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                       SUBJECT / SUJET:

                     EXAMINING NEW MEDIA /

HELD AT:                                TENUE À:

Conference Centre                       Centre des conférences
Outaouais Room                          Salle Outaouais
Place du Portage                        Place du Portage
Phase IV                                Phase IV
Hull, Quebec                            Hull (Québec)

February 8, 1999                        8 février 1999

                          Volume 12
tel: 613-521-0703         StenoTran         fax: 613-521-7668


In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of

However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.


Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.

tel: 613-521-0703         StenoTran         fax: 613-521-7668

                 Canadian Radio-television and
                 Telecommunications Commission

              Conseil de la radiodiffusion et des
                télécommunications canadiennes

                  Transcript / Transcription

                 Final Phase of Public Hearing
                     Examining New Media /
              Étape finale de l'audience publique
            portant sur l'examen des nouveaux médias


David Colville                          Chairperson / Président
                                        Telecommunications /
Françoise Bertrand                      Chairperson of the
                                        Commission / Présidente du
Cindy Grauer                            Commissioner / Conseillère
Joan Pennefather                        Commissioner / Conseillère
David McKendry                          Commissioner / Conseiller


Carolyn Pinsky /                        Commission Counsel /
Karen Moore                             Avocates du Conseil
Ted Woodhead                            Hearing Manager / Gérant de
Daphne Fry                              Manager of Convergence
                                        Policy / Responsable de la
                                        politique sur la
Carole Bénard /                         Secretaries/Secrétaires
Diane Santerre

HELD AT:                                TENUE À:

Conference Centre                       Centre des conférences
Outaouais Room                          Salle Outaouais
Place du Portage                        Place du Portage
Phase IV                                Phase IV
Hull, Quebec                            Hull (Québec)

February 8, 1999                        8 février 1999

                          Volume 12
tel: 613-521-0703         StenoTran         fax: 613-521-7668



Presentation by / Présentation par:

Rogers Cablesystems Limited                               3002

AOL Canada Services, Inc. and America Online, Inc.        3020

Fédération culturelle canadienne-française                3040

Astral Broadcasting Group                                 3058

Canadian Association of Internet Providers                3071

The Independent Internet Service Provider Group           3080

CATA Alliance                                             3092

Public Interest Advocacy Centre                           3100

tel: 613-521-0703         StenoTran         fax: 613-521-7668


 1                                Hull, Quebec / Hull (Québec)
 2     --- Upon resuming on Monday, February 8, 1999,
 3         at 0903 / L'audience reprend le lundi
 4         8 février 1999, à 0903
 5  13187                THE CHAIRPERSON:  Good morning,
 6     ladies and gentlemen.
 7  13188                Welcome to the oral final argument
 8     phase of the Hearing on New Media.  My name is David
 9     Colville.  I am the Vice-Chair, Telecommunications, for
10     the CRTC and I will be presiding over this final phase
11     of the hearing.
12  13189                With us this morning are Cindy
13     Grauer; our Chair, Françoise Bertrand; Joan Pennefather
14     and David McKendry.
15  13190                This is the final phase of a process
16     that began when we issued a public notice last July,
17     and we obviously captured the attention of all the
18     different players involved in the new media business. 
19     I think with the attention we had on the hearing in
20     response to our public notice, the Commission received
21     several hundred written comments on the subject of new
22     media, and at the public hearing held over 11 days last
23     November and December close to 80 parties made oral
24     presentations.
25  13191                I opened the first oral phase of this


 1     hearing by identifying three themes that the Commission
 2     wanted to address with respect to new media.
 3  13192                First, we wanted to examine the
 4     potential impact of the new media on regulation of
 5     traditional media.
 6  13193                Second, we wanted to explore the
 7     extent to which some or any of the new media services
 8     meet the statutory definitions of broadcasting or
 9     telecommunications services and, if they do, how should
10     they be treated by the Commission.
11  13194                Third, we wanted to determine whether
12     we could use this public forum to provide information
13     and recommendations to the government on broader policy
14     issues regarding the new media.
15  13195                Over the course of this process you
16     have given us a substantial record of information and
17     viewpoints on these three themes, as well as on other
18     important areas.  I should also tell you that this
19     hearing is unprecedented for the breadth of the range
20     of individuals, industries and interest groups from
21     which the Commission received comments.  I might note,
22     I thought at the time of the hearing that it was sort
23     of unprecedented media coverage too for one of our
24     proceedings.
25  13196                While we received comments on many


 1     issues during the first phase, a few major themes
 2     emerged.  Some of you recommended that there be no
 3     regulatory involvement in new media, as its global
 4     nature makes domestic regulation impractical or
 5     unnecessary for the development and marketing of
 6     Canadian products.
 7  13197                Others believe that funds, tax
 8     credits or other financial incentives should be
 9     established, either through the government or through
10     the imposition of a contribution towards Canadian
11     content on Internet Service Providers or other
12     distributors.
13  13198                Another recommendation was for more
14     "shelf-space" for Canadian content and methods to draw
15     viewers to this content.  Some of the proponents of
16     this idea suggested that Canada establish a
17     super-Canadian Web site.
18  13199                Some of you argued we need to address
19     offensive content, and others, on the same topic,
20     maintained that existing laws, self-regulatory measures
21     by ISPs and existing content control tools provide
22     sufficient protections.
23  13200                At the close of the first phase of
24     the public hearing examining new media we asked that if
25     you were planning on participating in this final oral


 1     argument phase you consider addressing a number of
 2     questions which included, among others:
 3  13201                Which types of new media would be
 4     defined as programs or broadcasting under the scope of
 5     the Broadcasting Act?
 6  13202                If you made a recommendation on this
 7     issue, what specific classes of new media undertakings
 8     should be either licensed or exempted under the
 9     Broadcasting Act?
10  13203                What would be the characteristics of
11     these services?
12  13204                What are the implications of the new
13     media for digital television and digital audio?
14  13205                This oral final argument phase is an
15     opportunity for you to emphasize your concerns and to
16     offer us more specific recommendations on these issues,
17     now, while we are still digesting all this information.
18  13206                Sixteen parties have asked for the
19     opportunity to present their views orally to the panel
20     this morning and tomorrow, and all have been invited to
21     do so.
22  13207                I am very pleased to welcome back
23     those of you we have already heard from.  I am also
24     very pleased to welcome some new participants -- and, I
25     would guess, welcome a class of students that I think I


 1     have seen come in this morning -- and we look forward
 2     to hearing from the participants over the next two
 3     days.
 4  13208                Several other parties have filed
 5     written comments, and I would like to assure them that
 6     these submissions will also be considered in our
 7     decision-making process.
 8  13209                So that we can further explore the
 9     issues and information identified at the oral public
10     hearing, you will be able to present summaries of your
11     written final arguments, and there may be a few
12     questions of clarification from Panel Members as well.
13  13210                On that theme, I would like to remind
14     you that the oral final argument phase is for the
15     purpose of allowing you to present a summary of your
16     written final arguments, and not to reply to the filed
17     written arguments of other parties.
18  13211                CRTC staff who will be assisting us
19     during this hearing are our Hearing Manager, Ted
20     Woodhead, from Broadcasting; Daphne Fry, Manager of
21     Convergence Policy; Legal Counsel Carolyn Pinsky and
22     Karen Moore; and Carol Bénard, our Hearing Secretary
23     for today.
24  13212                Our hearing will run for two days. 
25     We will sit to about five o'clock, although I suspect


 1     from the agenda we will probably finish somewhat before
 2     that both today and tomorrow.  Tomorrow we will start
 3     at 9:00 a.m.
 4  13213                I will now turn to counsel Pinsky for
 5     any logistics matters.
 6  13214                MS PINSKY:  Thank you, Mr. Chairman.
 7  13215                I would just like to note that
 8     translation services are available and that
 9     translations devices are available in the front room
10     from the Commissaire.
11  13216                We have a public examination room
12     where all the documents from the record of this
13     proceeding can be reviewed in the Papineau Room just to
14     the right outside in the hall.
15  13217                Thank you.
16  13218                THE CHAIRPERSON:  So, with that,
17     Madam Secretary, the first party, please.
18  13219                MS BÉNARD:  Thank you, Mr. Chairman.
19  13220                The first presentation will be by
20     Rogers Cablesystems Limited.
22  13221                MR. ENGELHART:  Thank you.
23  13222                Mr. Chairman, Members of the
24     Commission, I am Ken Engelhart, Vice-President
25     Regulatory, Rogers Communications Inc.  With me today


 1     is Hugh Stuart, Managing Director, @Home Canada.  @Home
 2     Canada, as you know, is jointly owned by Rogers, Shaw
 3     and Cogeco.
 4  13223                We are pleased to appear before you
 5     today to present our final argument in response to
 6     Broadcasting Public Notice CRTC 1998-82 and Telecom
 7     Public Notice CRTC 98-20.
 8  13224                We will address four broad issues:
 9  13225                i)  the competitive impact of new
10     media;
11  13226                ii)  economies of scope and scale;
12  13227                iii)  the regulation of new media
13     services under the Broadcasting Act and the
14     Telecommunications Act; and
15  13228                iv)  support for the development of
16     Canadian new media content.
17  13229                In addition, we will briefly address
18     comments made by various parties with respect to four
19     specific issues.
20  13230                First, The Competitive Impact of New
21     Media Services
22  13231                Throughout this proceeding Rogers has
23     taken the position that new media services currently
24     are not direct substitutes for regulated broadcasting
25     services and, therefore, are unlikely to be directly


 1     competitive with regulated broadcasting services in the
 2     near future.  Most parties to this proceeding share
 3     that view.
 4  13232                There are a variety of technical,
 5     economic and marketing reasons why the two media will
 6     not compete directly in the near term.
 7  13233                For example, the CAB described the
 8     developments that would be necessary before the
 9     Internet would be able to effectively deliver broadcast
10     video.  First, compression technology must improve to
11     reduce bandwidth requirements.  Second, modem speeds
12     must improve.  The CAB also identified IP multicasting
13     as another technical development that could make the
14     Internet a mass entertainment medium.
15  13234                The CAB estimated that somewhere
16     between 2001 and 2004 a critical mass of Internet users
17     could have the technical capacity to download video
18     programming with quality better than that currently
19     provided by a VCR.  Based on this, the CAB concluded
20     that Internet-delivered video-on-demand could be one of
21     the earliest examples of the convergence of traditional
22     and new media.
23  13235                In addition, while new media services
24     may not, for some time, become perfect substitutes for
25     the most regulated broadcasting services, the record of


 1     this proceeding indicates that new media services are
 2     already having an indirect competitive impact.
 3  13236                For example, at the public hearing
 4     some providers of regulated Canadian broadcasting
 5     services indicated that they expect the indirect
 6     competitive impact of new media services to reduce
 7     growth in their core broadcasting business.  In
 8     response to this, they intend to enter the new media
 9     market with services that complement their current
10     broadcasting services.
11  13237                The development of new media services
12     also may lead to increased competition in conventional
13     media markets as the providers of new media services
14     use their base in that market to backward integrate
15     into conventional media.
16  13238                We believe that the record of this
17     proceeding supports Rogers' view that new media
18     services are unlikely in the near term to have a direct
19     competitive impact on real-time or "appointment"
20     broadcasting services.  However, the Internet is
21     already well-suited to download content.  As such, we
22     agree with the CAB that services such as
23     video-on-demand may be early examples of convergence
24     between traditional and new media.
25  13239                In light of this, Rogers believes


 1     that it would be appropriate for the Commission to
 2     review the current policy and regulatory framework to
 3     ensure that it provides maximum scope for members of
 4     the regulated Canadian broadcasting system to respond
 5     to direct and indirect competition from new media
 6     services.
 7  13240                Economies of Scale and Scope
 8  13241                Rogers has submitted throughout this
 9     proceeding that there are few barriers to entry into
10     the new media market and, therefore, it is reasonable
11     to expect that there will continue to be a wide variety
12     of Canadian new media content and services available to
13     consumers.  This view was widely shared by the parties
14     to this proceeding, including members of the Canadian
15     new media content production industry.  At the same
16     time, Rogers has stated that Canada needs players of
17     all sizes, including large integrated providers to
18     compete in the new media marketplace.
19  13242                Integrated media companies can
20     achieve significant economies of scope by re-purposing
21     content across the distribution value chain.  The
22     ability to capture such economies is likely to play an
23     important role in determining whether a conventional
24     Canadian broadcasting or media company can compete
25     successfully with large, fully integrated,


 1     international information and entertainment companies.
 2                                                        0915
 3  13243                This issue was most clearly set out
 4     at the hearing by the CCTA.  In this regard, the CCTA
 5     expressed concern that the current policy and
 6     regulatory framework does not provide sufficient scope
 7     for members of the regulated Canadian broadcasting
 8     system to capture the operating economies necessary to
 9     respond effectively to increasing competition.
10  13244                Rogers shares the concerns expressed
11     by the CCTA with respect to any policies of the
12     Commission that may preclude cable television companies
13     and their affiliates from entering some segments of the
14     broadcasting industry.  Such policies could prevent
15     members of the regulated Canadian broadcasting system
16     from developing the ownership and operating structure
17     necessary to succeed in an increasingly competitive
18     environment.  As such, Rogers supports the
19     recommendation by the CCTA that the Commission consider
20     non-structural approaches to achieve its policy and
21     regulatory objectives.  In this regard, we are pleased
22     to see that the Commission, in Public Notice CRTC
23     1999-19, is proposing to re-examine its current
24     policies relating to distributor equity in cable
25     programming services and other cross-ownership issues.


 1  13245                The regulation of new media services
 2     under the Broadcasting Act or the Telecommunications
 3     Act.
 4  13246                This proceeding has considered
 5     whether new media activities should be governed under
 6     the Broadcasting Act or the Telecommunications Act.
 7  13247                With respect to the
 8     Telecommunications Act, the parties generally agreed
 9     that the Act does not regulate services.  The Act
10     regulates telecommunications carriers that own
11     transmission facilities.  The servers and leased lines
12     used by new media producers and indeed by most Internet
13     service providers do not constitute transmission
14     facilities under the Telecommunications Act. 
15     Accordingly, the Telecommunications Act can only govern
16     the providers of transmission facilities used in
17     provisioning the Internet.  Many of these providers are
18     already deregulated.
19  13248                With respect to broadcasting, the
20     parties generally agreed that there are three issues to
21     be considered.
22  13249                The first issue is whether new media
23     services are programs.  Programs do not include
24     services that consist predominantly of alphanumeric
25     text.  The Commission has defined predominance in terms


 1     of where the eye is drawn.  Since the Internet is more
 2     about reading than it is about viewing, most new media
 3     services are predominantly alphanumeric text and
 4     therefore are not programs.
 5  13250                The second issue is whether programs
 6     on the Internet are "transmitted".  Certainly,
 7     downloading a computer file is not the same as
 8     transmission in the usual sense of a broadcast
 9     transmission.
10  13251                Finally, there is the issues as to
11     whether the programs are transmitted for reception by
12     the public.  When a television program is broadcast,
13     everyone watches the same program.  However, it is
14     unlikely that any two Internet users will have the same
15     experience.  Each will see different pages and
16     therefore see a different program.  In that sense, the
17     programs are not transmitted to the public.
18  13252                If the Commission does find that some
19     of the new media services delivered over the Internet
20     are "broadcasting" as defined under the Act, most
21     parties to this proceeding agreed it would be desirable
22     for it to issue an exemption order.  In that case, it
23     would be necessary to distinguish traditional
24     broadcasting from new media.
25  13253                Traditional broadcasting services


 1     are, as the name suggests, broadcast.  The transmission
 2     is broadcast to all viewers simultaneously and they all
 3     get the same signal at the same time.
 4  13254                On the Internet, an individual
 5     receives a unique stream of packets destined just for
 6     them.
 7  13255                Accordingly, if the Commission wishes
 8     to issue an exemption order, it could exempt
 9     individually receivable transmissions of programs.
10  13256                In this regard, it may be appropriate
11     for the Commission to clearly define what is meant by
12     "individually receivable transmissions of programs."
13  13257                For example, it may be the case that
14     a consumer who uses an antenna will receive a
15     television program a micro-second before a consumer who
16     uses cable since the program delivered over cable must
17     pass through various pieces of electronic equipment on
18     its way to the consumer.  This particular type of
19     non-simultaneity would not, in Rogers' view, make that
20     television program an individually receivable
21     transmission.
22  13258                Similarly, a program such as the
23     broadcast of a sporting event that allows the viewer to
24     select camera angles probably should not be considered
25     to be an individually receivable transmission. 


