ARCHIVED -  Transcript / Transcription - Gatineau, Quebec - 2003-10-20

VARIOUS BROADCASTING APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

HELD AT: TENUE À:

Conference Centre Centre de Conférences

Portage IV Portage IV

Outaouais Room Salle Outaouais

Gatineau, Quebec Gatineau (Québec)

October 20, 2003 Le 20 octobre 2003

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.

BEFORE / DEVANT:

Charles Dalfen Chairperson / Présidente

Andrée Wylie Commissioner / Conseillère

Andrée Noël Commissioner / Conseillère

Ronald Williams Commissioner / Conseiller

Joan Pennefather Commissioner / Conseillère

ALSO PRESENT / AUSSI PRÉSENTS:

James Wilson Legal Counsel /

Conseiller juridique

Cynthia Stockley Acting Director of

Broacasting and Competition

Policy / Directrice

intérimaire des politiques

sur la distribution et la

concurrence

Coordonnateur de l'audience

Pierre LeBel Secretary / Secrétaire

HELD AT: TENUE À:

Conference Centre Centre de Conférences

Portage IV Portage IV

Outaouais Room Salle Outaouais

Gatineau, Quebec Gatineau (Québec)

October 20, 2003 Le 20 octobre 2003

PAGE / PARA

PHASE I

PRESENTATION BY / PRÉSENTATION PAR:

Norwesto Communications Ltd. 8 / 41

Star Choice Television Network Incorporated 90 / 547

PHASE II

INTERVENTION BY / INTERVENTION PAR:

Re: Norwesto

Fawcett Broadcasting Limited 50 / 323

Re: Star Choice

Canadian Film and Television

Production Association 202 / 1359

Communications and Diversity Network 220 / 1460

La MRC de Papineau 228 / 1506

La commissaire aux langues officielles 239 / 1569

Pelmorex Communications 252 / 1627

Impératif français 288 / 1812

Telesat Canada 306 / 1889

TQS Inc. 319 / 1966

Canadian Association of Broadcasters 336 / 2054

Canadian Broadcasting Association 378 / 2250

PHASE III

REPLY BY / RÉPLIQUE PAR:

Norwesto Communications Ltd. 76 / 484

Star Choice Television Network Inc. 403 / 2386

Gatineau, Quebec / Gatineau (Québec)

--- Upon commencing on Monday, October 20, 2003

at 0936 / L'audience débute le lundi

20 octobre 2003 à 0936

1 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.

2 Good morning ladies and gentlemen, and welcome to this public hearing.

3 Je me nomme Charles Dalfen et je suis le président du CRTC. Je présiderai cette audience en compagnie de mes collègues Andrée Wylie, vice-présidente de la radiodiffusion, Andrée Noël, conseillère régionale du Québec, Ronald Williams, conseiller régional de lAlberta et des Territoires du Nord-Ouest, ainsi que Joan Pennefather, conseillère nationale.

4 Léquipe du Conseil qui nous assiste durant cette audience se compose notamment de Cynthia Stockley, directrice intérimaire des politiques sur la distribution et la concurrence, James Wilson, conseiller juridique, et Pierre LeBel, secrétaire daudience. Nhésitez pas a vous adresser à M. LeBel pour toute question relative au déroulement de cette audience.

5 Nous examinerons au cours de cette audience la demande de Norwesto Communications ltée qui souhaite obtenir une licence pour exploiter une nouvelle station FM commerciale de langue anglaise à Vermilion Bay en Ontario. Nous étudierons ensuite les renouvellements de licences des entreprises nationales de distribution par satellite de radiodiffusion directe (SRD), soit le Réseau de télévision Star Choice inc. et Bell ExpressVu limitée Partnership. Nous nous pencherons enfin sur les demandes présentées par Look Communications inc. et Craig Wireless International inc. en vue de renouveler les licences de leurs systèmes de distribution multipoint (SDM).

6 The Panel will hear first from Norwesto Communications. Norwesto is seeking a licence to operate an English-language FM commercial radio station in Vermilion Bay, Ontario, with transmitters at Dryden and Kenora, also in Ontario.

7 The proposed station would offer a hot adult contemporary format and operate on 103.3 FM in Vermilion Bay and 104.5 FM in Kenora and Dryden.

8 The Norwesto Communications presentation will be followed by representatives of Star Choice, who wish to renew and amend their companys DTH broadcasting licence. Star Choice submits that a number of the conditions of its original licence are either no longer necessary, or should be amended in view of the provisions of the Broadcasting Distribution Regulations. It is also asking the Commission to maintain other conditions of licence, including those related to simultaneous substitution, the distribution of its programming guide and marketing channels, and service to multiple unit dwellings.

9 Furthermore, Star Choice is asking that the Commission allow it to delay the distribution of local television signals in small markets as set out in Broadcasting Decision CRTC 2003-258, to a new deadline 30 days after the Anik F2 satellite has been commercially deployed.

10 Finally, the Commission intends to study the issue of regional CBC signals provided by the licensee, in both official languages.

11 Next, the panel will examine the application for the renewal of the Bell ExpressVu licence. The licensee hopes to harmonize certain of its conditions of licence with the Broadcasting Distribution Regulation and eliminate some that have been made obsolete by the Regulations.

12 As well, ExpressVu is seeking to amend its licence to allow it to engage in bulk billing in multiple unit dwellings, on the same basis as cable distribution undertakings.

13 In addition, ExpressVu is requesting a new condition of licence similar to section 23 of the Regulations, which authorizes Class 1 and 2 cable operators to distribute audio services.

14 Lastly, the Panel will look at the regional CBC signals provided by the licensee, in both official languages.

15 The Panel will then look at the licence renewals for multipoint distribution systems or MDS. As specified in Broadcasting Notice of Public Hearing CRTC 2003-8, we will pay particular attention to the overall regulatory framework for these systems, their role in the broadcasting distribution market, and the number of specialized services they distribute in the official language of the minority.

16 Nous examinerons dabord le renouvellement du SDM exploité par Look Communications, qui dessert différents endroits au Québec et en Ontario. La titulaire propose que les modalités et conditions de sa licence pour le Québec soient similaires à celles de sa licence pour lOntario. Elle demande aussi plus de souplesse pour utiliser dautres technologies et davantage de latitude pour assembler ses services. Elle demande certaines modifications à sa licence ontarienne, dont de:

17 distribuer tout service de programmation canadien additionnel qu'elle devrait autrement distribuer en conformité avec larticle 17 du Règlement,

18 avoir la flexibilité doffrir les services dInternet selon les exigences de distribution des services spécialisés et payants, et,

19 éliminer sa contribution de 5 p. 100 de ses revenus annuels bruts à lappui du développement démissions canadiennes jusqu'à ce que ses revenus annuels bruts de radiodiffusion soient égaux ou supérieurs à 25 millions $.

20 Finally, we will hear the application from Craig Wireless. The licensee is asking for the amendment or deletion of certain conditions of licence, including the following:

21 that the requirements to operate a community channel and an education channel be removed;

22 that it be allowed to offer any licensed radio or television program service as well as the services set out in Appendices A and D to the Revised Lists of Eligible Satellite Services; and finally

23 that its contribution to Canadian programming be reduced from 6 per cent to 5 per cent and made payable at any point over the course of its licence term.

24 Laudience devrait durer trois jours. Nous prévoyons siéger de 9h30 à 18h. We will sit from 9:30 to 6:00 p.m. normally. Nous vous informerons au fur et a mesure de tout changement a lhoraire.

25 Je vous prierais déteindre vos téléphones cellulaires et vos téléavertisseurs lorsque vous êtes dans la salle daudience, car us pourraient importuner les participants et les membres du Conseil. Nous comptons sur votre collaboration a cet égard tout au long de laudience.

26 Jinvite maintenant le secrétaire, monsieur Pierre LeBel, a vous expliquer la procédure que nous suivrons.

27 Monsieur LeBel.

28 MR. LeBEL: Thank you, Mr. Chairman.

29 Before we begin, just a few housekeeping matters.

30 First, I would like to indicate that the Commission's examination room is located in the Papineau Room adjacent to the hearing room. Public files of the applications being considered at this hearing can be examined there.

31 Secondly, there is a verbatim transcript of this hearing being taken by the court reporter at the table to my left in the centre. If you have any questions on how to obtain all or parts of this transcript, please approach the court reporter during a break.

32 Next, Mr. Chairman, I would like to indicate for the record that in a communication dated 17 October 2003, Bell ExpressVu Incorporated advised the Commission that it was withdrawing one aspect of its application. ExpressVu was requesting specific authorization to distribute U.S 4+1 high definition signals from cities other than those used for its standard definition singles.

33 ExpressVu is now withdrawing the request for this authorization and a copy of ExpressVu's e-mail is on the public file.

34 As you have indicated in your opening remarks, Mr. Chairman, we will hear the appearing applications in the order set out in the agenda and we will hear the applications followed by the relevant appearing interventions. In the third phase the applicants will be provided with an opportunity to respond to the interventions.

35 We will now hear the first item on the agenda, which is an application by Norwesto Communications Ltd. for a licence to operate an English-language commercial FM radio station in Vermilion Bay with transmitters located in Dryden and Kenora, Ontario.

36 The new station would operate on frequency 103.3 MHz on channel 277A with a non-direction antenna, effective radiated power of 1,600 watts.

37 The Dryden transmitter would operate on frequency 104.5 MHz on channel 283A with a non-directional antenna, effective radiated power of 1,800 watts.

38 The Kenora transmitter would operate on frequency 104.5 MHz on channel 283A with a non-directional antenna, effective radiated power of 1,700 watts.

39 Appearing for the applicant, Mr. Richard Doucet, Mr. Spencer Bell, Brenda Bell and Wendy Bell.

40 You have 20 minutes to make your presentation.

PRESENTATION / PRÉSENTATION

41 MS B. BELL: Thank you. Good morning.

42 Mr. Chair, Members of the Commission, we are pleased to be here today as Norwesto Communications Ltd., hereinafter referred to as "Norwesto".

43 We are here to apply for the first commercial FM stereo radio signal for Dryden, Vermilion Bay and Kenora, Ontario. This area has never had the benefit of FM, and we are excited and confident about our ability to provide a high quality service to the area.

44 My name is Brenda Bell. I am Vice-President of Norwesto Communications Ltd. With me today are: to my right, Spencer Bell, Treasurer; Rick Doucet, President. To my left is Wendy Bell, Secretary of Norwesto. We are the shareholders of the company.

45 Who We Are.

46 Spence and Wendy Bell are no strangers to this process, as they are previous owners and operators of North Superior Broadcasting Ltd. North Superior Broadcasting owned FM stations CFNO and CJWA which served the communities of Marathon, Manitouwadge, Terrace Bay, Schreiber, Rossport, Nipigon, Red Rock, Geraldton, Longlac, Beardmore, Nakina, White River, Hornepayne, Chapleau and Wawa.

47 These stations were operated successfully by Spence and Wendy Bell for 20 years and were sold only last year. Spence was full-time general manager, salesman, engineer. Wendy was office and accounts manager until seven years ago when they hired general managers.

48 As previous operators in a similar multi-market situation, their experience is invaluable in these initial phases of preparing business plans and the application process itself.

49 Spence and Wendy Bell are also no strangers to the area. They met in Dryden while teaching and were married in Kenora 36 years ago. They still have friends and family in the area.

50 Rick Doucet and Brenda Bell, myself, will be the hands-on operators of CKQV, Norwesto's station. I am the daughter of Wendy and Spence Bell and worked at the family business in a variety of capacities, including sales. I took a minor in communications at university, including marketing and advertising, and took communications law in law school, all at the University of Ottawa.

51 I too operated a successful business for six years in Marathon prior to selling it last year. We all, therefore, have extensive business experience.

52 Rick Doucet is my significant other and is President and will be General Manager of the new station. Rick was general manager and head of marketing at CFNO in Marathon for the last five years. Rick has postgraduate business training which was useful, as he did sales, management, and installed a new state-of-the-art computer system while with CFNO.

53 Rick and I moved to Dryden with our two children, Mikey, three, and Lauren, one, last year.

54 Besides his radio experience, Rick is very familiar with northwestern Ontario's primary industry, forestry, as he was employed as a stationary engineer at the Terrace Bay pulp mill for three years. He is of official Métis status, has family in Kenora, and is an active athlete. As a result, he is very much in touch with the needs, interests, music and programming tastes of the citizens in the region.

55 Our Plans.

56 Norwesto's application is to provide Dryden, Kenora and Vermilion Bay with the first commercial FM radio station called CKQV. This area is likely one of the only densely populated areas in Canada without a commercial FM signal. Not only is there not an FM station in the region, there is no commercial FM stereo signal.

57 We believe that an FM stereo signal in this area is a definite need and the people in the region deserve no less. An alternate for format and programming for the listener and more options for new and existing radio advertisers will be a great benefit. Competition means better service and better value for businesses and listeners in any area.

58 We have the experience and the desire to provide high quality local news and programming to the region. We are confident that our programming and features will reflect the needs and interests of the residents.

59 Our Programming.

60 Features.

61 Norwesto guarantees to provide relevant local and spoken word programming to Dryden, Kenora and Vermilion Bay. The three communities have many things in common and their residents have similar interests. The economies are largely based on the forest industry, tourism, farming and transportation. Features to be broadcast would, therefore, reflect these interests.

62 A spoken word feature will be presented at the bottom of every hour, covering a wide range of topics including: frequent regional road and weather reports; features important to the forestry, transportation and agriculture industries; and fishing and boating features for locals and tourists. A variety of these and other features of a more general interest, such as sports, technology, lifestyle and entertainment, will be presented on an hourly basis.

63 Regional News.

64 The residents of Kenora, Dryden, and Vermilion Bay are interested in the activities of the neighbouring communities as well as their own. Thus, a news story from one community is of considerable interest to the others.

65 Presently, little news and information from one community is shared. We plan to gather news and follow civic affairs, sports and special events from all three communities and share this information with Kenora, Vermilion Bay, Dryden and area.

66 Regional Weather.

67 The climate and recreational activities in this area are common and frequently interrelated. As a result, a great deal of the information to be provided, such as weather, sports and highway information, will be pertinent to all served communities.

68 This information is also presently not shared. The fact that this information will now be available to the whole region is extremely advantageous to residents and visitors and will be invaluable to the smaller unorganized townships which presently do not receive radio service. Weather warnings and emergency updates would be received by the entire region.

69 This new and distinct regional FM radio service would assist in tying Dryden, Kenora and Vermilion Bay together, a service which is presently missing.

70 Format.

71 Our music format will be "Hot AC". CKDR and CJRL-AM are, in our opinion, middle-of-the-road, adult, easy listening with a more retrospective format than we would have. We consider "hot A/C" to be more contemporary and aimed at a younger audience.

72 In focusing on a younger audience, we intend to produce a weekly "top 40" show and/or a request line. This programming that is not available to the region would, in our opinion, bring new listeners to radio.

73 We also intend to have at least one morning per week of country hits. This is presently not available. This block programming will undoubtedly be welcomed whole-heartedly and is bound to have a following, as it will be the listeners' only radio source for country music.

74 We are well aware of our obligations regarding Canadian content. Recent experience in radio has proven that, with the great number of talented Canadians producing such quality music, it is not only our obligation, but our pleasure to play the quota.

75 We believe this exciting new service with alternate programming can be brought to this region and operate in a harmonious fashion with the existing media outlets.

76 Our Reach.

77 CKQV will be heard for approximately four hours of travelling time on the Trans-Canada Highway where presently CBC-One is the only English FM signal available. There is no English FM commercial radio signal available to the listener throughout this area. Everyone who crosses Canada on the Trans-Canada Highway travels through this area, and the City of Dryden traffic count study shows that 8,708 vehicles pass through Dryden in an eight-hour period.

78 Furthermore, to reach the increased seasonal population, being travellers, visitors to tourist camps and cottagers who presently get no signal, will be beneficial, as advertisers will be able to market to the large number of Americans who visit this area. Americans spend approximately one hundred and sixty-nine million, three hundred and eighty-eight thousand dollars per year in the district. This is two-and-a-half times what Ontarians spend. In the district, tourists spend a total of two hundred and thirty-four million, four hundred and seventy-seven thousand dollars.

79 The Markets.

80 Kenora.

81 The City of Kenora is the second largest centre in northwestern Ontario and has a very strong economy. The City of Kenora Website states that in 2001 visitor expenditures were up for the fifth year in a row. Retail and commercial space downtown and on Railway Street was approximately 100 per cent full, and there is 150,000 square feet of new retail development. They state:

"In summary the overall outlook is positive in the short and long term".

82 Furthermore:

"2003 is expected to be a positive year for economic activity in Kenora."

83 Since 2000, 24 new businesses have opened in Kenora and five have expanded. In the last year a new Timber Strand trus joist mill opened which hired 230 mill workers and a total of 109 spin-off jobs were expected to result. Also, Avalon Ventures Ltd. is doing extensive research on mining properties known as the "Big Mac" & "Big Whopper" for rare metals seen as "metals of the future" which are in demand for high technology applications.

84 The population of the greater city area is 23,469. This does not include the number of tourists that flock to the Lake of the Woods area in different seasons.

85 In 1998, the Retail Sales Tax Estimate was one hundred and eighty-four million, five hundred and thirty thousand, which is 6 per cent above the national average.

86 Vermilion Bay.

87 Vermilion Bay has a seasonal but robust economy which is based around forestry, tourism and the Trans-Canada Highway. We are pleased that our signal would be available not only to potential customers on the highway but to the many tourist lodges which presently receive no signal.

88 We look forward to benefiting the Municipality of Machin by hiring staff, paying taxes and having a business in Vermilion Bay. We have a letter from the mayor and council attached, which expresses their pleasure and support for our endeavour in their municipality.

89 Dryden.

90 Although there have been some lay-off announcements in Dryden, the overall atmosphere and economy are fine. A great number of people who will be leaving the mill over the next two years are actually taking early retirement with improved severance packages. These people would have retired in the next few years anyway and this money will remain in Dryden. The mill is actually right-sizing to remain competitive in the world, which is very good news for Dryden.

91 Further evidence of Weyerhaeuser's commitment to Dryden can be seen in the fact that it invested a significant portion of the $1.7 million to the renovations of the west wing of the Dryden Hospital; $25,000 into the rec centre, $3.5 million into a state-of-the-art learning facility; and $246 U.S. million capital investment into its own Dryden operations.

92 Furthermore, it is not only the paper industry that provides Dryden with revenue. As the City of Dryden Website states:

"...although pulp and paper has provided Dryden with a strong, stable economy, secondary industry has also contributed and prospered, especially during the past decade with a central location on the Trans-Canada Highway, Dryden has become a tourism Mecca..."

93 In northwestern Ontario. It also states that being:

"...a Regional Centre for neighbouring communities is a bonus with a total population of 35,000 to draw upon ... and this does not count the thousands of tourists that visit our area each year."

94 The Dryden year end report for 2002 stated that there was a record $49 million in building permit activities from all sectors. This was nearly a 400 per cent increase over 2001 and represented close to $300 million in new investment. Some of these investments in the last year include a new $4 million IGA Garden Market; a $1.5 million expansion of Wal-Mart, a $1.6 million expansion of Extra Foods, a new $400,000 Mark's Work Wearhouse, and a half million dollar Murphy Oil & Gas. In the last three years, Dryden has seen 28 new businesses open, including a new Tim Horton's and Holiday Inn Express. More businesses have opened than have closed.

