISSIONER KATZ:  I don't want to put words in your mouth.

10992            MR. RILEY:  Yes, I would say it's less an issue of vertical integration than it is what is video‑on‑demand and what is, you know, a specialty service or where will it mutate?

10993            And I think that has to be a decision, maybe because obviously under video‑on‑demand the kinds of contributions and rules are far fewer than they are with respect to a linear service.

10994            COMMISSIONER KATZ:  Do you think that BDUs should be the only players in Canada that should be allowed to offer VOD platforms?

10995            MR. RILEY:  Compared to whom?

10996            COMMISSIONER KATZ:  Compared to any other licensee.  If you came to us today and said you want to enter the VOD space if we give you a licence, you want to put the equipment necessary for that into a headend, into a BDU whether it's satellite‑based or anybody else?

10997            MR. BUREAU:  Mr. Vice‑Chair, we already have a VOD licence.  We can't operate it.  We will have to have an agreement with distributors to do that and obviously they have their own and they are not enthusiastic about the idea that we would operate one on their own premises.

10998            So the fact is that we suggest that all broadcasters should get through a condition of licence that could be part of their licence, of all the licences, that they will have the right to do SVOD with their linear service.

10999            On the other hand, for the BDUs we say there are two aspects there.  One is the kind of programming that we could offer them so that they can sell it on their video‑on‑demand platform.  And the other part is the programming that they could buy directly themselves and offer it on the video‑on‑demand platform.

11000            And we are saying in that case we are not opposed to it but in that case we have to be careful, or the Commission should be careful that they do not transform a transactional type of video‑on‑demand into a subscription video‑on‑demand and become a de facto specialty service without being licensed for that.  And we have seen that happening in some cases in BDUs already where they acquire rights in the United States of a service that is not authorized here in Canada and they sell those programs on a weekly subscription basis or even the longer term type of agreement with them.  And in fact they have created a specialty service that is not licensed and not authorized in Canada here.

11001            And so we are saying we are not against the idea that they could have their own activity in video‑on‑demand.  That's not our view.  But we say at least they should not create parallel services non‑authorized, non‑licensed to come and be in competition with the ones that are going through the licensing process.

11002            COMMISSIONER KATZ:  And what's the remedy?

11003            MR. BUREAU:  The remedy would be to apply the rules that exist at the present time.  They are not allowed to do that.

11004            MR. RILEY:  Well, I think the remedy goes a little bit beyond that because if you look at the time the VOD decision was made there was discussion about, you know, is VOD just a one‑off, I want to watch this movie, I pay x number of dollars, I watch the movie and the thing is over.

11005            The Commission examined a number of suggestions in that regard and did say that:

"The Commission considers that it would be consistent with the nature of VOD services to permit the VOD services to offer programming packages where the total period during which the programming may be viewed does not exceed one a week."  (As read)

11006            And I should have started a little earlier.  It says:

"The Commission does consider that a time limit is appropriate."  (As read)

11007            MR. RILEY:  And then concluded that one week was the way to go.  So be it.  That was at the time the feeling of the necessary flexibility.

11008            But if you look ‑‑ and I think it was Vice‑Chair Arpin who had checked out some websites ‑‑ but if you look at, frankly speaking, the VOD offerings that are not ‑‑ they are transactional.  You do buy ‑‑ you can just buy a movie and whatnot.  But things like Howard Stern TV and Anime Network, there are at least five or six services now and if you look at the website the statement is that this particular on‑demand service is a weekly service which presumably is to match here.

11009            MR. BUREAU:  To conform.

11010            MR. RILEY:  To conform here ‑‑ thank you ‑‑ a weekly service $4.29 a week that is billed on a monthly basis.  So you know, come on; for all intents and purposes and I won't name it, but there is one BDU that hasn't even put the weekly service in, just the monthly.

11011            So in all regard, I think the Commission ‑‑ it's understandable that in a nascent technology we would say should there be some flexibility to allow this to grow rather than being too restrictive, but I'm not sure that this is what everyone would have intended.  And in the long run it's not beneficial for the system.  It's creating ‑‑ I think the expression was used ‑‑ essentially a parallel system.

11012            So the remedy, I think, is there needs to be a tightening and whether that's reviewed in some other process or this process, our view would be VOD needs to look a lot more like VOD and not a subscription service.

11013            COMMISSIONER KATZ:  Presumably this issue is endemic to the BDUs, to those that are vertically integrated, which is where the issue comes in I would imagine because those companies you are citing probably are all BDUs?

11014            MR. RILEY:  Yes.  I am sorry, I don't follow when you say it's ‑‑

11015            COMMISSIONER KATZ:  What you are looking at here are independents like yourselves who are offering services that are competing with the morphing that's taking place by BDUs who have the ability ‑‑

11016            MR. RILEY:  Yes.

11017            COMMISSIONER KATZ:  ‑‑ to offer these services and to move into that space?

11018            MR. BUREAU:  Yes.

11019            COMMISSIONER KATZ:  And that begs the question of dispute resolution, reverse onus, how do you deal with these types of disputes as well?

11020            and I want to sort of move it that way because I think at some point in time, and you have identified it in your submissions as well, there is a need for the Commission to look closely at those companies that have the incentive and the propensity to grant themselves an undue preference, if I can call it that.

11021            MR. BUREAU:  Well, I think that separate from the issue of granting themselves some favour or whatever we believe that video‑on‑demand should be regulated in a way that it doesn't allow the creation of non‑authorized, non‑licensed specialty services.  That should be clear.  There should be rules that are clear in that direction.

11022            Now, it will not ‑‑ it should not, in our view, go back to the dispute resolution mechanism.  It should be a clear indication of what VOD should be.  We understand that at the beginning.  We were all experimenting what it could be.  We see what is happening now and we see how rules can be ‑‑

11023            MR. RILEY:  They are morphing.

11024            COMMISSIONER KATZ:  Morphed.

11025            MR. BUREAU:  Morphed.

‑‑‑ Laughter / Rires

11026            MR. BUREAU:  Yes, that's the word, thank you.  Thank you.

11027            So I think that this is a separate issue.  I think ‑‑ we don't mind going into the other subjects but I think that this is a separate issue.  We have to deal with the video‑on‑demand regulatory approach and rules and then we can talk about whatever else you want, Mr. Chair, Vice‑Chair.

11028            COMMISSIONER KATZ:  No, those are all my questions that I have actually, Mr. Chair.

11029            Thank you.

11030            THE CHAIRPERSON:  Thank you.

11031            Michel.

11032            COMMISSIONER ARPIN:  Thank you very much, Mr. Chair.

11033            Bonjour, Monsieur Bureau.

11034            Je vais revenir à votre présentation orale et puis au début du premier échange que vous avez eu avec le président sur votre modèle de distribution des services de langue française dans lequel vous préconisez la formation d'un volet qui soit formé de tous les services francophones.

11035            Donc, si je comprends bien votre modèle, il comprendrait pour l'instant tous les services dits analogiques, tous les services de catégorie 1 et de catégorie 2 ?

11036            M. BUREAU : Oui.

11037            Johanne, voulez‑vous élaborer ?

11038            MME ST‑LAURENT : En fait, notre objectif est de donner la priorité aux services de programmation de langue française dans le marché du Québec.

11039            L'offre globale est extrêmement restreinte. Il y a une vingtaine de services.

11040            Et puis, si on prend ‑‑ on évolue dans un marché qui est extrêmement étroit aussi, avec présence de joueurs dominants.

11041            Donc, on pense qu'il est important que les consommateurs aient l'opportunité de souscrire à un volet qui comprendrait l'offre de tous les services de langue française.

11042            Sans aucune obligation, évidemment, mais à tout le moins une opportunité de pouvoir souscrire à l'ensemble des services que l'on souhaite.

11043            À un prix abordable, bien entendu.

11044            CONSEILLER ARPIN : Ce qui voudrait dire que pour l'instant ‑‑ parce que, si ma mémoire est fidèle, actuellement il y a un volet, un grand volet, qui comprend des services francophones et des services de langue anglaise.

11045            Il y a une deuxième volet qui comprend des services licenciés à la fin des années 1990 qui Historia, Séries+, Canal Z et Évasion.

11046            Et évidemment, vous avez des catégories 1 qui ont leur existence par eux‑mêmes et qui, comme ils ont tous été lancés à des dates différents, sont quasiment en position de * stand‑alone +, je présume.

11047            Et puis, la même chose pour les catégories 2.

11048            Donc, ce que vous préconisez, c'est qu'ils soient tous regroupés.

11049            Ça veut dire que, si le Conseil statuait dans le sens que vous proposez, certains services catégorie 1 et certains services de catégorie 2, voire même les canaux Historia, Séries+ et compagnie, bénéficieraient de ce regroupement‑là et se retrouveraient donc bonifiés au niveau du nombre d'abonnés.

11050            MME ST‑LAURENT : Je pense que ce qu'il faut prendre en considération, Monsieur le Vice‑Président, c'est que les distributeurs décident de l'assemblage des services, et ce ne sont pas les services qui en décident non plus que du prix.

11051            CONSEILLER ARPIN : Dans votre modèle, vous demandez au Conseil de faire cet assemblage‑là.

11052            MME ST‑LAURENT : Mais ce ne serait pas obligatoire pour le consommateur d'y accéder.

11053            C'est une offre qui regrouperait l'ensemble des services où le consommateur pourrait y accéder.

11054            Évidemment, c'est basé beaucoup sur notre expérience de lancement de chaîne.

11055            Il y a des distributeurs qui ont un ensemble de forfaits qui regroupent déjà tous les services francophones sous un chapeau, mais ce n'est pas la pratique de tous les distributeurs.

11056            Et puis, il arrive effectivement que les mises en marché ne favorisent pas la vente des services francophones dans le marché du Québec.

11057            CONSEILLER ARPIN : Est‑ce que vous consentiriez, pour votre propre service de catégorie 2, de revoir vos conditions de contenu canadien et de dépenses de programmations, puisque vous vous retrouveriez quand même à bénéficier de vous retrouver à parité avec les services analogiques et de catégorie 1 et distants ?

11058            M. BUREAU : Monsieur le Vice‑Président, je pense que Sophie a quelque chose à dire.

11059            MME ÉMOND : Peut‑être juste une clarification, Monsieur le Vice‑Président.

11060            On n'oblige pas l'abonnement.

11061            On parle dans l'univers numérique. Donc, où de plus de en plus il va y avoir énormément de flexibilité à l'abonné.

11062            Par exemple, au Québec, il y a des phénomènes dont ‑‑ je m'excuse, j'ai juste le terme anglais ‑‑ * pick a pack +. Choisir un bouquet à la pièce.

11063            Donc, tout ce qu'on dit, c'est que, dans cette offre‑là où il y a une multiplication de bouquets disponibles, on pense qu'il serait dans l'intérêt du système, des services et de l'abonné d'avoir au moins le choix de pouvoir accéder à ce volet‑là.

11064            Évidemment, on n'a aucune garantie que des abonnés voudront le prendre.

11065            Donc, on ne s'attendrait pas à ce qu'il y ait des obligations qui changeraient pour les services.

11066            CONSEILLER ARPIN : Dans le modèle actuel ‑‑ j'y faisais référence plus tôt ‑‑ vous avez un grand volet qui comprend une mixité de services anglophones et francophones.