 1     However, a new media service that allows viewers to
 2     control the timing and nature of their interaction with
 3     the content could be considered to be an individually
 4     receivable transmission.
 5  13259                Support for the development of
 6     Canadian new media content.
 7  13260                There was general agreement among the
 8     parties to this proceeding that there is a substantial
 9     quantity of Canadian new media content available on the
10     Internet from an increasing number of Canadian creators
11     and Canadian new media service providers.  Based on
12     this, Rogers does not believe that there is a
13     compelling public policy rationale for the
14     establishment of a new media content production fund in
15     addition to the fund that has already been established
16     by the federal government.
17  13261                If such a fund were to be created,
18     Rogers does not believe that it should be financed by
19     contributions from ISPs.  Like many parties to this
20     proceeding, Rogers is concerned that a "tax" on ISPs
21     would prove to be damaging by slowing the dissemination
22     of Internet access throughout Canada.
23  13262                A number of parties to this
24     proceeding suggested that a portion of the funding
25     contributed by programming and broadcasting


 1     distribution undertakings to support the creation of
 2     conventional Canadian television programming should be
 3     made available to finance the development of Canadian
 4     new media content.  Rogers does not believe that the
 5     record of this proceeding demonstrates that funding
 6     specifically earmarked for traditional broadcasting
 7     should be diverted to the development, production and
 8     promotion of new media.
 9  13263                I would now like to turn to a number
10     of specific comments made by various parties to the new
11     media proceeding.
12  13264                First, access to high-speed
13     distribution facilities by third party ISPs.
14  13265                A number of parties commented at the
15     hearing on the issue of third party access to high
16     speed Internet access through cable television
17     distribution facilities.  As the Commission knows, a
18     separate proceeding currently is under way to deal with
19     this issue initiated by Telecommunications Public
20     Notice 98-14.  In light of this, we believe that it is 
21     not appropriate for the parties or the Commission to
22     consider the issue of third party access in the context
23     of this proceeding.
24  13266                Accordingly, in this proceeding we
25     wish to note only that the Internet access market


 1     currently is very competitive.  Rogers and the other
 2     Canadian partners in @Home Canada have made great
 3     strides in introducing the @Home service to Canada, but
 4     still have only a very small share of the Internet
 5     access market.  The record of this proceeding
 6     demonstrates that Canada's phone companies and other
 7     service providers also are offering a number of high
 8     speed Internet access services.
 9  13267                In our view, any determinations
10     regarding third party access to high speed Internet
11     access facilities must take into account the
12     competitive nature of the Internet market in Canada.
13  13268                The proposed Super-Canadian Web Ring.
14  13269                The Specialty and Pay Television
15     Association has proposed the creation of a
16     "Super-Canadian Web Ring".  Rogers submits that this
17     proposal would constitute an unwarranted intrusion into
18     the market and has the potential to become an
19     embarrassingly ineffective use of public funds and
20     industry energies.
21  13270                The record of this proceeding
22     indicates that Canadian Internet users already have at
23     their disposal powerful Internet search tools.  Various
24     companies and organizations have made substantial
25     investments to provide effective platforms for the vast


 1     amounts of Canadian content on the Internet.  Canadian
 2     content providers such as Rogers, Canoe and others
 3     already do a commendable job of bringing Canadian
 4     content to the attention of Canadians surfing the Web.
 5  13271                Rogers finds it difficult to believe
 6     that a central planning solution will provide more
 7     effective search tools than a competitive marketplace
 8     in which media companies are actively seeking to
 9     increase their audience size by providing more
10     effective and more innovative access to Canadian new
11     media content.
12  13272                Nature of the content provided by
13     @Home Canada.
14  13273                Several parties to this proceeding
15     suggested that the Rogers@Home service is largely based
16     on American content.  These statements are not
17     supported by the facts.  In our Phase I submission, we
18     described in detail the high level of Canadian content
19     provided to Canadian @Home customers.
20  13274                In this regard, we believe that it is
21     important to note that @Home Canada is first and
22     foremost an open, high speed gateway to all of the new
23     media content and services available on the Internet. 
24     As part of its high speed Internet access service
25     @Home Canada provides consumers with an attractive


 1     Canadian user interface.  That user interface includes
 2     various channels or packages of Canadian information
 3     that consumers may find useful and interesting. 
 4     @Home Canada currently devotes substantial time and
 5     attention to ensuring that it offers Canadian consumers
 6     a high quality and distinctly Canadian experience.
 7  13275                Access by Canadian new media content
 8     and services to Internet search engines and portal
 9     services.
10  13276                At the hearing, some parties
11     suggested that Canadian Web sites may not be listed on
12     Canadian portal or aggregator sites unless they are
13     paying advertisers or that there may be other
14     commercial reasons for not listing Canadian new media
15     services or content.
16  13277                In fact, as Rogers noted at the
17     hearing, the opposite is true.
18                                                        0925
19  13278                Given the rapid growth of the new
20     media industry and the increasing level of demand for
21     Canadian new media products and services, portals and
22     search engines must constantly update their listings to
23     include all new Canadian Web sites or Canadian users
24     will go elsewhere.
25  13279                If a search engine, for example, only


 1     gave the name of one hotel chain in response to queries
 2     about travel, users would soon recognize this
 3     development.  Users would stop accessing that search
 4     engine and the site would get less hits.
 5  13280                Soon the portal would not be used or
 6     would be used much less as users migrated to
 7     competitive search engines.  So it would be folly for a
 8     search engine to charge for access.
 9  13281                In fact, Rogers is making substantial
10     expenditures to acquire Canadian content to ensure that
11     its new media services, including search engines, offer
12     consumers the widest possible choice and diversity of
13     Canadian information.
14  13282                The  Commission should not be misled
15     by unsubstantiated allegations in its consideration of
16     the issues arising from this proceeding.
17  13283                Mr. Chairman, Members of the
18     Commission, I would like to conclude our presentation
19     today by commending you for convening this proceeding. 
20     It has been an interesting and stimulating process and
21     we have all learned a great deal.
22  13284                While a variety of views were
23     expressed, Rogers submits that the record of the
24     proceeding supports the following five key conclusions.
25  13285                i.  New media services are not likely


 1     to compete with conventional or appointment-based
 2     broadcasting services in the short or medium term. 
 3     However, services such as video-on-demand may face
 4     competition from new media before other licensed
 5     broadcasting services.
 6  13286                ii.  The Commission should allow
 7     Canadian media companies to expand into all areas of
 8     content creation to ensure cost-effective production of
 9     competitive Canadian new media content.
10  13287                The Commission could assist this
11     process by developing a regime to permit the affiliates
12     of Canadian cable operators to obtain licences to
13     operate cable programming services.
14  13288                iii.  Much if not all of the content
15     on the Internet can be regarded as outside the scope of
16     the Broadcasting Act.
17  13289                iv.  Applying taxes to ISPs will slow
18     the penetration of Internet access to Canadian homes
19     and businesses at a time when this penetration should
20     be stimulated.
21  13290                v.  The concerns expressed by some
22     parties about access to various facilities and services
23     fail to recognize the highly competitive nature of the
24     Internet and its rapid and dynamic evolution.
25  13291                We appreciate this opportunity to


 1     present our final arguments to the Commission and look
 2     forward to your findings as a result of this
 3     proceeding.  We would be pleased to answer any
 4     questions that you may have.
 5  13292                THE CHAIRPERSON:  Thank you, Mr.
 6     Engelhart.
 7  13293                Just a question or two of
 8     clarification.  On page 8 of your oral presentation
 9     this morning, you were talking about this whole issue
10     of how new media would fit into definitions of the
11     Broadcasting Act and whether or not we should exempt
12     some aspects of new media from the provisions of the
13     Act.
14  13294                You talk here about individually
15     receivable transmissions of programs.  At the bottom of
16     the page, your last sentence says "However, a new media
17     service that allows viewers to control the timing and
18     nature of their interaction with the content could be
19     considered to be an individually receivable
20     transmission".
21  13295                If I back up through your logic here,
22     you would suggest that we should exempt that.  I take
23     it your view is that that would still constitute
24     broadcasting.  The reason I ask this is because other
25     parties during the hearing in December were commenting


 1     that this sort of interaction wouldn't even constitute
 2     broadcasting.
 3  13296                MR. ENGELHART:  Yes.  We think the
 4     Commission could safely conclude that all of the
 5     content on the Internet is not broadcasting, but what
 6     we are saying is, I guess, if the Commission takes a
 7     different view and they are looking for some sort of
 8     line to draw in the sand, how are they going to do it? 
 9     How are we going to exempt it?
10  13297                I guess the only thing we were able
11     to come up with was this idea of an individually
12     receivable transmission.  It's not so much that we are
13     saying that programs like that are broadcasting, but if
14     you go that way, this may be a useful device.
15  13298                THE CHAIRPERSON:  What do you think?
16  13299                MR. ENGELHART:  I think a court would
17     agree with you if you found that all of the programming
18     content on the Internet today is not broadcasting.  I
19     think between the three arguments -- transmission,
20     program and receivable by the public -- I think a court
21     would support that.
22  13300                I think in an area like this the
23     court is going to grant a huge amount of deference to
24     the Commission in the way that it interprets the
25     Broadcasting Act.  I think the Broadcasting Act gives


 1     you a fair bit of wiggle room.
 2  13301                On first blush, the Broadcasting Act
 3     definition is very broad.  You can look at it and say
 4     "Pictures going over a wire.  That's broadcasting", you
 5     know.  On first blush that's what it looks like, but
 6     when you start to parse and examine it, I think the
 7     three areas of definition -- I think if the Commission
 8     scoped to make a finding that the Internet is not
 9     broadcasting, a court would support that.
10  13302                THE CHAIRPERSON:  Okay.  Thank you,
11     Mr. Engelhart.  I think those are all our questions.
12  13303                Madam Secretary.
13  13304                MS BÉNARD:  Thank you, Mr. Chairman.
14  13305                The next presentation will be made by
15     AOL Canada Services Inc. and America Online Inc.
16  13306                THE CHAIRPERSON:  Good morning, Mr.
17     Kane.
19  13307                MR. KANE:  Good morning.
20  13308                My name is Greg Kane and I am
21     appearing on behalf of AOL Canada and America Online
22     which we will collectively refer to as AOL.  Appearing
23     with me this morning is Julia Garcia who is senior
24     counsel and Director of Canadian Policy for American
25     Online.


 1  13309                We are pleased to appear in order to
 2     provide you with a summary of our detailed written
 3     final argument which is being filed with the Commission
 4     today.  For the record, we would ask that these oral
 5     submissions this morning, and the filed written
 6     document, be considered together as the AOL final
 7     argument in this proceeding.
 8  13310                Also for the record, Mr. Chairperson,
 9     we would acknowledge the Commission's direction, which
10     you have repeated this morning, that this phase is not
11     an opportunity to reply to the written arguments of
12     other parties and we certainly hope that no one who
13     follows us will be afforded any opportunity to reply to
14     our oral or written final arguments.
15  13311                As an aside, Chairperson, we noted
16     your comment on December 7 that the hearing room was
17     empty.  We wish to assure you that throughout this
18     hearing we have only been a transcript away and that we
19     have followed the proceeding closely.
20  13312                In this respect, we wish to
21     congratulate the Commission for putting the transcripts
22     on to the Commission's Web site.  This measure has
23     contributed a great deal to making this hearing an open
24     and very public process.
25  13313                Let me now summarize our final


 1     argument.  Consistent with our position throughout,
 2     interactive new media does not amount to broadcasting
 3     under the Broadcasting Act and Internet service
 4     providers such as AOL are not captured under the
 5     Telecommunications Act.
 6  13314                Julie Garcia will submit that there
 7     are adequate levels of Canadian content available
 8     today, that there is no issue with respect to access
 9     for producers of Canadian content, that Canadian
10     content is given prominent display and is easily
11     accessed.
12  13315                In addition, Julie will submit there
13     is a serious issue outstanding with respect to the lack
14     of access by third party Internet service providers to
15     the higher speed facilities of broadcast and
16     telecommunications common carriers.
17  13316                With the benefit of that summary, I
18     will turn to the issues which relate to jurisdiction
19     under the Broadcasting Act.  This will be the focal
20     point of our final argument as it was during the
21     hearing itself.
22  13317                Chairperson, in your concluding
23     comments on December 7, you indicated that perhaps we
24     should refer to the whole issue of new media as "the
25     stuff" of this business.