95 It is not surprising that growth in retail is as good as it is. The Ministry of Revenue estimated in 1998 that $250 million is the "annual value of goods and services purchased in Dryden".

96 Other evidence that Dryden is vibrant this year includes a new $7 million state-of-the-art public school which just opened; a new $7 to $8 million community auditorium; $600,000 renovations to the Dryden Memorial Arena and 32 new beds for the Home for the Aged.

97 Dryden received $2.3 million in grants used to improve the community as part of development projects; and, finally, "The City of Dryden Gateway Master Plan" for the west entrance into Dryden's downtown calls for almost $7 million dollars in improvements to help boost tourism and create an oasis of greenery and interpretive areas along the Wabigoon River.

98 These communities are very vibrant. Norwesto will further affect the markets in a positive way by increasing marketing and promotions and stimulating the local economies.

99 Canadian Talent Development.

100 We are excited about our plans to contribute to the development of Canadian talent. We undertake to contribute a minimum of $2000 to the development of Canadian Talent, even in our early years. This $2000 is more than the required $400 outlined in the CAB plan, and includes that $400 contribution allocated to FACTOR annually. A further $1600 will be devoted to station-sponsored initiatives proposed for Canadian talent development as follows:

101 1. We will make annual contributions in the form of scholarships, one for each of the high schools in the broadcast area, to be awarded to graduates who excel in music and/or art and have plans to further their education in their chosen field; and

102 2. We will make a number of smaller contributions to various groups in the area who require funding to promote, encourage and educate local talent. For example, school plays, concerts and/or music festivals in the Dryden, Kenora and Vermilion Bay area.

103 We would ensure that the funds be used toward the development of talent as opposed to infrastructure, and that the finds are distributed fairly throughout the broadcast area. We believe these contributions will be well received and will assist in encouraging local Canadian talent to pursue their goals in music and the arts.

104 Summary.

105 In conclusion, we are confident that Norwesto will bring to the area:

106 1) the first FM signal to three major communities, bringing the first and only stereo music service to the region;

107 2) a new clear, consistent signal extended along the Trans-Canada Highway where no commercial FM signal presently exists;

108 3) a first time focus on visitors, tourists and residents in the area who presently receive no signal at all;

109 4) new promotional opportunities for a vibrant growing marketplace;

110 5) spoken word features of great public interest every hour;

111 6) exciting new job and career opportunities;

112 7) an increase in the number of radio listeners and a greater variety of programming;

113 8) a source for new music formats "Hot A/C" with some attention to country;

114 9) a dramatic new information connection between the communities that currently does not exist;

115 10) an increased level of awareness of the neighbouring communities;

116 11) youth and vitality, vigour and enthusiasm;

117 12) a freshness to the airwaves.

118 For these reasons, we are both hopeful and optimistic that we will be able to provide this first commercial FM stereo radio broadcast to the people of Dryden, Kenora and Vermilion Bay.

119 We are confident that the time has come for the first, new, commercial FM stereo signal in the cars, homes, offices and businesses of the citizens of Dryden, Kenora and Vermilion Bay. As well, it will provide a wonderful new service for the very important travellers and tourists in the area.

120 We hope the Commission sees this project as a positive development and a great opportunity to enhance the lifestyle of all of the people in this dynamic region of the country.

121 Thank you.

122 THE CHAIRPERSON: Thank you, Ms Bell.

123 Commissioner Williams.

124 COMMISSIONER WILLIAMS: Good morning, Members of the Norwesto Panel, Mr. Doucet and the Bells.

125 Mr. Bell, last year your group sold a couple of radio stations, signalling your desire to exit the radio business, yet here you are before us.

126 Can you please explain your motivation or decision to re-enter the radio business?

127 MR. BELL: Yes. We operated the stations for 20 years and towards the end of that operation Rick joined the firm and proved to be extremely successful, very, very helpful, and had found a real desire to work in the business. This caused us to start looking at possible other opportunities to take advantage of his talents and interests.

128 COMMISSIONER WILLIAMS: Mr. Doucet, you were the general manager of one of those stations prior to their being sold though.

129 Is that correct?

130 MR. DOUCET: Yes, it is. For CFNO in Marathon.

131 COMMISSIONER WILLIAMS: Why did you choose not to stay on with the new ownership?

132 MR. DOUCET: The new ownership was bringing in a general manager, a fellow by the name of Ray Delatynsky, and he would be replacing me.

133 COMMISSIONER WILLIAMS: They actually asked you to stay on?

134 MR. DOUCET: Yes. I did stay on for quite a few months just to help the transition go through and bring him up to speed with all the computer programs and let them become familiar with the staff, et cetera.

135 Plus, my other half was moving, so I just had to go.

136 COMMISSIONER WILLIAMS: That is always an important consideration.

137 MR. DOUCET: Yes. Yes.

138 COMMISSIONER WILLIAMS: In your reply to Fawcett's intervention you indicated that as your intention was to keep your prices in line with those in the market area you would generate higher revenues from Kenora than that which were initially projected, giving CJRL's most recently published rates.

139 Could you please file revised projections for Kenora revenues reflecting this? You can file them with Mr. Secretary.

140 You were planning to operate only one broadcast studio located in Vermilion Bay with rebroadcasting transmitters located in Dryden and Kenora.

141 Please confirm that the same programming and advertising will be broadcast on all three transmitters?

142 MS B. BELL: Yes, that is accurate.

143 COMMISSIONER WILLIAMS: Would you accept a condition of license to that effect?

144 MS B. BELL: Yes, we would.

145 COMMISSIONER WILLIAMS: During the deficiency process you submitted estimates of the tuning share that your proposed station would receive in each market. These estimates would give your proposed station a tuning share comparable to CJRL's and CKDR's, yet your projected advertising revenues are substantially different than theirs, or inferior to theirs.

146 Please comment on how you view the relationship between your projected tuning share and your projected advertising revenues.

147 MR. BELL: Well, it is an initial operation starting fresh. It is going to take some time to familiarize the clientele with the operation and convince them that the service is of the quality that they would be willing to be part of. So we have been fairly cautious, I would say, in our initial projections for those reasons.

148 COMMISSIONER WILLIAMS: Thank you, Mr. Bell.

149 Given that you propose to locate your studio in Vermilion Bay, approximately what percentage of your projected expenses will be spent there?

150 MR. BELL: The majority for sure. I don't know the precise figure, but 70 to 80 per cent I would think.

151 COMMISSIONER WILLIAMS: So 70 to 80 per cent are spent in Vermilion Bay.

152 How would the remaining 20 or 30 per cent be allocated between, say, Dryden and Kenora individually?

153 MR. BELL: For the news department we were anticipating having stringers in other communities, so part of that would go to the other two communities.

154 The salespersons may operate out of Vermilion Bay, or it may be convenient for them to actually reside in one of the other two communities and therefore they would be citizens of the other communities. That is to be determined at how the staff develops sort of.

155 COMMISSIONER WILLIAMS: So that would be, say, an equal split between the two communities then?

156 MR. BELL: Yes.

157 MS B. BELL: Likely.

158 COMMISSIONER WILLIAMS: Okay. Thank you.

159 Do you think a regional service, one serving several markets, would be more attractive to national advertisers than those services specifically serving those markets?

160 MS B. BELL: I do think it would be an advantage if they had services in both communities. They would certainly look at that as an advantage and we would have to keep our prices in line to remain competitive, keep our spot prices in line with what the existing media is charging.

161 COMMISSIONER WILLIAMS: So there would be a pricing consideration.

162 Regarding your specific application, do you think your proposed service might not potentially be more attractive to national advertisers wanting to reach the Dryden/Kenora markets than the competitor?

163 MS B. BELL: It possibly would be, but in previous experience we have sort of dictated our prices depending on what markets we were selling to. If somebody was only really advertising in one market, they would have different pricing than if they were capturing the entire area. That is how you can sort of ensure that you are keeping your prices in line with the markets.

164 COMMISSIONER WILLIAMS: But yet your signal would be broadcast to the other markets.

165 MS B. BELL: Correct. So I do think there would definitely be an advantage for them.

166 But the existing media has the same two towns and I suppose what I'm saying is that what the cost of the two towns would be would be in line with what we would charge for the entire area.

167 COMMISSIONER WILLIAMS: Okay. So you would give them a different reach for similar pricing?

168 MS B. BELL: Right. Correct.

169 COMMISSIONER WILLIAMS: Maybe we can spend a bit of time talking about your local and regional programming plans to try to gain an understanding of how the communities of Dryden and Kenora would be served under your proposed regional community of interest broadcasting model with everything originating from a studio in Vermilion Bay.

170 You stated all three communities share a number of common and interrelated interests and as a result a great deal of the information programming you would provide would be pertinent to the three communities. You cited a number of examples of common interest, including forestry, tourism, transportation, weather, sports and highway information.

171 As you are aware, Fawcett filed an opposing intervention suggesting that the level of relevant local service you provide the communities in Dryden and Kenora under your regional broadcasting model would not be sufficient to meet the needs of either community.

172 Could you please review and provide additional details as to the nature of your regional and local spoken word programming proposals?

--- Pause

173 COMMISSIONER WILLIAMS: Maybe specifically you could talk of how your regional community interest programming model you plan to provide spoken word material of direct and particular relevance to the individual communities of Dryden and Kenora on levels sufficient to meet these communities' needs?

174 MS B. BELL: One of the things that we would be doing are these features of interest. Like we said, we would run one every hour. They are not provided right now in the area. There are some good features that we have looked into already that do discuss things like transportation, forestry, the forestry industry, agriculture. So we are already looking for different reports that we can provide to the area.

175 The main focus of the area is forestry and if we can find some features -- well, we have found features that we think would be of interest to the entire area that is not presently provided.

176 Again, there are lifestyle, sporting and entertainment features that we are looking at as well that we think, being northerners ourselves, would be of great interest to the entire region.

177 COMMISSIONER WILLIAMS: Do you have plans to offer magazine-style programs, original phone-in programming, community access programming or is your local reflection primarily achieved through these features of interest and news and DJ chatter?

178 MR. BELL: Not initially, but we would hope something might develop out of that. We are looking more at the two to four-minute feature at the bottom of the hour that serves the interest of a specific group and then continue with the rest of the format.

179 We have done this in the past. There are many, many interesting features out there that you can latch onto or can create for yourself. Fairly short but to the point and reaching different markets, different interest groups.

180 COMMISSIONER WILLIAMS: Could you give us a brief example of one of these features? What would the content be and the focus?

181 MR. BELL: There is a show relating directly to the fishermen in the crowd which even give them the best times for fishing each day. We find this gets a tremendous following.

182 Cottage country is something that is of interest to the people, all the little hints that you can give towards the people who have cottages, and so on.

183 These sorts of programs we find get a good following and are rather well done as well.

184 COMMISSIONER WILLIAMS: This information, do you have this information specific -- these features specific to the communities of Dryden and Kenora?

185 MR. BELL: I would say that there might be some interview programs that would fill some of these slots with people from the area. These also would be for a variety of topics, but some of these would definitely be of a local nature, yes.

186 COMMISSIONER WILLIAMS: In your 17th March 2003 deficiency response you stated that the programming focus of your proposed station would not only be on the three larger communities but you would also focus on serving smaller townships and outlying areas. You stated the service to these communities is presently missing in the area.

187 Can you talk a bit about the type of programming that you would offer to fill this void?

188 MS B. BELL: Again, the population in this area is probably either agricultural or there are many, many tourist camps which are a little bit out of the reach of radio service presently which we were hoping we would capture and we are quite confident we will. So it is the same type of programming, such as "The In Fisherman" would be of interest to all of the Americans at these fly-in fishing camps that presently don't have any service.

189 COMMISSIONER WILLIAMS: So a lot of your programming is focused on people who come into the area. What would you do for people who already live or permanently live in the area?

190 MS B. BELL: Well, the people who live there actually live there for the same reasons that the people travelling there come. We like the fishing and the outdoors and the cottage life. So the think the features of interest are actually features of interest to the entire population.

191 COMMISSIONER WILLIAMS: Okay. Thank you.

192 I would like now to talk a bit about your news programming.

193 In your 17th March deficiency you provided a breakdown of the news and information programming by region and individual community and also provided information of how each community's local reflection needs would be met on a consistent basis using local and regional interest stories.

194 I note that Fawcett Broadcasting intervention offered a very different interpretation of the numbers that you filed.

195 I note that in paragraphs 42 through 46 of your 17th June 2003 letter you set our your response to the Fawcett comment.

196 Would you please again take us through your explanation so that the Panel has a more concise understanding of how to relate the figures you provided that indicated news stories would be broken down to consist of 60 per cent regional stories, 15 per cent Dryden, 15 per cent Kenora and 10 per cent Vermilion Bay; and your statement that "90 per cent of our stories would be of interest to Kenora and Dryden" as opposed to 30 per cent that Fawcett is questioning?

197 MS B. BELL: I believe that the breakdown was how many -- the percentage of news and information that would be regional stories or of regional interest, Dryden stories, Kenora stories and Vermilion Bay stories.

198 COMMISSIONER WILLIAMS: That is correct.

199 MS B. BELL: What we were looking for was a total that ended up being 100 per cent. So we said that the regional stories, of course we assumed would be of interest to the entire region. The Dryden stories would be, then, 15 per cent of interest to just Dryden, so of course they would also be of interest -- they would also be interested in the regional stories, which meant their total interest percentage I guess would be 75.

200 Because in Dryden they would have 15 per cent Dryden stories and 60 per cent regional, which would be 75 total.

201 Kenora would be another 15 per cent, which would make their interest in the news another 75 per cent of the stories that are on.

202 Vermilion Bay stories would get 10 per cent of our attention, which would mean they would be interested in both the regional and the Vermilion Bay stories, which would put them at 70 per cent.

203 This was in line with the populations and I believe possibly the economic draw from each of the towns and it did end up at 60 plus 15 plus 15 plus 10 totals 100. We of course didn't want to go over 100 per cent.

204 That was our reading of how we were supposed to break those numbers down.

205 COMMISSIONER WILLIAMS: So your 90 per cent of stories that would be of interest to Kenora and Dryden is probably maybe 75 per cent to Kenora, 73 per cent to Dryden. Is that what I am to understand?

206 MS B. BELL: Correct.

207 COMMISSIONER WILLIAMS: Okay.

208 I note that in your 17th of March 2003 deficiency response you indicated that the proposed station would devote 280 minutes or four hours and 40 minutes per week to news programming.

209 MS B. BELL: Right.

210 COMMISSIONER WILLIAMS: You talked about your initial plans for employing one full-time newsperson and part-time stringers located in Kenora and Dryden. You also indicated you would hire an additional part-time news person when finances permit.

211 In its intervention, Fawcett has suggested your proposed staffing levels are inadequate to deliver on your news programming commitments.

212 You have identified news programming as one of the major means by which you would provide the communities of Vermilion Bay, Dryden and Kenora with relevant local reflection.

213 Would you elaborate on how news stories would be gathered, packaged and put on-air and why you feel that your staffing plans to employ only one full-time newsperson are adequate to meet your stated goal of four hours and 40 minutes of local news programming per week to these communities?

214 MS B. BELL: Again, we will have one full-time person who would be gathering the information from the various communities and, in addition, we will be paying for news tips, freelance reports, and we would have a number of stringers in the different communities to assist.

215 The first available extra funds, that would be where we would hire additional staff, being in the news department. But we do think that one full-time employee with the assistance that we will be giving will be sufficient, especially considering that everybody will be working as a team and if that person called in, of course, people in the studio would be willing to assist in the newsgathering as well.

216 COMMISSIONER WILLIAMS: You also indicated that you would use three to four-minute satellite feeds from broadcast news.

217 MS B. BELL: Correct.

218 COMMISSIONER WILLIAMS: How would these segments be integrated into your local news programming and when would these segments air?

219 Looking at your commitment to air 280 minutes of news programming per week, which proportion of those 280 minutes would consist of non-station-produced broadcast news programming?

220 Three to four minutes I guess --

--- Pause

221 MR. DOUCET: For the most part, broadcast news would be broadcast during the overnight hours from midnight to six a.m. to cover the overnights for relevant news and sports.

222 COMMISSIONER WILLIAMS: How many minutes would this broadcast news programming comprise on a typical broadcast day?

223 MR. DOUCET: In a particular day?

--- Pause

224 MR. DOUCET: You can estimate this of course, three to four minutes on every hour from midnight to 5:00 in the morning, 6:00 in the morning, will be local-produced news. So three or four minutes every hour for six hours.

225 It will be combined throughout the day as well. Then we will combine a local package following broadcast news.

226 COMMISSIONER WILLIAMS: So that would be 75 minutes a day then?

227 MR. DOUCET: Three or four minutes every hour. Yes, that's about right.

228 COMMISSIONER WILLIAMS: So 75 minutes a day, seven days, so almost 500 minutes.

229 MR. DOUCET: Yes.

230 COMMISSIONER WILLIAMS: You talked about 280 minutes for the --

231 MR. DOUCET: For the local.

232 COMMISSIONER WILLIAMS:  -- for the local.

233 MR. DOUCET: We will tag onto the broadcast news with the local.

234 COMMISSIONER WILLIAMS: So the local would be in addition to.

235 MR. DOUCET: Yes, exactly.

236 COMMISSIONER WILLIAMS: So I guess the answer to the question is, no portion of the 280 minutes would consist of broadcast news programming because it would be in addition to the 280 minutes.

237 MR. DOUCET: Correct.

238 COMMISSIONER WILLIAMS: Okay.

239 When would you hire this additional part-time newsperson?

240 MR. DOUCET: As soon as possible basically. Whenever funds were --

241 COMMISSIONER WILLIAMS: Whenever funds are available.

242 MR. DOUCET: Yes.

243 MS B. BELL: It is our first priority.

244 MR. DOUCET: Yes.

245 COMMISSIONER WILLIAMS: In your projections, when would you anticipate this might take place?

246 MR. DOUCET: The second year.

247 COMMISSIONER WILLIAMS: The second year?

248 MR. DOUCET: Yes.

249 COMMISSIONER WILLIAMS: In your 17th March deficiency you indicated that outside of news staff the station would employ four programming staff, some of which would share both on-air and management duties.

250 It would appear from your descriptions that the station would offer live-to-air programming from six a.m. until midnight Monday to Friday and some degree of live-to-air on the weekends.

251 Would you confirm for us when you plan to be live-to-air and when you plan to be voice-tracked or automated?

252 MR. DOUCET: We plan to be live-to-air from six a.m. through until midnight and then we will go voice-track throughout the evening.

253 We will use voice-tracking through the training process, bringing staff up to giving them an on-air presence and getting them comfortable with the automation system and then we will disconnect that basically and let them go live-to-air once they are fully trained.

254 COMMISSIONER WILLIAMS: How about the weekends?

255 MR. DOUCET: The weekends there will be a live -- I think we discussed an eight-hour show with some voice-tracking on Saturday and Sunday. That's how --

256 COMMISSIONER WILLIAMS: Okay.

257 In April of this year Fawcett Broadcasting filed an application for the Commission to flip its Kenora AM station CJRL to the FM band.