11067            Il y a sûrement un risque financier important pour les exploitants de services francophones de se retrouver uniquement avec ce projet‑là de services francophones.

11068            Il n'est pas impossible, effectivement, que les anglophones que vous rejoignez sur le territoire du Québec optent pour ne pas souscrire à l'ancien volet ou même au volet francophone.

11069            Et donc, est‑ce que vous avez mesuré cet impact‑là ?

11070            M. BUREAU : Monsieur le Vice‑Président, il ne s'agit pas de changer les bouquets existants ou les offres existantes.

11071            CONSEILLER ARPIN : Non.

11072            M. BUREAU : Il s'agit d'ajouter une offre additionnelle dans laquelle les francophones du Québec pourraient avoir accès, s'ils le désirent, à l'ensemble des services francophones.

11073            C'est simplement une modalité. C'est un bouquet de plus.

11074            Mais cela n'empêche pas les bouquets existants de demeurer tels qu'ils sont.

11075            Alors, donc, l'impact des non‑francophones, il n'y en aura pas parce qu'ils vont continuer à se procurer les bouquets qui existent dans lesquels il y a des services francophones, comme vous le mentionniez.

11076            MME ST‑LAURENT : Juste pour ajouter, évidemment, dans le mode numérique, actuellement, il y a des forfaits qui contiennent uniquement des services francophones ou uniquement des services anglophones.

11077            Alors, c'est un ajout d'un forfait qui serait uniquement francophone et qui contiendrait tous les services francophones sans aucune obligation pour le consommateur d'y souscrire.

11078            CONSEILLER ARPIN : Sauf que, si je prends le grand Télémax 1 de Vidéotron, pour parler des choses ‑‑

11079            MME ST‑LAURENT : Qu'on connaît.

11080            CONSEILLER ARPIN : ‑‑ qui sont connues à la fois pour les entreprises de distribution et les exploitants, le fameux Télémax 1, il comprend une mixité de services francophones et anglophones.

11081            Il risque de créer une opportunité pour Vidéotron de démanteler son Télémax 1.

11082            Je ne sais pas si vous avez regardé cette perspective‑là.

11083            MME ST‑LAURENT : Il y a déjà d'autres alternatives, par exemple, chez Vidéotron, où les abonnés peuvent choisir cinq ou 20 ou 30 services de leur choix ‑‑ évidemment, selon les règles d'assemblage.

11084            Donc, je crois que les télédistributeurs ont déjà évolué vers des offres qui sont plus larges que ce que la technologie analogique favorisait, des forfaits qui étaient quand même plus contraignants, je pense.

11085            CONSEILLER ARPIN : Maintenant, ce volet francophone‑là que vous préconisez risque quand même d'être populaire auprès d'une couche importante de la population québécoise.

11086            Qu'est‑ce qui arrive si le Conseil  prend le modèle que vous nous préconisez et que le Conseil dans, dans l'avenir, attribue des licences aux nouveaux services avec des conditions d'accès ?

11087            Qu'est‑ce qui arrive à ces nouveaux services‑là ?

11088            Ils se rattachent à ce volet francophone‑là ?

11089            Donc, c'est une nouvelle forme d'option négative que vous ‑‑

11090            M. BUREAU : Non, non, non.

11091            On ne tombera pas dans ce panneau‑là.

11092            Monsieur le Vice‑Président, s'il y a des nouveaux services qui obtiennent une licence du CRTC, ils seront offerts par les distributeurs parce qu'ils auront un accès garanti dans une multitude, probablement, de bouquets.

11093            Mais entre autres, ils feraient partie de ce bouquet compréhensif qui contiendrait tous les services de langue française.

11094            Mais ce n'est pas une question de ‑‑ ce n'est pas du tout une question de * negative option +.

11095            CONSEILLER ARPIN : D'accord.

11096            MME ST‑LAURENT : Permettez‑moi juste d'ajouter.

11097            Il y a un distributeur, Bell ExpressVu, qui dans sa façon de vendre les services ‑‑ par exemple, les services francophones ‑‑ met de l'avant où les abonnés doivent choisir trois de quatre forfaits en français.

11098            Alors, inévitablement, il y a toujours un des quatre forfaits qui est mis de côté par la promotion, la façon dont l'offre des forfaits est faite.

11099            Alors, je pense qu'offrir dans le marché francophone un forfait qui inclurait tous les services francophones pourrait donner un avantage additionnel dans le marché francophone, un accès possible.

11100            CONSEILLER ARPIN : Les droits d'accès que vous préconisez, dont vous nous avez parlé ce matin, est‑ce qu'ils s'appliquent en SD, en HD ou dans les deux ?

11101            Ça fait partie des discussions qu'on a eues avec certains distributeurs ou ‑‑

11102            M. BUREAU : On s'attend à ce qu'ils s'appliquent à tous.

11103            CONSEILLER ARPIN : À tous.

11104            Donc, que le choix de l'exploitant soit uniquement du numérique standard ou du HD ou les deux ‑‑ parce que présentement je crois comprendre que vos services francophones sont offerts à la fois dans les trois technologies.

11105            M. BUREAU : C'est ça.

11106            CONSEILLER ARPIN : Et comme on ne prévoit pas l'octroi de nouveaux services en analogique, les règles existantes ne sont pas appelées à changer.

11107            Mais en numérique standard et en HD, donc, ce que vous préconisez, c'est le maintien du droit d'accès dans les deux formats.

11108            M. BUREAU : Oui.

11109            MME ÉMOND : Si je peux me permettre, Monsieur le Vice‑Président, en fait, on n'a pas précisé dans notre mémoire notre pensée.

11110            On pourra peut‑être le faire en phase finale.

11111            Évidemment, l'idée, c'est qu'en évoluant peut‑être qu'un jour tout le monde sera en HD et la question ne se posera plus.

11112            L'idée c'est que peut‑être dans la phase de transition qu'il n'y ait pas un service qui perde son accès s'il y a encore un environnement analogique, par exemple, pour que tous les services, donc, restent avec les mêmes droits et restent offerts.

11113            CONSEILLER ARPIN : D'accord.

11114            Dans la mesure numéro 10 ‑‑ je prends votre document en annexe où vous avez mis les mesures que vous avez mis de l'avant.

11115            La mesure numéro 10, qu'est‑ce qui vous empêche de le faire présentement ?

11116            Premièrement, première question, est‑ce que vous préconisez que le Conseil émette des licences pour des blocs de programmation ou est‑ce que c'est un système où le Conseil serait appelé à vous octroyer des licences ?

11117            MME ÉMOND : En fait, ce qu'on pensait, c'est que la façon probablement la plus simple de permettre ‑‑ dans notre modèle, donc, de SVOD ‑‑ l'idée étant que les services tant de télé conventionnelle, spécialisés et payants canadiens puissent donc offrir une partie de leur programmation linéaire sur la plate‑forme vidéo sur demande.

11118            Donc, on se disait que le plus simple, probablement, ce serait d'avoir par condition de licence une autorisation un peu comme dans le HD où on peut moyennant une condition de licence avoir la version HD du service.

11119            Donc, au moyen d'une condition de licence. Alors, pas une licence séparée.

11120            Mais étant donné que ce serait rattaché avec le service linéaire, c'est la façon la plus simple.

11121            CONSEILLER ARPIN : Parce que, présentement, vous pourriez vous entendre avec les distributeurs pour offrir ce type de service‑là.

11122            Est‑ce que vous n'avez jamais essayé de négocier ce type de condition‑là ?

11123            MME ÉMOND : Bien, nous le faisons en ce moment pour le service ‑‑

11124            CONSEILLER ARPIN : De télévision payante.

11125            MME ÉMOND : ‑‑ de télévision payante.

11126            CONSEILLER ARPIN : Mais je parle avec les services de télévision spécialisée.

11127            MME ÉMOND : Je vais laisser Pierre Roy répondre à cette questions.

11128            M. ROY : Jusqu'à maintenant, on ne l'a pas fait.

11129            Et ce qu'on précise, c'est que ces services, ces blocs d'émissions en VSD par abonnement, devraient n'être accordés qu'à des * broadcasters + qui ont une programmation ‑‑ en provenance d'une programmation linéaire.

11130            Alors, c'est une grande distinction, là.

11131            Et donc, éventuellement, quand on pourra négocier ces droits‑là, on pourrait effectivement, les ayants droit, négocier les droits des ayants droit.

11132            On pourrait offrir des blocs de programmation en abonnement.

11133            CONSEILLER ARPIN : Ce qui signifie, si je vous comprends bien, que l'entreprise de distribution ‑‑ parce que monsieur Riley a décrit un peu plus tôt comment les droits se négociaient.  Ils se négociaient tous à la pièce.

11134            M. ROY : Oui.

11135            CONSEILLER ARPIN : Selon votre modèle, l'entreprise de distribution ne pourrait pas aller négocier avec vos distributeurs directement des droits d'utilisation de blocs de programmation ‑‑

11136            M. ROY : Durant la fenêtre de nos droits, on veut avoir des droits exclusifs et pour cette application.

11137            CONSEILLER ARPIN : Ce que vous dites, vous mettez une contrainte qui vous favoriserait, qui forcerait finalement votre distributeur à ne s'entendre qu'avec vous.

11138            M. ROY : Oui, André.

11139            M. BUREAU : Pour les émissions sur lesquelles on a des droits ‑‑

11140            CONSEILLER ARPIN : De diffusion linéaire.

11141            M. BUREAU : Absolument.

11142            CONSEILLER ARPIN : Oui.

11143            M. BUREAU : Il faudrait éventuellement probablement payer pour ces droits.  Alors...

11144            CONSEILLER ARPIN : Oui, oui.

11145            Mais vous ne pourriez pas être court‑circuité par l'EDR qui voudrait avoir aussi ces droit‑là et qui les négocierait en parallèle avec vous.

11146            Vous, vous négocieriez le droit pour la diffusion sur votre service, et lui, aurait négocié en parallèle le droit de reprise.

11147            M. ROY : Parce que, si ce droit‑là lui aurait été accordé, ça viendrait faire une dilution importante de la valeur de nos services, de notre écoute, de nos revenus et tout ça.

11148            Donc, ça affecterait d'une façon importante.

11149            Et on doit s'entendre avec les BDU parce que c'est eux qui ont la plate‑forme technologique qui permet cette chose‑là.

11150            Alors, ils ont donc un avantage technologique.

11151            Nous, notre avantage, c'est les droits que l'on a sur nos programmations.

11152            Et donc, on pense que cette négociation‑là serait mieux encadrée si ça ne leur était pas permis d'être fait.

11153            M. BUREAU : Et Monsieur le Vice‑Président, on parle ici de VSD par abonnement, hein.

11154            CONSEILLER ARPIN : Par abonnement.

11155            M. ROY : Bien, oui.

11156            M. BUREAU : Pas transactionnelle.

11157            M. ROY : Non.

11158            M. BUREAU : OK.

11159            Alors, donc, le court‑circuitage, si jamais les règles sont claires vis‑à‑vis les exploitants de vidéo sur demande, ils ne pourraient pas l'offrir par abonnement.