 1  13318                Your comment reminded me of a
 2     statement in the book "Road Warriors -- Dreams and
 3     Nightmares along the Information Highway".  In that
 4     book the authors captured the evolution from POTs
 5     which, as the Commission knows, is the acronym for
 6     "plain old telephone service", to the future by adding
 7     the acronym PANS, which stands for "pretty amazing new
 8     stuff".
 9  13319                In the context of this proceeding,
10     the issue is whether this pretty amazing new stuff
11     amounts to broadcasting under the Broadcasting Act.
12                                                        0935
13  13320                As the Commission is aware AOL has
14     taken the position in all phases of this hearing that
15     the "stuff" does not amount to broadcasting under the
16     Broadcasting Act.  Based upon our review of the record
17     in this hearing, we maintain our position.
18  13321                A very important introductory point
19     is that appeal courts, recognizing legislation has been
20     drafted in general language, will explore the
21     relationship between the apparent purpose of
22     legislation and the general words themselves in order
23     to arrive at the meaning of particular terms.  A
24     reading of the entire Broadcasting Act leads to a
25     conclusion that Parliament clearly had in mind a


 1     regulatory system designed to address the distribution
 2     of programming acceptable to all Canadians, as a mass
 3     audience, in circumstances where the programs were
 4     clearly pushed out to them.
 5  13322                As we discussed during our
 6     appearance, the entire dynamic of broadcasting as
 7     envisaged in the Broadcasting Act is fundamentally
 8     different from the dynamic which is applicable with
 9     respect to interactive new media.
10  13323                Turning to specific definitions
11     within the Broadcasting Act, and starting with the
12     definition of "broadcasting" itself, our review of the
13     record leads to the conclusion that there is a clear
14     consensus broadcasting does not exist at this time.
15  13324                A helpful discussion the Commission
16     had with those who advocate jurisdiction under the
17     Broadcasting Act occurred during the appearances by the
18     Astral Broadcasting and the Directors Guild of Canada. 
19     During these exchanges, there were key concessions that
20     most of the material today is alphanumeric text which
21     is clearly not broadcasting.  The issue, therefore,
22     focused on what Astral described -- and I'm quoting --
23     as "a long form television program, a movie".  I might
24     indicate, I have inserted some transcript references in
25     both the text of the oral and the written, which I


 1     won't repeat for the purpose of the transcript.
 2  13325                So what Astral described, then, as "a
 3     long form television program, a movie", which others
 4     have described as video quality broadcasting.  The
 5     discussion then became one of the degree of
 6     customization, a discussion which is necessary because
 7     of the requirement that broadcasting is intended "for
 8     reception by the public".
 9  13326                I would ask you to keep that in mind. 
10     Keeping it mind the other significant evidence received
11     by the Commission in this proceeding is that broadcast
12     quality video is not currently available through
13     interactive new media, for a variety of reasons,
14     principally technical, and will not be available for
15     some five to ten years.
16  13327                Therefore, putting all of this
17     evidence together, the record in this proceeding
18     clearly demonstrates that there is no broadcasting
19     through interactive new media.  As a result, it is
20     premature to talk about issues such as "customization"
21     because the long form television programs and movies
22     are not available for customization.
23  13328                This leads us to the issue of a
24     possible exemption order.  During our appearance we put
25     forward the position, and we were not alone, that the


 1     Commission should consider the legal issue of not being
 2     able to exempt what it cannot licence.  In discussion
 3     with parties which followed us we noted that this
 4     position was interpreted as being founded upon the
 5     assumed broadcasting activity being undertaken by
 6     foreign enterprises.
 7  13329                To be clear, while this is one aspect
 8     of the matter, the more important aspect is the
 9     existence or otherwise of a broadcasting undertaking. 
10     We submit that the record in this proceeding is clear
11     that the "stuff" available through interactive new
12     media does not today constitute "broadcasting".  What
13     this means is that the Commission does not have a
14     factual basis on which to make a finding that someone
15     is carrying on a broadcasting undertaking which, in
16     turn, would lead to the Commission being able to issue
17     an exemption order.
18  13330                Simply stated, the Commission cannot
19     assert an anticipatory jurisdiction which, we submit,
20     you would be doing if you were to issue an exemption
21     order as a result of this proceeding.
22  13331                Let me conclude this part of the
23     argument by examining the question of "broadcasting
24     undertakings".  The reason we must do this is that even
25     if there is a finding of "broadcasting", a further


 1     finding must be made that some entity is one of either
 2     a "distribution undertaking", a "programming
 3     undertaking" or a "network".  Of relevance to AOL
 4     Canada is the suggestion by some parties that Internet
 5     service providers can be considered as distribution
 6     undertakings.  In our view, this is wrong.
 7  13332                Those who have suggested that there
 8     may be an analogy between an ISP and a distribution
 9     undertaking argue they both would appear, at first
10     blush, to serve as intermediaries between the source of
11     information and its ultimate consumers.
12  13333                However, the record of this
13     proceeding demonstrates that unlike a conventional
14     distribution undertaking, an ISP simply provides a
15     conduit through which information travels in a
16     bidirectional manner at the initiation of a subscriber
17     who pulls the information.  Furthermore, what is
18     received by the ISP, and what is pulled in an active
19     manner by an ISP subscriber, is constantly changing and
20     often from sources other than the ISP with which the
21     subscriber has initial access.
22  13334                The fact is that any one server may
23     not even host all of the packets necessary to convey
24     any particular content.  Therefore, a particular server
25     would never receive a "program" because it is only the


 1     conduit for a portion of the packets that need to
 2     arrive at the end-user's computer.  The dynamics are
 3     fundamentally different and the two systems,
 4     conventional distribution undertakings and the ISPs,
 5     are the exact opposite of each other.
 6  13335                However, as the Chairperson observed,
 7     even if the Commission was to consider that some entity
 8     within the Internet system was a BDU, virtually all of
 9     the rules which the Commission has in place relative to
10     BDUs such as rate regulation, simultaneous substitution
11     for advertising, as well as tiering and linkage, are,
12     to use your words, Chairperson, "probably not
13     applicable".
14  13336                Consequently, all that would be left
15     when these other matters are stripped away would be,
16     again as you indicated, Chairperson, Commission
17     consideration that it might levy a fee.  It was
18     interesting that when this proposition was put to
19     counsel for the Directors Guild of Canada he did not
20     consider that a fee would be appropriate -- and I am
21     now quoting him -- "unless there was a pretty high
22     threshold passed in terms of broadcast quality
23     distribution".  As we have discussed, the record
24     clearly demonstrates that such a threshold, if ever
25     met, is some five to ten years away and clearly not


 1     present today.
 2  13337                Therefore, for all of these reasons,
 3     and reasons set out in much greater detail in our
 4     written argument, it is our submission the "stuff"
 5     available through interactive new media does not
 6     constitute "broadcasting" as that term is defined in
 7     the Broadcasting Act, nor is the scheme and purpose of
 8     the Broadcasting Act intended to capture interactive
 9     new media activity.
10  13338                I will now ask Julie Garcia to
11     address issues relating to Canadian content and access
12     to higher speed facilities.
13  13339                MS GARCIA:  Chairperson and Members
14     of the Commission, as I trust was evident to the
15     Commission in our written filings and in our appearance
16     here last November, AOL Canada considers Canadian
17     content to be an extremely important part of the
18     services it provides to consumers.  Without any
19     requirement or prompting, we have devoted considerable
20     resources to the production of Canadian new media and
21     have taken steps, such as our partnering arrangement
22     with Marc Boucher of Maple Square, to ensure that the
23     Canadian content receives prominent display and is
24     easily accessed.
25  13340                In the Chairperson's closing


 1     comments, he noted that many parties have expressed an
 2     opinion about the imposition of measures requiring
 3     operators of portals, content aggregators and others to
 4     provide visibility and prominence to new Canadian
 5     content.  As demonstrated by the record, it is our view
 6     that such measures are neither appropriate nor
 7     required.
 8  13341                Briefly, any Canadian business or
 9     individual can establish a Web presence with minimal
10     financing and programming skills.  Unlike the
11     conventional broadcasting system, access is not an
12     issue for new media.  As a result, there are low
13     barriers to entry for both the content producers and
14     for ISPs to enter the market.  This fact has been
15     recognized by the Commission in various determinations
16     forbearing from the regulation of the retail ISP
17     sector.
18  13342                It is AOL's strong belief that market
19     forces, rather than regulatory fiat, have provided the
20     optimal means to ensure that ISPs provide high quality,
21     relevant, informative and entertaining Canadian content
22     which is prominently displayed.  It is also our strong
23     belief, and supported by others in this proceeding,
24     that the creation of artificial and arbitrary measures
25     would inhibit rather than encourage the production of


 1     additional Canadian content.
 2  13343                The record in this proceeding on the
 3     issue of Canadian content was conveniently summarized
 4     by Commission McKendry during his questioning of
 5     counsel for the Directors Guild of Canada. 
 6     Commissioner McKendry summarized the record as follows:
 7                            "Maple Square told us that they
 8                            index over 60,000 Canadian
 9                            sites.  According to AOL, 5 per
10                            cent of all Web sites in the
11                            world are Canadian.  Rogers told
12                            us that Yahoo Canada can't keep
13                            up with the emergence of new
14                            Canadian sites.  They have two
15                            people working indexing them and
16                            they are always a little bit
17                            behind.  Rogers also told us
18                            that there is 14 million
19                            pages..." -- 14 million pages --
20                            "...of Canadian Web site
21                            information and AOL and Yahoo
22                            Canada, through Rogers, told us
23                            that they don't charge for
24                            indexing and they don't charge
25                            for display."


 1  13344                You will no doubt recall that as a
 2     result of this summary Commission McKendry then asked
 3     counsel for the Directors Guild about their written
 4     proposal for targeted financial support and a
 5     requirement that ISPs provide their customers with
 6     information on links to Canadian sites on their home
 7     pages.  Counsel informed the Commission that "the Guild
 8     in light of that experience would take the view, as you
 9     may, that there is no point in the Commission requiring
10     it if it's happening anyway".
11  13345                In conclusion, on this point, the
12     record in this proceeding demonstrates overwhelmingly
13     that market forces alone have and will continue to
14     ensure that adequate amounts of Canadian content are
15     readily accessible with prominent display to Internet
16     users.  As Greg discussed, any measures targeting the
17     distribution of Canadian new media content would be
18     beyond the Commission's statutory jurisdiction.
19  13346                I would like to turn to the issue of
20     access by Internet service providers to the higher
21     speed facilities of Canadian carriers.  This issue is
22     one which is of fundamental importance to the
23     advancement of new media in Canada, and one that goes
24     to the heart of the Commission's public interest
25     responsibilities.


 1  13347                Without going into a detailed
 2     background explanation, suffice it to say that the
 3     Commission, as you know, has made an explicit finding
 4     that incumbent telephone companies and cable
 5     companies -- as broadcast carriers -- have substantial
 6     market power with respect to higher speed access
 7     services.  And despite Mr. Engelhart's recent
 8     representations, the market is not yet sufficiently
 9     competitive to justify forbearance with respect to the
10     rates and terms on which the carriers provide the
11     higher speed access services.
12  13348                As a result, the Commission has held
13     that it would be appropriate to tariff the rates and
14     other terms on which such services are provided by
15     these incumbent broadcast carriers and telephone
16     companies.
17  13349                We recognize that the Commission has
18     initiated a proceeding, through Telecom Public Notice
19     CRTC 98-14, requesting comment on the methodology by
20     which the rates for higher speed access services should
21     be developed.  The written record in that proceeding
22     closed on November 2nd with the reply comments of The
23     Canadian Association of Internet Providers.  As a
24     result, AOL and the over 700 other competitive ISPs in
25     Canada are now waiting for the issuance of the


 1     Commission's decision.
 2  13350                AOL strongly endorses the message
 3     that the ISP community has put before the Commission in
 4     this proceeding, which was summarized by the
 5     Chairperson, and I quote, "that it's time for the
 6     Commission to take some action to resolve this - issue
 7     of access by ISPs to the higher speed facilities of
 8     Canadian carriers."
 9  13351                I would now like to return the final
10     argument to Greg Kane for concluding comments.
11  13352                MR. KANE:  Through our written
12     filings in the two preliminary phases, as well as our
13     appearance in the oral phase, AOL has been a full
14     participant in the Commission's examination of the
15     relevant questions and issues relating to the "stuff"
16     of new media.  Like other participants, we are
17     impressed with the record which the Commission has
18     generated as a result of this proceeding, and we
19     believe that the Commission's expectation of developing
20     a comprehensive record has been met.
21  13353                In accepting the invitation offered
22     by the Commission to participate in this proceeding,
23     AOL has tried to be as forthcoming and direct as
24     possible in responding to the Commission's questions
25     and addressing the various issues outlined in both the


 1     public notices and the questions raised during the oral
 2     portion of the hearing.
 3  13354                On behalf of AOL, I would like to
 4     emphasize that we respect the Commission for initiating
 5     this important proceeding and that there is no lack of
 6     respect when we submit the record demonstrates that the
 7     Commission's jurisdiction under both the Broadcasting
 8     and Telecommunications Acts does not extend to the
 9     "stuff" of new media content or new media service
10     providers.  We do not believe the Commission needs to
11     monitor the progression from "POTS" to "PANS", but if
12     it does so, then this monitoring should not be done in
13     the context of an exemption order.
14  13355                We trust that our submissions
15     throughout this proceeding, culminating in this final
16     argument, have been of assistance to the Commission and
17     we wish you well in your important deliberations.  We
18     would be pleased to answer any questions you might
19     have.
20  13356                THE CHAIRPERSON:  Thank you, Mr. Kane
21     and Ms Garcia.
22  13357                Just a question or two on this last
23     point, and we don't take any disrespect on this issue
24     when people say "Don't touch the stuff.  Keep your
25     hands off."


 1  13358                In your presentation this morning at
 2     about pages 5 and 6 dealing with this question of
 3     jurisdiction and definitions and exemption orders, and
 4     so on, you talk about -- where are we here?  About five
 5     or six lines up from the bottom of page 5 you say:
 6                            "We submit that the record in
 7                            this proceeding is clear that
 8                            the `stuff' available through
 9                            interactive new media does not
10                            today..." -- Underscore
11                            "today" -- "...constitute
12                            `broadcasting'.
13  13359                Then you go on page 6 to say that:
14                            "...the Commission cannot assert
15                            an anticipatory jurisdiction
16                            which, we submit, you would be
17                            doing if you were to issue an
18                            exemption order as a result of
19                            this proceeding."
20  13360                Now, one of the concerns that has
21     been expressed to us in the context of this proceeding
22     is the -- how shall I say -- the uncertainty with
23     respect to the Commission's role with respect to
24     treating new media on a going-forward basis, and it has
25     been expressed by some parties that the fact of this


 1     uncertainty has or may lead either to people simply not
 2     developing a business in Canada, which they otherwise
 3     might, for fear of requiring a broadcasting licence, or
 4     going elsewhere to do that, perhaps the United States.
 5  13361                If we accept that you are correct,
 6     that today it does not but tomorrow it might, and that
 7     one might define the parameters around which tomorrow
 8     it might -- and I assume that you would acknowledge
 9     that tomorrow it might if you are underscoring the
10     point that today it doesn't -- I'm wondering your view
11     about the Commission not asserting an anticipatory
12     jurisdiction -- that's not the phrase I might use, but
13     to make it clear, if one was going to take that route
14     that even if it is tomorrow the Commission would be
15     exempting it -- and I guess I'm kind of curious about
16     the point you seem to be stressing here, which my first
17     reading of it would be that even if it is going to be
18     you shouldn't today assert that you would be exempting
19     it.
20  13362                MR. KANE:  I would not like the focus
21     of the discussion to be on the word "today,
22     Chairperson, and the reason is that we simply want to
23     try to reach a safe ground and a noncontroversial
24     ground in terms of the Commission's jurisdiction, and
25     our point then is that the Commission jurisdiction


 1     clearly does not exist as a result of this
 2     proceeding -- the record of this proceeding.
 3  13363                To be clear, as you may recall from
 4     our appearance, we would take the position that even
 5     tomorrow it will not constitute broadcasting because of
 6     the issue of interactivity or, the word that was
 7     developed in the course of the hearing, the
 8     customization of the programming.  We believe that as
 9     the system evolves that degree of interactivity or
10     customization will continue to keep it outside the
11     purview of broadcasting.
12  13364                But my point is, let's not go there
13     because I don't think we have to for present purposes.
14  13365                But your point is well taken,
15     Chairperson, and it would be our recommendation that
16     rather than issuing an exemption order, which might be
17     problematic, the Commission could give a very clear
18     signal to the market through its pronouncement from
19     this hearing to say "We don't recognize jurisdiction
20     today, and as we continue to monitor the matter it may
21     arise in the future, but if it does, and if it does in
22     the way that we anticipate it might, our inclination
23     right now would be to issue an exemption order."
24  13366                So you would provide, I think, a very
25     good framework for the future in doing it that way and,