258 Should the Commission approve your application, what impact, if any, would approval of the Fawcett application for the flip have on your operations?

--- Pause

259 MS B. BELL: I think that we are still looking at different markets to an extent that they would be sort of a local -- although a bigger network, they are a local radio station whereas we are going for a regional sound.

260 I think start-up at the same time may be a bit detrimental to us because we haven't had much time to establish ourselves and they have had 63 years of AM to establish themselves. So it might set us back a bit at the beginning, but I certainly think we could all survive.

261 COMMISSIONER WILLIAMS: So if we were to approve their application, that wouldn't affect your business that much in the longer term, then?

262 MS B. BELL: I think it would affect our start-up for sure, the first few years. There might be some confusion as to a couple of new FM signals at the same time and, again, we wouldn't have a chance -- an opportunity to establish ourselves in the area. But I do think in the long run certainly there would be room for two stations.

263 COMMISSIONER WILLIAMS: Okay.

264 In your intervention reply dated 17th June 2003 you stated that your hot AC music format would offer listeners a more contemporary sound and target a younger audience than the AC formats offered by both Dryden and Kenora radio stations.

265 What musical styles and who are some of the artists you would feature as part of your hot AC format?

--- Pause

266 COMMISSIONER WILLIAMS: I guess what we were looking for, is everybody looking at featuring predominantly contemporary hit radio, dance, modern rock, AC pop rock or some hip-hop, urban? I'm trying to get a flavour of how this station would sound in relation to the more standard pop-oriented AC station? How is it different?

267 MR. DOUCET: It would be a little more towards the CHR format, but with some adult contemporary mixed into it. It will be some dance with a lot of -- with the top 40 mostly, which is not played presently.

268 Some of the artists would be Justin Timberlake, Britney Spears, a lot of more dancey, upbeat pop stars I guess.

269 COMMISSIONER WILLIAMS: You also stated that your hot AC would feature hits from the '80s, '90s and today.

270 Which percentage of your weekly playlist would come from each of the periods that you have identified?

--- Pause

271 COMMISSIONER WILLIAMS: What I'm trying to find out is how contemporary your hot AC format would be.

272 MS B. BELL: We know that we are limited to the amount of hit material we are allowed to play, but we would probably play as much as -- close to as much as we could top 40 hits and then I would say the next highest percentage of music we would play would be from the last decade and then a few classics from the decade before, but not really focusing on that period of time at all.

273 COMMISSIONER WILLIAMS: Can you put an estimated percentage to that answer, to each of the --

--- Pause

274 COMMISSIONER WILLIAMS: What percentage from the '80s? What percentage from the 90s? What percentage from contemporary?

275 MS B. BELL: I would say 10-15 from the '80s, possibly from the last decade more like -- I have to total 100 here.

276 I would say 40 would be pop right now, another 30 from the last decade, maybe 40, and then 10 or 15 from the '80s.

277 COMMISSIONER WILLIAMS: From the one previous to that.

278 MS B. BELL: Yes.

279 COMMISSIONER WILLIAMS: Okay. Thank you.

280 You state your format would target a younger audience than either CKDR or CJRL does with their AC format. What specific age group are you looking at?

--- Pause

281 MS B. BELL: We are looking at something around 12 to 35.

282 COMMISSIONER WILLIAMS: Okay. Thank you very much.

283 I have no further questions, Mr. Chair.

284 THE CHAIRPERSON: Thank you.

285 Commissioner Pennefather.

286 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

287 Good morning, everyone.

288 Just a quick question on the technical.

289 You said that this is a new, clear, consistent signal extending along the Trans-Canada Highway. So if I were driving from Dryden through Vermilion Bay to Kenora, you are saying I could get the signal everywhere?

290 The maps that I have showing the reach of Kenora and Vermilion Bay seem to show some gaps.

291 MR. BELL: In previous applications that I have made we were serving an area north of Lake Superior and the engineering studies always included a 50 microvolt per metre band. Currently they don't provide those and I did have the engineer sketch out what he thought where that 50 microvolt per metre band would land, because we are quite familiar with that. We know that we have -- that the signal is, in northern Ontario, very useable right out to the 50 microvolt per metre contour. Those contours do overlap, even though they don't show there on the maps currently prepared by broadcast engineers.

292 COMMISSIONER PENNEFATHER: Thank you.

293 MR. BELL: So that would mean that they would overlap and they would be good signals.

294 COMMISSIONER PENNEFATHER: Thank you. I was going with the maps that we have, though, and what is normally done these days by Industry Canada.

295 MR. BELL: Yes. Yes.

--- Laughter / Rires

296 COMMISSIONER PENNEFATHER: Thank you very much.

297 THE CHAIRPERSON: Thank you.

298 Commissioner Noël.

299 COMMISSIONER NOËL: Just one question concerning the development of Canadian Talent Development.

300 You mentioned that you would have an envelope of $2000, $400 going to FACTOR, and the rest would be for scholarships for students with particular talent in music or arts at the high school level.

301 How many high schools are there in the area?

302 MS B. BELL: There are three high schools.

303 COMMISSIONER NOËL: Three high schools, which would mean that each scholarship would be in the range of $530-odd dollars.

304 MS B. BELL: We were looking at $400 to $500 for each scholarship. That is one area that we realize as groups -- especially in the next category, as groups that have some type of musical or artist background request donations, we may end up -- that would be a minimum of $2000. The more we discuss it, the more we would think it would probably be higher, but we are committing to a minimum of that, and the scholarships would be $400 to 4500.

305 COMMISSIONER NOËL: Thank you very much.

306 THE CHAIRPERSON: Thank you.

307 Counsel?

308 MR. WILSON: Thank you, Mr. Chairman. I just have a couple of questions.

309 In your presentation today you indicated that your signal would reach a number of people or a number of areas which currently receive no signal at all.

310 Do you have any estimate as to the number of people that currently are not receiving any signal who would receive a signal if your application were approved?

311 MS B. BELL: That would be quite a difficult number because StatsCanada only gives us the number of people who are within city limits as opposed to outside of city limits. Without engineering reports I guess we can't tell, but the application from the intervenors actually does acknowledge that there are many people who are not receiving any signal at this point.

312 MR. WILSON: Thank you. Just one final question to follow up with you.

313 In response to a question from Commissioner Williams you agreed to file some revised numbers with respect to Kenora advertising.

314 Would you be able to file those with Mr. LeBel by the end of today?

315 MS B. BELL: We certainly could. Sure.

316 MR. WILSON: Thank you.

317 THE CHAIRPERSON: Thank you very much.

318 Mr. Secretary.

319 MR. LeBEL: Thank you, Mr. Chairman.

320 The appearing intervention submitted on this application was filed by Fawcett Broadcasting Limited.

321 Appearing for Fawcett are Howard Fawcett, Bruce Walchuk and Hugh Syrja.

--- Pause

322 MR. LeBEL: Gentlemen, you have 10 minutes to make your presentation. Thank you.

INTERVENTION

323 MR. FAWCETT: Good morning, Mr. Chairman and Commissioners. My Name is Howard Fawcett, president of Fawcett Broadcasting Limited. On my right is Bruce Walchuk, Manager of CKDR Dryden. On my left is Hugh Syrja, Manager of CJRL Kenora.

324 Together, the three of us have 81 years of accumulated broadcast experience in these markets.

325 This application is a very serious matter for the three of us, our 28 employees in Kenora and Dryden, and all 41 employees of Fawcett Broadcasting. We have taken considerable time and resources to respond to this application because we know the strengths of our markets and we know unequivocally that neither Kenora nor Dryden can sustain a second commercial radio service.

326 If our radio stations are to continue to provide live, local programming, and if the stations are to remain viable entities, as they are now, we must find new ways and means to strengthen our position in these markets, not weaken them.

327 As you can appreciate, it is a daily struggle in small, single industry markets. However, we have an obvious commitment to Kenora, Dryden and all the communities served by Fawcett Broadcasting. Therefore, we oppose this application for the following reasons:

328 Number one. The approval of Norwesto's application will have a serious economic impact on our operations in Kenora and Dryden. The effect of siphoning local revenue from our existing stations will have an immediate negative impact throughout Fawcett Broadcasting Limited.

329 Number two. It will alter our long-term business plan, including our strategy of continuing to provide live, local radio service. We are very proud of this service.

330 Number Three. Norwesto's business plan is unrealistic in its expectations. Kenora and Dryden can support one, but not two commercial radio stations.

331 I will now ask Mr. Syrja to speak about the effects on Kenora.

332 MR. SYRJA: Thank you.

333 My community of Kenora has a population of approximately 15,800 people. If one considers that the total capacity of Ottawa's Corel Centre is 18,000, the entire population of Kenora would fit into this hockey arena, with plenty of empty seats.

334 Mr. Chairman and Commissioners, with my 33 years experience in these markets I can say without hesitation or exaggeration: Kenora cannot support another commercial radio station.

335 Throughout this process the onus has been on the applicant to provide compelling evidence that their proposal will not unduly impact on our existing stations. Norwesto has failed to do this in their written correspondence or in their oral presentation today.

336 Conversely, we have supplied substantial evidence that the introduction of a second commercial radio service would seriously impair our ability to carry out our programming obligations.

337 The vast majority of my revenue comes directly from the streets of Kenora. The contours of the proposed station would cover Kenora's entire central radio market and beyond.

338 Should this application be approved, Norwesto will be on an equal footing with CJRL on the streets of Kenora. Therefore, assuming they are proficient in sales and marketing, it is reasonable to conclude Norwesto will achieve a minimum 50 per cent of the radio revenue currently available.

339 Kenora cannot support two commercial radio stations. A second broadcaster will precipitate a serious negative impact on my audience, my station, and my 14 staff members.

340 MR. WALCHUK: Good Morning.

341 Dryden has a small population of 8,200. To carry on with Mr. Syrja's analogy regarding the capacity of the Corel Centre, each person in Dryden could bring a guest to the game and there would still be empty seats.

342 Mr. Chairman and Commissioners, I would like to put forward this example to emphasize the economic situation in my town.

343 The fact is, roughly 30 per cent of the jobs at Dryden's primary employer are being permanently eliminated. Regardless of early retirement packages being offered to senior employees or of other concessions, 30 per cent are being eliminated.

344 To underscore the significance of these layoffs, one in eight residents of Dryden is employed at this mill.

345 Other recent closures and massive layoffs in the community and in the region make me very nervous about making my monthly local sales goals.

346 I also know, having 30 years experience at the radio station in Dryden, this small market cannot support another radio station. It just cannot happen in a community of 8,200 people.

347 Norwesto's contentions regarding the growth potential of our region are misleading. The bottom line is, these markets have not grown in the past 30 years. The 2001 Census reveals that this trend is continuing.

348 We have stated repeatedly this application by Norwesto is intentionally designed to penetrate the Kenora and Dryden markets and has little to do with serving the 800 residents in the village of Vermilion Bay.

349 Norwesto has stated clearly that they require Vermilion Bay as a transmitter site. That is exactly our point. They are attempting to use a "back-door" approach to the Kenora and Dryden markets.

350 Norwesto has applied to offer a regional repeater service with a principal marketing area of 26,500 people.

351 In a recent denial of a Thunder Bay broadcaster, the Commission determined that the Thunder Bay market lacks the financial capacity to support another commercial radio service. Thunder Bay, with a population of 122,000, makes up over half the population of Northwestern Ontario. If Thunder Bay cannot support a new radio station, it is unrealistic to expect a combined population of only 26,500 to do so.

352 As is the case of Kenora, the contours of the proposed station would cover Dryden's entire central radio market and beyond.

353 Both CJRL Kenora and CKDR Dryden are providing, as stand-alone radio stations, a very high level of local and regional programming and public service. We are immensely proud of what we do and want to continue doing it in the future. It is more important to provide a live, community-driven, local radio service instead of two automated, voice-tracked, jukeboxes.

354 Mr. Fawcett, our President, has already committed to both the Commission and to us that he is steadfast in his determination to improve service with an FM stereo signal to Kenora and to Dryden.

355 MR. FAWCETT: Mr. Chairman, overall we are looking at very small population figures. Using Norwesto's universe of 26,500, we pointed out in our written intervention that no other Canadian communities within this population range are able to sustain two commercial radio stations unless they are jointly operated by a single ownership.

356 Our research of Canadian radio stations operating in small markets revealed compelling evidence that both the Commission and experienced broadcasters have already realized: The small population base proposed by Norwesto does not have the financial capacity to support a new commercial radio service.

357 Based on our review of the application, we would like to make the following brief comments:

358 Local sales revenues for both Kenora and Dryden have declined during the last three years. The Commission has our audited annual returns as evidence to verify this statement. Our PBIT is approaching dangerously low levels.

359 Denial of this application will ensure the continued survival of live, local radio service in Kenora and Dryden.

360 Denial of this application will also allow Fawcett Broadcasting Limited to continue to implement its long range business plan to convert its AM stations to the FM band and provide that best possible radio service to Kenora and Dryden.

361 This long range plan has been on record with the Commission since January 15, 2001. Fort Frances has been successfully converted. An application to convert Kenora is now before the Commission, and Fawcett will soon submit an application to convert Dryden to the FM band.

362 Mr. Chairman, Commissioners, Fawcett Broadcasting Limited respectfully submit that the application by Norwesto should be denied for the following reasons:

363 The economy of these markets in Kenora and Dryden simply cannot sustain a second commercial radio station. As in many other areas in Canada, there is room for one, but not two, radio stations. Our interventions have provided compelling evidence to support our position.

364 Fawcett's PBIT is approaching dangerously low levels. The Commission has our audited annual returns to verify our concerns.

365 To repeat Mr. Walchuk's earlier comment, it is more important to provide a single, live, local radio service, rather than two automated and voice-tracked jukeboxes. We suggest that it is better to have one healthy radio station than two very sick ones.

366 It is for these, and many other reasons raised in our two letters of intervention, that we respectfully appear before you today and ask that the application by Norwesto be denied. Thank you.

367 We would be pleased to answer any questions you may have.

368 THE CHAIRPERSON: Thank you.

369 Commissioner Pennefather.

370 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

371 Good morning, gentlemen.

372 MR. FAWCETT: Good morning.

373 COMMISSIONER PENNEFATHER: As you have presented today, and in two very complete interventions, you have laid out your position quite clearly so I just have a few questions of clarification.

374 As you say, this is a balancing act. As you said at the very end of your comment this morning, you are making a very strong comment regarding the possibility of a second commercial radio service in this area.

375 Obviously the Commission is looking at the points you have raised along with diversity of voices in markets across Canada. So you can understand that the point you have made is a very important one, but I would like to delve into it a little further in terms of the balance of objectives.

376 Just to be clear, here and again in your interventions you discussed at length the economic situation in Kenora and Dryden. There seem to be varying opinions on the numbers in terms of population growth and/or the economic outlook in these areas.

377 But my question is, could you be a little more specific on how you see these economic indicators affecting radio advertising in, first, Dryden and then Kenora?

378 MR. FAWCETT: I would, if I may, just speak to the -- I agree with the population discrepancies. I would like to just state on that front that we have been kind of squabbling about hundreds here and there.

379 Our evidence is from StatsCanada and basically what we are saying is since 1971 the population of the area has not changed. It has remained static and actually it has dropped a little bit. The last Census states clearly that it is dropping. So instead of squabbling about hundreds we are just saying that it has remained static.

380 I would ask Mr. Walchuk and Mr. Syrja to address the local economy.

381 COMMISSIONER PENNEFATHER: But particularly how -- I understand you have your views on that, it is quite thorough, but what is the effect on radio advertising revenues going forward, in your view, of this economic situation?

382 How do you see the radio advertising market per se? Not just the general economic market but the radio advertising market?

383 MR. FAWCETT: Specifically for our communities in Kenora and Dryden? Yes, okay.

384 MR. WALCHUK: Specifically of Dryden -- and we keep coming back to the layoffs at the Weyerhaeuser's Mill. Understand, the announcements of these layoffs occurred on July 15th of this year. So certainly Nortwesto's application had gone in well before these announced layoffs.

385 There had been rumblings that the layoffs were coming. I am a two-time past-president of the Chamber of Commerce and well connected locally in the business community and we knew something was coming down. We didn't know what and how bad.

386 As we worked through, we thought in a worst-case scenario 100, possibly 150 jobs. The announcement of 330 union positions and 55 staff jobs in a mill with a total employment of 1,2000 was thunderous, absolutely thunderous.

387 Weyerhaeuser's has good reasons for doing this, not the least of which is the ongoing softwood lumber dispute, an outdated sawmill in Dryden -- they have just opened a new one in Ear Falls. The fibre is now going to go to Ear Falls rather than Dryden -- and the Canadian dollar. They were having problems with a 65 cent Canadian dollar. The dollar as of yesterday I think is around 76. They are projecting it could hit 80. So we think there are tougher and leaner times ahead yet.

388 The bottom line comes down to -- and while we do appreciate negotiations have gone on with the union, that there are earlier retirements taking place at the mill, there are still close to 400 jobs, positions gone, at an average of $50,000 and upwards a year.

389 The significant withdrawal of that amount of money has already impacted on some of our advertisers. We already have advertisers who are down-scaling their budgets for the year. Some have said they are going to be going on a week-by-week basis now. They are no longer planning a year at a time.

390 I project, frankly, that our revenues for the next year, if we are very lucky, will remain flat, but I am budgeting and running my staff levels anticipating a 5 per cent to 6 per cent decrease.

391 I would like, before I turn the microphone over to Mr. Syrja, by the way, to discuss this issue of business closures.

392 Again, we have been throwing numbers around with Nortwesto and we had indicated that we had identified 27 businesses that had closed in Dryden since the year 2001. A lot of these business closures had to do with the fact that, frankly, we have a large Wal-Mart store in our town.

393 Wal-Mart is what we refer to in advertising as a category killer. They kill your shoe stores, they kill your sporting good stores, they beat up on your small retailers. You have all seen reports on Wal-Mart.

394 We came up with a list of 27 that either had closed or had been absorbed by larger competitors. Nortwesto responded with a list of 28, saying that we had used figures going back to 2000. We had not. We had based our $100,000 on lost revenue in some instances on the year 2000, because if a business closed early in 2001 the numbers you are looking at are from 2000. So they came up with 28 business.

395 Having seen their list and having reviewed it, five of their new business are name changes on existing business; six of them went down prior to 2001; and three of their are expansions, leaving not 28 new business in town, but 14.

396 I do also want to comment that in confirming that five of these business were not new but were expansion, I contacted Jim Diamond, our economic development officer, who they were using as a database and said "Jim, I have a problem with some of these being described as `new'" and received an e-mail from him on Thursday agreeing with me that five of these business were in fact not new businesses.

397 COMMISSIONER PENNEFATHER: So this is the kind of information you have to say that, as you do in your reply, the amount of money available in the market for new radio advertising and for other media is not possible?

398 MR. WALCHUK: The amount of money, as witnesses by the fact that our local newspaper has scaled back operations, as witnessed by the fact that our revenues prior to the mill closure in fact were already flat for the subsequent three years.