11160            Alors, on parle ici, nous autres, d'une mesure de vidéo sur demande par abonnement.

11161            CONSEILLER ARPIN : Cette semaine, on a entendu des représentations de Torstar concernant certains problèmes qu'ils vivent, et ils ont mentionné l'existence de TATV lors de leur comparution.

11162            Et ils nous ont soulevé des questions relativement aux règles d'exemption qui existent actuellement en regard de ce type de service‑là.

11163            Ils nous ont demandé de réaffirmer ou de renforcer certaines de ces règles‑là.

11164            Je ne sais pas si vous avez eu l'occasion de prendre connaissance de ce que Torstar a soumis ou si vous préférez commenter sur leur proposition dans la phase finale.

11165            MME ÉMOND : Monsieur le Vice‑Président, effectivement, on a eu l'occasion d'en prendre connaissance.

11166            Premièrement, je pense que pour répondre ‑‑ vous aviez une question à savoir si de notre côté, TATV, nous avions des ententes signées avec les distributeurs.

11167            On en a, et avec Cogeco et Vidéotron.

11168            Et pour le détail, je pourrais juste vous dire que, sur les principes en général, nous sommes d'accord. Surtout avec notre position sur l'accès.

11169            On trouvait ça intéressant d'entendre les propos de Torstar.

11170            Incidemment, on n'a pas vécu les mêmes choses que Torstar, ce qui a été décrit, dans le cas de TATV.

11171            Et pour le détail de leur proposition, nous vous reviendrons en phase ultérieure.

11172            CONSEILLER ARPIN : Monsieur le Président, c'était mes questions.

11173            THE CHAIRPERSON:  Okay.

11174            I note we have been into this for an hour and a half.

11175            Several of my other colleagues want to ask you questions.

11176            So let us take a 10‑minute break and we will continue.

11177            MR. BUREAU:  Thank you.

‑‑‑ Upon recessing at 1032 / Suspension à 1032

‑‑‑ Upon resuming at 1044 / Reprise à 1044

11178            THE CHAIRPERSON:  Okay, Rita, I believe it is your turn.

11179            COMMISSIONER CUGINI:  Thank you, Mr. Chairman.

11180            Welcome back.  I just have a couple of follow‑up questions.

11181            One of them is on your access model.

11182            As you know, the BDUs who have been before us have said all that the current access rules do currently is actually stifle innovation and creativity when it comes to the programming services.  They may meet the regulatory test and they will get licensed, and even in your model they may meet the regulatory test and get licensed, but then essentially their job stops there.  They don't do as much market research, they don't have to demonstrate market demand, they don't have to wrap it in a pretty bow that convinces us to carry it.

11183            How do you respond to those comments by the BDUs?  Nicely.

‑‑‑ Laughter / Rires

11184            MR. BUREAU:  It's easy.  I think that we have to look at the picture, the global picture.  They are coming before you explaining that new entrants, new services, should meet with them first, get some form of an understanding on whether the service is a good one or not.  If we pass this test, then we should come to the Commission, go through the entire process, as we suggest ‑‑ not the Category 2, the full process ‑‑ and get or not get a licence.  But if we get a licence with guaranteed access, then we go to them and we start again the negotiation with them.

11185            And they don't want that.  They don't like that.  They say there is no reason why they should have a guaranteed access, and we should be the ones that know the market.  We can talk in the name of the consumers and decide whether we will carry that service or not.

11186            I mean, it is a travesty of the overall process.  In fact, why do we need a Commission in the middle of that is a good question probably.  Should we not just go to them and ask whoever they are can we please be carried by your service?  What do you want to know and at what price is it okay with you?

11187            I think that at some point there is a limit, and I believe that in some cases we are pretty close to that limit.

11188            I think that we come to the Commission, we work very hard to be able to convince the Commission that what we are presenting will bring something different, something that will add to the Canadian broadcasting system.  The Commission is expert in those things.  They know the markets.  They know what is happening in the overall system.  They can ask all the questions they want.  They can ask us to do additional work to make sure that the project is fully analyzed before the Commission.  Finally, the Commission makes a decision and then we would have to renegotiate again all those terms with the distributors.

11189            I believe that this is a little bit too much.

11190            I suggest that in the future ‑‑ that's why we say Category 2, we should stop going in that direction, and we should make sure that when the Commission grants a licence that it is a meaningful decision, and that starting from there we should be carried.

11191            MR. RILEY:  May I add something?

11192            To answer specifically the question you said, the response would be, nicely, there is absolutely no evidence to support the contention that access rights stifle innovation or result in unmotivated programmers. That is the answer.

11193            The reason for that is, you know, there has been some characterization ‑‑ I think there is one characterization that the Canadian broadcasting system almost resembles East Germany before the fall of the war as if we maybe licensed one channel in let's say the children's genre and we said that's enough, we don't need any more.  It is genre exclusivity, so be it.  Then of course the programming service was so comfortable with its access, with its one exclusivity, that it said you know what, let's just buy one program and stick it on air and run it all day long because it is a monopoly and we are guaranteed.

11194            I mean, this doesn't represent the picture of the Canadian broadcasting system in any way whatsoever.

11195            First of all, with respect to genre exclusivity, it is almost unfortunate nomenclature because we don't really have genre exclusivity.  We have defined nature of services.  This has allowed a significant ‑‑ it still allows targeted services, but it has allowed a significant degree of overlap.

11196            So competition for program ‑‑ we have lost many a program to another service, taking a look at let's say Family Channel in the children's area, to other services because there is sufficient overlap in those defined targets that permits that.

11197            Second, most of these services are ad supported so the only way they can grow is by having ‑‑ they are motivated to have good programming and audiences in order to grow their revenues.

11198            Third, when you are renegotiating a deal with a distributor with respect to your service, if your service is not performing, you can imagine the position that's ‑‑ even if your service is performing, you can imagine the position.  The distributors are obviously motivated to how programming costs be as low as possible.  It's natural.

11199            So if you come in with a weak service, you just exacerbate the problem in the attempts to lower it.

11200            I would suggest this.  The other day I took the opportunity to look at Time Warner offering in New York and look at Rogers offering in Toronto in terms of ‑‑ I just looked at sort of the general kids area.

11201            Rogers offers the following service ‑‑ let's call it the general area of kids.  The definition of the genre is obviously a moving target, but here is what we have in Rogers Toronto:  we have YTV; we have Teletoon; we have Family Channel, which has launched a multiplex called Playhouse Disney; we have Treehouse; we have Teletoon Retro; we have Discovery Kids; we have BBC Kids; and something that I think is general Baby First TV.

11202            So I looked at Time Warner in New York City and it has Nickelodeon, a relationship with YTV; Cartoon Network, a similar programming as Teletoon; Disney Channel; Family Channel; Noggin, which for all intents and purposes we might say is comparable to Treehouse; Boomerang, which is an offshoot of Cartoon Network and Teletoon Retro, a similar service.

11203            They have Discovery Kids; we have Discovery Kids.  We have BBC Kids; they don't.

11204            And in the American market there are some other family oriented, but by and large most of those are offshoots of the giant media corporations, so Disney has a Toon Disney, Viacom has its Nicktoons and whatnot.

11205            So it's not as if somebody else from the market has come in and said hey, let's launch an animation service.  It's the big guys launching offshoots of their services.

11206            So I guess if you could say that the Canadian market stifles competition with this access rule, the mere existence, to get to the market, to have the consumer decide your fate, I guess here if that contention is true, that access rights do result in stifling of innovation and unmotivated programmers, I guess the same must be true of the United States because the offerings are comparable.

11207            M. HOULE : Si je peux me permettre, pour répondre aussi à votre question, dans le marché francophone, s'il était vrai que les services, une fois qu'ils ont obtenu l'accès, se reposaient sur leurs lauriers, on peut dire qu'au fur et à mesure ou s'accroîtrait la concurrence leur part de marché aurait tendance a baisser.

11208            Or, si on regarde dans le marche francophone, les 17 services analogiques spécialisés et payants qui existaient en 2000 avaient une part de marché de 17 pour cent.

11209            Ils s'accaparaient de 17 pour cent de l'écoute des francophones.

11210            En 2006, les mêmes 17 services avaient une part de marche de 38 pour cent.

11211            Alors, j'imagine que, s'ils ont plus que doublé leur part de marché dans un univers de plus en plus concurrentiel, c'est qu'ils ne se sont pas reposés sur leurs lauriers, mais qu'ils ont fait des efforts de marketing et de recherche pour adapter et répondre aux besoins des consommateurs.

11212            COMMISSIONER CUGINI:  Well, thank you very much for your response.

11213            Mr. Riley, in your section of the oral presentation today you said:

"We strongly recommend maintaining the concept of a defined nature of service."

11214            But you also said:

"... programming expenditure obligations specific to a given service."

11215            You know that CanWest and CTV were here yesterday and what they suggested is that we group CPE by ownership group and allow the ownership groups to then decide how best to spend the money, even though each licensee within that ownership group would still have the obligation of the CPE, but then that money could be spent on other services within the ownership group.

11216            I just wanted to ask you if the statement "expenditure obligations specific to a given service" rejects the CanWest/CTV proposal or if you support it?

11217            MR. RILEY:  Well, first of all, that statement was intended to address the issue of the so‑called programming genre buckets or whatnot.  So that is what that means.

11218            COMMISSIONER CUGINI:  Yes.

11219            MR. RILEY:  So that's number one.

11220            Number two, with respect to whether it rejects that, I guess not necessarily so because ‑‑ although without having had the opportunity to really think about this, is that if, for example, we decided, the broadcasting system said, you know what, here is an area that is not addressed and there is a shortage here, this is a good idea, someone wants to launch a channel, a group does, and then says but wait a minute, we also have a sports channel, and sports channel rights are going through the roof and we really need to win these NHL rights.  Let's suck up all the revenue from this new channel we launched, that might be any given kids Channel, whatnot.

11221            If the proposal is that as long as it is spent, let us allocate it amongst the channels, I would tend to think you might end up with the circumstance that the revenue will be drawn to the channel that most needs to compete in the highest profile, most viciously contested area.

11222            So in my example if you had that sports channel, presumably all resources would go ‑‑ would be ‑‑ there is a danger that they get pulled there to make sure you win those NHL rights, to the detriment of, you know, whatever other channels you have in the stable.

11223            So put it this way, I just say that might be ‑‑ if that's what is contemplated, I would suggest that might be a risk and it might defeat, if you follow our model, the intention that, you know what, here is a new service, here is some diversity.  You have to fund it.

11224            Getting a channel ‑‑ plus I guess you could also end up in a situation where someone goes out and gets a whole bunch of channels, tries to arrange arrangements for the deals, then use all that revenue to support another channel.

11225            So put it this way:  I don't think it is compatible essentially with what we think is the appropriate way to add full diversity.

11226            But that is just off the cuff.

11227            COMMISSIONER CUGINI:  Basic service.

11228            You are not alone in your proposal for what should be mandated on basic.  Others have said and then allow the BDUs to add whatever they want to the basic service.

11229            Is that essentially your proposal as well?

11230            MR. BUREAU:  Well, as long as they will have as a separate offer something that their subscribers will have to buy, the small basic service.