 1     more importantly, that would be the proper legal way in
 2     which you should do it, in our submission.
 3                                                        1000
 4  13367                THE CHAIRPERSON:  Okay.  Thank you.
 5  13368                I think counsel may have a question.
 6  13369                MS MOORE:  Thank you,
 7     Mr. Chairperson.
 8  13370                I would just like to clarify some
 9     comments that were made at the top of page 7, in
10     particular, it is the second full line from the top
11     where you state:
12                            "...a particular server would
13                            never receive a `program'
14                            because it is only the conduit
15                            for a portion of the packets
16                            that need to arrive at the
17                            end-user's computer."
18  13371                I just wanted to clarify whether you
19     are saying that not all of the packets would go through
20     the ISP and, if that is the case, who or what would be
21     the conduit for the remaining portions of the packets?
22  13372                MS GARCIA:  All of the packets would
23     go through the ISP to get to the end-user's computer,
24     but they wouldn't go in any particular order and they
25     wouldn't necessarily all ever reside on the same server


 1     so a program, as it's anticipated under the
 2     Broadcasting Act, would never be constituted in the
 3     transmission process.
 4  13373                MS MOORE:  Okay.  Thank you.  Those
 5     are my questions.
 6  13374                THE CHAIRPERSON:  Thank you, counsel.
 7  13375                Thank you very much, Ms Garcia,
 8     Mr. Kane.
 9  13376                MR. KANE:  Thank you.
10  13377                Madam Secretary.
11  13378                MS BÉNARD:  Thank you, Mr. Chairman.
12  13379                The next presentation will be la
13     Fédération culturelle canadienne-française.
15  13380                M. LAFRENIÈRE:  Bonjour, Monsieur le
16     Président et membres du Conseil.  Mon nom est
17     Pierre-Paul Lafrenière.  Je suis le coordonnateur du
18     Regroupement des arts médiatiques du Canada ainsi que
19     le coordonnateur de la production et des services à la
20     clientèle de ConceptArt multimédia, une entreprise
21     enregistrée de la Fédération culturelle
22     canadienne-française.
23  13381                Une petite clarification avant de
24     poursuivre.  C'est la première fois qu'on se présente
25     devant vous au sujet de ces questions et c'est surtout


 1     parce qu'on a entendu dire qu'il y a eu très peu de
 2     commentaires de la communauté canadienne-française sur
 3     ce sujet et on a beaucoup insisté pour qu'il y ait des
 4     commentaires déposés devant vous.
 5  13382                Alors il me fait plaisir, à titre de
 6     représentant de ces trois organismes nationaux, voués à
 7     la défense de la culture francophone au Canada et
 8     impliqués dans le développement de contenus canadiens
 9     sur l'Internet, de comparaître devant le comité du CRTC
10     chargé de la consultation sur les nouveaux médias. 
11     Permettez-moi de vous dresser le portrait des
12     initiatives actuelles et en développement dans les
13     communautés francophones et acadienne en matière de
14     création et de développement de contenus francophones
15     sur l'Internet, de vous parler de la concertation
16     associative qui se fait dans ce domaine, de vous
17     communiquer les besoins de ces communautés et de vous
18     suggérer des moyens quant à la garantie du contenu
19     canadien-français sur l'Internet.
20  13383                Les trois organismes qui me mandatent
21     de les représenter sont des organismes qui oeuvrent à
22     l'échelle du territoire canadien dans les communautés
23     francophones et acadienne situées à l'extérieur du
24     Québec.  Notre exposé et nos recommandations visent
25     donc les communautés francophones et acadienne oeuvrant


 1     dans un contexte minoritaire.
 2  13384                La Fédération culturelle
 3     canadienne-française, fondée il y a plus de 20 ans,
 4     regroupe les organismes provinciaux francophones
 5     oeuvrant dans le domaine de la culture, les artistes de
 6     toutes les provinces et territoires excluant le Québec,
 7     ainsi que cinq organismes sectoriels nationaux.  Elle a
 8     comme mission de soutenir le développement culturel des
 9     communautés canadiennes-françaises par le biais, entre
10     autres, de services d'appui, de formation et de
11     promotion de la culture.  Elle représente leurs
12     intérêts dans les grands projets et dossiers des arts
13     et de la culture, tel le dossier des nouveaux médias.
14  13385                ConceptArt multimédia a été créée
15     afin de favoriser la présence francophone sur
16     l'inforoute.  Elle est active dans la création et la
17     gestion de sites portails francophones et dans le
18     développement d'outils pouvant aider la communauté dans
19     des initiatives reliées à l'inforoute.
20  13386                Le Regroupement des arts médiatiques
21     du Canada, fondée en 1994, représente les
22     professionnels des arts médiatiques du
23     Nouveau-Brunswick, de l'Ontario et des provinces de
24     l'ouest.  Son rôle est de créer des liens entre ses
25     membres, mettre en place des outils et des structures


 1     d'information et de communication, favoriser la
 2     création d'un esprit de partenariat, assurer une
 3     collaboration et une concertation avec les organismes
 4     engagés dans le développement culturel et artistique
 5     des communautés francophones et acadienne et
 6     représenter ses membres auprès des gouvernements.
 7  13387                La sauvegarde du contenu canadien sur
 8     l'inforoute est d'une importance culturelle capitale. 
 9     La consultation nationale qu'effectue le CRTC sur
10     l'impact des nouveaux médias en est la preuve.  Nous
11     louons cet exercice et désirons attirer l'attention du
12     CRTC plus particulièrement sur la création, la
13     sauvegarde et le maintien du contenu canadien
14     francophone sur l'inforoute.
15  13388                Le contenu canadien francophone hors
16     Québec est actuellement créé par les organismes
17     communautaires, entreprises et individus francophones
18     qui ont des assises dans les communautés francophones
19     et acadienne du Canada.  Ce sont ces communautés,
20     enracinées dans le milieu, qui sont habilitées à
21     fournir un contenu canadien francophone qui reflète les
22     valeurs et réalisations locales, régionales,
23     provinciales et nationales.  Ce sont ces mêmes
24     organismes, entreprises et individus qui peuvent le
25     mieux analyser leur environnement pour le traduire en


 1     termes de développement et direction à donner.
 2  13389                La création et la sauvegarde du
 3     contenu canadien francophone ne peuvent être dévolues
 4     directement aux pourvoyeurs de services Internet et
 5     encore moins être assurées par eux,
 6  13390                - parce qu'ils ne sont pas enracinés
 7     dans les diverses communautés francophones et
 8     acadienne;
 9  13391                - parce qu'ils ne connaissent pas les
10     enjeux des communautés francophones et acadienne en
11     matière d'inforoute; et
12  13392                - parce que, s'ils étaient obligés de
13     par la réglementation de créer des sites portails
14     francophones, ils pourraient tout aussi bien limiter la
15     création de sites portails à leurs locataires.
16  13393                J'attire par ailleurs votre attention
17     sur le fait qu'une ou un internaute a le choix, au
18     départ, de configurer son navigateur soit pour déployer
19     une page vierge ou un portail de son choix, qui
20     pourrait être un des sites portails canadiens de langue
21     française.  Alors le simple fait de se brancher à
22     l'Internet ne nous engage pas à voir le contenu d'un
23     portail particulier.  On peut faire les choix qu'on
24     veut lorsqu'on se branche.
25  13394                Nous privilégions donc la création et


 1     la sauvegarde du contenu canadien via les organismes
 2     qui fournissent déjà des sites portails canadiens ou
 3     travaillent de concertation à les rendre disponibles et
 4     accessibles.
 5  13395                Présence et initiatives francophones.
 6  13396                Permettez-moi de vous faire un bref
 7     exposé de la présence et des initiatives francophones
 8     en matière d'Internet en vous présentant brièvement un
 9     descriptif des sites portails existants, en vous
10     renseignant sur les sites d'accès communautaires, sur
11     les divers programmes gouvernementaux auxquels
12     participent les communautés, ainsi que sur diverses
13     initiatives de commercialisation et de promotion en
14     cours.
15  13397                Sites portails existants.
16  13398                Au niveau national, voici entre
17     autres trois sites portails de la francophonie
18     canadienne:
19  13399                - est un site portail sur
20     les communautés francophones et acadienne du Canada; ce
21     site portail comprend entre autres un centre de forum
22     électronique, un centre de documentation, un agenda
23     d'activités de la francophonie et une liste des
24     portails principaux des communautés;
25  13400                - francovoyageur est un site portail


 1     contenant un répertoire annoté sur les sites existants
 2     de la francophonie canadienne sur Internet, incluant le
 3     Québec; et
 4  13401                - francoculture est un site portail
 5     sur le domaine des arts et de la culture au Canada
 6     français hors Québec; il comprend entre autres des
 7     portraits d'artistes, les catalogues complets de toutes
 8     les maisons d'édition et toutes les compagnies de
 9     théâtre professionnelles ainsi qu'un catalogue de vente
10     en ligne de produits culturels.
11  13402                Au niveau provincial:
12  13403                - neuf provinces et territoires ont
13     un site portail sur leur communauté francophone;
14  13404                - l'Ontario et la Nouvelle-Écosse ont
15     des projets de création de site portail en cours sur
16     leur communauté francophone; et
17  13405                - seule la Colombie-Britannique et
18     Terre-neuve n'ont pas d'initiative en cours à ce jour.
19  13406                Je vous ai mis en annexe à ce
20     document la liste des sites portails dans chacune des
21     provinces et territoires.
22  13407                Mise à jour de sites Web -- un projet
23     ÉdiWeb.
24  13408                ConceptArt multimédia développe
25     actuellement trois outils -- Public, Pro et Plus -- qui


 1     rendront plus simple la mise à jour d'un site Web
 2     francophone.  Le propriétaire d'un site Web pourrait
 3     faire la mise à jour de son site sans nécessairement
 4     connaître la programmation html.  Cette mise à jour se
 5     fera de façon interactive grâce à une programmation
 6     installée sur les serveurs de ConceptArt multimédia et
 7     avec l'aide de conseillers.  Le propriétaire pourra
 8     donc modifier son site sans l'aide du développeur. 
 9     Alors nous investissons dans des outils pour la
10     communauté.
11  13409                Sites d'accès communautaires
12     francophones à l'Internet -- programme d'Industrie
13     Canada.
14  13410                À compter de mars 1998, grâce au
15     Programme d'accès communautaire d'Industrie Canada, 130
16     communautés rurales et éloignées francophones hors
17     Québec ainsi que 250 communautés québécoises
18     francophones avaient pu se doter d'un site d'accès
19     communautaire desservant le grand public.  Les sites se
20     répartissent ainsi... vous avez la liste; je ne vais
21     pas aller nécessairement en détail, mais je peux vous
22     dire que c'est réparti à travers le Canada au niveau de
23     sites d'accès en français.
24  13411                Ce programme vise les communautés
25     rurales.  Les communautés francophones et acadienne


 1     attendent avec impatience la mise en oeuvre de
 2     l'élargissement du programme pour les communautés
 3     urbaines.  Et là, vous allez avoir plusieurs
 4     communautés urbaines qui vont se présenter vers ce
 5     programme.
 6  13412                Les groupes bénévoles et de
 7     bienfaisance francophones et l'Internet -- programme 
 8     VolNet d'Industrie Canada, un nouveau programme qui
 9     devrait être lancé de façon ouverte, j'espère, dans les
10     prochains mois.
11  13413                Les groupes bénévoles et de
12     bienfaisance francophones participeront bientôt à un
13     nouveau programme d'Industrie Canada, le programme
14     VolNet.  Celui-ci vise à améliorer l'accès du secteur
15     du bénévolat à l'infotechnologie et aux outils qui lui
16     sont nécessaires pour jouer un plus grand rôle dans la
17     société canadienne.  Il a pour objectif de brancher
18     10 000 groupes bénévoles et groupes de bienfaisance à
19     l'Internet d'ici la fin de l'année financière
20     2000-2001.  Le comité consultatif est à compléter la
21     mise en place de la structure de livraison du
22     programme.  En mars 1999, le programme sera lancé
23     ouvertement à la grandeur du pays.
24  13414                Je soulève ça parce que c'est un
25     moment critique en ce moment où plusieurs initiatives


 1     font en sorte que la communauté va être très présente
 2     au niveau de l'utilisation et la création de contenus.
 3  13415                Développement de contenu de langue
 4     française -- le programme Réseau des communautés
 5     virtuelles de langue française d'Industrie Canada.
 6  13416                Le programme Réseau des communautés
 7     virtuelles de langue française est une initiative
 8     d'Industrie Canada initiée en septembre 1998; il
 9     favorise l'appropriation de l'inforoute par la
10     population francophone canadienne ainsi que le
11     développement de contenu de langue française. 
12     L'objectif du programme est de positionner
13     avantageusement les communautés francophones et
14     acadienne du Canada dans la révolution numérique.  En
15     1998-1999, seuls des projets pilotes furent considérés. 
16     En mars 1999, le programme sera lancé ouvertement à la
17     grandeur du pays.
18  13417                Un contrat découlant de ce programme
19     est un projet intitulé "Trousse de développeur de
20     projet Internet".  Grâce au financement d'Industrie
21     Canada, en collaboration avec Développement des
22     ressources humaines Canada, ConceptArt multimédia est à
23     créer quatre répertoires et un document d'information
24     portant sur l'élaboration et la gestion d'un projet
25     Internet.  Il s'agit de répertoires regroupant les


 1     informations suivantes:
 2  13418                - les sites existants de la
 3     francophone canadienne sur Internet, en d'autres mots
 4     le site francovoyageur;
 5  13419                - les projets en développement et en
 6     poursuite dans les communautés de la francophonie
 7     canadienne;
 8  13420                - les sources d'appui financier pour
 9     des projets Internet; et
10  13421                - les ressources de production pour
11     des projets internet.
12  13422                Cette trousse sera disponible sur
13     divers sites portails de la francophonie canadienne;
14     elle sera aussi disponible en format numérique et
15     papier.
16  13423                Initiatives de commercialisation.
17  13424                ConceptArt multimédia négocie
18     présentement avec divers partenaires potentiels du
19     domaine bancaire afin d'élargir l'ampleur des
20     initiatives commerciales de la communauté.  Par
21     ailleurs, il a entrepris la vente de bannières
22     publicitaires sur les sites portails auprès de divers
23     commanditaires.
24  13425                Promotion des sites francophones.
25  13426                ConceptArt multimédia a entrepris


 1     récemment une démarche particulière auprès de TFO, de
 2     TVOntario et de la Société Radio-Canada en ce qui
 3     concerne l'agenda d'activités de la francophonie et la
 4     promotion des entreprises et produits artistiques
 5     affichés à l'Internet.
 6  13427                Concertation francophone.
 7  13428                Les communautés francophones et
 8     acadienne se concertent déjà depuis plusieurs années en
 9     matière de création et de développement du contenu
10     francophone sur l'Internet.
11  13429                Au niveau national:
12  13430                - Le Consortium des organismes
13     nationaux francophones sur le positionnement dans l'ère
14     numérique regroupe 11 organismes nationaux
15     francophones; il a été formé dans le but d'assurer une
16     présence continue et dynamique du français sur
17     l'inforoute, de développer une approche qui permettra
18     l'émergence d'une prise en charge des nouvelles
19     technologies d'information et de communication et de
20     contribuer à faire des communautés francophones et
21     acadienne de véritables "communautiques".
22  13431                - Le Comité consultatif du programme
23     Réseau des communautés virtuelles de langue française
24     d'Industrie Canada, formé de représentants et
25     représentantes de chacune des provinces et territoires,