399 COMMISSIONER PENNEFATHER: Okay. Thank you.

400 MR. WALCHUK: It can only go downhill. We are trying to be optimistic, but...

401 MR. FAWCETT: If I may add to that, it is just part of the experience of running radio operations in these towns. Our experience in these markets tells us that the 30 per cent that they are proposing for new revenue is just not realistic. We recently flipped Fort Frances to FM and the vast majority of our revenues have come from existing advertisers, not from new business.

402 There is not new businesses cropping up all over the place and decided to start advertising, nor are there a lot of businesses who have held back for years and decided not to advertise on radio.

403 The application of that for us was that when we applied for our licence in Kenora, we projected new revenue sources at 2 per cent, a long way from 30.

404 COMMISSIONER PENNEFATHER: I just wanted to ask you a question about Vermilion Bay.

405 What kind of coverage does your signal provide for Vermilion Bay at the moment?

406 MR. WALCHUK: Am radio of course is very susceptible to atmospherics. By and large, the motoring public carries us very clearly right through Vermilion Bay and beyond. In fact, I carry our signal virtually static-free half way to Kenora.

407 We do have some problems with home reception in Vermilion Bay on days when the sun is very bright and the atmospherics are wrong. Normally our listener base in Vermilion Bay is very good most days throughout the year. We are routinely broadcasting for community events in the community, we do have some advertisers in the community.

408 But again, referring to Vermilion Bay, it is a village of 800 people.

409 If I may comment, using Norwesto's own figures, they are projecting $38,000 in revenue from the village based against total first-year revenues of $561,000. That is only 7 per cent. That is only 7 per cent.

410 We certainly aren't doing 7 per cent out of Vermilion Bay. The village is just -- it is a very small village.

411 COMMISSIONER PENNEFATHER: What proportion of your advertising revenue, then, would come from Vermilion Bay?

412 MR. WALCHUK: From Vermilion Bay right now, without the numbers in front of me, I would say probably less than 1 per cent.

413 COMMISSIONER PENNEFATHER: The next area I would like to ask you about, can you help us understand the difference between your approach in programming in Dryden and your approach in programming in Kenora in the two different markets? How is your programming difference in the two markets?

414 MR. SYRJA: If I could jump in?

415 We are, although owned by the same corporation, our music programming is basically the same because it comes out of head office. We are autonomous bodies, with our own announce staff, our own news staff, our own creative people who direct us to what public service features we should put on. So other than the basics of music programming we are different. I can't --

416 MR. FAWCETT: Just further to that, other than we do carry some broadcast news evenings and overnights and we carry a small religious block on Sundays on both of those stations, other than that the programming 100 per cent originates from each station. In other words, they may share news, the news directors are in constant contact with each other and those other kinds of things, but the stations basically originate their own programming and everything that they do is basically connected to the town so that they are separate entities in that way.

417 COMMISSIONER PENNEFATHER: Are there are any commonalities besides the music format?

418 MR. FAWCETT: I would say that the commonalities would be that we do have similar formats as far as how hot clocks are set up, how formatics are done by the DJs. We carry a lot of the same community programs simply because they work in both markets.

419 The markets are very, very similar. There are people -- you know, everybody is married to everybody kind of thing and everybody knows each other in the region. We have all been there for a long time so we tend to carry the programs that the people like and they tend to be programs that some people would term to be -- maybe quaint would be a word they would use, but they work in our communities. They are programs that work for us.

420 COMMISSIONER PENNEFATHER: I think that was more my point, the commonality between the markets per se --

421 MR. FAWCETT: Okay.

422 COMMISSIONER PENNEFATHER:  -- obviously speaking to the concept of the regional approach as opposed to local programming.

423 Just one other point regarding the Dryden station.

424 There is paragraph 27 in the reply of June in which you mention:

"The decrease of 20 per cent revenue from a town with a population of Dryden would have an effect on program service, not only to CKDR but to all six communities served by the LPRTs as well." (As read)

425 Can you clarify for us what you mean by that and how in fact the communities would be affected, in your view?

426 MR. WALCHUK: Currently the same six LPRT communities served out of Dryden receive essentially the same programming as does Dryden. They are rebroadcasters.

427 Before I address your question, it is important to note that they do not receive the same commercials. We tailor our rates and our commercials according to the community involved.

428 I like to tell people we have a big satellite dish on the roof. The difference is that our programming goes up and then we bring it back down into each of the small communities.

429 We split the commercials out. From time to time we have even split newscasts out. If we had a particularly important story for Ear Falls that warranted three or four minutes of coverage to Ear Falls but 30 seconds in Dryden, we have that ability and we do it.

430 If Norwesto takes the 20 per cent they say they will, based on our current profit margins, two, possibly three staff will be the result.

431 They are making the claim that increased competition will mean more advertisers will come to radio. I disagree wholeheartedly.

432 In a market, particularly a market that is going through some tough economic times, advertisers are not increasing their advertising budgets, they are shrinking them. A new player in the field is going to mean they are going to divy the pie up that much further. Potentially, using Norwesto's numbers, it could cost me two, possibly three staff.

433 I think Norwesto's projected impact is low. We have already talked about the business closures we have had. We have already said we lost $100,000 in revenue which we managed to make up, but we have been flat for three years.

434 MR. FAWCETT: I'm sorry. May I add something?

435 COMMISSIONER PENNEFATHER: Please, go ahead.

436 MR. FAWCETT: I just think we need to make it clear -- and this is a major point for us -- that their contours dictate that they will be on equal footing with us in Kenora and Dryden. You can look at this in a regional sense if you want, but this is a local application. They are talking about putting these repeater services into Kenora and Dryden and then hitting the streets and taking us on head-to-head on the streets of Kenora and Dryden.

437 Given that their contours are going to be as good as ours or better when they get started, it makes complete sense that they will take to us -- Norwesto has yet to refute this -- that they will take at least 50 per cent of the revenue. Why wouldn't they? They should take 50 per cent. All else being equal, they should take 50 per cent.

438 MR. WALCHUK: If I can interject again with a specific example.

439 You asked earlier what they were going to do by way of rates. In part they provided the answer to my question. Because we split our programming out and so we will charge $10 to somebody in Dryden, we will charge $3.00 to somebody in Red Lake. They each hear their own commercials.

440 In the case of Kenora and Dryden, let's say for instance we are using a rate of $10 in Dryden and a rate of $10 in Kenora, the McDonald's franchise in Dryden is paying $10 to be heard in Dryden, the McDonald's franchise in Kenora is paying $10 to be heard in Kenora.

441 Norwesto's programming will be heard right across the board. So Norwesto's choice is going to be to charge $20 -- which they have said a blended rate depending on where you are being heard -- or match our rate. I suspect what they will do is they will come in probably at around $11.

442 If you are an agency buying for McDonald's, this is a no-brainer. Instead of paying $20 you are now going to be paying $11.

443 Our sales staff have identified enough of the McDonald's/A&W-types of customers, the national customers that exist in both markets, that we think it could cost Dryden upwards of $100,000.

444 In terms of on-the-street, how you would, in a town the size of Dryden where the owner/operator of McDonald's is in the same Chamber of Commerce and sharing drinks with the fellow who owns the shoe store, run the risk of having them say, "Well, I am buying the Norwesto group for $20" and the other guy says, "I am only paying $10", because they are saying they are going to tailor it according to the size of the client. That is illogical. That is charging the "rate du jour".

445 COMMISSIONER PENNEFATHER: Thank you very much.

446 That was my last questions, rates. You answered it before I asked it. Thank you.

447 MR. FAWCETT: Thank you.

448 COMMISSIONER PENNEFATHER: Those are my questions, Mr. Chairman.

449 THE CHAIRPERSON: Commissioner Noël.

450 COMMISSIONER NOËL: Two questions.

451 When did you apply for a flip from your AM to FM in Kenora?

452 MR. FAWCETT: That application I believe was filed it -- it was filed a the beginning of April this year.

453 COMMISSIONER NOËL: Was this before or after the application by Norwesto was made public?

454 MR. FAWCETT: Actually we didn't know about Norwesto or had heard the name until Norwesto's -- I believe the public notice for Norwesto came out in May, the middle of May this year.

455 COMMISSIONER NOËL: So it was not driven by Norwesto's application?

456 MR. FAWCETT: No. We didn't know --

457 COMMISSIONER NOËL: It is part of a long-term strategy?

458 MR. FAWCETT: Yes. Actually the strategy has been set for several years. Actually, after the PN regarding hits on FM, I think it was in 1997, we started to formulate our plans then. So we have been at this for quite a while.

459 COMMISSIONER NOËL: What do you think, we have heard a lot about AM stations not being -- to use a French expression -- "au goût du jour" any more.

460 Would it be a factor in the fact that your advertising has been less than increasing -- in advertising revenues has been less than increasing in the last years?

461 MR. FAWCETT: I would say that from our experience from flipping Fort Frances, there has been some increase in FM from the FM in revenue. But when we did our business plan for Kenora, we based our assumptions for Kenora based on Fort Frances, which is the growth -- there is not a huge jump in growth. We are projecting a 4 per cent growth for Kenora.

462 We think it will definitely boost our marketing abilities in the community. We know that communities are excited about it.

463 That being said, we have survived very well on AM for a long time. We did for a long time, well into the late 1990s. We are happy to move to FM. We think it has its advantages. But we think small market radio in general, whether it is AM or FM, if you are local and you are telling people out there what they want to know, we think it is viable.

464 COMMISSIONER NOËL: Maybe a last question: Will your operating costs be reduced by flipping to an FM station rather than operating an AM with all the electricity and the wiring and whatnot?

465 MR. FAWCETT: Actually, in order to get the ERP we want we will have to -- hydro seems to be the big number now, what you have to pay for hydro. We will be running a 10 kilowatt transmitter, if we are approved.

466 So we are not expecting operating costs to drop when we go to FM, we are expecting -- we built in a rise for operating costs.

467 COMMISSIONER NOËL: Maybe your amortization costs will rise, but your operating costs per se would increase as well?

468 MR. FAWCETT: I'm sorry, I don't quite understand what you mean.

469 COMMISSIONER NOËL: If you invest in a new -- of course your depreciation costs will go up.

470 MR. FAWCETT: Yes.

471 COMMISSIONER NOËL: Which are non-cash.

472 MR. FAWCETT: Yes.

473 COMMISSIONER NOËL: But your operating costs would increase as well?

474 MR. FAWCETT: Yes, because the FM transmitter, which is a larger transmitter than the one we are using now, we budgeted through and did a hydro budget for the thing compared to the 5 kilowatt AM transmitter we are using and there will be an increase in power. That is a substantial increase.

475 So there is a little bit of an -- there is an increase over your operating costs for AM.

476 COMMISSIONER NOËL: Thank you.

477 I don't have any other questions.

478 MR. FAWCETT: Thank you.

479 THE CHAIRPERSON: Thank you very much, gentlemen.

480 Mr. Secretary.

481 MR. LeBEL: Thank you, Mr. Chairman.

482 I will now ask Norwesto Communications Ltd. to respond at this time.

483 You have 10 minutes to make your response.

REPLY / RÉPLIQUE

484 MS B. BELL: Fawcett Broadcasting Limited is a network of three AM stations which has enjoyed 63 years with a monopoly in the area. We are not surprised that they would like to continue this monopoly indefinitely.

485 Kenora has proven lucrative for their operations and Dryden's CKDR is also lucrative, with a total of seven communities from which to draw revenue. We are confident that with their experience and community involvement, Fawcett will continue to be successful regardless of some healthy FM competition.

486 Fawcett argues otherwise, by producing population charts with data missing to show decrease in population when in reality the populations of Dryden, Kenora and the area are either stable or have increased.

487 They have produced charts of businesses that closed when more businesses have opened in the timeframe. On that note, we did put businesses that were renamed to offset the businesses with the old name that were listed on their charts as closed. So that is why we did that.

488 They make accusations that we have no business experience or business plans, when we have 20 years or 50 years combined experience in the business.

489 The strategy seems to be, if their arguments are convincing, at best they may be able to continue a lucrative monopoly and at least they could beat us to an FM signal they could have requested decades ago.

490 Regarding population, in Fawcett's original intervention they discussed declining populations of 1.1 and 3.2 per cent for Kenora and Dryden respectively. However, in its second intervention Fawcett's own chart accurately shows that Dryden had only a .1 per cent decline in population, which amounts to seven people over 20 years. This is not a slow but steady decline in population. It is long-term stability.

491 Kenora's population is actually up by 3.2 per cent since 1981. This is certainly not flat. It is long-term growth.

492 The Kenora Website states that the Ontario Ministry of Finance projects that by 2028 the Kenora district will grow in population by 17.3 per cent. Thus, there should be no concern regarding the population.

493 As a matter of fact, Fawcett's letter of support from the Lake of Woods Business Incentive Group actually states:

"The Growth in our city also brought upon us greater demands for entertainment and expectations of advanced technology in the entertainment field." (As read)

494 We agree.

495 With respect to the markets, Fawcett stated in their first intervention the economy of Kenora is flat. However, Kenora's market is obviously strong as Fawcett now has an application in requesting to convert to 40,000 watts on FM.

496 Furthermore, they specifically asked the CRTC repeatedly not to issue a call. This is further evidence they know the market is strong and there may be room for some healthy competition.

497 Dryden. It is interesting that CKDR will applying to go to the FM band. Months ago, during their first intervention, it is not in their immediate plans. In the past few months their in the future, long range potential plans have been set in motion. This is interesting, as Fawcett insists that since their intervention there have been:

"...an alarming serious of recent events and pessimistic news from Dryden and area that will severely impact on CKDR-AM and the entire Fawcett group of stations." (As read)

498 With the economy in the last few months being so supposedly bleak, Fawcett has decided that conditions warrant it is time to invest in the conversion to FM for Dryden and the six LPRTs.

499 It appears that Fawcett wants us to believe the economy is bleak, yet for their operations there seems to be no alarm.

500 Again, Weyerhaeuser did announce layoffs and a good number of these people will be taking early retirement with increased severance packages. These people will stay in the town of Dryden.

501 Their own revenues. A large focus of Fawcett's first intervention dealt with our competition for advertising dollars in Vermilion Bay. CKDR's entire revenue from Vermilion Bay is only $3,894. Three thousand, nine hundred dollars per year is only approximately 0.01 per cent of Fawcett network's gross revenue. This amount would not affect their operations at all and is hardly a point that should affect our application.

502 Dryden. Fawcett stated in its original intervention that a loss in CKDR's sales to Norwesto in the amount of $47,040 would "produce an implosion throughout the entire company". This was downgraded by the second intervention to approval would "alter its long-term business plan".

503 After reviewing their financial data in their Kenora application, where it shows annual revenues from Kenora alone are in excess of $1 million, and understanding that Dryden brings in 44 per cent of the revenues for Fawcett network, we estimate that $47,000 is only approximately 1.6 per cent of Fawcett's gross revenues. This could not possibly produce an implosion throughout the company.

504 Furthermore, CKDR also has the advantage of broadcasting to six other communities, namely Red Lake, Ear Falls, Atikokan, Hudson, Sioux Lookout and Ignace, which would not be part of our coverage area. Therefore, this area which makes up 66 per cent of Fawcett's reach will continue to enjoy this uninfringed monopoly.

505 We actually only propose to broadcast to 33 per cent of CKDR's current reach.

506 Having six other communities from which to draw revenue is a real advantage. They acknowledged this in their second intervention which state:

"A single rate across two communities would be beneficial." (As read)

507 They have a single rate across seven communities where the population exceeds that of Dryden and Kenora.

508 Because of the nature of Fawcett's network, it also has the advantage of selling the same 30-second time slot four times, which is very lucrative.

509 It is a certainty that Dryden's operations will continue to be successful regardless of the applicant's licence being granted.

510 Kenora. Fawcett stated in the second intervention that:

"The fact is, Kenora's local revenue has been in decline since 1999." (As read)

511 This seems to be in conflict with their own application, where it estimates a 3.5 per cent increase in revenues year-after-year based on their last five years. In their own admission they show that after 63 years there is still an assumed 3.5 per cent increase per year.

512 The Kenora station also proudly displays a plaque on the wall from Fawcett network showing numerous times the sales were up from previous years, including one in 2002.

513 Furthermore, Fawcett estimates in their application that revenues and profits will continue to increase whether or not they convert to FM. They also state their profit before income tax is 8.7 per cent of their gross revenue. 8.7 per cent of over $1 million is $87,000. This is impressive, considering Fort Frances gets subsidized from Kenora revenues and approximately half a million dollars in administration is paid prior to profits being declared.

514 Why then would Fawcett insist the local revenue is in decline? Fawcett's own application shows their sales are up.

515 Regarding Fawcett's own FM application, which came after ours, when it acknowledges the residential and commuting listeners along the highways east and west of Kenora presently have a signal with "severe electrical interference that degrades the AM signal."

516 They also state at home and at work "electrical noise is an issue." Furthermore, their signal has been "unusable in many lower lying areas surrounding town". And they acknowledge there are some areas, including Sioux Narrows, where CJRL-AM signal is weak and distorted and a significant number of cottagers and residents will "be able to listen to local radio for the first time".

517 Fawcett has been in the area for 63 years. These are among the factors that led us to make our application. In 63 years they have made no effort to resolve these issues. It is only after we have committed to providing a better signal and a new option to the people of the area that they have presented their application.

518 It seems like a great opportunity and we are excited about providing this service. We are not only to provide a strong quality signal but an alternative to the people of Kenora.

519 Furthermore, we agree wholeheartedly with a letter in support of Fawcett's application from Buck Matiowski, Lake of the Woods Business Incentive Group. Mr. Matiowski states:

"In his profession of entertainment and community attractions he is elated at the prospect of an FM radio station in the City of Kenora." (As read)

520 He states:

"The growth in our city has also brought upon us greater demands for entertainment and expectations of advanced technology in the radio entertainment field." (As read)

521 He further states:

"Many supporting factors should be taken into account, which include: as a thriving tourist destination, visitors will be treated to another entertainment attraction;

an increase of local and area radio listeners with greater variety of listening pleasure;

creates incentive for young adults towards careers in the radio broadcast industry;

an FM station will motivate the greater community interest in music and the fine arts;

an FM station will increase directly and indirectly job opportunities in Kenora; and

increased marketing and promotions will impact our economy and the community." (As read)

522 Fawcett's application doesn't consider the above. The application states:

"The existing format will not change."

"It will not have a significant impact on the market."

"The total tuning will not increase significantly as a result of this proposal." (As read)

523 They would have the same format, same programming and presumably the same staff.

524 These points are undoubtedly met by our application. We have a main focus on our application to provide a consistent Trans-Canada signal from the Manitoba border to Dinorwic which is presently missing. We will focus on the highway for visitors and tourists. We will be an alternative which will provide the stated increase in the number of listeners and a greater variety.

525 Furthermore, we will increase job opportunities and marketing and promotions as a result of some healthy competition.

526 Fawcett's application does not depict any of these factors have been taken into consideration, whereas our application has considered all of them.

527 For these reasons, we believe our application will "undoubtedly provide a better quality of life for its locale and citizens of the surrounding area."

528 Fawcett's application speaks nothing to the benefits of the public and only protection their own monopoly in the area. We believe the public interest would be best served with an alternate.

529 A regional station would be good for the listener, good for the advertiser, and indeed good for the market.

530 As shown, Fawcett is a complete network of stations and has had 65 years to establish itself before having any competition. Our strategy is to rely upon more than one community which lowers the impact on the Fawcett network.