11231            COMMISSIONER CUGINI:  Right.

11232            MR. BUREAU:  Then if they want to offer, in addition to that, an extended one, that's fine with us.

11233            COMMISSIONER CUGINI:  I will ask you the same question I asked Allarco:  Should they be able to put The Movie Network on basic if they so choose?

‑‑‑ Laughter / Rires

11234            MR. RILEY:  Yes.  In fact, that should be a mandatory order coming out of this hearing.  If you only do one thing at this hearing, that should be it.  For good measure, maybe Family Channel as well, too.

11235            I'm kidding of course, sort of.

11236            I would say this:  Even if The Movie Network had the opportunity to be carried on basic, the reality is, you know, pay movie service is kind of a special circumstance.  First of all, the nature and the window and the timing, the way it has evolved, it is carved out that there be almost this predecessor window to others.  So that would be problematic.

11237            It is a premium channel that is advertising free so you would never be able to monetize, you know, the benefits of being there.  Your cost structure probably wouldn't allow you to go onto a basic without the price of that escalating.

11238            Furthermore, pay has traditionally ‑‑ pay movies have traditionally had, in terms of its content, content that ‑‑ well now I guess maybe it is rendered somewhat moot by parental controls or whatnot, but it is uncut programming.

11239            So I think even if that right existed, for all practical purposes the likelihood of that happening is just this side of zero.

11240            COMMISSIONER CUGINI:  Thank you very much.

11241            Thank you, Mr. Chairman.

11242            THE CHAIRPERSON:  Michel?

11243            CONSEILLER MORIN : Oui. Bonjour.

11244            M. BUREAU : Bonjour.

11245            CONSEILLER MORIN : Je voudrais juste être clair sur la règle de prépondérance.

11246            Vous écrivez : * Cette règle de prépondérance, 50 pour cent plus 1, devrait s'appliquer uniquement aux services optionnels à l'abonné. +

11247            Et vous avez parlé tout à l'heure de double prépondérance.

11248            Alors, est‑ce que...

11249            M. BUREAU : Je vais demander à madame Émond de vous répondre, Monsieur.

11250            MME ÉMOND : Alors, monsieur le Conseiller, ce qu'on dit, c'est que le calcul de la prépondérance doit être fait au niveau des volets discrétionnaires.

11251            C'est‑à‑dire qu'on exclut dans le calcul le service de base minimal dont on a parlé.

11252            Alors, c'est * over and above +.

11253            Et au sujet de la double prépondérance, on dit que le test doit être rencontré, donc, au niveau de ce qu'offrent les entreprises de distribution aux abonnés.

11254            Donc, dans cette offre‑là, il faut qu'il y ait un ration de 50 pour cent plus 1 de services canadiens, et aussi dans ce que les abonnés peuvent avoir comme services, le volet qu'eux vont prendre, vont choisir.

11255            CONSEILLER MORIN : Donc, les consommateurs, d'une certaine façon, c'est une restriction sur les choix aux consommateurs.

11256            MME ÉMOND : Bien, c'est‑à‑dire qu'il y a une certaine ‑‑ ils choisissent quand même à l'intérieur de tous les bouquets.

11257            Ils peuvent choisir parmi une panoplie de services.

11258            Et effectivement, il y a quand même dans le système canadien de radiodiffusion, en vertu de la politique canadienne, une question de priorité aux services canadiens.

11259            COMMISSAIRE MORIN:  Mais, la prépondérance, est‑ce qu'on ne pourrait pas la voir à l'entrée du système, plutôt qu'au niveau des choix des consommateurs, du choix qui est offert aux consommateurs ?

11260            M. BUREAU : Vous voulez parler de... au niveau de l'offre ?

11261            CONSEILLER MORIN : Oui, au niveau de l'offre.

11262            M. BUREAU : Oui.

11263            Alors, nous autres, on croit que, s'il y a vraiment une question de priorité aux services canadiens, elle doit se traduire par la priorité ‑‑ la prépondérance, pardon ‑‑ 50 pour cent plus 1, au niveau de ce qui est acheté, de ce à quoi l'abonné souscrit, et aussi au niveau de l'offre, de façon à ce qu'on n'ait pas cette situation qui serait vraiment étrange à l'effet qu'on pourrait avoir 300 canaux américains dans l'offre et, admettons, 100 canaux canadiens de l'autre côté et qu'on donne l'impression à l'abonné qu'il y a une ‑‑ franchement, il devrait aller là où il y en a le plus.

11264            Il y a une question de perception tout autant qu'une question de direction de la part du gouvernement, de la part de la loi, pour nous dire : On devrait s'assurer ‑‑ on s'attend à ce que le consommateur reçoive chez lui une prépondérance de services canadiens.

11265            Et c'est vrai que ça peut ressembler à une forme de restriction. C'est vrai.

11266            Mais d'un autre côté, aujourd'hui, quand les gens peuvent acheter 50 canaux de télévision, s'ils sont obligés d'en choisir 26 canadiens et puis 24 étrangers, je ne pense pas que personne puisse se sentir lésé à ce point‑là.

11267            Il faut être réaliste. À un moment donné, il y a une limite.

11268            Je ne sais pas combien de signaux on peut vouloir examiner.

11269            Nous autres, on est un peu comme des malades dans ce domaine‑là. On veut tous les voir.

11270            Mais le citoyen, le consommateur normal, probablement que, pour lui, là, déjà, s'il prend le paquet de 30 ou de 40 ou de 50 canaux, il ne trouvera pas qu'il manque de choix.

11271            CONSEILLER MORIN : Mais Monsieur Bureau, vous êtes un ancien président du CRTC.

11272            M. BUREAU : Ah, boy !

‑‑‑ Laughter / Rires

11273            M. BUREAU : Oui, Monsieur le Conseiller.

11274            CONSEILLER MORIN : Je me demande si, après 40 ans de règlements, de protection, ce ne serait pas le temps de laisser le choix aux consommateurs, moyennant qu'à l'entrée il y ait une prépondérance parce que, selon la loi, on doit encourager le système canadien, bonifier le système canadien.

11275            Mais est‑ce que ça veut dire qu'on limite les choix des consommateurs canadiens ?

11276            M. BUREAU : Je pense qu'il y a plusieurs aspects à votre question qui n'ont rien à voir avec le fait que j'étais au Conseil avant.

11277            Évidemment, j'ai appris beaucoup pendant cette période‑là. Je suis un peu imbibé de certains principes, objectifs, et donc je ne peux pas en faire abstraction quand je vous répond, Monsieur le Conseiller.

11278            Mais d'un autre côté, je pense que, si on veut maintenir, assurer, l'évolution de notre système canadien de télévision, il faut faire attention.

11279            À un moment donné, quand on voit qu'il se développe des services nouveaux chez nos voisins du Sud, par exemple, si on se dépêche d'accepter, d'autoriser, des services étrangers pour ajouter dans la liste des distributeurs, on empêche peut‑être le développement d'un service canadien qui soit dans le même type que ce service étranger.

11280            C'est un aspect de l'affaire.

11281            Mais il faut garder en tête qu'on a réussi à développer contre toute attente des services spécialisés canadiens de valeur que les gens aiment, apprécient, et qui sont d'aussi bonne qualité que les services étrangers du même type.

11282            Alors, dans un premier temps, je dirais qu'il faut toujours avoir en tête qu'il faut y aller mollo du côté des services étrangers si on veut continuer à favoriser l'éclosion de nouveaux services canadiens.

11283            Deuxièmement, je pense qu'il faut être réaliste, que le nombre de services offerts est déjà abondant, très abondant.

11284            Et troisièmement, je pense qu'il faut essayer de comprendre l'objectif de la loi, qui est de dire que le service canadien devrait être prioritairement canadien.

11285            Ils n'ont pas dit de fermer la porte. Ils n'ont pas dit d'empêcher des choses. Mais je pense que c'est un des outils que le Conseil a utilisés jusqu'à présent et qu'essayer d'encourager la priorité aux services canadiens, que ça devrait continuer.

11286            CONSEILLER MORIN : Mais je reviens sur ça.

11287            Au niveau du consommateur ‑‑ on reviendra tout à l'heure au niveau de l'offre. Mais au niveau du consommateur, par exemple, Rogers nous a dit cette semaine que dans une ville aussi multiculturelle que celle de Toronto, 75 pour cent des canaux qui étaient offerts et qui sont choisis par les consommateurs sont des canaux canadiens.

11288            Alors, est‑ce qu'on a besoin de protection dans la mesure où on parle de canaux canadiens qui ont acquis leur lettre de créance, qui ont développé leurs créneaux, qui ont une étonnante variété qui a été saluée par l'Association des radiodiffuseurs comme dans pas un pays au monde.

11289            M. BUREAU : C'est vrai.

11290            CONSEILLER MORIN : Donc, alors, est‑ce que ce n'est pas le temps de dire : * Les consommateurs, vous avez le choix. On vous offre. Vous avez le choix. +

11291            M. BUREAU : Écoutez, ça marche. Ça marche.

11292            Et à l'heure actuelle, les initiatives canadiennes sont nombreuses, plus nombreuses que dans beaucoup d'autres pays au monde.

11293            On est probablement stimulé par le fait que nos voisins américains lancent des nouveaux services tous les jours et puis qu'il y en a chez nous qui disent : * Moi aussi, je vais faire ça. +

11294            Et donc, ça marche. On a réussi à créer ça.

11295            Si on n'avait plus de règles au niveau de l'entrée, comme vous le ‑‑

11296            CONSEILLER MORIN : Mais ce n'est pas ça que j'ai dit. Au niveau du choix aux consommateurs.

11297            M. BUREAU : Oui. Au niveau du choix aux consommateurs.

11298            CONSEILLER MORIN : C'est à ce niveau‑là, moi, que ‑‑ la prépondérance au niveau du choix des consommateurs, c'est qu'on offre aux consommateurs au moins 50 plus 1, hein ‑‑

11299            M. BUREAU : Oui.

11300            CONSEILLER MORIN : ‑‑ des canaux qui sont disponibles par l'entreprise de distribution.

11301            Est‑ce qu'on a besoins d'une telle règle de prépondérance au niveau du consommateur avec l'offre qui est déjà là, de tous les canaux canadiens ?

11302            M. BUREAU : Moi, il me semble qu'une règle qui a marché devrait continuer parce qu'à l'heure actuelle je ne pense pas qu'il y ait un Canadien qui trouve qu'il manque de choix.

11303            M. RILEY : Est‑ce que je peux rajouter quelque chose ‑‑

11304            CONSEILLER MORIN : Bien sûr.

11305            M. RILEY : ‑‑ en anglais, s'il vous plaît ?

11306            CONSEILLER MORIN : Oui, oui.  Allez‑y.

11307            MR. RILEY:  It will be faster.

11308            First of all, it is not just the mere offering of the services that is good enough.

11309            For example, if you were to say, begin with the premises:  "Look, fine.  We put you on the shelf.  But after that, can't we allow the consumer to just do what they want."

11310            Being on the shelf, as anyone that has sold a product knows, is not good enough.

11311            Packages of services that are not Canadian could be developed, and those could be marketed.

11312            One part of the equation is the mere right of existence.

11313            The next part of the equation is how it is marketed and how it is packaged.

11314            So, just being there is not good enough, number one.

11315            Number two is it seems a little, to me, like saying:  "You know, your whole exercise regime, your eating right, your training, has produced a fantastic, superior, healthy person, an athlete.  So isn't it time that we can stop eating properly, exercising and doing our training?"