 1     des ministères d'Industrie Canada, du Patrimoine
 2     canadien et Développement des ressources humaines
 3     Canada, a pour mission de positionner avantageusement
 4     la francophonie canadienne par l'intégration de
 5     l'information et des communications, et du réseautage
 6     dans toutes les facettes de son développement.
 7  13432                Au niveau provincial:
 8  13433                - Divers organismes de concertation
 9     oeuvrent au niveau provincial.  Mentionnons entre
10     autres le Consortium internet franco-ontarien,
11     regroupant 12 organismes francophones de l'Ontario dont
12     le rôle se rapproche du consortium national mais à une
13     échelle provinciale.  Le Consortium internet
14     franco-ontarien fut responsable entre autres de faire
15     la promotion du Programme accès communautaire auprès de
16     la communauté franco-ontarienne pour le compte
17     d'Industrie Canada visant la mise sur pied de centres
18     d'accès communautaires à l'Internet.
19  13434                Les besoins.
20  13435                Les organismes de concertation
21     francophone en matière d'Internet réfléchissent depuis
22     quelques années non seulement à la présence francophone
23     sur l'Internet mais au développement et au maintien du
24     contenu sur l'Internet.  Le Consortium des organismes
25     nationaux francophones et le Consortium internet


 1     franco-ontarien entreprendront en février, dans les
 2     prochaines semaines, une planification stratégique au
 3     cours de laquelle ils discuteront de leur prise en
 4     charge du contenu canadien-français.  Dix axes de
 5     développement de la présence et du contenu francophone
 6     à l'Internet ont d'ores et déjà été proposés et seront
 7     alors discutés et traduits en termes des besoins de la
 8     communauté.  Il s'agit de:
 9  13436                1.   l'émergence d'un leadership et
10     la promotion de l'innovation.
11  13437                2.   l'établissement de partenariats
12     en matière de contenu francophone, de compétence, de
13     communication, de capital et de commercialisation;
14  13438                3.   l'accès à des outils
15     technologiques et de l'appui technique;
16  13439                4.   la présence francophone sur le
17     World Wide Web en développant et liant, par exemple,
18     les principaux sites Web francophones, en développant
19     du contenu francophone, en développant et accédant à
20     des banques de données diverses et favorisant
21     l'interactivité et la mise ne place d'une communauté
22     intelligente;
23  13440                5.   le réseautage de lieux de
24     communication offrant les services de courrier
25     électronique avec attachement de dossiers binaires, des


 1     conférences, la gestion de conférences à partir de
 2     sites clients, l'accès à différents champs d'intérêt à
 3     partir d'un endroit commun;
 4  13441                6.   l'apprentissage continu par la
 5     formation en assurant la formation en français des
 6     différents intervenants et un accès aux outils de
 7     démarrage;
 8  13442                7.   la démarche d'accompagnement et
 9     animation dont l'évaluation de facteurs de succès, la
10     formulation de recommandations et d'ajustements, la
11     mise à jour de contenus, la mise en place de projets
12     utilisant l'Internet comme véhicule de concertation et
13     l'organisation d'activités ou d'événements centrés sur
14     l'Internet;
15  13443                8.   la contribution au développement
16     socio-économique dont la promotion de la communauté
17     francophone, le partage de ressources, de services et
18     de connaissances, l'accès à des services et des
19     personnes ressources et l'établissement de communautés
20     intelligentes;
21  13444                9.   le commerce électronique dont la
22     bancatique, le cybermagasinage, la publicité et le
23     marketing, les services gouvernementaux, le transfert
24     électronique de documents, la transmission électronique
25     des déclarations de revenus et les transactions entre


 1     entreprises; et
 2  13445                10.  la présence et la promotion à
 3     l'échelle internationale d'événements francophones tels
 4     le Sommet de la francophonie à Moncton en 1999 et les
 5     IVe Jeux de la francophonie dans la région
 6     d'Ottawa-Hull en 2001, et d'autres événements de la
 7     sorte.
 8  13446                Les enjeux.
 9  13447                En conclusion -- non, il y a des
10     recommandations qui viennent -- les enjeux prioritaires
11     pour les communautés francophones et acadienne en
12     matière de présence francophone canadienne à l'Internet
13     sont:
14  13448                1.   de s'approprier le contenu
15     francophone à l'Internet; c'est un contenu qu'elles
16     détiennent, qu'elles connaissent et qu'elles sont les
17     mieux habilitées à gérer et à mettre à jour;
18  13449                2.   d'obtenir un investissement
19     financier majeur leur permettant de développer,
20     entretenir et mettre à jour ce contenu;
21  13450                3.   de former la communauté à trois
22     niveaux:
23                            I. Premièrement, en éduquant
24     l'infrastructure organisationnelle des bienfaits des
25     nouvelles technologies afin de faciliter son


 1     cheminement et assurer son développement;
 2                            II.  En offrant une formation
 3     dans l'utilisation de l'Internet et des outils reliés à
 4     l'Internet; et
 5                            III.  En formant les cadres
 6     professionnels dans la création de sites.
 7  13451                À ce jour les programmes
 8     gouvernementaux visent principalement l'accès à
 9     l'Internet.  Les besoins actuels sont axés sur le
10     développement, l'entretien et la mise à jour des
11     contenus ainsi que sur la formation.
12  13452                Les recommandations.
13  13453                La Fédération culturelle
14     canadienne-française, le Regroupement des arts
15     médiatiques du Canada et ConceptArt multimédia et leurs
16     organismes membres recommandent donc au CRTC:
17  13454                1.   de reconnaître les organismes et
18     entreprises canadiens-français comme pourvoyeurs de
19     contenu canadien-français;
20  13455                2.   de créer un fonds destiné à:
21                            - créer des nouveaux contenus,
22                            - entretenir et mettre à jour le
23     contenu,
24                            - intégrer les nouvelles
25     technologies,


 1                            - réseauter les sites,
 2                            - fournir la formation et créer
 3     les outils de formation,
 4                            - fournir l'appui technique
 5     nécessaire,
 6                            - développer le commerce
 7     électronique de produits francophones, et
 8                            - promouvoir les activités et
 9     les sites francophones.
10  13456                Ce sont entre autres des activités
11     qui pourraient être financées par un tel fonds.
12  13457                Au nom des organismes que nous
13     représentons, nous désirons remercier le CRTC d'être à
14     l'écoute des besoins et recommandations des communautés
15     francophones et acadienne en matière de nouveaux
16     médias.
17  13458                Merci.
18  13459                LE PRÉSIDENT:  Merci, Monsieur
19     Lafrenière.  Je pense que nous n'avons pas de
20     questions.  Merci beaucoup.
21  13460                M. LAFRENIÈRE:  Merci.
22  13461                THE CHAIRPERSON:  I think we will
23     take one more presentation and then we will take our
24     morning break.
25  13462                Madam Secretary.


 1  13463                MS BÉNARD:  Thank you, Mr. Chairman.
 2  13464                The next presentation will be Astral
 3     Broadcasting Group.
 4                                                        1015
 6  13465                MR. ZOLF:  Obviously time is
 7     everything.  I stepped out for five minutes.  My
 8     apology.
 9  13466                Good morning, Mr. Chairman, members
10     of the Commission.  It does say good morning there and
11     I'm glad it does say good morning on the presentation.
12  13467                My name is Stephen Zolf.  I am here
13     today on behalf of the Astral Broadcasting Group to
14     summarize Astral's final written argument.
15  13468                Astral's presentation will address
16     the following issues:  The Broadcasting Act and new
17     media services.  Who are the relevant broadcasting
18     undertakings in a new media environment?  What are the
19     next steps for the Commission following the conclusion
20     of this proceeding?  What is the appropriate scope of a
21     new media exemption order?  Finally, should the
22     Commission modify its regulatory treatment of
23     traditional broadcasting services as new media
24     proliferates?
25  13469                The Commission has heard a range of


 1     views in this proceeding as to the appropriate
 2     regulatory treatment of new media services.  A number
 3     of parties have argued that none of the content on the
 4     Internet is within the Commission's jurisdiction, while
 5     others have argued that the Commission has no choice
 6     but to regulate the Internet.
 7  13470                Astral's position on this matter is
 8     clear.  A sub-set of new media content on the Internet
 9     indeed falls under the definition of broadcasting. 
10     That being said, the nature and attributes of this
11     content currently pose little threat of bypassing
12     traditional broadcasting services and their
13     contributions to the creation and presentation of
14     Canadian content.
15  13471                This in turn suggests that it will be
16     appropriate for the Commission to take a low profile
17     with respect to new media content and the Internet for
18     now.
19  13472                But Astral's concern has largely been
20     a forward looking one.  To the extent that the Internet
21     becomes a partial or complete alternative for the
22     delivery of the programming that is now provided within
23     the broadcasting system, the current contributions made
24     by Canadian broadcasting undertakings would be
25     threatened.


 1  13473                This threat would occur because of a
 2     critical dichotomy. While the Internet as a
 3     distribution medium has had a significant impact on the
 4     economics of delivering content, it has not and it will
 5     not change the economics of program creation.
 6  13474                If indeed the Internet evolves to
 7     allow traditional broadcasting content to be
 8     distributed on a ubiquitous basis, then the Commission
 9     will need to ensure favourable conditions for the
10     expression of Canadian voices.
11  13475                Moreover, we have seen that the pace
12     of change in this area is extremely fast and impossible
13     to predict.  Again, this underscores the need for the
14     Commission to reserve its right to oversee the new
15     media sector in the future.
16  13476                During our oral appearance before the
17     Commission on December 2, Chairperson Colville sought
18     our view as to the scope of the Commission's
19     jurisdiction under the Act.  By way of final argument,
20     we note that most of the new media content that is
21     currently distributed on the Internet is predominantly
22     alphanumeric text and, therefore, would not be programs
23     under the Act.
24  13477                Furthermore, even programs would not
25     comprise broadcasting if they are customized in a


 1     manner that would allow individual users to view
 2     different images, hear different sounds and read
 3     different text.  Using the nomenclature of the Act,
 4     such content would not be transmitted for reception by
 5     the public.
 6  13478                Of course, this hearing has
 7     demonstrated that the dividing line between what does
 8     and what does not come under the paradigm of the Act is
 9     not an easy one to draw. In any case, we support
10     Chairperson Colville's suggestion made during our
11     December 2 appearance that the Commission should
12     clarify its approach to interpretation of the phrase
13     "for reception by the public".
14  13479                In our view, this would effectively
15     provide more certainty to the industry about the
16     sub-set of content that the Commission is concerned
17     about.
18  13480                Astral fully supports this principled
19     interpretive approach to the Commission's jurisdiction,
20     but we must be clear about where this dividing line is. 
21     There mere ability to select new media content on a
22     non-simultaneous or point to point basis is not, in our
23     view, sufficient to take the activity outside of the
24     ambit of the Act.
25  13481                While we noted in our written


 1     submissions that the ability to select content at a
 2     user's discretion was one element of non-broadcasting
 3     content, it should be clarified that this attribute,
 4     without any other defining characteristic such as
 5     interactivity or customization, would not be sufficient
 6     to take it outside of the definition of broadcasting.
 7  13482                We are pleased to note that other
 8     parties clearly support this view.  The Directors Guild
 9     of Canada is on record as urging the Commission to
10     focus on whether the nature and characteristics of the
11     content are amenable to customization rather than the
12     "mechanism by which the content is transmitted and
13     received by a user".
14  13483                This analysis clearly suggests that
15     traditional long form content such as feature films and
16     other long form programming will comprise broadcasting,
17     even when such content becomes available over the
18     Internet on an on-demand basis.
19  13484                In fact, as broadband becomes more
20     ubiquitous over the Internet, it is likely that the
21     proportion of broadcasting content will similarly
22     increase.  This again leads to the conclusion that the
23     Commission should reserve its right to be proactive in
24     this sector if the need arises.
25  13485                A number of parties during the


 1     proceeding noted that it is difficult to predict to
 2     what extent new media distribution networks will
 3     duplicate a broadcast paradigm.  However, in response
 4     to various questions raised by the Commission during
 5     the hearing, three specific issues are noteworthy.
 6  13486                First, the definition of a
 7     broadcasting undertaking.  Astral concurs with those
 8     parties who noted that the definition of broadcasting
 9     undertaking in the Act is expansive rather than narrow
10     in scope.  It is defined to include a distribution
11     undertaking, a programming undertaking and a network.
12  13487                Ultimately a new media broadcasting
13     undertaking could consist of a hybrid programming and
14     distribution undertaking, depending ultimately on the
15     nature of the transmission and receive arrangements
16     employed.
17  13488                Second, the role of ISPs.  Already
18     certain functions performed by ISPs resemble a
19     broadcasting function.  Content aggregators and ISPs
20     are increasingly replicating the role of traditional
21     BDUs.  As the price of access falls, ISPs are looking
22     at alternative means to differentiate their product and
23     to generate revenues.
24  13489                They are increasingly integrating the
25     access and the aggregation functions to include the


 1     selection and organization of content.  So the primary
 2     function of an ISP may indeed move away from that of a
 3     mere gateway and closer to that of a program
 4     distribution undertaking.
 5  13490                Furthermore, during the public
 6     hearing the Commissioned questioned the relevance of
 7     the comparison between ISPs and BDUs.  Chairperson
 8     Colville noted that ISPs face lower costs and
 9     significantly lower barriers to entry than BDUs.  This
10     in turn suggests that the potential for gatekeeping
11     that exists among traditional BDUs would be
12     non-existent in a new media context.
13  13491                Yet, it may be equally likely that
14     the ISP market evolves to be less competitive in view
15     of the potential for new media service providers to
16     acquire a dominant position by virtue of access to the
17     local high speed delivery last mile.
18  13492                This was already raised before the
19     Commission during the hearing.  This in turn suggests
20     that the ISP market could find an equilibrium in which
21     only a handful of ISPs survive.
22  13493                The recent application by CAIP to the
23     Commission seeking equitable access to retail telco
24     ADSL Internet access services underscores the potential
25     for dominant firm behaviour in the broadband access


 1     sector.
 2  13494                Third, ISP territoriality.  We are
 3     pleased to note that other parties have also noted the
 4     likelihood of the Internet ultimately adopting the
 5     strictures and disciplines of copyright.  In as little
 6     as five years copyright sanctions may begin to apply
 7     which will impose a discipline of territoriality on the
 8     distribution of long form programming.
 9  13495                What are the next steps for the
10     Commission?  All of these factors suggest that at the
11     very least the ultimate configuration of the new
12     distribution sector is in flux.  While ubiquitous
13     delivery of long form broadcasting on the Internet is
14     not here today, the Commission must nevertheless avoid
15     throwing the baby out with the bath water if this
16     medium begins to resemble the traditional broadcasting
17     paradigm.
18  13496                In fact, the Internet is already in
19     some aspects beginning to resemble a mass
20     communications medium.  As we noted in our written
21     submissions, the development of multicast Internet
22     protocols have enabled the use of point to multipoint
23     broadcast models over digital networks.  This has moved
24     the Internet paradigm further away from the litmus test
25     of a non-broadcasting activity, as some have suggested,