531 Fawcett's network is considerably larger than ours will be. The Fawcett network will be in no jeopardy whatsoever if there is a second, smaller regional station in the area.

532 Furthermore, businesses are always faced with new advertising opportunities and, as such, they are likely to continue their current advertising programs if they have been successful up to now, but may venture a few funds on a new opportunity.

533 It is very unlikely that businesses would abandon their successful old promotional patterns. More likely, and especially in this case, they would increase their budgets and take advantage of a greater reach in all directions.

534 This application process is for the purpose of applying to utilize the public airwaves. Surely then the public interest should be considered and not just the interest of maintenance of a monopoly after 63 years for a network of radio stations.

535 Fawcett's own FM application showed it was not going to do anything to enhance what is provided presently. Their application speaks little of the public good. We promise not only to provide this long overdue, better FM signal, but an alternative which would benefit the advertisers, listeners and visitors in the area.

536 We contend that none of Fawcett's points provide any valid reason why the residents of Dryden, Kenora and Vermilion Bay should be denied the benefits of an FM stereo signal and only the second commercial service AM or FM.

537 Thank you.

538 THE CHAIRPERSON: Thank you very much.

539 MS B. BELL: Thank you.

540 THE CHAIRPERSON: We will take a break now and resume at 11:30. Nous reprendrons dans 15 minutes

--- Upon recessing at 1115 / Suspension à 1115

--- Upon resuming at 1130 / Reprise à 1130

541 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.

542 Mr. Secretary.

543 MR. LeBEL: Thank you, Mr. Chairman.

544 The next application will be presented by Star Choice Television Network Incorporated to renew the broadcasting licence of its national direct-to-home distribution undertaking expiring 29 February 2004.

545 Appearing for the applicant, Mr. Jim Shaw; Ken Stein, Cynthia Rathwell, Peter Bissonnette, Michael Abram, Chris Johnston, Gary Pizante, Don Fletcher and Gaston Dufour.

546 You have 20 minutes to make your presentation.

PRESENATION / PRÉSENTATION

547 MR. SHAW: Super. Thank you.

548 Mr. Chairman, Commissioners, ladies and gentlemen, good morning.

549 Today, as we appear before you to discuss Star Choice's first licence renewal application, we would first like to reflect upon the success of the Canadian DTH industry, particularly the significant benefits to the Canadian broadcasting system which it has delivered. This success is remarkable in view of the initial odds against the industry and the complexities of the enterprise.

550 As well, we want to talk to you about ensuring that DTH's successes are not squandered. While our current customer base and revenue are measures of our progress, our business has always been and remains a very difficult one. We must now create and seize opportunities to move satellite broadcasting forward to ensure that the Canadian broadcasting system remains attractive to Canadian viewers.

551 While we are confident of our ability to do that in the context of the existing regulatory framework for DTH, we also face formidable challenges from black market satellite. Far more aggressive enforcement and government leadership are needed to stop the black market so that our investment in digital innovation is not undermined, to the detriment of Canadian broadcasting policy goals.

552 We are always mindful that the grant of a broadcasting licence is a public trust. We believe we have honoured this trust, not only by our contributions to the broadcasting system, but by our commitment to grow a service that has not yet shown any return on our over $1.2 billion investment.

553 This licence renewal is critical to the future of the business. We need to plan for the longer term. We need to make investments now that will only provide a return years from now. For example, we had to make a $48 million commitment in our next satellite, Anik F2, in the year 2000. It will not even be in service until 2004.

554 As well, we need to turn the corner on our losses. Last year, we had negative cash flow of $214 million. In fact, our negative cash flow over the last three years has been over $600 million. Given that others have reaped great benefits from our investment, which we do not begrudge them, one would think that they would at least offer their support for a full-term licence to Star Choice.

555 Finally, we must be clear about the certainty we need, not only for the conduct of our business, but also to retain the confidence of the financial markets that we depend upon for the investments we must make. Time after time, analysts raise their concerns about Star Choice.

556 To quote:

"We view Star Choice as the big risk..."

557 In the valuation of Shaw. And:

"Star Choice remains the key fundamental and valuation risk for Shaw investors."

558 These are the views that we must deal with in the market. To counter them, we have taken significant measures to establish Star Choice as a business, and to eliminate our losses. It is only as a viable, long-term business that Star Choice can have that will bring benefits to the Canadian broadcasting system.

559 Continuity in our regulatory and licensing framework is needed to ensure that the business challenges before us can be met and that, in turn, we remain a strong contributor to the Canadian broadcasting system.

560 What Have Been The Successes of Canadian DTH? It is a long list:

561 Canadian DTH has provided Canadians with the benefit of choice in distributors, as well as choice in pricing, packaging and technical features.

562 We have attracted over two million subscribers. Approximately a million of these are new distribution customers, primarily in rural and underserved areas, not customers that have converted from cable.

563 We have repatriated or deterred hundreds of thousands of Canadian households from taking U.S. black market DTH service.

564 Canadian DTH services have greatly expanded the available subscriber base for Canadian specialty and pay services as reflected in the financial performance of those companies.

565 We have also extended digital broadcasting service to hundreds of thousands of households in rural and remote areas of Canada where there is no access to cable. We should not underestimate what we have achieved by enabling a subscriber in Iqaluit to receive the same breadth of service as those living in downtown Toronto or Montreal.

566 Canadian DTH has driven incumbent cable operators to roll-out digital distribution technology, which they had been slow to do until the introduction of digital DTH competition.

567 We have created a subscriber base for digital-only Canadian pay and specialty services, making their existence possible.

568 We have contributed, since inception, approximately $100 million to the Canadian Television Fund, $50 million last year alone.

569 DTH licensees have contributed well over $800 million in payments to Canadian broadcasters and programmers since the launch of Canadian DTH, over $300 million last year alone. This is a function of the fact that approximately 80 to 90 per cent of DTH programming payments are made to Canadian programmers.

570 We support the space segment industry of Canada by well over $120 million per year for transponder leasing and satellite operating costs.

571 Finally, we have spent millions on the research and development of DTH hardware and advanced broadcasting applications. Star Choice itself spent $4 million on the development of its latest box alone.

572 MR. BISSONNETTE: Why has the success of Canadian DTH, and particularly Star Choice, been remarkable?

573 First, because only seven years ago, there was no such thing as a Canadian DTH service. Before Canadian DTH even got off the ground, American DTH service, with its continental reach, had become popular in the U.S. and Canadians had begun subscribing to that service. This led the Direct-to-Home Satellite Policy Review Panel to observe that despite their focus on recommending an appropriate DTH policy framework for Canada:

574 valuable time had been lost;

575 opportunities may have been missed; and

576 the negative impact on the entire Canadian broadcasting system might be irreparable if the federal government did not exercise its jurisdiction appropriately and expeditiously.

577 In short, there was a real fear that Canada had missed the boat and that the whole broadcasting system was at risk as a result.

578 Despite that fear, the government and the CRTC pushed ahead to implement a licensing model for Canadian DTH that featured dynamic competition and a flexible, yet responsible, regulatory framework suited to DTH technology.

579 Beyond the late start, a second reason why the success of Canadian DTH has been remarkable is the technical complexity of the enterprise. Providing DTH satellite service actually is rocket science.

580 Satellites are built and operated by a third party, not DTH licensees. The design, construction and launch of these satellites are basically beyond our control.

581 The satellites also have a finite amount of transponder capacity. When challenges arise, tremendous vigilance, responsiveness and expertise on our part is needed to ensure that our business is not undermined.

582 Star Choice has faced more than its share of challenges in connection with its satellites. For example:

583 To ensure that our service offering remained competitive, we moved to two satellites to acquire additional capacity. Beyond the cost of that capacity, this change required the devotion of extensive engineering resources and costs in the order of $35 million. To make the change successful, we developed and rolled-out new receiving apparatus and ensured that all Star Choice subscribers maintained the flexibility they wanted with respect to viewing choices. We made this conversion to two satellites with minimum disruption to customers and broadcasters.

584 The launch of Anik F2 has been delayed several times, stalling the expansion of our capacity. Anik E2, which Anik F2 was to replace, was subsequently expected to fail before the delayed Anik F2 was to be operational. As a result, we had to make a rapid transition earlier this year from Anik E2 to a replacement satellite, Anik E2R.

585 Once again, we achieved this with no disruption to subscribers or broadcasters.

586 Anik F1, the other satellite that we use, has begun to experience degradation, requiring planning for yet another move of our service to replacement satellite, Anik F1R, in 2005. Again, we expect a smooth transition, but not without significant effort and cost.

587 In addition, Star Choice faces unique challenges given its use of Fixed Satellite Service satellites for a small dish, direct broadcasting application. Operating in this way was a very creative technical strategy that allowed Star Choice to enter the DTH business.

588 Canada had only one DBS satellite at the time of Star Choice's launch and it was for our competitors. Nevertheless, this approach has led to increased risks of interference from adjacent satellites, which are only 1.9 degrees away.

589 Recently, for example, the Mexican satellite operator, Satmex, wanted to launch a new satellite between Anik F1 and Anik E2 at power levels that far exceeded those agreed upon for the previous Mexican satellite in the slot. It took over two years of tense negotiations between Telesat and Satmex, assisted by a high-level diplomatic intercession by Canada, to ensure that Satmex respected earlier coordination commitments. While Mexico finally agreed to honour its prior commitments, achieving this agreement was very difficult.

590 Beyond managing satellite-specific issues, operating a DTH network means planning the backhaul, uplinking and transponder assignment of programming services in a way that minimizes costs and ensures maximum uptake by interested subscribers. We have built eight uplink centres across Canada to reduce the need to costly, cross-country backhauls.

591 Every uplink centre has more or less finite uplink capability, so the economics of adding regionally-based services to our offering is influenced by the availability of uplink multiplexers in proximity to those services. The need for service duplication on the two-satellites, so that even single-look dish owners retain wide viewing choice, also consumes expensive satellite bandwidth and uplink facilities.

592 Our system management is even more complex, because Star Choice and Cancom, an SRDU serving small cable systems throughout Canada, share the same platform.

593 The dual-use of our satellite infrastructure is a key part of enabling both Star Choice and Cancom to remain competitive and make significant contributions to the Canadian broadcasting system. For Star Choice, however, it also means that transponder locations of services must be carefully managed to minimize disrupting service to small cable companies. Changes can result in the need for additional equipment purchases by these small cable operators and costly changes to their programming guides.

594 Finally, pioneering digital distribution in Canada, and continuing to push the digital envelop in order to remain competitive, has led us through nine versions of Star Choice receivers, all of which we continue to serve. We have never asked customers to purchase new receivers in order to continue to receive the service. Our hardware investments are very sizable, and managing our infrastructure is extremely complex.

595 Moreover, we have secure receiver and uplinking technology to ensure that our services are secure. Our DigiCipher II security system has never been hacked.

596 We have also conducted a recent audit of our multiple receiver customers and confirmed that multiple-receiver misuse is not an issue. On enforcement, we have helped to develop and broadcast anti-piracy advertisements, produced both by the Coalition Against Satellite Signal Theft, to which we belong, as well as those of our parent company, Shaw Communications.

597 We also belong to the Film and Video Security Office and worked very closely with both them and the RCMP to ensure that raids have been conducted and charges laid against black market dealers. Taken together, these measures represent an investment of millions of dollars in the future of our service and the broadcasting system.

598 MR. ABRAM: Although Canadian DTH has achieved high subscriber penetration, entering the market has been very expensive. Acquisition costs are in the order of $700 per subscriber. Those costs, coupled with the need for very high capital expenditures, mean that we have not yet, seven years after launching our service, experienced positive cash flow. Star Choice and Cancom are, however, poised to begin realizing positive cash flow, on a consolidated basis, at some point in the second half of this fiscal year.

599 Where has our over $1.2 billion in investment in Star Choice gone?

600 First, it has been used to build a national service infrastructure. Our customers demand the very best in customer service, which is our key competitive advantage over the black market. We have over 800 customer service representatives. Twenty-four hours a day we handle our customers' programming inquiries about the 400 channels we offer and any technical service issues they face.

601 With 24 per cent of our customers taking French-language and bilingual packages, we provide customer service in both official languages.

602 We have two new major facilities, both new, in Calgary and Montreal, and are constantly striving to enhance and build upon our successes in this key area. Our customer service costs run at around $50 million per year.

603 Second, the investment has been used to secure and maintain satellite bandwidth, as well as to plan and carry out signal backhauls and uplinks.

604 Satellite bandwidth must be obtained with large upfront payments years before the satellite goes into service. For example, our obligations to Anik F2 began in May 2000, although the satellite will not come into service until August 2004, over four years later. At this point, we have paid $43.2 million for these transponders, with service not expected to commence for another nine months.

605 To maintain outstanding picture and sound quality for over 400 channels, we also must continually invest in our network service operations, management control and hardware capabilities. Our total satellite and related operating costs run over $60 million per year.

606 Third, our investment has been used to develop a national sales capability. Star Choice is sold throughout Canada in over 3,000 retail locations, with national and independent retail partners, and also through our direct channels. Warehousing, shipping, marketing and sales costs to serve these multiple channels are significant, and run over $35 million annually.

607 Finally, we have the ongoing equipment and installation subsidies to bring new customers from across the country into the legitimate Canadian DTH service industry. Literally hundreds of millions of dollars have been spent on these activities.

608 Our investment demonstrates our commitment and belief in this business.

609 MR. STEIN: We are proud of our successes in meeting these challenges. A significant contributing factor has been the flexible regulatory framework for DTH. The Commission introduced that framework to ensure dynamic competition and to derive from DTH's addressable, digital technology, the maximum contribution to the system.

610 In our view, the resulting benefits to Canadian viewers have been impressive.

611 We have moved from offering Canadians fewer than 20 services, when we launched, to more than 400 today. A subscriber in a community like Kenora, Ontario has over 40 separate programming packages to pick from.

612 If the subscriber chooses an English-language "Essentials" package, our equivalent of basic service, she will receive 43 local and regional, public and private broadcast stations from across Canada, including French-language services. If she selects a bilingual "Essentials" package, she will receive 45 local broadcast signals, 13 of which are French-language services.

613 From there, that subscriber can choose from 18 themed specialty bundles, including information, lifestyle, sports, music, movies and family theme packages comprised predominantly of Canadian specialty services.

614 On top of that, she can add premium options like movies, Canadian ethnic services, U.S. superstations and high definition services. Navigating all of these choices is made easy with a user-friendly interactive programming guide, which can sort and colour-highlight individual programs by genre and which can also be programmed by viewers to identify "favourite" channels.

615 Not only viewers benefit from the wide choice we offer. Our marketing of theme bundles and the fact that our subscribers use an interactive program guide which exhibits the names of all services on our system, means that licensed Canadian specialty and pay services get more exposure.

616 DTH theme-bundling and service presentation means a subscriber can see the choices he has clearly and choose selectively. As a result, a key hurdle to marketing such services via analog cable does not exist for DTH.

617 With analog cable, a subscriber has to buy a large, undifferentiated tier to acquire a handful of services he really wants. Canadian DTH viewers are aware of the choices they have, but do not feel corralled into paying for what they do not want. This is critical in an environment where viewers are aware of non-Canadian, black market alternatives that are sometimes perceived to provide more choice than licensed Canadian services.

618 The benefits of DTH to Canadian programming services are real and measurable. Since the inception of Canadian DTH, the revenues of Canadian specialty services has risen from $842 million to over $1.7 billion, and their viewing share has increased from 38 per cent to over 50 per cent. Their revenue from DTH alone has gone from $9.6 million in 1998, to $282 million in 2002.

619 Canada's large broadcasters, many of whom own these specialty services, ultimately benefit as well from the success that we have helped Canadian pay and specialty services achieve. Those same large broadcasters, as well as small, unaffiliated broadcasters, will also benefit from the measures to which we have committed ourselves pursuant to the recent local signal carriage proceeding. In fact, the carriage commitment to unaffiliated broadcasters alone that emerged from that proceeding will cost Star Choice approximately $6 million per year.

620 Finally, all local broadcasters on Star Choice benefit from our unique simultaneous substitution technology -- called Virtual Channel Override -- which enables us to meet our simulcasting requirements and maximize protection of local program rights.

621 MR. SHAW: All of these successes, while significant, are just first steps. We have a long way to go. We have been around for only seven years, compared to cable's 50.

622 The road ahead requires meeting the challenge of continuing to grow and maintain our subscribers, by taking on incumbent cable companies -- who are now also digital -- on their primary turf, major urban centres.

623 Doing this, as well as remaining competitive with black market service, also means continuing to research, develop and market expensive new digital applications, including HDTV, interactive services and Internet capability.

624 The Commission's regulatory framework continues to work well, allowing us to grow a high-quality, DTH service, while making tremendous contributions to the Canadian broadcasting system. Our ability to become a major partner in the system will also be strengthened by the certainty of a full-term, seven-year licence renewal and a cautious approach to licensing requirements.

625 By contrast, a short term renewal would raise concerns within investment community, limiting Star Choice's ability to raise financing and undermining its ability to keep contributing to the Canadian broadcasting system.

626 Over the last licence term, we believe that we have delivered on our commitments and have made Star Choice a dynamic and beneficial part of the Canadian broadcasting landscape. That is the role we want to continue to play going forward and respectfully request that we be issued a seven-year licence renewal.

627 Thank you. That ends our comments for today.

628 We have attached a couple of graphs which you might find interesting.

629 We have a chart showing the history of delays on the launch of Anik F2 from inception.

630 We have a graph describing the relative penetration of DTH in Canada and the United States.

631 Lastly, we have a graph showing the growth of digital distribution in the Canadian marketplace over the last -- I think it is five years, isn't it, Ken?

632 MR. STEIN: Five year, yes.

633 MR. SHAW: Perfect.

634 Mr. Chairman, that concludes our remarks.

635 THE CHAIRPERSON: Thank you very much.

636 Vice-Chair Wylie.

637 COMMISSIONER WYLIE: Thank you, Mr. Chairman, and good morning Mr. Shaw, your colleagues and Ms Rathwell.

638 I congratulate you on your successes. It is a good thing that you actually put them on the table for us because our role is usually to look at the things that we don't understand or may not be working as well as we would like. So congratulates on the success.

639 Now let me examine your warts, if any, or ask for a remedy for them or deny that they exist and explain why not.

640 My first area of questioning will be carriage issues that have cropped up, either through complaints, interventions or the Commission's own questioning in the deficiency process. I will refer to those deficiency answers as the first one, the second one, the third one, because this has been an extended process from the first time that you filed your application for renewal, which was, I think, way back in November 2001. So we have had a number of clarification questions to you.

641 So the carriage issues.

642 I will deal with the concerns about the carriage of CBC/SRC signals.

643 Secondly, the question of the smaller market station carriage and your request for an amendment to what was dictated in the recent decision of the Commission.

644 Thirdly, the question of the equitable distribution of larger broadcast group station, which is also part of Decision 2003-258.