11316            I mean, the fact of the matter is this system works because of those rules, and despite any characterization that these rules are overly burdensome.

11317            We accept that their finetuning in terms of how things are implemented is always a good thing to achieve, but any notion that this is some kind of clamp‑down system that doesn't allow choice is belied by the facts.

11318            The facts do not show that at all in any way whatsoever.

11319            There would be no reason for anyone, any system, that has achieved health through a certain manner of doing things to suddenly stop doing those things because it thinks that it has achieved its goal.

11320            You would lose all those benefits.

11321            M. BUREAU : I think it is also an encouragement for the distributors to make sure that they add the array of Canadian services if they want to satisfy their consumer as they say they want to.

11322            CONSEILLER MORIN : Mais quand je regarde ‑‑

11323            M. BUREAU : Ah, excusez‑moi de vous avoir répondu en anglais.

11324            CONSEILLER MORIN : Quand je regarde le portrait : CTV doit posséder à peu près 32 canaux, si j'ai bonne mémoire; Canwest, au moins une vingtaine; vous autres, vous êtes près d'une vingtaine; Corus, à peu près une dizaine.

11325            Et vous avez besoin d'être protégés comme ça au niveau ‑‑

11326            M. BUREAU : Non, non.

11327            Je pense que les règles qui ont été établies, d'abord, ne partent pas d'une décision unilatérale.

11328            Elles partent d'un consensus législatif qui a amené la création d'un système de radiodiffusion.

11329            CONSEILLER MORIN : Je vous ferai remarquer, Monsieur Bureau, et vous serai d'accord avec moi, que la Loi canadienne sur la radiodiffusion ne parle pas du consommateur.

11330            M. BUREAU : Ça, vous avez probablement raison. Je ne nie pas ça.

11331            Comme elle ne parle pas non plus des valeurs du marché et de ces choses‑là.

11332            Et on est assez intelligent pour comprendre que l'évolution des choses fait qu'il y a des éléments dont il faut tenir compte et dont on a peut‑être pas tenu compte dans une rédaction qui date déjà de X années.

11333            Mais je reviens au principe de dire:  * Il y a dans la loi suffisamment d'indications pour nous montrer qu'on doit utiliser les talents canadiens et qu'on doit s'assurer de contributions canadiennes.

11334            C'est l'obsession de cette loi‑là, et ça a marché.

11335            Ça nous a donné un service que ‑‑ je ne sais pas si vous avez eu l'occasion de rencontrer des visiteurs d'autres organismes de réglementation à travers le monde qui généralement viennent visiter le CRTC ‑‑ parce que c'est un modèle. Parce que notre système est devenu un modèle.

11336            Et effectivement, ils viennent voir comment ça fonctionne, comment on a réussi, nous, à côté des Américains, à se bâtir un système qui fait qu'il y a suffisamment d'espace pour nos talents créateurs qui fait que ça devient de la qualité, de la programmation de qualité.

11337            Mais si à un moment donné on les inonde, on laisse nos services être inondés complètement, c'est dangereux.

11338            CONSEILLER MORIN : Qu'est‑ce qui vous dit que les consommateurs vont choisir ces services‑là ?

11339            M. BUREAU : Moi, ce que je pense, c'est que, les consommateurs, à l'heure actuelle, on sait ce qu'ils choisissent en vertu des règles existantes. Et puis ça va bien. Ils ont l'air heureux.

11340            Je ne sais pas pourquoi ‑‑

11341            CONSEILLER MORIN : Est‑ce que l'ultime test ne serait pas de leur faire choisir, leur donner le choix à 100 pour cent ?

11342            M. BUREAU : C'est comme dire que, John Riley, avec ses deux yeux, il voit bien. Pourquoi est‑ce qu'on ne lui en mettrait pas un troisième ?

‑‑‑ Laughter / Rires

11343            M. BUREAU : Il verrait peut‑être plus.

11344            Je ne vois pas l'utilité. En toute humilité, Monsieur le Conseiller, je pense que ‑‑ je ne vois pas l'utilité.

11345            Je vois qu'il y a quelque chose qui fonctionne et puis je...

11346            Je ne sais pas si mes collègues ont des vues différentes. Peut‑être que mon * boss + a des vues différentes.

‑‑‑ Laughter / Rires

11347            THE CHAIRPERSON:  I think we have exhausted that particular topic.  Let us go on.

11348            CONSEILLER MORIN : Alors, maintenant, au niveau de la publicité ‑‑ pas de la publicité, pardon ‑‑ des tarifs d'abonnement.

11349            Vous avez parlé d'une situation où, au Québec, s'il y avait des tarifs d'abonnement, ça pourrait nuire à votre marché.

11350            On sait qu'au Québec, de toutes façons, c'est un joueur dominant qui en profiterait.

11351            D'autre part, ce joueur dominant n'est pas nécessairement en faveur des tarifs d'abonnement comme tels. Il préfère une formule où on négocierait le tarif d'abonnement.

11352            Mais évidemment, quand vous êtes seul, c'est difficile ‑‑ on est bien positionné pour le faire.

11353            Et vous savez ‑‑ et je ne vous apprendrez pas ça, à vous ‑‑ que le CRTC a dans son histoire traité le marché québécois comme un marché distinct.

11354            Évidemment, quand on parle des tarifs d'abonnement, dans le Canada anglais, ils n'ont pas, eux, 20 canaux spécialisés. Ils en ont 80 qui jouent des coudes contre les télédiffuseurs en direct.

11355            Ils ont toute la concurrence américaine.

11356            Bref, les conditions du côté anglophone sont bien différentes des conditions du côté francophone.

11357            Ma question est simplement celle‑ci : *?Est‑ce qu'il y aurait un sens à ne pas accorder de tarif de distribution au Québec si, d'aventure, évidemment, le Conseil décidait, compte tenu de la situation différente du marché québécois?

11358            Et je n'ai pas énuméré, sans doute, toutes les raisons, mais je vous en donne quelques‑unes.

11359            M. BUREAU : Le pire, c'est que je pourrais en ajouter.

11360            Mais je pense que, effectivement, le Conseil devrait être préoccupé de regarder les impacts et les besoins tels qu'ils existent dans les différents marchés, que ce soit le marché de langue anglaise ou le marché de langue française.

11361            Et vous avez des points de vue là‑dessus qui sont intéressants.

11362            Je pense que le Conseil doit surtout essayer de s'assurer que c'est vraiment une décision ‑‑ en supposant que vous accordiez des redevances ‑‑ qui va vraiment être dans le sens de fournir au système un nouvel essor pour pouvoir continuer à se développer.

11363            Est‑ce qu'il y aura des différences dans les conditions qui pourraient être imposées s'il y avait des redevances qui étaient accordées ?

11364            Est‑ce qu'il y aurait des conditions qui seraient relatives, justement, aux éléments différents du marché ?

11365            C'est possible.

11366            Est‑ce qu'il y aurait des conditions qui devraient être relatives aux situations où on a des entreprises intégrées et où effectivement ce n'est pas tout à fait la même chose que de négocier avec des entreprise ‑‑ pas des entreprises, mais des entités qui sont à * arm's length + ?

11367            Et il y peut‑être rien qu'une façon de le faire. Ce peut peut‑être être rien que d'avoir un tarif qui soit vraiment réglementé par le Conseil pour éviter qu'il y ait une espèce de possible conflit d'intérêt dans la discussion des négociations quand on a des entreprises intégrées.

11368            Mais de toutes façons, je pense que ce n'est pas une mauvaise idée que de regarder quelles pourraient être les conditions qui pourraient être différentes d'un marché à l'autre.

11369            Ça pourrait peut‑être aller même jusqu'à dire que, dans un marché, il y en aura et puis, dans l'autre marché, il n'y en aura pas.

11370            CONSEILLER MORIN : Hier, j'ai introduit la notion au niveau de l'ensemble de l'industrie des télédiffuseurs en direct que, si d'aventure le Conseil allait de l'avant avec l'octroi de tarifs d'abonnement ou de redevances, compte tenu de la conjoncture qui évolue extrêmement rapidement et puis qu'on ne sait pas ce qui va arriver dans trois ans ou dans deux ans, est‑ce que pour vous cela aurait un sens de ne pas geler ces redevances pour l'éternité parce que le modèle économique a été construit et le signal était libre et le Canada, s'il devait faire ça ‑‑ hier monsieur Asper nous a confirmé effectivement qu'il n'y aurait aucun endroit au monde où on aurait pour les télédiffuseurs, à la fois l'accès et la redevance.

11371            Alors, on s'engage dans un sentier tout à fait nouveau. L'avis du Conseil était de déréglementer. Enfin, d'ouvrir un peu le processus.

11372            Et là, on arrive avec de nouvelles règles pour les redevances.

11373            Alors, est‑ce que pour vous les redevances devraient être pour une période de sept ans ?

11374            Vous connaissez très bien l'industrie. Comment vous voyez ça ?

11375            Est‑ce qu'il y aurait des avantages à ce moment‑ci à considérer ça sur le plan un peu plus temporaire qu'une période de trois ans, pardon ?

11376            M. BUREAU : Il y a beaucoup de lois qui ont des * sunset clause +, qui ont des échéances et qui exigent que l'on revoit ces dispositions‑là pour voir si elles sont encore nécessaires, particulièrement dans les cas où on essaie de régler un problème qui vient d'arriver et puis qu'on ne sait pas exactement si c'est un problème permanent ou si c'est un problème temporaire.

11377            Alors, il y a ce mécanisme qui permet au bout de deux ans, trois ans, quatre ans, de revoir les dispositions pour voir si elles sont encore appropriées ou pas.

11378            Et le Conseil peut utiliser ça et peut considérer quelque chose comme ça. S'il n'est pas convaincu qu'il s'agit d'une situation permanente et définitive, il pourrait peut être considérer quelque chose comme ça.

11379            CONSEILLER MORIN : Je remarque que vous faites front commun avec Radio‑Canada pour l'établissement d'un service de base restreint entièrement canadien.

11380            Depuis le début de la semaine ‑‑ enfin, depuis lundi, la première journée d'audience ‑‑ j'ai introduit un modèle.

11381            Ce n'était pas la décision du Conseil, mais je l'ai fait par moi‑même et en mon nom. Peut‑être éventuellement que je le déposerai.

11382            Un modèle où le service de base, au lieu d'être restreint comme vous le proposez, minimal ‑‑ parce qu'on le sait et les différentes entreprises de distribution sont venues nous le dire ici, on sait que peu de clients, finalement, prennent le service de base, même au prix actuel, qui est déjà peut‑être plus élevé dans bien des cas qu'il ne le serait avec votre service de base restreint.

11383            Encore là, les consommateurs choisissent, et ils choisissent plutôt des assemblages qui sont plus importants que le service de base.

11384            Alors, évidemment, Radio‑Canada, pour eux, pourvu que leur service est sur le service de base, c'est bien parce que ça respecte la loi, et cetera, de Radio‑Canada et du CRTC et évidemment la Loi canadienne de la radiodiffusion.