 1     namely individual receivable transmissions.
 2  13497                Today we do not know the extent to
 3     which the Internet will tomorrow serve as a primary
 4     delivery pipeline for traditional film and television
 5     programs.  This merely underscores the need for the
 6     Commission to reserve its right to assert its
 7     jurisdiction on a prospective basis in order to
 8     implement cultural policy initiatives in the future.
 9  13498                Astral supports the issuance of a
10     broad exemption order for new media services.  At this
11     stage of their evolution, we agree that neither
12     licensing new media broadcasting undertakings nor
13     requiring compliance with other provisions of the
14     Broadcasting Act would contribute in a material manner
15     to the implementation of broadcasting policy.
16  13499                If the Commission adopts an exemption
17     order, it should be broad as well as time limited so
18     that it has the right to revisit the overall new media
19     area after a reasonable time period.  The Commission
20     should also make clear its expectations to the industry
21     that at the conclusion of the specified period, it will
22     consider reasserting its jurisdiction over all or some
23     of the new media content, if necessary.
24  13500                This time limited approach will be
25     useful, particularly if the Internet indeed becomes a


 1     partial or a complete substitute medium for the
 2     delivery of traditional film and television
 3     programming.  This would preserve the Commission's
 4     authority to address key cultural policy objectives,
 5     namely the creation and exhibition of Canadian film and
 6     television programming.
 7  13501                The Commission should also accompany
 8     its exemption order with a statement under section 6 of
 9     the Act that it will continue to monitor how the new
10     media environment develops.  This policy statement
11     would provide adequate notice to the new media sector
12     that the Commission could indeed have a potential role
13     in overseeing content that falls squarely within its
14     ambit.
15  13502                We note that some parties have
16     proposed that all exempt undertakings should be
17     required to make contributions under certain
18     conditions.  Astral supports these proposed approaches
19     in principle, but nevertheless feels that they may be
20     premature at this time.  It would be preferable if the
21     Commission considered such an approach after an initial
22     blanket exemption process.  We have suggested 18 to 24
23     months.
24  13503                Moreover, there is a risk that
25     attaching conditions to an exemption order may be


 1     subject to a legal or jurisdictional challenge by
 2     parties to whom the exemption order may inadvertently
 3     attach.  Thus, we support the arguments for a very
 4     broad exemption approach.  At this stage there is no
 5     need to split hairs among different types of new media
 6     services.
 7  13504                Finally, we note that a number of
 8     parties have submitted that the Commission must avoid
 9     any asymmetry of regulation between new media and
10     traditional broadcasting undertakings.  They assume
11     that the Commission is powerless to take action in
12     relation to new media broadcasting services. 
13     Accordingly, they seek a similar equitable regime of
14     forbearance.
15  13505                We urge the Commission to reject
16     these arguments.  They would have you believe that
17     there is no longer any justification for regulation in
18     traditional broadcasting markets.  We beg to differ.
19  13506                As we noted in our appearance on
20     December 2, the Broadcasting Act was intended to be
21     technologically neutral.  It clearly recognizes that
22     old wine can indeed be poured into new bottles.  Thus,
23     Astral rejects the view of some of the parties of the
24     inevitability of total forbearance with respect to new
25     media solely due to the difficulties involved in


 1     asserting or enforcing jurisdiction under the Act.
 2  13507                There will indeed be a continued need
 3     for the Commission to provide the appropriate
 4     incentives in traditional broadcasting environments to
 5     produce, promote and distribute such programming, even
 6     if that programming is ultimately consumed on a purely
 7     on-demand point to point fashion over new media
 8     distribution networks such as the Internet.
 9  13508                It is unlikely that the new media
10     distribution network model alone can support certain
11     types of content, namely high cost, long form
12     programming designed initially for distribution in
13     traditional mediums.
14  13509                Rather, the creation of this type of
15     programming depends on the existence of adequate
16     regulatory and other structural incentives to produce
17     and distribute and exhibit such content in traditional
18     broadcast mediums.
19  13510                There is a cogent precedent for the
20     distinction between long form content such as full
21     length feature films delivered on a purely VOD basis,
22     for example, and other point to point services that may
23     be appropriately exempted by the Commission.
24  13511                This distinction was articulated in
25     the Convergence Report where the Commission indicated


 1     that mass appeal on-demand applications, such as VOD,
 2     because of their nature and scale can and should be
 3     regulated where this would contribute materially to the
 4     cultural objectives of the Act.  In fact, the
 5     Commission has licensed a number of VOD providers,
 6     including an Astral-owned service on this rationale. 
 7     Thus, it follows that similar regulatory tools should
 8     be applied to such services when they are distributed
 9     over global distribution networks such as the Internet.
10  13512                These are Astral's final comments and
11     recommendations in this proceeding.  We are grateful to
12     the Commission for initiating this important
13     proceeding.
14  13513                I would be pleased to respond to any
15     questions.
16  13514                THE CHAIRPERSON:  Thank you, Mr.
17     Zolf.  I don't think we have any questions.  Again,
18     thank you very much.
19  13515                MR. ZOLF:  Thank you.
20  13516                THE CHAIRPERSON:  We will take our
21     break at this time and reconvene at a quarter to
22     eleven.
23     -- Short recess at / Courte suspension at 1030
24     --- Upon resuming at / Reprise à 1050
25  13517                THE CHAIRPERSON:  We will return to


 1     our proceeding now.
 2  13518                Madam Secretary.
 3  13519                MS BÉNARD:  Thank you, Mr. Chairman.
 4  13520                The next presentation will be by the
 5     Canadian Association of Internet Providers.
 6  13521                THE CHAIRPERSON:  Mr. Kawchuk.
 8  13522                MR. KAWCHUK:  Good morning.  My name
 9     is Rob Kawchuk from the Canadian Association of
10     Internet Providers, and we are very pleased to be here.
11  13523                With me today are some familiar
12     faces, starting with Julie Garcia from America Online
13     Canada; Richard Cantin from UUNet Canada and Wayne
14     MacLaurin from Cyberus Online.  As of three days ago
15     Wayne became a board member of CAIP at our AGM.
16  13524                Today we are going to talk about
17     three main issues:  access to telecom, some Broadcast
18     Act issues; and what CAIP and the industry itself is
19     doing regarding self-regulation and self-management.
20  13525                Richard.
21  13526                MR. CANTIN:  CAIP wishes to summarize
22     its position with respect to these proceedings and to
23     build upon our earlier oral presentation.
24  13527                In its oral presentation the
25     Commission engaged the CAIP panel in a discussion of


 1     the merits of a "hands off" approach to regulating the
 2     new media industry.
 3  13528                While there are areas where such an
 4     approach is necessary, CAIP firmly believes that there
 5     are a number of key roles which the Commission must
 6     take in order to assist the nascent new media industry
 7     in Canada in becoming an international force.  These
 8     roles include a stronger regulatory hand, primarily
 9     under the Telecommunications Act, in respect to the
10     creation of a competitive last-mile infrastructure for
11     these new media products and services.
12  13529                CAIP respectfully submits that the
13     Broadcasting Act does not apply to current new media
14     content and services, and that the Commission should
15     maintain a hands off approach with regards to the
16     Broadcasting Act.
17  13530                Throughout the proceedings the
18     Commission and a number of our colleagues focused
19     attention on access to the Canadian infrastructure on
20     which new media is transported and delivered.  CAIP and
21     its membership believe the issue of competitive
22     last-mile access is crucial to the expansion and
23     success of the Canadian new media industry.
24  13531                As such, our membership is presently
25     involved in a number of discussions and proceedings,


 1     including some before this Commission, involving the
 2     opening of access to the networks of the telephone
 3     companies and cable companies.  For years telephone
 4     companies and cable companies alike have been working
 5     towards building the physical networks to carry broader
 6     bandwidth.  Technologies, however, are continuously
 7     emerging, which make the existing infrastructure faster
 8     and more cost-efficient.
 9  13532                While the costs of building the
10     physical networks is enormous and far beyond the
11     investment capabilities of all but the largest industry
12     players, the initial infrastructure is currently in
13     place.
14  13533                If new technologies are implemented
15     into the last mile of the existing infrastructure, the
16     Canadian industry will have access to faster, more
17     cost-effective networks, and the Canadian public will
18     have access to competitively priced services and
19     innovative new media products.
20  13534                Ron.
21  13535                MR. KAWCHUK:  Thank you.
22  13536                I would like to talk a little bit,
23     briefly, about some of the things that have been in the
24     recent press and media about what is actually happening
25     today.


 1  13537                We had an annual meeting a few days
 2     ago and Bell Canada representatives were present to
 3     discuss a service option with us.  That service option
 4     included significant delay because of new technology,
 5     technology that is currently not being used by their
 6     own affiliate, though they are an affiliate that is
 7     already in the marketplace.  There appear to be two
 8     services in high speed access in ADSL, one of which is
 9     tariff.  We highly encouraged the telco to immediately
10     tariff the other service if they -- if they would so do
11     so that we could have access to it.
12  13538                We believe that Bell is actually
13     stalling on this whole issue, and we think it is a key
14     issue because we believe that the outcome of this
15     specific battle and this overall war is the future of
16     the Internet in Canada and whether we will have a
17     vibrant industry or whether we will end up with a
18     duopoly.
19  13539                On the one hand, the telephone
20     companies have provided some access to their ADSL
21     services, but non-facilities-based members of CAIP
22     contend that such access is not being offered on a
23     competitive basis.  On behalf of these members CAIP is
24     asking the Commission to direct the telephone companies
25     to provide both competitively priced access and timely


 1     implementation of new cost-effective technologies.
 2  13540                With respect to the cable companies,
 3     as you know, CRTC 96-1, quite some time ago, opened up
 4     access, and we had some input during the proceeding
 5     98-14 that set a time frame and a schedule for third
 6     party access to cable to also take place, and we
 7     certainly want the cable companies to abide by that and
 8     the Commission to move forward.
 9  13541                Cable companies, on the other hand,
10     have yet to open their access to third parties, despite
11     the Commission's direction some years ago to do so.
12  13542                CAIP believes the Commission's
13     immediate intervention on these issues will provide
14     much needed support to the new media industry in
15     Canada, both on the service side and with respect to
16     the production of new innovative digital content and
17     applications.
18  13543                Richard.
19  13544                MR. CANTIN:  It should be noted that
20     while CAIP membership does have a vested interest in
21     securing access to the infrastructure, CAIP is not
22     alone in its pursuit of additional speed and bandwidth. 
23     CAIP is in agreement with many of the new media content
24     providers and their representatives who have appeared
25     before the Commission to note that greater access to


 1     broadband networks would foster the growth of Canadian
 2     new media content and production industry.
 3  13545                The Commission has also seen, during
 4     the course of these proceedings, that access to such
 5     networks would also benefit other Canadian industries
 6     such as health care, education and a myriad of small
 7     businesses.
 8  13546                As was seen in October during the
 9     OECD Ministerial Conference in Ottawa, much of the
10     world is looking to Canada as the leader in new media
11     technology and the policy relating hereto.  With a
12     clear stated direction in regulatory policy to address
13     new media, Canada would be in a position to set the
14     benchmark for other jurisdictions.
15  13547                CAIP, along with other participants,
16     has stated that it does not believe the Broadcast Act
17     applies to new media.  For clarity, CAIP contends that
18     the content available as new media is not programming
19     within the meaning of the Act, and the distribution of
20     such content is not broadcasting within the meaning of
21     the Act.  CAIP further contends that where the nature
22     of new media falls beyond the scope of the application
23     of the Act, the Commission does not have the
24     jurisdiction to use its exemption powers.
25  13548                CAIP believes that all of the policy


 1     objectives are met under the status quo, without the
 2     intervention of the Commission, without additional
 3     legislation, and without concluding that the content is
 4     programming or the service is broadcasting.
 5  13549                The bulk of the new media created by
 6     and used by Canadians in Canada still falls into
 7     categories which, under any circumstances, should not
 8     be considered broadcasting within the meaning of the
 9     Act, for example, e-mail, business-to-business data
10     transmissions, and still images with limited
11     interactivity.
12  13550                Respondents in a recent study
13     indicated that 84 per cent of the activities or
14     services done online relate to e-mail communications. 
15     Other key activities include research, companies,
16     financial institutions and products; downloading
17     software and visiting sites, including cultural sites. 
18     Looking at new media applications from a products
19     perspective instead of activities or services, a 1997
20     survey reported that U.S. home users purchased
21     software, books, travel-related items, computers,
22     subscriptions, information and stocks.
23  13551                Internet and new media opportunities
24     also include software application development,
25     integration, training, as well as value-added services


 1     such as security and network computing, none of which
 2     constitute broadcasting.
 3  13552                The seven consensus points addressed
 4     earlier by CAIP have been addressed in our earlier
 5     presentations, and that, coupled with AOL's comments of
 6     the morning, have adequately addressed the hands off
 7     issues in respect of the Broadcasting Act.
 8  13553                With respect to CAIP's position that
 9     self-regulation is both preferable and effective, we
10     refer the Commission to CAIP's published Fair Practice
11     Guidelines, attached with our Phase III submission,
12     which covers the following five areas:  privacy,
13     security, content management, reputable service
14     delivery, and unsolicited e-mail or SPAM.
15  13554                Ron will, with a recent testimonial,
16     demonstrate how these practices have been successfully
17     used in Canada.
18  13555                MR. KAWCHUK:  As you know, we like to
19     tell you a little bit about our members of our
20     association, and there is a very interesting member who
21     appeared at our Annual General Meeting.  Actually,
22     while I was talking to John Darcy (ph) from the media
23     awareness group he came up.
24  13556                It's a company called the OA Group of
25     Companies in Edmonton.  They provide end-to-end


 1     solutions to business institutions and government
 2     agencies.  Many of those agencies fall under the
 3     Freedom of Information and Privacy Act.  Their
 4     division, OA Internet, was recently tendered a bid for
 5     a FOIT (ph) organization.  In that bid they included
 6     their affiliation with CAIP and their voluntary use of
 7     CAIP's Code of Conduct covering issues like privacy.
 8  13557                This document was reviewed by the
 9     committee and was included in their final report to
10     their board as one of the salient points.  The total
11     contract for Internet services was a six figure
12     contract over a three year term, and the message was: 
13     Thank you, CAIP.
14  13558                And I also would like to thank that
15     company for starting to move forward with industry
16     self-management.
17  13559                MR. CANTIN:  In conclusion, we
18     believe that the Commission will continue to play an
19     active role in the new media industry in Canada.  Our
20     immediate concern is that the infrastructure on which
21     new media is distributed be accessible to Canadians at
22     competitive prices and that the Canadian cultural
23     industries developing in new media be granted the right
24     to continue and grow.
25  13560                On behalf of its membership and the


 1     Canadian new media industry, CAIP undertakes to
 2     continue its leadership role in the establishment of
 3     industry practice, codes of conduct and community
 4     education, both nationally and internationally.  In
 5     this regard, CAIP released its Fair Practices
 6     Guidelines on Friday, Feb. 5, 1999, which will serve as
 7     a benchmark for the industry and are included in your
 8     package.
 9  13561                CAIP wishes to thank the Commission
10     for the opportunity to participate in this process and
11     looks forward to working with the Commission on other
12     new media related matters.
13  13562                THE CHAIRPERSON:  Thank you very
14     much, Mr. Cantin and Mr. Kawchuk.
15  13563                I don't think we have any questions. 
16     Thank you.
17  13564                Madam Secretary.
18  13565                MS BÉNARD:  Thank you, Mr. Chairman.
19  13566                The next presentation will be by the
20     Independent Internet Service Provider Group.
22  13567                MR. MacLAURIN:  Good morning.
23  13568                The Independent group of ISPs is a
24     loose affiliation of a number of ISPs who felt that our
25     views were best represented by ourselves rather than