645 Fourthly, the question of the carriage of TalentVision and, it would appear, Pulse 24 as well.

646 The CBC/SRC services. As you are well aware, the Commission in its report on French-language and minority environment, a report to the government, stated at paragraph 106 -- let me state exactly what it says:

"The Commission expects satellite service providers to offer regional signals of the CBC in both official languages. The Commission proposes to deal with this issue when it considers the licence renewal of satellite service providers and will take into account their efforts in this regard." (As read)

647 Since I also do what the Commission has told me to, I am now going to ask you to summarize the efforts you have made in this regard since that statement, which was in 2001?

648 MR. STEIN: Thank you.

649 Talking just about the Radio Canada services, over the past year we have added -- we now have two services, Moncton and Montreal, of the Radio Canada services.

650 We are aware of the Commissioner's recommendation and the government's response on that.

651 The issue with respect to the Radio Canada services across the country is that there would be a fair degree of duplication in terms of the services that are offered.

652 We have recognized the issue, though, in the sense of the local and regional programming that is available and so what we have been trying to do is to look at some options based on, actually, the report from the Heritage Committee -- which, if you don't mind, I will just quote as well because I think the Standing Committee on Heritage is important -- where it basically recognizes the issue of the Radio Canada services across their country and their availability on DTH, and says:

"This does not mean, however, that the committee believes that every CBC and SRC station requires carriage on DTH satellite. On the contrary, the committee is of the view that a strategy could and should be developed to ensure that a reasonable amount of CBC/SRC local and regional news and non-news programming is made available to DTH subscribers." (As read)

653 So we have been trying to look at some alternatives. I know that the CBC has complained about the lack of discussion, but I would point out only in that sense that many of the things we plan to do are with respect to the availability of F2.

654 So we have been trying to balance a number of interests over the past year and a number of processes in order to decide how we could deal with this issue.

655 So basically what we have concluded is that there is a way -- there are ways, two particular ways, which we could explore that we would have to do in cooperation with the CBC and Radio Canada.

656 Since the services are available in Montreal, what we would be able to do is to link up the local news and regional programming, which is the key differentiator across the markets -- this applies only to the Radio Canada services, not to the other services -- that what we would do is uplink it and make it available on our Channel 298.

657 So that a viewer in Winnipeg, at the time of the local news, it would be possible for them to go to Channel 298 and view the Radio Canada French-language news that pertains to that region. We would do that across the country.

658 We think that is consistent with the Heritage Committee report.

659 As well, there is also a technical solution, and that is that there is an ability on a receiver, this dish receiver -- which not many people have taken advantage of but which I personally have taken advantage of -- which allows you to hook up an antenna back through the satellite receiver itself and receive the signal with a very high degree of quality, depending on the area of reception of course, but you can receive a very high quality signal over-the-air via your box and into your television set. It simply means pressing a button to do that on your set.

660 So there are alternatives that we are willing to explore with Radio Canada to solve this issue.

661 COMMISSIONER WYLIE: In your deficiency responses and again this morning you acknowledge or state that you recognize the problem and want to meet it and continue discussions with the CBC.

662 How recently have you had discussions with the CBC?

663 MR. STEIN: Excuse me?

664 COMMISSIONER WYLIE: How recently have you had discussions with the CBC?

665 MR. STEIN: We haven't really had -- I would think we have had a number of, I would say, short conversations rather than -- we have not had, I would say, one overall -- well, we have had a number of discussions but I wouldn't say that they are complete discussions because in some cases we are at different starting points.

666 COMMISSIONER WYLIE: How recent was this last discussion?

667 MR. STEIN: During the time running up to the filing of the intervention, I met with the President of the CBC and Cynthia met with the staff of the CBC, and we had various phone conversations back and forth about their concerns. I think we are making some progress.

668 I think one of the issues we had was that the CBC felt -- and this also relates on the English language side. There are really two differences between us that are pretty fundamental.

669 One is that they do not believe that CBC affiliates count in terms of carriage, which we find hard to fathom.

670 Second, they believe they should be able to specify which French language services we carry.

671 In other words, if we were able to make room for a couple of additional signals, they believe that they should have the ability to instruct us as to which those services would be.

672 We believe we want to be more in a position to make those decisions based on our customers and on our markets that we serve.

673 COMMISSIONER WYLIE: And of course what the Commission expects.

674 MR. STEIN: Absolutely.

675 COMMISSIONER WYLIE: Did you discuss with the CBC in any detail this plan as a possible interim or total solution of uplinking the various unique local content of the SRC base stations, what I will call their base stations -- would you agree with that: Quebec, Montreal, Moncton, Ottawa, Winnipeg, Regina, Edmonton and Vancouver?

676 This is what I refer to as their base stations that have unique local programming.

677 Have you discussed this plan with them as either a total substitute for the services or an interim solution? Has that been discussed with the CBC?

678 MR. STEIN: I think we are at a pretty significant point with the CBC in the sense that they expected full carriage of the services. We didn't really get to the point of laying out in detail the alternatives.

679 COMMISSIONER WYLIE: Could you tell us how many CBC and SRC signals you are currently distributing and what you understand to be the total signals they would want you to uplink?

680 Would it help if I told you what I think it is and then you could tell us?

681 MR. STEIN: Yes.

682 COMMISSIONER WYLIE: Eleven CBC signals out of 29, and two SRC signals out of 13, which would be Moncton and Montreal.

683 MR. STEIN: Yes. You are not speaking of the affiliates.

684 COMMISSIONER WYLIE: No, at the moment, but I know that there are also -- by the affiliates, you are referring to some that will be uplinked or some that have been uplinked?

685 MR. STEIN: Yes, we are referring to two that have uplinked recently and others that are on the list that came out of the local signal decision that we have committed to list.

686 COMMISSIONER WYLIE: That are to be uplinked in the future.

687 MR. STEIN: Yes.

688 COMMISSIONER WYLIE: So there are already two, and those are CBC affiliates.

689 MR. STEIN: Yes.

690 COMMISSIONER WYLIE: If I were to add those, I would have 13 CBC?

691 MR. STEIN: Yes.

692 COMMISSIONER WYLIE: I don't have my calculator, but 11 out of 29 is 38 per cent. Then if you add two, you would get beyond 40 or around 40. And two out of 13 in French Canada is 15 per cent. I am now drawing a comparison between the CBC and SRC because part of the Commission's concern of course is not enough French language ones are uplinked, especially in other regions of Canada.

693 How many TVA signals do you carry currently?

694 MR. STEIN: We carry six TVA signals.

695 COMMISSIONER WYLIE: Out of how many, Ms Rathwell?

696 MS RATHWELL: Sorry, I am not aware of the total.

697 COMMISSIONER WYLIE: How many CTV signals do you carry?

698 MR. STEIN: There are a number of ways of counting that as well. There is the major markets, and of course we carry TVA west, and then we are also committed to --

699 COMMISSIONER WYLIE: Except that you were adding the small affiliates in the CBC as well.

700 MR. STEIN: Yes.

701 COMMISSIONER WYLIE: So I suppose that would be good for the TVA services as well, to be consistent?

702 MR. STEIN: You are right, yes.

703 COMMISSIONER WYLIE: How many CTV signals do you uplink?

704 MS RATHWELL: It believe eight.

705 MR. STEIN: Eight, yes.

706 COMMISSIONER WYLIE: Eight?

707 MS RATHWELL: Yes. And I believe there is one private affiliate, which makes it nine.

708 COMMISSIONER WYLIE: How many TQS signals?

709 MS RATHWELL: Two.

710 COMMISSIONER WYLIE: Do you think that it would be fair to look at parity between the networks and the CBC with regard to uplinking?

711 MR. STEIN: Yes. One has to take into account on the English language side we are probably closer to achieving that. I think that on the French language side for Radio-Canada one has to take account of the kind of programming that is available.

712 When we are carrying the CBC services, we have to take account of what does it mean to a customer when they are looking at the programming they get and to what extent is there duplication within the same time with that programming?

713 We would have to take that into account in terms of making the decision about which services to put up.

714 COMMISSIONER WYLIE: This proposal that you have brought forward of uplinking the unique local, do I understand that then you would have one channel and depending on where you live you would get to know at what time you would get the local programming of a particular station? Is that how it would work?

715 MR. STEIN: Yes.

716 COMMISSIONER WYLIE: It would be continuous, as though there were slots or banks of time of programming coming from those base stations: Ottawa, Vancouver, Edmonton.

717 So the Edmonton viewer would have to know that if he wants to see Edmonton local programming or somebody is interested in seeing Ottawa, they would get to know where that is in the broadcast day.

718 Is that it?

719 MR. STEIN: Well, we would certainly promote that.

720 COMMISSIONER WYLIE: I want to understand what the proposal is.

721 MR. STEIN: It would be available at the time that it is broadcast in that area.

722 COMMISSIONER WYLIE: So that would be --

723 MR. STEIN: And on the guide.

724 COMMISSIONER WYLIE: And all on one channel.

725 MR. STEIN: Yes.

726 COMMISSIONER WYLIE: Do you see that proposal as an interim one pending more satellite capacity or as a substitute for uplinking the base station?

727 MR. STEIN: We would not see it as an interim solution, because even when F2 comes on we still would be capacity -- in terms of our competition, we still do have capacity issues. That is one issue.

728 The second issue is that in terms of making sure that our customers see a range of programming choices, that we don't have duplicated programming across a whole range of channels.

729 The key differentiator is the local and the regional programming for the SRC stations.

730 So the extent to which that programming is the same across a particular area, then we would not see that as being something that we would want to go to in terms of uplifting a lot of signals that are essentially duplicates, given the transponders' capacity issues, or the economics of that, and also just given the kind of consumer response there would be.

731 COMMISSIONER WYLIE: In what way is it more duplicative than the nine CTV stations that are uplinked?

732 MR. STEIN: Primarily the time shifting advantage one gets from CTV.

733 COMMISSIONER WYLIE: Has this proposal actually been officially made to the CBC for its consideration?

734 MR. STEIN: No, it has not.

735 COMMISSIONER WYLIE: Has the CBC made any proposal to you as to what they want?

736 MR. STEIN: Yes. The CBC made it very clear that they felt that the Standing Committee report and the government's response would form the basis of what they would see was necessary, and we disagreed with that.

737 COMMISSIONER WYLIE: You said earlier that you thought parity was not a bad way to look at it. What would you consider parity for the CBC and particularly SRC compared to TVA and in English compared to CTV, or across the country?

738 There are many people who probably want both.

739 What would you consider parity since you agreed with the CBC or with my statement, and I suppose the CBC's, that that should be a starting point?

740 MR. STEIN: We did indicate to the CBC that in terms of moving to parity, we would be willing to launch a new French language service quite soon, that we would also look at other alternatives with respect to F2. Barring that, we felt moving up the scale from two was obviously what we wanted to do, but we were just faced with the existing services that were there.

741 One of the realities we would face is that in terms of our capacity as it now exists, we would have to basically make arrangements with our pay and specialty signals. We would have to take them off.

742 So one of the ways of achieving parity, of course, is to reduce the number of services.

743 COMMISSIONER WYLIE: Yes. Of course, intervenors have all kinds of mathematical calculations as to how that can be done, not surprisingly, and you also have answers as to why it should not.

744 In light of this issue being raised by the Commission and the Commission telling the world that it was going to deal with it today, where in your application or even in your reply -- which I have already read but I will let you make again at the end of the process -- can I find a concrete proposal with timelines and commitments that maybe we could attach as conditions of licence with regard to this issue?

745 MR. STEIN: No. I don't think we have dealt with it in terms of definitive timelines or plans. What we have talked about is the fact that we are willing to sit down with the CBC and to talk about this issue and to try to work out alternatives.

746 COMMISSIONER WYLIE: As I mentioned earlier, you have three sets of deficiency answers and the answer is always you are willing to talk and you are continuing talking.

747 But here we are. It is renewal time, and we are on the record in the Notice of Public Hearing that we are going to deal with it and hopefully settle this. Presumably our job would be to eventually say this is reasonable in the circumstances and that is what you are going to do in these timelines regardless of the other party. That is the lovely job we have.

748 Are you not in a position to say exactly what you can do pending more capacity and what you will do when you get capacity?

749 In some ways when we discuss it, which we will later, it appears a long time but it is nine months. We won't see you for seven years. Mr. Shaw of course says he wants a seven-year renewal, which makes good sense.

750 Maybe if we don't have anything that is quite committed and clear with timelines, regardless of the success of discussions with the other side that you are prepared to do, would it be better to see you again in a shorter period and reassess this after more negotiations?

751 What are you prepared to tell us what it is you can do between now and Anik F2?

752 I know you don't like conditions of licence, but what if we did -- or maybe you prefer coming to see us in three years; whichever.

753 MR. STEIN: I might ask Peter Bissonnette to inject in this as well.

754 One of the issues we deal with right now is the current situation as opposed to the F2 situation. What we have been involved in over the past year is an attempt to try to sort out our obligations from a number of different vantage points.

755 The local signal issue is an issue.

756 COMMISSIONER WYLIE: Yes. We are going to get into that too.

757 MR. STEIN: I understand you indicated you would.

758 In terms of our situation, we are trying to balance a number of things.

759 The first is that we were facing in 2003 delays in the estimate of when F2 was going to be available. So we had to look at a timeline -- when you said did you come up with a specific timeline, since we could not get a specific timeline on F2 and we are dealing with all kinds of replacement issues, we couldn't come up with a timeline.

760 COMMISSIONER WYLIE: Mr. Stein, many times the Commission says this date or that date, the first to occur or the last to occur. You can say if Anik F2 takes another six months, maybe we would accept your interim solution as an attempt to respond to this concern and to be more equitable as the different groups.

761 The interim can be until F2 is commercially deployed or usable.

762 Do you think we can end this renewal process just on the basis of "we will continue discussing, it is difficult, CBC is unreasonable, they won't accept anything we are doing" without giving us a commitment as to what you are prepared to say you will do in the interim and after you have more capacity?

763 MR. SHAW: Can I just jump in here for a second?

764 I think you can end the process that way, and I think you can do it a couple of different ways: One, you would ask the licensee to work ahead to develop those programs together and based on capacity and fairness.

765 The Commission has the ability to jump in on any issue any time on any dispute so it does not have to wait for a licence renewal process, which I kind of find to be a funny time to be dealing with some of these things, not all.

766 So you have the ability any time through the process to deal with it. You could ask to have the report filed as to when the satellite has been in place commercially for 30 days; that you would like to know the report from both parties and to have that filed with the Commission and put pressure on both.

767 I think there are lots of ways to do it rather than just trying to definitize the thing right now.

768 COMMISSIONER WYLIE: We could do it in three years or in two or in one when the satellite is available.

769 You think about it and I will think about it, as to what should be a possible interim solution and a commitment that you feel is reasonable. If you want to show me your plan at reply -- and if you don't, we may show ours.

770 Surely, Mr. Shaw, you are not criticizing us for saying that we would deal with that at renewal.

771 MR. SHAW: No, no, I didn't say that. I said that you have lots of ways to deal with it other than just at renewal.

772 COMMISSIONER WYLIE: There have been quite a few questions about the number of French language services available, especially the public related ones.

773 You carry some legislative assemblies right now, I believe: Ontario and B.C.?

774 MR. STEIN: Yes, that is correct.

775 COMMISSIONER WYLIE: Do you carry l'Assemblé nationale?

776 MR. STEIN: No, we do not.

777 COMMISSIONER WYLIE: Why not?

778 MR. STEIN: We do not carry it because we haven't yet worked out an arrangement with l'Assemblé nationale. We have had correspondence going back and forth in terms of doing that.

779 COMMISSIONER WYLIE: How close are you to considering the possibility?

780 MR. STEIN: We have a fundamental issue. The legislative assemblies we carry pay us for the uplink charges, and the Quebec National Assembly has felt that they should not pay for the uplink facilities.

781 COMMISSIONER WYLIE: The other two legislative assemblies do.

782 MR. STEIN: Yes.

783 COMMISSIONER WYLIE: The second distribution issue that faces us is the small market station issue and Decision 03-258.

784 I want your understanding of how this whole scheme works, and then we will discuss the request for an amendment of the timeframe that is in Decision 258.

785 I invite you to correct me if I don't have the same understanding as you about your responsibilities vis-à-vis small market stations since the original decision.

786 In the original decision you had conditions of licence 4(b) and (c) with regard to substitution and deletion. Those are substantially the same in the BDU Regs, which I believe have a 1998 date in Sections 42 and 43.

787 These sections still have the caveat "except as otherwise provided". So conditions of licence can vary this.

788 These requirements were suspended in 1997. Correct?

789 Then with regard to your service in 2000-39 the Commission substituted for deletion and substitution the remission to the CAB of 20 cents per month for each subscriber within the Grade B contour of the broadcasters, which were listed in the agreement.

790 My understanding of that is you had an MOU, which I have here. That would be the money remitted. As long as you did in accordance with that agreement, the Commission would suspend the application of your conditions of licence 4(b) and (c).

791 Is that correct?

792 MR. STEIN: Yes.

793 COMMISSIONER WYLIE: That was until August 2000, the MOU. Correct?

794 What do you understand, either you or Ms Rathwell, happened in August 2000? Did the suspension end and therefore your conditions of licence kicked in?

795 MS RATHWELL: At that time we took it that the suspension continued because we entered into a process of ongoing negotiations with the CAB to determine whether we could arrive at a new compensation or compensation and other components arrangement, which we believe ultimately culminated in Decision 2003-258 that was published by the Commission this summer.

796 COMMISSIONER WYLIE: Is it your view that between August 2000 and now you neither had to abide by Conditions 4(b) and (c) nor pay the 20 cents?

797 MS RATHWELL: Yes. We believe that there was effectively an ongoing suspension while negotiations were under way. At a certain point last autumn deletion requests were made by CAB members. Also in that same period we filed an application, as you know, that resulted in this summer's local signal carriage decision for an arrangement which we thought addressed well the broadcaster's concerns.

798 COMMISSIONER WYLIE: Is it your view that it is only when deletion and substitutions is requested that you say we don't have to do this nor pay?

799 MS RATHWELL: Pardon me, just to clarify, I intended to imply that the payments under the prior agreement were to be ongoing.

800 COMMISSIONER WYLIE: Were ongoing.

801 MS RATHWELL: And actually would continue to be ongoing. In view of the fact that we have asked for an amendment with respect to F2, it would continue during that interim period.

802 I know that was an issue of concern that the CAB raised in its intervention, but there is no doubt on that.

803 COMMISSIONER WYLIE: That is actually in the schedule to 258 -- there is no doubt about it -- that the interim 20 cents must be paid and 30 cents in other circumstances.

804 There is a letter from you, Mr. Stein, dated October 28, 2002 where you do acknowledge the continuation of a compensation, which leads me to ask you where you are at with this compensation.

805 MR. STEIN: What happened was that I think towards the end of August or beginning of September of this year when we had a meeting with CAB officials, they indicated to us that they had not received the compensation payments for some time period going back.

806 We determined with the accounting people that there had been changes that had been made and that the payments had not been made. So we subsequently, under Peter Bissonnette's direction, instructed that the payment be made despite the fact that they had some difficulty in terms of changes that had been made, some of which were on our side because we had changed accounting systems, et cetera.

807 We did ultimately make the payment.

808 We always recognized our obligation to do that, and we indicated that to the CAB officials when we met them; that there was no attempt not to do that.