11385            Quand vous proposez l'accès d'une façon générale au service canadien, c'est une chose.

11386            Mais l'accès au service de base, ça en est une autre.

11387            Et vous avez des moyens, vous, avec CTV, avec Corus, avec Canwest ‑‑ vous pouvez offrir beaucoup de services spécialisés, ce qui n'est pas toujours le cas des petits.

11388            Et mon système, enfin, d'après certains témoignages qui sont venus ici ‑‑ vous avez parlé de Pelmorex tout à l'heure, mais il y a aussi The Score qui est venu ‑‑ pour dire : * Bien, nous, on aimerait bien votre système de points parce qu'on n'est pas sûr que, si on donne les clés de la maison aux entreprises de distribution, on sera sur le service de base, alors que là, bien, dans ces cas, on y est ou on y est pas.

11389            Alors, le système de points que j'ai envisagé, c'était justement de reconnaître les points pour lesquels vous, comme ancien président, vous avez travaillé au CRTC : le contenu canadien, la programmation canadienne, moins le coût au consommateur du tarif qui est celui du CRTC, qui actuellement, évidemment, les tarifs de gros sont déréglementés, mais le tarif officiel du CRTC.

11390            Est‑ce que ce système‑là, même si certains de vos services n'y seraient pas ‑‑ et je regarde dans la liste ici que j'ai, et effectivement vous avez des scores très bas en contenu canadien et en programmation canadienne.

11391            Quand je regarde certains de vos canaux au Québec ‑‑ je l'avais ici ‑‑ Historia...

11392            Historia, je pense que c'est dans 40; VRAK, bien, c'est 35.

11393            Alors que, moi, je parle d'un chiffre qui, pour le Québec, pourrait être de 80, suivant cette équation‑là.

11394            Alors, est‑ce que ce ne serait pas bon pour le système canadien, qui met de l'avant le contenu canadien, qui met de l'avant la programmation canadienne ‑‑ je ne vous dis pas d'avoir un système exactement comme celui que je propose et puis, si je le propose, il sera déposé et puis vous verrez comment ça fonctionne et puis on pourra l'améliorer.

11395            Mais est‑ce que ce ne serait pas naturel d'avoir quelque chose qui dit à toute entreprise, la vôtre ou les plus petits:  * Si vous avez du contenu canadien, si vous avez de la programmation canadienne et puis vous ne coûtez pas trop cher, bien, vous avez bien des chances de vous retrouver sur le service de base. + ?

11396            Et ça, bien, on en aurait probablement un peu plus que vous proposez avec votre service restreint, mais les tests que j'ai faits montrent que, dans une ville comme Toronto, avec un seuil de 100, il n'y en aurait pas plus sur le service de base.

11397            Et ce serait toujours au Conseil de décider si on monte ou on descend la barre.

11398            M. BUREAU : Monsieur le Conseiller, la première des choses, c'est que j'espère que tout le monde a compris que, dans le service de base restreint, on n'y sera pas, nous autres.

11399            Alors, on ne demande pas, on ne propose pas quelque chose au Conseil pour essayer de se trouver une place plus favorable.

11400            On ne sera pas là parce qu'on n'a pas de télévision conventionnelle et puis on n'a pas encore de service pour le 9(1)h) et puis toutes ces choses‑là. Bon.

11401            Deuxièmement, vous avez dit ‑‑ moi, je vous ai entendu dire au cours des deux semaines que vous alliez déposer un document expliquant votre modèle, et je pense que, en toute honnêteté, j'aimerais bien le voir par écrit pour pouvoir le commenter de façon honnête, de façon complète, de façon juste.

11402            Je vous avoue que j'ai eu l'impression de le comprendre d'une façon, et puis une autre fois je l'ai compris d'une autre façon. Je ne veux pas me tromper, et on est encore en train d'en discuter pour voir qui a raison dans l'interprétation de ce modèle‑là.

11403            Si on pouvait l'avoir par écrit, si effectivement vous le déposez, si jamais le président nous donne le droit d'utiliser une demi‑page pour y répondre dans des notes, on va le faire. On va vous répondre à ce moment‑là.

11404            CONSEILLER MORIN : C'était simplement que, au niveau des considérations générales, parce que les trois points sur lesquels reposent le système, c'est le contenu canadien, la programmation canadienne et le prix au consommateur.

11405            C'est des variables de base.

11406            M. BUREAU : Oui. Ça, ce bout‑là, je l'ai compris.

11407            CONSEILLER MORIN : Non, non. Mais les équations peuvent être refaites et les pondérations peuvent être différentes.

11408            M. BUREAU : Oui, oui. Absolument. Si vous me permettez d'en prendre connaissance de façon précise, parce qu'à un moment donné vous avez ajouté un test de popularité.

11409            Vous avez dit : * On pourrait peut‑être ajouter un test de popularité.

11410            Est‑ce que je me trompe ?

11411            En tous cas, moi, j'ai fait le saut. Mais, en tous cas.

11412            Je voudrais être bien sûr qu'on sache exactement quel est le modèle pour pouvoir le commenter de façon honnête.

11413            CONSEILLER MORIN : Ce que j'ai dit c'est que peut‑être qu'il y a des canaux qui sont extrêmement populaires et qui ne passeraient pas le test avec ça.

11414            M. BUREAU : Ah, c'est possible.

11415            CONSEILLER MORIN : Comme RDS, qui, parce qu'il coûte trop cher, ne serait jamais sur le service de base.

11416            Merci, Monsieur le Président.

11417            THE CHAIRPERSON:  Thank you.

11418            M. BUREAU : Merci, Monsieur Morin.

11419            THE CHAIRPERSON:  A fascinating discussion we have had with you that raised all sorts of issues.  We will just revisit a couple of them so I understand correctly.

11420            First of all on preponderance, you are suggesting a double preponderance, but it is really a triple preponderance because the basic package is not part of the preponderance.

11421            So first of all, it has to be a basic package and then all the additional services.  Why?  You are one of the few interveners who do not count the basic package as part of the preponderance.

11422            MS ÉMOND:  It is actually an evolution of our model because when we initially submitted, we thought that in our view to have a meaningful presence of Canadian services in the system, we were actually questioning whether we shouldn't have a higher rate than 50‑plus‑one.  So we were suggesting going higher to 66.

11423            THE CHAIRPERSON:  Yes.

11424            MS ÉMOND:  So instead, we have revisited and we thought let's have the basic.  And then what's important is in those services where there is no full liberty of packaging, we just thought then it is 50.

11425            So that is why we have evolved.

11426            THE CHAIRPERSON:  Okay.

11427            Second, in your evolved model where in future everybody basically has guaranteed access and we have annual or biannual hearings to see whether somebody ‑‑ the Category 2s who are existing right now, you said they would be grandfathered.

11428            That I understand to be those who were actually being carried right now would continue to be carried on that basis according to whatever obligations they have right now.  Those who are not carried and who don't manage to get carried by the expiry of their licence date will basically fade away.

11429            And those are being carried right now at Cat 2s presumably have the option of trying to become a Cat 1, for lack of a better term, at one of these annual hearings that we have.  But of course that would mean increased obligation in terms of content and expenditure.

11430            Is that the model that ‑‑

11431            MR. BUREAU:  Yes, yes.  That is what we mean.

11432            THE CHAIRPERSON:  Now, you spoke earlier, Mr. Bureau, about impression and appearances, et cetera.  This whole scheme is very neat, very orderly.  We have a world where everybody at the end of the day, once we are through the transition period, everybody has guaranteed access; some of them mandatory access, the others at least guaranteed access and then consumers choose.

11433            That has really a bit of an air of going backwards, the future of yesterday, because suddenly there is no more choice.  There is no more creativity.  We become the gatekeepers.  We, the CRTC, each year hold a hearing and say:  Are you offering a service that Canadians should want or may want, et cetera?

11434            Why are we doing this and how can we justify that we are not becoming what we have terribly tried to avoid but it certainly looks like we are becoming the keepers of taste; what can come on to the system or not.

11435            We are basically saying this is a closed system.  The only way you can come up is come here and get a licence from us which will give you guaranteed access, maybe even mandatory access, but that is the only way you can come in, notwithstanding we are having a 5,000 channel universe or something like that, unlimited capacity.  Boom, we set ourselves up as gatekeepers.

11436            How do I deal with that impression?

11437            I know that's not what you want to create, but that is really the way it is going to be perceived and characterized.

11438            MR. BUREAU:  Maybe we were not clear enough in our presentation.

11439            We are not suggesting that the existing services would have to come back before the Commission every year.  We are saying for new services, we suggest that maybe instead of letting the door open and everybody could come in at their leisure and get involved into a process of licensing as we propose, that you could say once a year or twice a year, or whatever you feel it is appropriate, we will have a hearing to listen to the new applicants coming in with new ideas.

11440            I believe this is your role, being the gatekeeper.  We may disagree on that.

11441            I think that I prefer having the CRTC as a gatekeeper than others.

11442            THE CHAIRPERSON:  Yes, but our Cat 2, let's be honest right now ‑‑

11443            MR. BUREAU:  Yes.

11444            THE CHAIRPERSON:  ‑‑ is relatively a paper process.

11445            MR. BUREAU:  I know.

11446            THE CHAIRPERSON:  You get it.  Then it is up to you to sell yourself to the BDUs, whether they can carry you or not.  You are completely closing that option.

11447            MR. BUREAU:  Of course, because it doesn't work.

11448            I'm sorry, we should be clear.  We have supported this approach.  We have participated.  We have licences of Category 2, so we are not saying it is a total failure.  We are looking at the future and we are saying look at the volume of work that has been processed by your staff to come out with those hundreds of decisions of people that have now a licence but they can't get access and they can't get to be carried by any cable system or any distributor.

11449            So we say after those years, we believe that it would be appropriate to probably drop that form of access to the Commission and that form of ‑‑ because it doesn't work.  Only 5 per cent have been able to be carried.

11450            So we say it seems to us that it's not the appropriate way to ensure that there will be real new ideas coming up.  So we say why not try and establish a new way of licensing where the focus will be on the question of what sort of diversity do you bring to the system?

11451            THE CHAIRPERSON:  I understand your proposal.  I'm just putting myself into ‑‑ okay, I accepted the André Bureau proposal.  You are here a year later, 25 applications ‑‑

11452            MR. BUREAU:  Yes.

11453            THE CHAIRPERSON:  ‑‑ I'm looking at them, so one diversity.  Does this add to diversity or not?

11454            MR. BUREAU:  Plus Canadian ‑‑

11455            THE CHAIRPERSON:  That, by the way, is not exactly an easy term to define or to get consensus on.

11456            Then we say, yes, you are diverse, you can come in.  No, you are not diverse, you can't come in, et cetera.

11457            And what are we being perceived?  Clearly as the gatekeeper, but more than that, we are in effect dictating tastes.  That's how it's going to ‑‑ because isn't there a danger that that is exactly how it is going to be perceived?

11458            And that is certainly not what we want and that is not what you want.  I don't know how to measure diversity, how to characterize something as new and diverse and something as no, that is not diverse.

11459            Give me the criteria.  How would I do this?

11460            MR. BUREAU:  Ah!  We are suggesting this approach, this licensing model, and we said that we could come back on some other occasion to discuss exactly how it could work.  But we say we have to recognize that the system of the Category 2 has not produced the results that everybody intended.