 1     some of the larger affiliates we are with.
 2  13569                Tim Denton here is our legal counsel
 3     and myself, Wayne MacLaurin, with Cyberus Online.
 4  13570                We have had the advantage of
 5     co-ordinating our response with CAIP.  We can only
 6     declare our complete agreement with its positions.
 7  13571                Basically they are twofold:  First,
 8     that the Broadcasting Act does not apply to the
 9     Internet; and, second, that the critical issue for the
10     survival of a healthy domestic access market depends
11     upon the Commission taking action to regulate the terms
12     upon which owners of "last-mile" access facilities, and
13     their affiliates, offer Internet access to the public.
14  13572                Of the two issues, it is now apparent
15     that the second is of pressing urgency.
16  13573                There remain a few points which we
17     think it would be useful to emphasize.  First, the
18     discussion of whether the Broadcasting Act applies must
19     be linked to an understanding of the technical system
20     called the Internet.
21  13574                "New media" is a term without precise
22     meaning.  It is used equivocally to cover both the
23     technical system for distributing signals on IP
24     networks, and the products and services that most
25     resemble television programs that might be distributed


 1     on such networks.
 2  13575                In our October 1st submission, the
 3     Independent Group was at pains to describe the
 4     technical construction and operation of the Internet,
 5     including the software standards that make it work. 
 6     The considerations of the Commission must be grounded
 7     in a precise technical understanding of the Internet to
 8     be of any use or effect.
 9  13576                The Internet is the result of a
10     fundamental redesign of communications based on the
11     needs and characteristics of computers, rather than
12     that of the human voice.  So great a transformation of
13     communications does it represent that we can now talk
14     about the Public Switched Telephone Network as a
15     "legacy" system.
16  13577                The transformation of communications
17     systems, including what we now call broadcasting, will
18     not stop.  All communications, including a ubiquitous
19     broadband video-capable system of the near future, will
20     eventually run on the Internet protocol and related
21     technical ideas.
22  13578                Despite this ongoing transformation,
23     the broadcasting system as we know it has a reasonable
24     long life ahead of it.  The public does not yet see an
25     affordable alternative to the convenience of the


 1     television set, and interactive broadband to the home
 2     is in its infancy.  These considerations determine the
 3     pace of change, but not its direction or ultimate
 4     destination.
 5  13579                The arguments against the application
 6     of the Broadcasting Act from a legal point of view are
 7     compelling.  They are extensively discussed in other
 8     submissions and in the previous submissions of this
 9     group.  The technical characteristics of how a person
10     selects and receives material found on the servers of
11     the Internet mean the distribution of content via the
12     Internet cannot be "broadcasting" and that the content
13     available is not "programming".  They need not be
14     related further here.
15  13580                Though the determinations of American
16     courts have no legal force in this country, it is
17     significant that the United States Supreme Court, and
18     the U.S. Federal Court before it, determined that the
19     Internet did not constitute "broadcasting" after a
20     careful examination of its technology and methods of
21     operation.
22  13581                However, beyond the legal arguments,
23     which are compelling enough, there remains a further
24     fundamental question for the Commission.  This concerns
25     the extent of the Broadcasting Act.  Putting it in its


 1     essence, the problem with the Broadcasting Act is that
 2     it captures systems, not transactions.  It knows no
 3     boundaries.  Once it captures a part of a system as
 4     "broadcasting", it captures the whole.  The Commission
 5     must carefully weigh this feature of the Act.
 6  13582                The issue is not whether transactions
 7     on the Internet are subject to the laws of the land. 
 8     It is commonly agreed that the rule of law, both civil
 9     and criminal, applies to all transactions on the
10     Internet, and that "cyberspace" is not some independent
11     realm immune to competent legislation.  Sale is a sale,
12     whether conducted on paper or through a
13     computer-mediated transaction.  So is fraud.  Neither
14     legal nor criminal activity changes its nature by the
15     mere fact that it is transacted through computers and
16     telecommunications.
17  13583                The issue for the Commission to
18     consider, if it really wanted to apply the Broadcasting
19     Act to "new media", is its potentially unlimited
20     application to all components of the Internet within
21     federal jurisdiction.
22  13584                The Broadcasting Act captures systems
23     and undertakings, not transactions.  The Act subjects
24     "distribution undertakings" or "programming
25     undertakings" to its authority.  Once deemed to be a


 1     part of a broadcasting "system", all the equipment
 2     involved tends to be deemed part of a
 3     government-regulated system, subject to licensing and
 4     heavy penalties for evasion of licensing.
 5  13585                As the technology of communications
 6     evolves towards a ubiquitous infrastructure of
 7     broadband-capable signalling, based on the Internet
 8     protocol and packet switching, every form of
 9     electronically or photonically mediated transaction
10     will be potentially subject to the Broadcasting Act, if
11     the Commission or the courts of this land decide that
12     any one of them, transacted across the Internet, is
13     "broadcasting" within the meaning of the Act.
14  13586                The defect of the Broadcasting Act is
15     that if it were ever to be applied to the Internet it
16     would capture too much.  Like nuclear weapons, the
17     Broadcasting Act is too devastating to be used.  A
18     25 megaton bomb going off over Detroit would rip the
19     shingles off roofs in Toronto.  Likewise the
20     Broadcasting Act applied to the Internet would have
21     large, catastrophic and unintended consequences for
22     every aspect of the Internet in this country.  The Act
23     would apply indiscriminately to computers attached to
24     the Internet, if any part were found to be
25     "broadcasting".


 1  13587                Consider the following:  The number
 2     of Internet service providers in Canada is estimated at
 3     around 700.  If ISPs were found to be "distribution
 4     undertakings", the Commission would be forced to
 5     license them.
 6  13588                The Act does not stop at
 7     "distribution undertakings", however.  In a broadband
 8     Internet people would be sending "programs" to one
 9     another.  Home movies or other forms of full-motion
10     video sent over the Internet would constitute
11     "programs", according to some extreme and, we believe,
12     wrong interpretations of the Act.
13  13589                But suppose, for the sake of
14     argument, that the Commission ignored the weight of
15     legal opinion submitted to it and opted to apply the
16     Act to the Internet.  The extent of government
17     licensing and regulation would logically extend to
18     every computer capable of directing video signals to
19     any other within the jurisdiction of the federal
20     government.
21  13590                The Independent Internet Service
22     Provider Group believes that this is a plainly
23     unacceptable result.  It would constitute a massive and
24     unwarranted extension of governmental licensing
25     authority into innumerable private transactions having


 1     nothing to do with any conceivable cultural objective. 
 2     A few minutes of clear thought on this question will
 3     suffice to persuade the Commission that trying to apply
 4     the Broadcasting Act to the Internet constitutes
 5     "massive overkill".
 6  13591                For reasons advanced in many of the
 7     submissions, we do not believe that the signals
 8     conveyed and received over the Internet constitute
 9     "broadcasting", and we are pleased to see that when the
10     issue was fully considered judicially in the ACLU v.
11     Reno case, careful analysis by judges with similar
12     concerns as would motivate a Canadian court came to the
13     same conclusions.  We cite this case not because
14     Canadians are bound to accept an American case, but
15     because when a court determines whether the Internet
16     should be considered "broadcasting", the process of
17     reasoning followed by courts in both countries would be
18     very similar.
19  13592                As we submitted in October:
20                            "For ISPs, and we think for the
21                            vast majority of Canadian
22                            computer users, the relevant
23                            issue is not whether some
24                            particular line of businesses
25                            would benefit from being


 1                            regulated, that is, from being
 2                            the target of subsidies, or be
 3                            harmed by having costs imposed
 4                            upon it.  The important issue is
 5                            whether the government should
 6                            take the entire zone of
 7                            computer-communications and make
 8                            it subject to state licensing. 
 9                            Such an expansion of government
10                            authority over private
11                            communications would be
12                            unprecedented, and, in our
13                            submission, unwarranted."
14  13593                Regulating Access to the Internet
15  13594                The Internet promises everyone a
16     degree of citizen empowerment that would have been
17     inconceivable only a few years ago.  This empowerment
18     consists of services, information and transactions made
19     possible by ever cheaper and more powerful computer
20     power.  This vast resource of computer-driven
21     possibilities is accessible only through two physical
22     media, for the time being:  co-axial cable and
23     telephone systems.
24  13595                The cost of replacing or bypassing
25     these two physical media remains uneconomically high,


 1     and owners of these media can exercise market power to
 2     preclude, dissuade or defeat competitive entry. 
 3     Wireless media are not in place and, for a number of
 4     technical reasons, wireless access to the Internet does
 5     not look to be a competitive alternative for a long
 6     time to come.
 7  13596                Independent ISPs are fighting for
 8     their survival against competitors who own these
 9     physical media.  The race to supply high-speed access
10     to the Internet is on, and those unable to offer
11     increasing bandwidth will be progressively eliminated.
12  13597                If access to high speed facilities is
13     not made available, or if unregulated affiliates of
14     these monopolies are allowed to underprice their
15     competition unfairly, then we could see a return to the
16     old situation where a cable and telephone duopoly
17     control access to all other possible services that lie
18     beyond the last mile.  The promise of the Internet, to
19     bring a vast array of computer-mediated services to the
20     home would be largely defeated if the owners of the
21     choke points reduce the competition to two owners of
22     physical media.  This must not be allowed to happen.
23  13598                CAIP has already submitted an
24     application to the Commission to address the issue of
25     Bell and its affiliates as regards the pricing of ADSL


 1     services.  The independent ISP sector, under the banner
 2     of RISC, has supported that submission fully and tried
 3     to explain why the issue is vital to the future of the
 4     Internet in Canada.
 5  13599                The independent ISPs, those who do
 6     not own "last-mile" facilities, urge the Commission to
 7     undertake immediately a general review of this issue,
 8     and to act in the interim energetically to maintain the
 9     ability of Canadians to access the Internet through a
10     wide variety of competitive access providers.
11  13600                Do not allow the promise of the
12     Internet to be lost for failure to see the nature of
13     the issue.  The Internet is the first technical system
14     that allows for the separation of the services provided
15     from ownership of the physical means of transmission.
16  13601                In principle, limited means of
17     physical access does not necessarily translate into
18     market power over the services made available over
19     those physical media.
20  13602                To illustrate a point that was made
21     in earlier submissions by this group, in a telephone
22     system you cannot but call forward from anyone other
23     than your telephone provider.  On the Internet, and by
24     means of the Internet model of layered software,
25     services are divorced from the physical transmission


 1     medium.
 2  13603                Competition in services of all kinds
 3     is possible despite the fact that the Internet rides on
 4     limited physical media.
 5                                                        1115
 6  13604                The Internet already delivers a
 7     worldwide free "local calling area", effortless
 8     "call-forwarding" and a host of other features that the
 9     telephone systems cannot or can only barely deliver. 
10     This value proposition is deeply troubling to companies
11     long accustomed to collecting an economic rent from
12     their ownership of expensive and inherently limited
13     physical plant.  Independent ISPs are but the first
14     level of enhanced service providers that owners of
15     these physical medias can perceive as commercial
16     threats.  Eliminating them would assist them to control
17     other sectors of the computer-mediated economy.
18  13605                It is vitally important for the
19     future of the Internet in Canada that the Commission
20     understand the stakes involved in these apparently
21     mundane issues of access to high speed facilities.  The
22     independent sector urges the Commission to act
23     consistently with a vision of maintaining a competitive
24     Internet access market.  By doing so, all of its goals
25     for "new media" will be achieved, and by failing to do


 1     so the promise of new media will go largely
 2     unfulfilled.
 3  13606                Thank you for the opportunity to
 4     speak.
 5  13607                THE CHAIRPERSON:  Thank you very
 6     much.
 7  13608                I don't think we have any questions. 
 8     Thanks again.
 9  13609                Madam Secretary.
10  13610                MS BÉNARD:  Thank you, Mr. Chairman.
11  13611                The next presentation will be by
12     CATA Alliance.
14  13612                MR. PATTERSON:  Good morning,
15     Mr. Chairman, ladies and gentlemen.
16  13613                The membership of CATA Alliance
17     includes many companies which are important players in
18     various aspects of the new media.  They include
19     telecommunications equipment manufacturers who provide
20     the backbone for the Internet, software companies which
21     produce the tools to operate it and develop the
22     content, and the content producers which make the Web
23     interesting and valuable.  They all have strong views
24     on these proceedings but that is not where I wish to
25     focus today.


 1  13614                The majority of our members are not
 2     suppliers to the Internet, but its users.  All our
 3     members use the Net for one purpose or another, from
 4     simple e-mail to sophisticated electronic commerce.  As
 5     a result, they too have a keen interest in your
 6     proceedings.  They fear that intervention by the CRTC
 7     in the Internet will cause higher communication costs,
 8     create regulatory barriers which increase costs and
 9     slow development, and discourage investment in
10     technology, equipment and content.  Their concerns are
11     identical to those of businesses in all sectors of the
12     Canadian economy.  This breadth of interest
13     distinguishes these proceedings from other CRTC
14     hearings under the Broadcasting Act.  The impact of
15     your recommendations will extend far beyond the
16     broadcasting sector.
17  13615                The subject of the Broadcasting Act
18     is essentially entertainment, but new media, as defined
19     in these proceedings, is not entertainment.  The
20     Internet is primarily a business tool.  More than 70
21     per cent of Internet traffic is business-to-business,
22     and that percentage is rising.  We are all familiar
23     with the forecasts for incredibly rapid growth in
24     electronic commerce.  CRTC intervention in the Internet
25     risks a perverse instance of the 80/20 rule, a case


 1     where addressing a perceived problem of the 20 per cent
 2     inflicts serious damage on the 80.
 3  13616                I decided not to use the
 4     tail-wagging-the-dog analogy here, but since the baby
 5     was thrown out with the bath water earlier this morning
 6     I think I will insert it at this time.
 7  13617                CATA Alliance's members see no need
 8     to apply Broadcasting Act style rules on content and
 9     ownership to the Internet.  There is no apparent
10     shortage of Canadian content in terms of both quality
11     and quantity.  Access is not a problem; anyone can get
12     on the Net by using simple software to create a Web
13     site.
14  13618                Access to portals has been identified
15     as a concern.  The best known portals are major
16     commercial enterprises.  Their business practices do
17     not differ much from other large retailers; they
18     emphasize what sells best.  Specialty portals are now
19     emerging, which cater to specific markets or market
20     segments.  These will proliferate, as specialist
21     magazines and TV channels have.
22  13619                There is no shortage of opportunity
23     to offer content on the Internet.  Success is dependent
24     on the quality of the product, not the nationality of
25     the author.