809 COMMISSIONER WYLIE: These arrears were since when?

810 MR. STEIN: It depends when you get your notice. I guess since the beginning of September this year when we determined it. But I think they went back --

811 COMMISSIONER WYLIE: If I understand you and Ms Rathwell -- and I want to know how you understand this question of substitution and deletion -- did I hear you say that the 20 cents remained required until 258?

812 MS RATHWELL: Yes.

813 COMMISSIONER WYLIE: So that would be August 2000 until now.

814 MS RATHWELL: It has been a continuing requirement.

815 COMMISSIONER WYLIE: Until July.

816 MS RATHWELL: And it continues to be a requirement.

817 COMMISSIONER WYLIE: Yes. Do you have arrears with regard to that at the moment?

818 MR. STEIN: We hope we don't right now.

819 MR. BISSONNETTE: There are no arrears. It has been paid in full.

820 COMMISSIONER WYLIE: When was that?

821 MR. BISSONNETTE: I think the cheque went to them last week.

822 COMMISSIONER WYLIE: So renewals are helpful.

823 MR. BISSONNETTE: They are very.

824 COMMISSIONER WYLIE: You are asking for an extension of the time at which you have to abide by 258. Obviously it is clear-cut in paragraph 7 of the schedule to the decision that the interim compensation of 20 cents will have to continue until it is done.

825 The Commission's timeline was 31 December 2003 or 60 days after Anik F2.

826 Do you have any plans to uplink any of the stations concerned in that Annex A should you be granted an extension to 90 days or after F2?

827 MR. BISSONNETTE: Yes.

828 COMMISSIONER WYLIE: Is it 90 days? Am I correct?

829 MR. BISSONNETTE: Is it 90 days?

830 COMMISSIONER WYLIE: No. It is 60 days. The 90 days is what you expect it will take between launch and commercial view.

831 Do you have any intention of uplinking any of the stations at all?

832 MR. BISSONNETTE: We are actually looking at a plan that may result in us being able to carry -- we actually have four channels right now which are contingency spare channels. We were looking at a plan that would see us take two of those spare channels and actually uplink two of the small market services and while we are doing that to also try to address some of the equity issues as we carry those.

833 Then of course when F2 is finally available for service, we would add the remainder of those local broadcasters.

834 COMMISSIONER WYLIE: There are some explanations about your expectations with regard to F2 and we can discuss that a bit more after.

835 In response to what your intentions were, what is the extension that you request?

836 In the third deficiency, Question 1, you say that the licensee will not want an extension and you talk about after the commercial deployment of Anik F2.

837 However, you add "or earlier to the extent practicable".

838 MR. BISSONNETTE: I guess there are two points.

839 The commercial deployment may actually occur in advance. We are expecting that by August of next year that it will be up and tested. The test period is 60 days, in that order of magnitude, before we can actually function in a commercial fashion.

840 There may be an opportunity to launch earlier.

841 The alternative that we have talked about, which is taking two of our spare channels, provides us with also the alternative which is at least to provide carriage for two of those services in advance of commercial availability.

842 COMMISSIONER WYLIE: When you say commercially operable, you mean that it actually works.

843 MR. BISSONNETTE: That is correct.

844 COMMISSIONER WYLIE: It could be longer as well, couldn't it.

845 MR. BISSONNETTE: You have seen the chart that we have provided to you. We have been very patient. As you know, we have spent $42 million on these transponders, and we would love to have them right now. We would like to be able to meet that second condition by December, but it is out of our power.

846 To the extent that Boeing tells us it will be up and it will be in operation and will be available, we have to take that for what it is. They tell us that in July it will be in the air and by August it will be commercially available.

847 In the meantime, we are looking at ways that we can meet that second condition.

848 We have asked you to essentially allow us to amend that because there is no chance at all that it will be up and operable by December 31st.

849 COMMISSIONER WYLIE: If I understand, you would be under the interim compensation regime in the meantime.

850 MR. BISSONNETTE: That is correct.

851 COMMISSIONER WYLIE: Have you sorted out all the difficulties that have caused you to not make payment between August of 2001 and last week?

852 MR. BISSONNETTE: Yes, we have.

853 COMMISSIONER WYLIE: I don't know if Ms Rathwell wants to comment.

854 On a going forward basis, do you have a problem with Sections 42 and 43 of the Regulation, being the governing alternative to abiding by 258?

855 MS RATHWELL: No, we don't.

856 COMMISSIONER WYLIE: So you would need a condition of licence, what is in 258 plus possible alteration today that you are requesting for a longer period.

857 The third area of distribution that I wanted to look at is the equitable distribution of the larger broadcast groups which are listed in Appendix B of 258.

858 I know that Section 2 of that schedule talks about everything is subject to two transponders being used. Would you agree that this requirement is to be immediately applicable and is required for the suspension of the deletion requirement to be effective?

859 It is not tied to any date. It is immediate, giving equity or parity to the larger groups listed in B.

860 It is not tied to any date. It supposedly is immediate.

861 MR. BISSONNETTE: We took the interpretation that it flows obviously from F2, the availability of F2.

862 COMMISSIONER WYLIE: You are asking us to interpret it in that way.

863 MR. BISSONNETTE: That is correct.

864 COMMISSIONER WYLIE: How do you not see it as immediately applicable, that particular requirement?

865 Maybe Ms Rathwell can look at that.

866 MR. STEIN: We had quite a discussion about this. The interpretation that we put on it was that there were a number of different interests in here that we had to take into account.

867 One is we had the Appendix A issues, as you point out. Then we had the equitable carriage.

868 What we thought was our obligation was to be able to manage both of those, taking into account the equitable carriage.

869 In other words, as we put services up that met the requirements for the small services, we would also take that into account in terms of our equitable requirements.

870 In other words, adding CBC affiliates in our view was meeting the terms of equitable treatment rather than the position of the CBC, which only O&Os count as CBC signals.

871 COMMISSIONER WYLIE: So you would take the position that the extension you are asking for is to apply to Section 2 of that schedule, which are conditions for the deletion and suspension.

872 MR. STEIN: Would it apply in terms of the amendment we are asking for? I would think yes.

873 COMMISSIONER WYLIE: Yes. Right now it does look as though it is to be done immediately.

874 Have you any plans of satisfying concerns from some broadcasters with regard to parity?

875 We went through earlier in the discussion how many signals from some groups, especially in the francophone area, that you are uplinking and the apparent discrepancy and lack of parity between the two.

876 MR. STEIN: Maybe just a bit of the history on this in terms of the equitable distribution.

877 When the framework in the decision was first set out there were certain requirements, and decisions were made at Star Choice to launch an increased number of services. Then there were issues raised about undue preference and equitable treatment, and then the concept of equitable treatment became a stronger consideration, which was not there in the original framework.

878 That new element of equitable treatment is something that we support. After having had discussions with the CAB with respect to the local signal carriage issue, they were very clear about the point of equitable treatment.

879 In fact, in meetings that the larger broadcasters had with Mr. Shaw, they also pointed out the need for equitable treatment. We agreed to that.

880 I think we then sat down and said: How are we going to achieve that? Very much we achieved it -- maybe we have too much of an engineering focus here. But we thought we would do that with F2; that as F2 comes up then in December 2003, then we will add these services and we will achieve the equitable treatment that way.

881 That was our plan.

882 COMMISSIONER WYLIE: At that time.

883 MR. STEIN: Yes.

884 COMMISSIONER WYLIE: You mentioned earlier, did you not, that you had some possible capacity available, Mr. Shaw?

885 MR. SHAW: Do you mean the spare capacity that we use for managing the network?

886 COMMISSIONER WYLIE: Yes.

887 MR. SHAW: I could get the engineers to --

888 COMMISSIONER WYLIE: I had the impression that you were saying there would be some that would be available.

889 MR. SHAW: We have four channels is my understanding -- Don could explain it here -- that we have used. We were talking about utilizing them. We manage the network all the time, so we need to have some flexibility in the network to take channels up and down.

890 Of course, the people that are on there don't want to be disturbed at all. So as we change satellites to do lots of stuff on the network, we need some management flexibility.

891 Of course, this is the problem with satellite. We are fixed capacity based. It is not like a cable enterprise where we can expand very quickly. It is really hard to expand.

892 I think Peter had said that we could add a few more channels on here and work to try and meet all the conditions that we have in place just pending our extra capacity coming on.

893 We wouldn't even be in this issue if we could have delivered that satellite when it was supposed to be.

894 COMMISSIONER WYLIE: Maybe I missed it -- yes, Mr. Stein.

895 MR. STEIN: One point I want to add to all this is that the decisions that are made about these services that we offer are not made just on the basis of what we offer on the DBS side. Part of the issues that we have to deal with is the fact that we also run a significant uplink business. In fact, it is the only part of the business that actually makes money.

896 In terms of doing that, a lot of our decisions in terms of what we offer to cable headends dictate what services we put up and how they are available now.

897 For example, if they are available to them without our service, that makes it easier for us to supply their needs without having to do that.

898 That leads to a real richness, a much better service that has been made available to cable headends, and particularly in Quebec a much richer set of services.

899 What I am trying to say here is the issue of deciding what services to put up take a number of inputs into account when we make those decisions.

900 MR. SHAW: I would also think that competing with the entrenched cable companies, especially now as we enter the urban markets, makes it even more important that we select the right signal for consumers to really have any hope at competition, considering especially now the ability to bundle on the local side, and different things like that, which satellite doesn't have.

901 It is going to be very important to pick the right signals to have a really healthy DTH industry.

902 COMMISSIONER WYLIE: Having said that -- and I am sure those are things that Mr. Bissonnette and you, Mr. Stein, and whoever else, discuss all the time -- if you do choose to propose a plan as to how you will respond to distribution concerns in light of what the Heritage Committee has said, what the Commission has hoped for and what is in our decisions and in our regulations, perhaps you can add to that plan what you would do in what order of priority with any capacity that you can find.

903 That would be helpful for us. It is very difficult with all of these concerns and pressures. Of course, there are always pressures on the licensees and there are pressures on us.

904 It is very difficult to not have anything more concrete, because from deficiency to deficiency to deficiency we have discussions and goodwill but nothing concrete as a plan.

905 Perhaps you can think of how you would make these priorities. The Commission is not always able to simply wait for things to consensually be arrived at.

906 The last section in distribution I wanted to raise was Talent Vision and Pulse24.

907 The language of the conditions that you had with regard to the offering of services is different from what we find in Section 38 of the Regulations. On a forward going basis the way we understand Section 38.2(a), unless it is altered by condition of licence, is that it requires that each specialty service be uplinked, each specialty service except Category 2.

908 Is that your understanding, Ms Rathwell?

909 MS RATHWELL: Yes.

910 COMMISSIONER WYLIE: In Deficiency 1, Deficiency 2 and Deficiency 3 the staff has asked you to clarify what is the state of affairs with the uplinking of Talent Vision. Every time we were told that you were considering it, you were continuing to negotiate but you haven't reached an agreement.

911 Is there anything new since the last deficiency?

912 MR. BISSONNETTE: We have met with Talent Vision, and quite frankly Talent Vision acknowledged that in their two core markets, which are Toronto and Vancouver, they are receiving carriage from broadcast distributing undertakings and that the economics of getting their signal back on their signal to our uplink facility and, if you will, the benefits of doing that, they just decided that it wasn't economically viable. We agreed with them.

913 We don't believe now that we would see any lift from subscribers, and if we did it would be very minimal because they are already well served.

914 COMMISSIONER WYLIE: What do you mean they agree with you? They agree with you that they are no longer pressing to be uplinked?

915 MR. BISSONNETTE: They acknowledged to us that the cost of getting their signal to our uplink and the benefits that would accrue to them because of that just didn't warrant that expenditure.

916 COMMISSIONER WYLIE: We expect then not to hear any more from Talent Vision.

917 MR. BISSONNETTE: I don't think they are here. I guess they would have had an opportunity to come here.

918 COMMISSIONER WYLIE: Your view is that you have settled that matter.

919 MR. BISSONNETTE: That is correct.

920 COMMISSIONER WYLIE: Are there other specialty services that are not carried?

921 MR. BISSONNETTE: The only other issue we have heard, of course, is CP24, which is a regional specialty service for the Toronto area. It is our view that it really is a regional service and not for carriage on a national licensee.

922 COMMISSIONER WYLIE: Where do you or your lawyers see the distinction in that section of the Regulations?

923 MR. STEIN: We have had a number of discussions with CHUM, and we have agreed to carry certain services. So if we were required to carry Pulse24 we would have to drop one of the other ones.

924 COMMISSIONER WYLIE: Has that been discussed with them?

925 MR. STEIN: I thought it had been, but I don't know.

926 COMMISSIONER WYLIE: The regulation on a forward going basis requires you to carry them all unless they agree not to.

927 MR. STEIN: We would take the discussion we had with them had that agreement. If they now are saying that is an issue, then we will have to revisit the agreement that we thought we had.

928 COMMISSIONER WYLIE: I don't know what they are pressing for. I am just puzzled by the comment that it doesn't have to be carried on a forward looking basis. in accordance with Section 38, which will be what governs.

929 Do you agree, Ms Rathwell, that Pulse24 has to be carried if it insists to be carried?

930 MS RATHWELL: Yes, I agree with you on your reading of the regulation. I think what was also driving our interpretation was the conditions of licence of cable Pulse24 itself, which makes reference to the fact that it can only require access to distribution undertakings serving the GTA, et cetera. That was a decision from 1996.

931 COMMISSIONER WYLIE: Yes, related to cable operators.

932 MS RATHWELL: Yes. But I agree with you concerning the language of the regulation.

933 COMMISSIONER WYLIE: Of course, you can make whatever deal you can. I am not aware of whether they are pressing.

934 Do you know whether they intervened?

935 MR. BISSONNETTE: No. We have had extensive discussions with CHUM in the last six months, and we have come to an arrangement and agreement on all the services we carry. That was never discussed.

936 COMMISSIONER WYLIE: Fine. I just wanted to make sure we understood what your understanding is of the requirements of Section 38.

937 On your program lineup attached to your last deficiency response, there are three channels called HDTV-1, HDTV-2 and HDTV-3.

938 Could you explain to me what those are.

939 MR. BISSONNETTE: Yes. Those are high definition channels. One of those channels is used to distribute certain movies that The Movie Network has authorized us to distribute in high definition.

940 As you understand, there is a Movie Network channel, and sometimes they provide us with high definition programming. We will make that high definition programming available on one of our channels.

941 There are also channels now that will be used to provide high definition programming of the 4 plus 1 services. When they do in fact make programming available in high definition, because this is an area that clearly is becoming very important, both to the Commission and ourselves, we make those available on a separate channel so that customers who have acquired a high definition television set can utilize the benefits of that set.

942 We also make available that channel to small cable systems Alliance members who have asked us to provide that to them because the competitors, whether it be Star Choice or ExpressVu, are offering high definition programming. They find that they have to have that benefit of having a high definition offering.

943 COMMISSIONER WYLIE: Are there any HDTV programs from any Canadian suppliers on those three channels?

944 MR. BISSONNETTE: CityTV, we understand, just received your approval to transmit in high definition, and it is our plan with CityTV, when it is available, to similarly provide that service.

945 COMMISSIONER WYLIE: Given the prohibition in the regulations against altering signals except under very specified circumstances, on what grounds would this particular practice be authorized?

946 MR. BISSONNETTE: We believe that if ABC, for instance, is providing programming in high definition, we aren't actually altering the programming; we are just making it available technically in another format on another channel for those customers who may receive it.

947 COMMISSIONER WYLIE: I stand to be corrected, but I think it is the service. You are not supposed to create another service.

948 Can you help me, Ms Rathwell?

"A licensee shall not alter or delete a programming service without authorization."

949 That would be creating a service from bits and pieces, creating three new services from bits and pieces of other services, plus whatever you add, creating three what I see here -- the channels, except for the guide, et cetera, are services that you uplink. I was surprised to see HDTV-1, 2 and 3, because I didn't know of any service called HDTV-1, 2 and 3.

950 MS RATHWELL: I think it is fair to say that while we use -- it is now I believe six channels to facilitate the transmission of HDTV programming, the transmission of the programming on that channel occurs simultaneously with its transmission on the analog channels as well.

951 We regarded it not so much the creation of a new service, but just as the distribution of the different definition programming on available channel capacity, which is what we have.

952 COMMISSIONER WYLIE: Are you actually asking us to authorize this if we felt that it was not authorized?

953 MS RATHWELL: Yes, we would be.

954 COMMISSIONER WYLIE: How long have these reconstructed channels or reconstructed services been on?

955 MR. BISSONNETTE: They are actually on -- I think Cable Systems do the same thing. I know our competitor ExpressVu has been doing the same thing. We have been doing this now for probably well over a year.

956 COMMISSIONER WYLIE: We have had a discussion in the context of the small markets about capacity issue and discussed the fact that I guess it would be August 2004 at the earliest for F2 to be operational.

957 Are there any other solutions in the meantime for you to meet the expectations of services and of the Commission to expand your capacity?

958 MR. BISSONNETTE: Clearly one of the alternatives is to drop services. As the Commission knows, we have customers that do not appreciate services being dropped, and we don't think it is in the best interests of our relations with our customers in the broadcasting system to be dropping signals.

959 COMMISSIONER WYLIE: You would see that as an issue of optimizing the capacity you already have now.

960 MR. BISSONNETTE: That is correct.

961 COMMISSIONER WYLIE: Optimizing it but dancing to somebody else's tune, not yours.

962 MR. SHAW: I think also the other thing is that people who subscribe to DTH do so because it is totally digital and totally flexible and has so many more packages other than cable. As soon as we start pulling away services from these consumers, the backlash is unbelievable, because they say: If I just wanted to be forced into a package, I would have just stayed with cable.

963 They really come for that choice and flexibility. Most of those services that are on there have been up there for a year or more. Even just to pull down a CAT-2 or any of those services, the flare-up we get is unbelievable.

964 COMMISSIONER WYLIE: So if that is not an answer, is trying to look for additional capacity in the meantime another solution?

965 MR. BISSONNETTE: There is something we are looking at, and that is if there was a way that The Movie Network, for instance, could transmit its movies on one channel and use the second audio channel for the French service and the primary audio for the English, there may be a way of us doing something.

966 Our technical people are looking at that as an option. I know that that option is being presented to those from TMN, and there has been a certain degree of resistance to that. That is an option that we certainly have looked at and are pursuing.

967 COMMISSIONER WYLIE: Have you looked into the possibility of getting additional capacity, simply getting additional capacity rather than trying to optimize the use of the capacity you now have?

968 I know in your presentation at page 13 you have gone into the fact that you have financial obligations vis-à-vis F2 already.

969 Have you discussed with Telesat the possibility of additional capacity on an interim basis, occasional use basis? Does your contract with Telesat make it possible to look into that option?

970 MR. SHAW: I guess it kind of boils down to some old principles. Maybe I need to get Stursberg back here, one of these guys that helped negotiate some of these original contracts with Telesat, and pour some cold water on him.

971 When you have already bought a car and you paid $40-some-million for your car and you are waiting for your car, waiting for it to arrive and it's been a year, it's been two years, it's been three years and more, you are not too happy about not getting your car.