11461            So we are saying let's try something else, which will be based on the diversity of the choice.

11462            So yes, somebody will have to say yes or no, but I would rather see you say yes or no than somebody from other parts of the country.  I feel that you are responsible for the system as a whole while he is not.

11463            THE CHAIRPERSON:  If you are meaning whether it should be us or the BDU, I agree with you, but hopefully it should be the Canadian viewer who makes that decision.

11464            MR. BUREAU:  Well, of course at the end of the day they will, because if they don't agree with your choice and the service doesn't produce audience, it will be killed at some point.

11465            How many have been killed since the Commission has exercised this gatekeeper role in choice or taste master?  How many?  One?

11466            THE CHAIRPERSON:  I don't know.

11467            MR. BUREAU:  One?  The Health Service.

11468            THE CHAIRPERSON:  You know better than me.

11469            MR. BUREAU:  The Health Service which lasted one day on the air?

11470            THE CHAIRPERSON:  Okay.

11471            Mr. Riley, you wanted to add something?

11472            MR. RILEY:  Yes.  If I may, I would just add ‑‑ and André touched on that point ‑‑ that we think that the model we propose ‑‑ and you hit it on the point actually ‑‑ is all anyone should be seeking and what we should all be seeking is for the consumer to have the right to determine our fate.

11473            In your characterization of the current process with the Category 2, you said it's mostly a paper process and then it's up to you to sell yourself to the BDU.

11474            That's not what we want.  We don't think that ensures the greatest amount of diversity.

11475            Sure, under our model it does require a little upfront work, but we can discuss this about how you do that in terms of having the process and what are the thresholds or factors that apply.

11476            But I think at a minimum if the Commission's goal ultimately is to ensure innovation and diversity, at least give those that have those ideas the right to get to the market.  Remember, we are also saying there are no tiering and linkage rules.  So it's like let us get to the shelf and then if the consumers say, you know what, we don't need an archery channel, thanks very much, then that will take care of the archery channel.

11477            Also, getting access just means you have the right to get on air to be distributed.  After that point, in terms of the packaging and marketing, which are fundamental ‑‑ in our view, just getting that right to get onto the shelf is, we believe, just the bare minimum.

11478            The real action, the real I guess factor which will determine the success or not is the marketing and packaging obviously coupled with whatever that fee may be.

11479            So what we are saying is, I mean obviously you have to pick one model or another.  There is this one; there is this option.  We are saying your fundamental goal to give that opportunity for innovation to those whatever seeds they may be to flower, we think you have a higher chance of success of achieving that if you allow one to at least fail in front of the consumer as opposed to not even getting that opportunity.

11480            I think everyone in the industry is prepared to accept that and just getting on there ‑‑ any notion that just getting onto the system means after that everyone lies back and reaps the rewards is just not the case.

11481            In fact, just one last thing.  We have had plenty of great ideas that we have looked at from a market plan and said, do you know what, we don't think this is going to work.  We have taken it upon ourselves to have conversations with the BDU.  They are the seller, they are extremely important in the process.

11482            So you have to remember there have been many great applications or many great ideas or innovation where people have said I don't think this will work.  But once you cross that threshold to where you are providing something that is diverse, let's let the consumer dictate whether or not we succeed.

11483            That's all the model asks for and we only suggest that this model will probably produce a higher probability of that happening than the existing model or any other model that has been proposed.

11484            MR. BUREAU:  Mr. Chairman, the model that we have proposed is not a perfect model by far.  We are not suggesting it is the only model.  We are saying one is not producing the results that we all hoped it would, and we are trying to propose something for discussion, for analysis.

11485            There may be other models to look at and we don't pretend that this model is the only one, of course not.

11486            THE CHAIRPERSON:  Let me ask you a few questions about the arbitration model that you put in.  None of my colleagues have touched upon that.

11487            First of all, why is an arbitration model necessary at all?  Why couldn't we just have an expedited and a streamlined dispute settlement process by the Commission?

11488            Why do you feel there should be an arbitration?

11489            Obviously if you and a distributor want to go to arbitration, nothing stops you from doing that right now.  But presumably I assume we are talking mostly about issues which arise as a result of application of the CRTC policies or regulations, et cetera.

11490            Why do we want to bring in an outside arbitrator?  Why would this not be done through a streamlined improved CRTC process?

11491            MR. BUREAU:  Well, we believe, Mr. Chairman, that the guaranteed access doesn't solve all of the problems and that we need a way of making sure that it is resolved somewhere.

11492            We have asked somebody that we have a lot of respect for, Mr. Hank Intven, to look into it and come up with some suggestion.  These are not our suggestions.  These are his suggestions and we have invited him here.  I'm very glad that you are asking that question.  It will give him the opportunity to earn what we are paying him today.

11493            So Hank...?

‑‑‑ Laughter / Rires

11494            MR. INTVEN:  Thank you, Mr. Bureau.

11495            Mr. Chairman, I think the reasons are fairly straightforward.

11496            The Commission has tried all types of dispute resolution mechanisms of its own, from the Part VII mechanisms in the telecommunications area to a whole variety of mechanisms in the case of broadcasting, and the fact is they are all quite time consuming.  They require a heavy engagement of Commission resources and a lot of time, which frankly is not required in I think a lot of the cases where there are essentially commercial issues to be determined as between distributors and broadcasters.

11497            So what we did is tried to come up with a process that would enable several tracks, one of which would be a rather fast track to deal with essentially commercial disputes through final offer arbitration.

11498            To answer your question why, I think the answers are:  one, it is more efficient.  We have suggested very strict timetables which I think can be adhered to because they don't use Commission resources.  The Commission will establish these timetables.

11499            Second ‑‑ and I think this is very important ‑‑ final offer arbitration establishes very different incentives for resolution of a dispute than does a Commission process.  It encourages both parties to come up with offers that are realistic and, as we would like to say, in the market, concepts that they could live with and that a neutral party is likely to select from one or the other.

11500            It doesn't require the Commission, who when all is said and done, no matter how well it does its homework, will know less about the details of the business than the players actually in the business.  So it doesn't require the Commission to substitute its judgment for the judgments of the two market players.

11501            I think that is another advantage of arbitration.

11502            Well, I think those are the main ones really:  good incentives; efficient.

11503            And finally, it is very objective and fair.  It can be utilized by both parties.  In many cases the BDUs will have more bargaining power but, as we have heard from Bragg Communications and others, in some cases the small BDUs will have less power.  So both sides can use this in an objective fashion.

11504            We think those are all reasons that it is preferable for Commission determination.

11505            THE CHAIRPERSON:  Maybe I read your proposal too fast, but I thought you had three alternatives:  final offer arbitration; what I would call sort of general arbitration trying to find the best solution; and an expedited Commission process if it should involve a policy.

11506            By offering three options, don't you automatically invite disputes as to which one of the avenues is the proper one that should be followed, whether the dispute falls into Category A, B or C?

11507            MR. INTVEN:  Well, it is in the nature of the Commission's role as a decision‑maker to make decisions, and I think that with experience particularly it should be fairly simple to make a classification, within five days, as we are recommending, as to whether something is essentially a commercial dispute that can be easily handled by final offer arbitration, or whether it is something that has more issues and therefore is better subject to another form of arbitration, or whether it is a policy issue.

11508            To the extent that initially the Commission ‑‑ there may be a few growing pains.  The Commission may initially be uncertain as to which category it would go into and therefore may prefer to make some policy decisions in a few cases at the outset.

11509            But certainly with experience, as it learns more about the disputes that arise, I think it should be fairly easy to make a fast‑track decision within the five days.

11510            THE CHAIRPERSON:  Well, I thank you for your proposal.  It is obviously very thoughtfully thought out and carefully crafted and it i ‑‑ like always, I like submissions that give us a concrete product so we can comment.  It is much easier to deal with these rather than dealing with them in the abstract.

11511            So we will certainly look at it very carefully.

11512            You were here yesterday or the day before ‑‑ I forget, the days seem to merge into each other ‑‑ when TELUS was here and talked about NPVR, which is network PVR.

11513            First of all, I had never heard the expression before TELUS mentioned it.

11514            Second, the way they explained it to me, there were two things that caught my attention.

11515            Number one, they said it is actually working right now already in the U.K., I believe.  Second, the way they suggested is that the distributor in effect has all the programming that it puts on its own computer at home.

11516            If you could find a mechanism that through the remote at the customer's the customer can actually get to the computer and watch either for a specific period, for months or for a week or so, everything that was on there and could in effect use the existing linear schedule, run backwards and watch whatever they want, or there could be a search function and they could find ‑‑ that in effect you could have the entire program on a video on demand way offering alternative to the normal linear programming.

11517            It struck us that certainly if you could do that, if you could combine that with ad insertion or ad substitution, et cetera, you are in effect bringing the whole broadcasting system one gigantic step closer to the Internet and giving it the functionality of targeting consumers, specific consumers, getting the ads there, because you know that consumer at that point in time wants that show and you know who the consumer is, et cetera, and could in a large way prevent the migration of advertising as we have seen it from traditional broadcasting to the Internet.

11518            What TELUS suggested, they want to work on that.  That is sort of the end goal where they want to go and they see themselves exploiting that.  You would be on a shared basis with broadcasters and in effect dynamic ad insertion or targeted advertising, all of that, and they are clearly working on that, and that's where they want to go.

11519            Are you working on this?  Do you see that that is the right way to do that?

11520            Obviously we had not even thought of it until yesterday or the day before.

11521            But since you are looking prospectively, is this something we should address and in effect should we work towards a rule which suggests this mandatory sharing that TELUS is talking about?

11522            MR. BUREAU:  Mr. Chairman, first of all, I am amazed at your capacity to understand these issues very quickly.  I have looked at you during the exchange you had at that moment, and I must say that I'm a little bit at a loss to understand all the ramifications of what was presented there.

11523            I believe we are working on some aspects of things like that.  I don't think we are working directly with TELUS or that we have been presented this model, this technology.

11524            Have we, John?

11525            MR. RILEY:  I don't know precisely the answer to that question.

11526            THE CHAIRPERSON:  I may have misunderstood it.  I gave you my interpretation of what I understood.  Maybe TELUS meant to tell me something totally different.

‑‑‑ Laughter / Rires

11527            MR. RILEY:  But just so I understand, when you say you are working on it, are you referring to ‑‑ because you emphasize the ad insertion as perhaps a way almost of repatriating whatever might be lost.

11528            Is your ‑‑

11529            THE CHAIRPERSON:  Well, there are two aspects.

11530            MR. RILEY:  Yes.

11531            THE CHAIRPERSON:  First of all, as TELUS explained it, you don't have to constantly update your PVR, et cetera.

11532            MR. RILEY:  Right.

11533            THE CHAIRPERSON:  In fact, the network has a PVR for you, et cetera.

11534            But also because they control it, they can refresh it, let's say.

11535            MR. RILEY:  Right.

11536            THE CHAIRPERSON:  At the very least they can refresh it.  They can change the ads.  They can also then ‑‑ it doesn't take a genius to figure out you can also go then to dynamic ad insertion and targeted advertising.