 1  13620                Many intervenors have emphasized that
 2     the Net is a global phenomenon to which it is
 3     impractical to apply Canadian regulations.  Without
 4     getting into a technical argument about whether it is
 5     possible or not, the mere threat of regulation will
 6     precipitate migration of Web sites to more hospitable
 7     climes.  The centre of the Internet universe, in terms
 8     of innovation, volume and costs, is only a few miles
 9     away.  Other countries make no bones about offering
10     generous tax breaks, privacy, and other attractions to
11     build their Internet economies.  Again, these locales
12     are only a mouse click away.
13  13621                Electronic commerce is seen as the
14     leading engine of economic growth in the new
15     millennium.  IDC forecasts that worldwide it will grow
16     from US$33.5 billion in 1998 to US$435 billion in 2002. 
17     That is a growth rate of 89 per cent annually. 
18     Forrester Research has an even higher forecast,
19     US$3.2 trillion by 2003 which would be 17.5 per cent of
20     total global sales.  E-comm's contribution to the
21     Canadian economy will be reduced if Canadian businesses
22     move their activities offshore to avoid costs and
23     regulations.  Regulation will have a real impact on
24     jobs and growth.  What you decide will determine
25     whether Canada gets its share of this market or whether


 1     the U.S. gets our share.
 2  13622                Several intervenors have urged the
 3     CRTC to apply a tax, usually 5 per cent, on the
 4     revenues of Internet service providers to subsidize the
 5     production of Canadian content.  It is our members'
 6     view that there is no shortage of Canadian content so
 7     why is there a need for a subsidy?  What interest is
 8     served by taxing one small business to subsidize
 9     another?
10  13623                Leaving that aside, an ISP tax would
11     raise the cost of Internet use for all Canadians.  It
12     would create another incentive for businesses of all
13     sizes to look outside Canada for Web site locations. 
14     The impact on jobs and growth would unquestionably be
15     negative.  Any job growth in the content industry would
16     be offset many times over by the loss of jobs in the
17     broad economy.  Taxing the Internet would also be
18     contradictory to the assurances of the Prime Minister
19     and Revenue Minister Dhaliwal that business on the Net
20     will not be subjected to new taxes.
21  13624                The government has announced its
22     Connecting Canadians strategy.  It has six core
23     elements, four of which, Canada On-line, Smart
24     Communities, Canadian Content On-line and Electronic
25     Commerce, will be effected by the outcome of these


 1     proceedings.
 2  13625                In the first two categories, Industry
 3     Canada operates two excellent programs, SchoolNet and
 4     Community Access, aimed at assuring access to the
 5     Internet from all Canadian communities.  The government
 6     announced its Canadian Electronic Commerce Strategy
 7     when it hosted the OECD Ministerial Conference on
 8     Electronic Commerce last October.  Its objective is for
 9     Canada to be a world leader in the development and use
10     of electronic commerce by the year 2000.  None of these
11     will be successful if CRTC regulatory decisions raise
12     costs or impede growth.  Such decisions would directly
13     conflict with government policy.
14  13626                Canadian Content On-line is being
15     supported by such initiatives as Heritage Canada's
16     Multimedia Fund.  It is not evident to us that further
17     support is necessary from CRTC.
18  13627                Our members see the CRTC's actions
19     under the Telecommunications Act as a more appropriate
20     model for dealing with new media.  They heartily
21     applaud the CRTC decisions which have led to
22     deregulation and more competition.  The result has been
23     better service and lower costs for all Canadians.  They
24     do not want the CRTC to reverse course now and regulate
25     the Internet.  The result will inevitably be negative


 1     for the broad range of Canadian users.
 2  13628                At the conclusion of the first round
 3     of hearings, the Chair asked for specific comments on
 4     certain issues.  CATA Alliance offers the following:
 5  13629                - The definition of broadcasting
 6     obviously includes those who currently fall under the
 7     Act.  If they are already regulated, we do not see a
 8     need to create special new media regulations for them. 
 9     The CRTC should limit any consideration of extending
10     the definition to activities which fall clearly in the
11     field of entertainment.  It should be noted that this
12     definition does not encompass education.
13  13630                - We are not sufficiently versed in
14     the Act to comment on licensing or exemption beyond
15     reiterating the position that regulation of the
16     Internet is to be avoided.
17  13631                - Again, it is premature to
18     specifically define ISPs because the industry is
19     evolving at a rapid pace.  It's hard to tell whether
20     they are telecoms or BDUs because the business models
21     which they have developed vary so widely.
22  13632                - New Canadian content is plentiful. 
23     The question of prominence is largely a matter of
24     quality.
25  13633                - On the subject of monitoring the


 1     status of new media, in that regard we would be
 2     grateful if the CRTC could bully Statistics Canada into
 3     collecting any numbers on new media at all.  They seem
 4     to have chosen to ignore all of the new knowledge-based
 5     economy in favour of metal bashing and resource
 6     processing.
 7  13634                - At this time, we do not see a need
 8     for additional proceedings at this time.
 9  13635                These proceedings are being held
10     under the Broadcasting and Telecommunications Acts. 
11     Our members, and industry in general, dread the
12     application to the Internet of the content and
13     ownership rules and cross-subsidization which are
14     features of broadcasting.  They prefer the
15     telecommunications model, where the CRTC's moves to
16     deregulate the industry and encourage competition have
17     led to both better service and lower costs.
18  13636                We commend the later approach, and
19     urge you to apply it to new media.  Forebear from
20     regulating the Internet, which will discourage
21     innovation, increase costs and reduce economic growth
22     and job creation.  An open, competitive environment,
23     unburdened by regulations and taxes, will establish the
24     conditions under which the Connecting Canadians
25     strategy will flourish.


 1  13637                MR. PATTERSON:  Thank you for the
 2     opportunity to present.
 3  13638                THE CHAIRPERSON:  Thank you very
 4     much.
 5  13639                Notwithstanding what some people
 6     think, it is not in our nature to bully anybody, but we
 7     would be happy to discuss the issue.
 8  13640                I should remember this, but I don't. 
 9     Could we have your name for the record?
10  13641                MR. PATTERSON:  Dave Patterson.
11  13642                THE CHAIRPERSON:  Mr. Patterson,
12     thank you.
13  13643                I don't think we have any questions. 
14     No.
15  13644                MR. PATTERSON:  Thank you.
16     --- Short pause / Courte pause
17  13645                THE CHAIRPERSON:  Good morning,
18     Mr. Reddick.
19  13646                MR. REDDICK:  I have five copies of
20     my presentation.
21  13647                THE CHAIRPERSON:  The Chair was
22     noting this is just-on-time delivery, I guess.
24  13648                MR. REDDICK:  I would like to thank
25     the Commission for asking us to appear here today.


 1  13649                My name is Andrew Reddick and I am
 2     with the Public Interest Advocacy Centre.  I am also
 3     representing Action Réseau Consommateur in addition to
 4     PIAC.
 5  13650                PIAC and ARC have found that this
 6     proceeding is both timely and useful.  In particular,
 7     it raises a number of important broad policy questions
 8     which we feel have not been properly addressed by the
 9     and this also has implications
10     for the Commission.
11  13651                Part of this policy confusion exists
12     because the development of new media, the Internet, and
13     an information society are works in progress.  We are
14     very much in a transition or developmental stage.
15  13652                In the context of this proceeding, we
16     have found that before asking "How does new media
17     affect existing regulation?" or "Do some new media
18     constitute broadcasting or telecommunications
19     services?" or "Can we provide recommendations on policy
20     to the government?" it is more appropriate to ask: 
21     What are our social, economic and cultural objectives
22     with respect to the development of an information
23     society?
24  13653                We ask this because rather than being
25     driven by technology, our actions in society are driven


 1     by decision making relating to objectives and goals.
 2  13654                The means by which we achieve
 3     objectives are shaped by the rules, regulations and
 4     market frameworks we apply, and how technologies and
 5     content are treated within those.
 6  13655                Ostensibly, one of our goals in
 7     Canada is to create an information society, a society
 8     that is not physically grounded but exists using the
 9     Ether.  Now, to be clear, the Ether I am referring to
10     is that used for the transmission of communications as
11     opposed to the anaesthetic, though I do have to say
12     Neil Postman may not have been too far off when he
13     observed a certain hysterical enthusiasm in the hype
14     about the information highway.  To some degree, both
15     ethers may be involved.
16  13656                The point is, if the intention is to
17     create an information society where much of our
18     socio-economic activities are on line as they are in
19     real life, then as it develops, and in future, we
20     should be able to look at that information society like
21     a mirror, and see the existing diversity of our real
22     life social practices and interests -- our society --
23     also existing in the electronically-based environment.
24  13657                Part of what Postman was getting at
25     with his comment about hysterical enthusiasm is that


 1     the information society, the Internet, new media and so
 2     forth are not exception to society.  They do not exist
 3     outside of society, its obligations and
 4     responsibilities, they are a part of it.  They are not
 5     wholly exceptional to broadcasting or
 6     telecommunications, they are a part of these.  But at
 7     the same time, there are significant aspects of these
 8     which are different than traditional broadcasting and
 9     telecommunications, for example, in the area of
10     content.
11  13658                Now, as we noted in our written
12     submissions, it would appear that the Federal
13     Government advocates broad objectives relating to
14     access, diversity of content, economic and social
15     needs, among others, for the information highway, but
16     there is also considerable fudging and a lack of
17     specificity by the government.
18  13659                Clarification is required on a number
19     of issues, particularly those regarding end objectives
20     and the means for achieving these end objectives.  This
21     is important because clarity on objectives has
22     implications for regulatory, market, fiscal and other
23     tools which may need to be employed on a selective or
24     permanent basis to achieve these desired results.
25  13660                Some of the important policy issues


 1     which need to be clarified include:  Is the Internet
 2     now, or in the next few years will it be, considered an
 3     essential service, a service which all Canadians should
 4     have access to from the home comparable to telephone
 5     service?  Are some types of content or services
 6     considered essential or will they be?
 7  13661                If the answers are yes, then
 8     questions about the regulatory, government program,
 9     fiscal, market-based, third sector-based and other
10     mechanisms which may need to be employed to achieve
11     such goals need to be addressed.
12  13662                PIAC/ARC make two recommendations to
13     the Commission with respect to these concerns.
14  13663                First, we recommend that, as part of
15     its final decision or report from this proceeding, the
16     Commission request that the government of Canada
17     clarify its policy positions on the essential nature of
18     the Internet and related new media content.  This
19     clarification should include policy direction for both
20     federal departments and the Commission where required.
21  13664                Second, PIAC/ARC recommend that the
22     Commission conduct periodic reviews -- for example,
23     every three years -- which include a public proceeding
24     to assess and determine which services are essential
25     and whether some regulatory initiatives may be required


 1     to ensure universality of these services at reasonable
 2     and affordable rates.  Such a review should also be
 3     concerned with essential content and the diversity of
 4     content.
 5  13665                Regulation.
 6  13666                PIAC/ARC are of the view that the
 7     objectives of the Broadcasting Act and the
 8     Telecommunications Act are relevant and important for
 9     new media, however, the means of realizing these will
10     require some innovation in approach by the Commission. 
11     The Commission has stated previously that under
12     convergence it has confidence in its abilities to do
13     this, and we have similar confidence in the
14     Commissions' abilities but we have a few suggestions.
15  13667                Part of this innovation requires
16     evolving and modernizing the meaning of "social" in
17     telecommunications beyond that of basic voice telephone
18     service to include what is also being transmitted by
19     these services -- new forms of digital content.  It
20     would also be useful to have a more coherent policy on
21     content in Canada within which new media, programming
22     and other forms of content would be included.
23  13668                It is also our view that
24     telecommunications companies and those companies using
25     the PSTN have obligations and responsibilities in an


 1     information society and that these need to be brought
 2     into an information society context.
 3  13669                We have recommended the type of
 4     regulation we feel would be appropriate in the near
 5     term in our written final argument.  This regulation
 6     would take the form of required contributions to be
 7     used to meet the apparent objectives of the
 8     government's connectedness agenda as well as the
 9     public's emerging communication and information needs
10     in a converged communications environment.  Our
11     proposal also brings symmetry with the regulatory
12     approach applied to broadcasting distribution
13     undertakings under the Broadcasting Act.
14  13670                We note that in many submissions to
15     this proceeding, representatives of the free market
16     have asked for public money or subsidies to be spent in
17     the form of tax and fiscal initiatives, among other
18     ideas, to help make their businesses and investments
19     viable.  Justifications include that this will
20     contribute to industrial policy and cultural policy
21     such as the creation of a diversity of information.
22  13671                It is our view that, for social in
23     addition to economic objectives to be realized, funding
24     is also required to facilitate public access through
25     community not-for-profit sites and networks, and for


 1     the development of not-for-profit content resources.
 2  13672                If the Internet is a network of
 3     networks, then local community networks and
 4     non-commercial social, cultural and civic content
 5     similarly must continue to be developed and supported. 
 6     A number of communities have been providing these types
 7     of services for some years.  Both the Federal and
 8     Provincial governments have provided seed funding to
 9     foster the development of these services in communities
10     throughout Canada.
11                                                        1130
12  13673                Without the continued support of this
13     type of new media at the local level, many community
14     networking initiatives, if they survive at all, will be
15     little more than ports to the outside Internet, in
16     other words, an electronic bus out of town.  Local
17     buses are also needed.
18  13674                Market players are not able to
19     provide these types of services or content.  With these
20     community-based public services, there is little to
21     sell and a commercial imperative has little relevancy
22     to the needs and activities of citizens, community
23     groups, NGOs and similar organizations who are
24     increasingly integrating new technologies as part of
25     their operations.


 1  13675                Is it possible that these needs could
 2     be met through government program funding as opposed to
 3     a regulatory solution or in some combination of these?
 4     Any of these options are possible, but policy
 5     clarification is required.
 6  13676                In conclusion, in general, PIAC/ARC
 7     believe that the Commission will need to pursue a
 8     strategy of selective regulation as new media, the
 9     Internet and other new services evolve.
10  13677                No one can predict how all this will
11     look in the years to come, though a study of
12     communications history and the current structures and
13     practices of the marketplace, particularly in the areas
14     of market structure, distributing and marketing,
15     suggests a certain continuity as opposed to
16     revolutionary change.
17  13678                The most realistic course is to
18     generally adopt a lighter regulatory approach, but with
19     selective interventions to ensure that defined policy
20     objectives are achieved.  Once the market has matured
21     and stabilized, there may be cause for other
22     interventions, for example, if market power develops.
23  13679                PIAC/ARC recommends that the
24     Commission should as a minimum monitor and supervise
25     and undertake research to assess developments in this


 1     sector.
 2  13680                The results of these activities,
 3     including research, should be made public on an annual
 4     basis.  As well, the Commission should hold public
 5     proceedings on a regular basis to review policy and
 6     regulation in this area.
 7  13681                That concludes our comments.  I would
 8     be pleased to answer your questions.
 9  13682                THE CHAIRPERSON:  Thank you very
10     much, Mr. Reddick.  I don't think we have any
11     questions.
12  13683                Madam Secretary, I think those are
13     all the parties registered for today.
14  13684                MS BÉNARD:  Yes, they are.  Yes.
15  13685                THE CHAIRPERSON:  In that case, that
16     concludes our proceeding for today.
17  13686                We will resume tomorrow morning at
18     9:00 a.m.
19     --- Whereupon the hearing adjourned at 1132, to resume  
20         on Tuesday, February 9, 1999, at 0900 / L'audience
21         est ajournée à 1132, pour rependre le mardi,
22         9 février 1999, à 0900
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