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TRANSCRIPT OF PROCEEDINGS FOR THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION TRANSCRIPTION DES AUDIENCES DU CONSEIL DE LA RADIODIFFUSION ET DES TÉLÉCOMMUNICATIONS CANADIENNES SUBJECT / SUJET: FINAL PHASE OF THE PUBLIC HEARING EXAMINING NEW MEDIA / ÉTAPE FINALE DE L'AUDIENCE PUBLIQUE PORTANT SUR L'EXAMEN DES NOUVEAUX MÉDIAS 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 Transcripts In order to meet the requirements of the Official Languages Act, transcripts of proceedings before the Commission will be bilingual as to their covers, the listing of the CRTC members and staff attending the public hearings, and the Table of Contents. However, the aforementioned publication is the recorded verbatim transcript and, as such, is taped and transcribed in either of the official languages, depending on the language spoken by the participant at the public hearing. Transcription Afin de rencontrer les exigences de la Loi sur les langues officielles, les procès-verbaux pour le Conseil seront bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience publique ainsi que la table des matières. Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est enregistrée et transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience publique. 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 BEFORE / DEVANT: David Colville Chairperson / Président Vice-Chairperson, Telecommunications / Vice-président, Télécommunications Françoise Bertrand Chairperson of the Commission / Présidente du Conseil Cindy Grauer Commissioner / Conseillère Joan Pennefather Commissioner / Conseillère David McKendry Commissioner / Conseiller ALSO PRESENT / AUSSI PRÉSENTS: Carolyn Pinsky / Commission Counsel / Karen Moore Avocates du Conseil Ted Woodhead Hearing Manager / Gérant de l'audience Daphne Fry Manager of Convergence Policy / Responsable de la politique sur la convergence 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 ii TABLE OF CONTENTS / TABLE DES MATIÈRES PAGE 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 2997 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 StenoTran 2998 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 StenoTran 2999 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 StenoTran 3000 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 StenoTran 3001 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 StenoTran 3002 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. 21 PRESENTATION / PRÉSENTATION 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 StenoTran 3003 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 StenoTran 3004 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 StenoTran 3005 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 StenoTran 3006 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, StenoTran 3007 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. StenoTran 3008 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 StenoTran 3009 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 StenoTran 3010 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. StenoTran 3011 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 StenoTran 3012 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 StenoTran 3013 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 StenoTran 3014 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 StenoTran 3015 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 StenoTran 3016 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 StenoTran 3017 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 StenoTran 3018 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 StenoTran 3019 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 StenoTran 3020 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. 18 PRESENTATION / PRÉSENTATION 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. StenoTran 3021 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 StenoTran 3022 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. StenoTran 3023 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 StenoTran 3024 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 StenoTran 3025 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 StenoTran 3026 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 StenoTran 3027 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 StenoTran 3028 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 StenoTran 3029 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 StenoTran 3030 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 StenoTran 3031 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." StenoTran 3032 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. StenoTran 3033 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 StenoTran 3034 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 StenoTran 3035 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." StenoTran 3036 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 StenoTran 3037 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 StenoTran 3038 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, StenoTran 3039 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 StenoTran 3040 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. 14 PRÉSENTATION / PRESENTATION 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 StenoTran 3041 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 StenoTran 3042 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 StenoTran 3043 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 StenoTran 3044 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 StenoTran 3045 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 - franco.ca 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 StenoTran 3046 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 StenoTran 3047 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 StenoTran 3048 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 StenoTran 3049 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 StenoTran 3050 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 StenoTran 3051 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, StenoTran 3052 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 StenoTran 3053 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 StenoTran 3054 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 StenoTran 3055 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 StenoTran 3056 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, StenoTran 3057 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. StenoTran 3058 1 13463 MS BÉNARD: Thank you, Mr. Chairman. 2 13464 The next presentation will be Astral 3 Broadcasting Group. 4 1015 5 PRESENTATION / PRÉSENTATION 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 StenoTran 3059 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. StenoTran 3060 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 StenoTran 3061 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 StenoTran 3062 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 StenoTran 3063 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 StenoTran 3064 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 StenoTran 3065 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, StenoTran 3066 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 StenoTran 3067 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 StenoTran 3068 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 StenoTran 3069 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 StenoTran 3070 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 StenoTran 3071 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. 7 PRESENTATION / PRÉSENTATION 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 StenoTran 3072 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, StenoTran 3073 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. StenoTran 3074 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 StenoTran 3075 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 StenoTran 3076 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 StenoTran 3077 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 StenoTran 3078 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 StenoTran 3079 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 StenoTran 3080 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. 21 PRESENTATION / PRÉSENTATION 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 StenoTran 3081 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 StenoTran 3082 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 StenoTran 3083 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 StenoTran 3084 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 StenoTran 3085 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". StenoTran 3086 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 StenoTran 3087 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 StenoTran 3088 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, StenoTran 3089 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 StenoTran 3090 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 StenoTran 3091 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 StenoTran 3092 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. 13 PRESENTATION / PRÉSENTATION 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. StenoTran 3093 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 StenoTran 3094 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. StenoTran 3095 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 StenoTran 3096 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 StenoTran 3097 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 StenoTran 3098 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 StenoTran 3099 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. StenoTran 3100 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. 23 PRESENTATION / PRÉSENTATION 24 13648 MR. REDDICK: I would like to thank 25 the Commission for asking us to appear here today. StenoTran 3101 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 StenoTran 3102 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 StenoTran 3103 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 StenoTran 3104 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 StenoTran 3105 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 StenoTran 3106 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 StenoTran 3107 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. StenoTran 3108 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 StenoTran 3109 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 23 24 25 StenoTran
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