11537            MR. RILEY:  Right.  Well, I would say this.

11538            We demonstrated, as my example of The Movie Network on demand and Pics and Family, because we have to mention Family as well too.  So we are always interested in any way that new technology can address consumer wants and needs.  It has been valuable to us and we support that.

11539            I would say we may not be that far along.  We support going in that direction.

11540            The only thing we caution and we have said, too, is we always have to be aware of what the ramifications of that are and to ensure as we move forward that the suitable contributions are being made.

11541            In other words, there would be no point in it if it is something that undermines the contributions that the services today are making.

11542            We found TELUS, in our discussions with them, to be a very good partner.  They are open.  So we would certainly pursue that.

11543            But we would want to see, obviously as we move from the linear world to on demand, just to make sure, as we brought up with the SVOD/VOD dichotomy, we make sure that when we make these steps there is something that is net beneficial to the system.

11544            THE CHAIRPERSON:  Yes.  The SVOD issue versus linear and this one.  They are the second cousins.  They are all in the same area.  TELUS' attitude may be quite different as some other BDUs who are vertically integrated and have their own specialty channels, et cetera.

11545            MR. RILEY:  Well, two things are going to happen.

11546            One, when I get back to the office, someone goes I told you about this.  Why couldn't you remember it?

11547            Or number two, we will be phoning TELUS.  So it's either way.

‑‑‑ Laughter / Rires

11548            THE CHAIRPERSON:  And number three, as we said, there will be an opportunity for you to make further written submission.  I would like you to specifically address, you and everybody else:  (a) the NPVR issue; and, second, the issue that you highlighted today, Mr. Bureau, the whole issue of SVOD and linear service.  Where is the delineation?  Where does one stop?  How should we treat that?

11549            I think today's discussion has shown us this is clearly going to be an important issue and we have to put some clarity and finality to it.

11550            So in submissions we will ask everybody ‑‑ and I am just mentioning it today now ‑‑ to address that point.

11551            MR. BUREAU:  We shall.

11552            THE CHAIRPERSON:  Well, thank you very much for your intervention.  I think those are all our questions for you today.

11553            Thank you.

11554            MR. BUREAU:  Thank you very much.

11555            THE CHAIRPERSON:  Let's take a five‑minute break before we see the next intervener.

‑‑‑ Upon recessing at 1152 / Suspension à 1152

‑‑‑ Upon resuming at 1202 / Reprise à 1202

11556            THE CHAIRPERSON:  Madam Secretary.

11557            THE SECRETARY:  I would now invite the Coalition of Canadian Audio‑Visual Unions to make their presentation.

11558            Appearing for the Coalition is Mr. David Hardy.

11559            Please introduce your colleagues, after which you will have 15 minutes for your presentation.

PRESENTATION / PRÉSENTATION

11560            MR. HARDY:  Mr. Chairman and members of the Commission, my name is David Hardy and I am the Business Agent representing NABET 700 CEP.

11561            Before starting our presentation today, I would like to take a moment to introduce to you our panel and the organizations that they represent.

11562            From your far left to your right, they are:  Stephen Waddell, National Executive Director of ACTRA; Kim Hume, Director of Public Policy and Communications for ACTRA; Kelly Lynne Ashton, Director of Policy of the Writers Guild of Canada; Maureen Parker, Executive Director of the Writers Guild of Canada; Monique Lafontaine, General Counsel and Director of Regulatory Affairs of the Directors Guild of Canada; Brian Anthony, National Executive Director and CEO of the Directors Guild of Canada; and on my left, Peter Grant of McCarthy Tétrault, outside counsel to the CCAU.

11563            Mr. Grant is also the author of a paper attached to the CCAU's October submission, and can speak to that proposal, as well as to any other legal issues.

11564            This proceeding is tremendously important for the creative community.  If the Broadcasting Act were revoked and pure market forces were allowed to prevail, as some BDUs appear to prefer, we would not have a Canadian broadcasting system, and the first category of programming to be harmed would be the hard‑to‑finance programming like Canadian drama, which is so important to the system, yet so vulnerable.

11565            The approaches we are taking reflect a central concern that our broadcasting system needs more attention paid to, and more money directed into Canadian dramatic programming.

11566            The Broadcasting Act has not been revoked.  In terms of the situation of the pay and specialty sector, we think that the current regulatory framework has worked relatively well.  We are very concerned with the efforts of the BDUs to roll back this progress and to propose major changes, with potentially disastrous consequences to the Canadian broadcasting system.

11567            So we are here to implore you to maintain the basics of the current system.

11568            The suggestion that the Commission has to deregulate in the face of the unregulated internet market was particularly ill‑supported.  The Commission will have a chance to look at the impact of new media later this year, but there is no evidence at this stage that the internet forces you to deregulate traditional media.

11569            Indeed, to the extent that the internet poses an issue for the system, BDUs and broadcasters are learning how to turn it to their advantage anyway.

11570            BDUs are very profitable.  Commission statistics show, in 2007, cable operating profits of 23 percent.

11571            Those figures also show that their internet services generated operating profits of 67 percent.

11572            BDUs have been able to use the backbone built by broadcasting to enrich themselves by selling internet services.

11573            Clearly, BDU‑owned ISPs, as well as broadcasters are becoming savvy about the magic of streaming and alternate revenue sources.  As these begin to impact the revenues of the parties in the system that have Canadian content obligations, we need to determine how best to ensure that the appropriate contribution is made.  We do not need a complete dismantling of the system.

11574            With that as background, I will now speak briefly about each of your five questions.

11575            Your first question asked:  What should be the size of the basic package?

11576            Today, the basic analog tier is fairly large, although very few cable subscribers limit themselves to those services.

11577            Our belief, to answer your question, is that we have seen no evidence that the size of the basic tier should be handled in any different manner than in the past.

11578            Your second question asked whether there should be guaranteed access for certain Canadian pay and specialty services; and, if so, which ones and on what terms.

11579            Here our position is that the analog and Category 1 pay and specialty services that have access rights today should continue to have guaranteed access to BDUs, although BDUs could be given a right to apply to change a particular service's status.

11580            I will ask Stephen Waddell to comment further.

11581            MR. WADDELL:  If the Commission were to drop the must carry requirements for the analog and Category 1 pay and specialty services, this would fundamentally shift the balance of power in favour of the BDUs.

11582            For any services without guaranteed access, BDUs will simply extract more onerous terms, in particular, lower affiliation payments, and a piece of the ad revenue, if the Commission will permit them to take advantage of local avails on Canadian specialty services.

11583            There can be no doubt that this will, in turn, result in far fewer dollars in the system for Canadian programming.

11584            Guaranteed access is particularly important for those pay and specialty services that exhibit and finance Canadian content programming in the genre that is most difficult to finance, namely, Category 7 drama, including children's programming and animation.

11585            In the CCAU's view, the current access rules should be maintained.  There is a quid pro quo.  The services that get such access must be required to contribute significantly to Canadian content, both in terms of scheduling and in terms of Canadian programming expenditures, or CPE.

11586            The CPE contribution is absolutely essential.  Programming undertakings should continue to have their CPEs raised according to their PBIT levels at renewal time, although the Commission will need to plug obvious loopholes, such as the use of management fees to artificially shrink reported profit levels.

11587            It is also important to stop the pay and specialty broadcasters from counting CTF licence fee top‑up money toward their CPE, as they spend it on themselves.

11588            An average of more than $30 million per annum is lost to the system because of this policy.  With pay and specialty renewals coming up, now is the time to revoke this practice.

11589            The Commission should also focus on the Category 2 services which started life with low introductory Cancon rates.  Some of them could, and should now be obligated to begin making CPE expenditures.

11590            I will now ask Monique Lafontaine to address the issue of genre protection.

11591            MS LAFONTAINE:  Thank you.

11592            Over the years, genre protection has enabled the CRTC to license diverse, economically viable services, each with a maximum contribution to Cancon.  So we think that genre protection should be continued for all analog and Category 1 pay and specialty services, both as against Canadian and foreign competitors.

11593            However, we do see some room for flexibility here.

11594            In that regard, we don't see the idea of five or six broad genre categories to be practical.  However, the CRTC could open the door to services that wish to compete in a genre if they can make a sufficient case at a public hearing.

11595            In other words, the Commission could permit a broadcaster to come forward and argue that in a particular genre it is time to allow some competition.

11596            This is exactly how Allarco ended up with its general interest pay licence.

11597            However, the CCAU proposes that these exceptions should be subjected to full public scrutiny, and the challengers should at least have to prove the following:

11598            (a)  a sufficient supply of distinct programming content within the genre;

11599            (b)  matching or higher CPE and other obligations;

11600            (c)  consumer demand; and

11601            (d)  no self‑dealing.

11602            In addition, the CCAU does not think that BDUs or Canadian consumers should be stuck with an underperforming service just because it occupied a genre first.

11603            Picking up on a suggestion made by Commissioner Cugini earlier in this proceeding, we have no problem with allowing a BDU to be able to apply to the Commission at the licence renewal of a service to change its status if it was not contributing to meeting the objectives of the Broadcasting Act.

11604            But what is common about both of these recommendations is that the Commission remains in charge.  BDUs should not be given life‑and‑death power over services that contribute to the objectives of the Act.  That power should be in the Commission's hands only.

11605            Genre protection with respect to foreign services is even more crucial.  In our view, the criteria for the admission of foreign services to Canada should remain unchanged.  Their contributions are minimal, they siphon viewers from licensed Canadian services, and they are notoriously difficult to eject, should they change genres.

11606            Let me turn now to your fourth issue, namely, fee for carriage.

11607            The CCAU continues to have major concerns with the English‑language OTA sector, where their chronic underspending on Canadian drama needs to be addressed.

11608            That will be, hopefully, front and centre at the OTA renewal hearings next year.

11609            We heard yesterday from CTV and Canwest that they want fee for carriage to be used to support local programming only, and, in particular, local news.

11610            In our view, this is a self‑servicing proposal that ignores the real problem in the system.

11611            Local news is not a threatened category of programming.  Viewers around the world always prefer local news sources to foreign news sources.

11612            In Canada, we all receive the U.S. supper‑hour newscasts from ABC, CBS and NBC, but few viewers watch them.

11613            The reality is that when Canadian broadcasters do news programs, they compete only with themselves, not against Hollywood.

11614            The situation is quite different for entertainment programming like drama and comedy.  In that category, unlike the situation with news, we have to compete with the best that Hollywood offers.

11615            There is a reason why the CRTC calls drama priority programming, and it used to call it under‑represented programming.

11616            Drama is the kind of programming that no private broadcaster will support, unless they are forced to do so by regulation.

11617            The broadcasters' request for fee for carriage turns this priority on its ear.  Instead of using the money to help the kind of programming that most needs help, they want to put it into the kind of programming that least needs help, where they face no competition from Hollywood, where they only compete with themselves, where they already benefit from basic carriage, where they have sole access to local ad revenue, and where they will spend all the money on their own facilities.

11618            We think this is completely self‑serving.  It ignores the real problem in our system, namely, competing with Hollywood on the hardest to finance category, Canadian drama.

11619            If fee for carriage is to be approved, the revenue should be earmarked to support Canadian drama programming.  That is where the funding problem is.

11620            The fifth question posed by the Commissi