972 COMMISSIONER WYLIE: But maybe you buy a bicycle in the meantime or you rent a car.

973 MR. SHAW: Okay. But when the bicycle guy comes up here and you ask him how much it is, he says: "It's only $175,000 a month." And I'll say: "You know, I am already losing $20 million a month now. Let's just load it on top."

974 We just can't handle it. That is all we are saying.

975 We are saying we are here to do it. We have committed and we are living up to it. We will manage within our skin. But $175,000 for another transponder or $135,000 for the first one and $175,000 for the next one a month, and I already paid the money for the car, we are not too happy about it.

976 So we haven't found a solution there where Telesat -- if they want to give us the transponder space, we would be more than glad to take it and make it all work. But it doesn't look like that so far.

977 COMMISSIONER WYLIE: When you use these numbers, have you actually discussed the possibility of occasional use transponder space pending the commercial deployment of Anik F2?

978 MR. BISSONNETTE: Yes, we have.

979 COMMISSIONER WYLIE: These are the numbers you were given?

980 MR. BISSONNETTE: Yes, they are. They are more expensive than the transponders we have already paid for.

981 COMMISSIONER WYLIE: And this is the reason why it is not possible.

982 MR. STEIN: Can I just add another point to that in terms of the costs?

983 COMMISSIONER WYLIE: Yes.

984 MR. STEIN: In the situation we are in, every investment we make has to be shown to have a return. One of the difficulties in this is that we wouldn't be leasing these transponders in order to add to the market. This would not be transponders that would be used where we could say to our investors: We are making this investment on an interim basis, but because we are making that investment it is actually going to improve the performance of the company.

985 It is a challenge making those kinds of investments, given the financial circumstances of the company.

986 COMMISSIONER WYLIE: What is the difference in the financial requirements of the 20 cents per subscriber per month for the period compared to the cost of the transponders that would be required to abide by 258?

987 MR. PIZANTE: It is about 220 to I guess $150,000 a month.

988 COMMISSIONER WYLIE: So the cost would be far less than you think. You were talking about a motorcycle, not a bicycle.

989 MR. SHAW: I was talking about a big Ferrari car.

990 COMMISSIONER WYLIE: You are talking here about what would be required in terms of space to relieve you from interim compensation and also convincing us that you have to have an extension while the other DTH service is abiding by 258.

991 So that is $50,000 a month.

992 MR. BISSONNETTE: There is also about a million dollars of capital expenditures that would be necessary to take advantage of those uplinks.

993 There are also some unknown costs that we have been told; that depending on how much coordination and recoordination will be required by Telesat, it could add more costs.

994 COMMISSIONER WYLIE: These uplink costs would be different costs than what would be required when Anik F2 makes it possible for you to abide by 258?

995 Would they be duplicated, or you would just have the uplink in place to do what 258 requires earlier?

996 MR. BISSONNETTE: The costs would be at a great premium to what we have already paid.

997 COMMISSIONER WYLIE: I am not sure I understand your answer.

998 When you talk about the uplink costs, suppose you got extra strength transponder space, you say there are uplinking costs. This would be to abide by the requirements of 258.

999 When Anik F2 is in place and you can use it, would these uplinking costs have to be duplicated or you would have already done that once and that would be done?

1000 MR. BISSONNETTE: No. That would just be an interim solution, and we would transition whatever services were on this extra transponder onto F2.

1001 COMMISSIONER WYLIE: So the million dollars in uplink facilities and so on would be lost and you would have to --

1002 MR. BISSONNETTE: A portion of them would certainly be lost, yes.

1003 COMMISSIONER WYLIE: A portion. What portion?

1004 MR. BISSONNETTE: I understand what you are trying to do. I think Jim said it best. We want that satellite today. We have paid for that satellite. To the extent that we can look at living within our own skin, within our own capacity, we are going to try to achieve those conditions of licence.

1005 We are asking for your consideration, given that this is a situation that goes well beyond our control. I think it would be very reasonable to say if there is no satellite, there is no capacity.

1006 We are asking you to defer that. In the meantime we will do some of our requirements but ask your indulgence in moving the conditions for those services that we can't accommodate.

1007 We truly are trying to accommodate, to the best of our ability, within the capacity we have, those needs and those requirements.

1008 MR. STEIN: Can I just clarify on the costing of this. The compensation payments that we make to the broadcasters now run about $18,000 a month.

1009 So the difference is at least $120,000 per month if we had to go to the transponder. That is the $135,000 rate for the transponder, which could be as high as $175,000, and as well the associated capital costs.

1010 COMMISSIONER WYLIE: Yes. We are up to a Moped at least, Mr. Shaw.

1011 Short of a short-term renewal to sort all this out, because there are many things up in the air that are dependent on certain things occurring, would it be an alternative to ask Star Choice to report on these matters; to report on its consistency in paying the compensation on what is happening with the CBC and on what you are planning to do in the future, and that you will tell us at reply stage?

1012 MR. STEIN: I think we would have no difficulty doing the report. What I would like to point out --

1013 COMMISSIONER WYLIE: So that we get timelines and see how things are going over the seven years, assuming you tell us what it is you are going to do and then you report on whether it is happening.

1014 MR. STEIN: Right. The thing I would point out, though, is that the short-term -- all that is involved here really is the short-term consideration. The only issue is the launch of F2.

1015 Some of the intervenors tried to make it seem like we are responsible. Some of them have even tried to put in punitive arrangements on the compensation because of the delays in F2.

1016 What we are saying is that all of our obligations that we are talking about, equitable carriage, the local signal delivery, dealing with the Radio-Canada situation, are all tied to what we will be able to do when we have F2 up.

1017 That is an issue that if it is not a short-term issue, we have bigger problems.

1018 COMMISSIONER WYLIE: Mr. Stein, you will see --

1019 MR. STEIN: But the reporting we do agree with.

1020 COMMISSIONER WYLIE: You will see, if you have read the interventions and if you are here to hear them, that there are parties who feel that maybe even alternatives are not followed through as quickly or easily as one would hope when you are asking for flexibility.

1021 When we speak about compensation not being paid until three days before a hearing --

1022 MR. STEIN: Without getting into the rebuttal yet, I do feel --

1023 COMMISSIONER WYLIE: Fine. So you will later on.

1024 I have a few more questions about how you see HDTV developing.

--- Pause

1025 THE CHAIRPERSON: I think we are going to break for lunch, because Commissioner Wylie is going to move to another topic.

1026 From a procedural point of view, following up on the discussion you have just had with Commissioner Wylie, one of the things that we might be inclined to do is to issue a decision on your amendment request earlier than the total decision on the renewal, because of the obvious timing issue, so that whether it is yea or nay, you will have an opportunity to deal with the December 31st deadline.

1027 When you are doing that report that you discussed with her, perhaps you could also spell out what measures you would take in the event that that request which you have applied for were denied, as to what the options you would undertake would be.

1028 That would be helpful to us. Thank you very kindly.

1029 We will break for lunch now and resume at 2:30. Nous reprendrons à 14 h 30.

--- Upon recessing at 1308 / Suspension à 1308

--- Upon resuming at 1415 / Reprise à 1415

1030 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.

1031 We will continue with questioning of the panel.

1032 Madam Wylie.

1033 COMMISSIONER WYLIE: Thank you, Mr. Chairman.

1034 Welcome back.

1035 We had a very brief discussion about what you are doing at the moment with HDTV services, the services that you currently offer.

1036 Since you are here, we have a few questions to try to get a better lay of the land basically with the transition to high definition.

1037 How many of your customers do you figure have a high definition receiver?

1038 MR. BISSONNETTE: Just about 10,000.

1039 COMMISSIONER WYLIE: Can those receivers also provide the standard definition analog version of an HD signal?

1040 MR. BISSONNETTE: They receive the whole range of services that we offer. So they will receive HD and they will receive any of our other services.

1041 COMMISSIONER WYLIE: With the same equipment.

1042 MR. BISSONNETTE: With the same receiver; that is correct. It is a device that has the HD decoder imbedded in what we will call a standard Star Choice receiver.

1043 COMMISSIONER WYLIE: How much more expensive is it to have the receiving capacity for the subscriber?

1044 MR. BISSONNETTE: I think we sell those for around $400. That includes the subsidy. Our cost is around $600.

1045 COMMISSIONER WYLIE: How does that compare with an ordinary receiver?

1046 MR. BISSONNETTE: An ordinary receiver is in the $149 after subsidy range.

1047 COMMISSIONER WYLIE: Is the ratio of the subsidy as high?

1048 MR. BISSONNETTE: No. The customers that typically buy a high definition decoder have spent $5,000 on a television set, so the additional cost of actually making it work --

1049 COMMISSIONER WYLIE: Yes. They are definitely in the motorcycle level of expenditure.

1050 How do you foresee this developing, both for your company specifically and in general? What is your vision of how easily this transition will be made?

1051 MR. SHAW: Are you talking when the Commission forces licensees to deliver in high definition?

1052 COMMISSIONER WYLIE: No. I am talking about what you see is a reasonable expectation of how it will develop.

1053 We don't always ask for reasonable; we don't have to.

1054 MR. SHAW: We think it will develop mainly in the supporting genre. You would have seen very, very big high definition this year at the Masters, especially with Weir winning. It was very, very popular. I think sales of high definition sets expanded like tenfold right after that win.

1055 You have seen all sorts of football and hockey now coming in high definition. I am told Monday Night Football every Monday night is in high definition all across North America.

1056 I think you are only a year or two away from seeing just about all the sporting events in high definition.

1057 We have seen the new satellite service launch -- was it Zoom or Voom? -- Voom in the U.S. with 37 high definition channels right off the start.

1058 So it certainly is a quality phenomena that is just continuing. It is really just the same signal with tremendous amount of quality.

1059 COMMISSIONER WYLIE: So you see it getting an uplift in the next couple of years as more and more of the popular programming, like sports, is available in that format.

1060 MR. SHAW: Correct.

1061 COMMISSIONER WYLIE: At which point I suppose television set prices would go down.

1062 MR. SHAW: I would hope. It certainly has worked that way.

1063 COMMISSIONER WYLIE: And your subsidy could go down as well if you have more --

1064 MR. SHAW: A little bit, yes.

1065 It is all scaled. It is the same as the digital box or the cable modem or any of those things.

1066 COMMISSIONER WYLIE: How many HD services could you carry without removing any services? How do you foresee this happening without removing analog?

1067 MR. BISSONNETTE: Currently with the capacity that is available to us we would continue to offer those HDTV channels. When F2 becomes in service and available to us, then we may be able to add a few more HDTV services.

1068 COMMISSIONER WYLIE: You are talking about Anik F2.

1069 MR. BISSONNETTE: That is correct.

1070 COMMISSIONER WYLIE: How do you foresee the packaging or channel lineup, as we are still talking about transition, where there are fewer customers?

1071 When do you see a time when the packaging and the offer of analog services starts to differ?

1072 MR. SHAW: Are you talking on cable?

1073 COMMISSIONER WYLIE: No, no, I am not talking about cable today. Shame on you.

1074 MR. SHAW: Well, you said analog and there is no analog on satellite.

1075 COMMISSIONER WYLIE: I realize that. But what is actually a service that is not --

1076 MR. BISSONNETTE: Not HD.

1077 COMMISSIONER WYLIE: Not HD, yes.

1078 MR. SHAW: You are going to have a combination forever. There will be some services that will never qualify in that category of content or will ever be able to afford to spend the money to produce in HD.

1079 COMMISSIONER WYLIE: It is really an unknown as to how quickly the transition would occur.

1080 Unless I misunderstand, Mr. Bissonnette, I would imagine that there is a time when you may have duplicates.

1081 MR. BISSONNETTE: That is essentially what we have right now. For instance, ABC --

1082 COMMISSIONER WYLIE: But a growing number of duplicates unless something happens.

1083 MR. BISSONNETTE: Right.

1084 COMMISSIONER WYLIE: Because there is not enough customers for HD.

1085 Can you lower or compromise, or whatever, the quality of some of the services offered to make more space without losing customers or going beyond what is reasonable in optimizing the use of the capacity as you go forward?

1086 MR. SHAW: One of the issues is if we came to you and said your service is TSN and would you like us to reduce your quality to allow someone else to come one, you could imagine what would happen if we went to TSN and asked them that.

1087 COMMISSIONER WYLIE: What about if it is to allow TSN to be carried in HD?

1088 MR. SHAW: That is a different issue. I was assuming you wanted us to add capacity to limit people's ability to compression or to higher compression them to add more to the satellite.

1089 COMMISSIONER WYLIE: But you would not foresee -- you raised TSN -- TSN accepting to be compressed further, especially if the puck disappears when there is a hockey game.

1090 MR. SHAW: Right.

1091 COMMISSIONER WYLIE: Sports are the very ones that require less compression, from what I understand.

1092 MR. BISSONNETTE: We have optimized our compression ratios. We have different compression ratios for our movie services. It is a higher compression ratio, because it can actually operate in that regard. And our other services are optimized as well.

1093 COMMISSIONER WYLIE: You wouldn't want the puck to disappear in the third inning.

1094 As you can see, I'm a sports fan.

1095 MR. BISSONNETTE: Was that a curve ball or a slider?

1096 COMMISSIONER WYLIE: You indicate in your presentation at page 17 that you are looking at new digital applications, including HDTV, interactive services and Internet capability.

1097 Do you have interactive capacity now? Do you have interactive services?

1098 MR. BISSONNETTE: No, we don't.

1099 Yes, only the pay.

1100 COMMISSIONER WYLIE: The pay.

1101 Do you see having any in the next licence term?

1102 MR. SHAW: I guess we wouldn't totally know how that would unfold. I would think that if there was capacity, you might see some Internet services to rural Canadians would be a pretty good option to work on.

1103 There are different interactive services developing all the time. I don't have a specific application to bring forward to you or anything, but I think that is certainly a possibility.

1104 It would be probably more alphanumeric or different interactive things where you just poll for data or something like that.

1105 COMMISSIONER WYLIE: What do you foresee developing with regard to services that have interactive components that they would want Star Choice to deliver to the subscriber?

1106 MR. SHAW: I guess you are talking about weather or alarm systems or something?

1107 COMMISSIONER WYLIE: Yes. Have you participated in the process about the definition of program related and the responsibilities of the distributor in that regard?

1108 MR. SHAW: Ken, do you have a comment?

1109 MR. STEIN: Well, we are familiar with the Commission process with respect to interactivity.

1110 Is that the one you were referring to?

1111 COMMISSIONER WYLIE: Yes.

1112 MR. STEIN: I think the issue is that there are certain interactivity applications or signal passthrough issues that need to be dealt with, but we don't yet have any applications in mind.

1113 COMMISSIONER WYLIE: Do we have submissions from you on that process?

1114 MR. STEIN: I would doubt it.

1115 COMMISSIONER WYLIE: You don't foresee that as a dispute area.

1116 MR. SHAW: Most of those services that we would look at, whether it is early warning or that, we see that as just a kind of community service. If someone wanted that, it wouldn't be hard for a distributor to put it in place. It is a very low-cost thing.

1117 COMMISSIONER WYLIE: Yes.

1118 MR. SHAW: So you would try to do it not to make money off the consumer or anything but just provide some type of early warning or storm alert system, which is pretty functionary to do.

1119 COMMISSIONER WYLIE: You have not yet considered the repercussions on you as a BDU when program services add interactive components to their service and require you to pass it through to the consumer.

1120 MR. SHAW: No, we haven't.

1121 COMMISSIONER WYLIE: One other area that we would like clarification on is the issue of contribution.

1122 You have basically asked for a different treatment than the one that is in Section 44 of the Regs on a going forward basis, if I understand correctly.

1123 MS RATHWELL: Yes, that is correct.

1124 COMMISSIONER WYLIE: My understanding of the past is your original conditions of licence required you to provide as contribution 5 per cent of your gross revenues on broadcasting activities to unspecified funds. It was amended in 2001 so that 20 per cent could be remitted directly to broadcasting undertakings which you outline: APTN, some educational services, et cetera.

1125 MS RATHWELL: Yes.

1126 COMMISSIONER WYLIE: Or to independently administered funds. And now we have 258 which requires .4 of that 20 per cent to be directed to a new fund, which is very specific.

1127 Then of course you have Section 44 of the Regulations which, on a going forward basis, would presumably replace your conditions of licence. So you would have 80 per cent of the CTF and 20 per cent to independently administered funds, with the tweaking that .4 per cent somehow additional or presumably of the 20 per cent would go to the small market fund.

1128 My understanding is that we are asking that we continue the condition of licence 9.

1129 It is in your second deficiency question, as well as the third; question 2, I think, of the third.

1130 So basically you would have 8 per cent of the 20 per cent would go to the .4 per cent, would be the .4 per cent; and 12 per cent would go to broadcasting undertakings; and 80 per cent to any independent fund, unspecified, which would be quite different on a going forward basis from Section 44 of the Regs.

1131 Have I got it right, Ms Rathwell?

1132 MS RATHWELL: Yes. I think essentially the proposal is -- because it gets very complicated talking about percentages of percentages, as some of the interventions pointed out.

1133 The idea would be to continue to contribute 4 per cent to the CTF, with the remaining 1 per cent to make the .4 per cent contribution to the new local broadcasting fund; and the remaining .6 of that remaining 1 per cent would be for the purposes of continuing to support the broadcasting undertakings which we support, such as APTN and ARC, and also to lend support to other independent production funds.

1134 COMMISSIONER WYLIE: I may have misread your proposal, but I didn't see the 80 per cent to specify the CTF. I thought it was generally to any independently administered fund.

1135 MS RATHWELL: The intention would be actually that it would be to the CTF.

1136 COMMISSIONER WYLIE: In your third -- I may have this wrong -- you have Annex 1 attached to the third deficiency response.

1137 MS RATHWELL: With respect, the most recent deficiency response, which was --

1138 COMMISSIONER WYLIE: This is the one with Annex 1 attached.

1139 MS RATHWELL: Yes, correct.

1140 COMMISSIONER WYLIE: It says independently administered Canadian program production fund.

1141 So you would want this to be -- the intention is to have the word that is used in Section 44.

1142 MS RATHWELL: Yes.

1143 COMMISSIONER WYLIE: Which makes it quite clear that it is the CTF.

1144 MS RATHWELL: Yes.

1145 COMMISSIONER WYLIE: Do you see it as clear in Annex 1?

1146 MS RATHWELL: Yes, I see it clearly now.

1147 In Annex 1, yes, in 9(c), proposed 9(c), I believe that is where the reference is to independently administered program production fund.

1148 COMMISSIONER WYLIE: But that is not the same as Section 44 which says --

1149 MS RATHWELL: Yes, I understand.

1150 COMMISSIONER WYLIE: The intention is the fund.

1151 MS RATHWELL: That is correct. And it would be fine to reflect the fact that it should be the fund.

1152 COMMISSIONER WYLIE: Here are the Regs. I forget what we use, but it is more specifically the existing fund.

1153 To the Canadian Production Fund as opposed to a more generic independently administered fund. I think intervenors probably picked up on that; that it would remain unspecified. But you want it specific.

1154 MS RATHWELL: Yes, that's fine. I think there is some degree of misunderstanding, and I acknowledge the lack of specificity in the language.

1155 Essentially all we would like to do is continue our ability to support APTN and ARC through the 1 per cent.

1156 COMMISSIONER WYLIE: So at a minimum we could change Annex 1 to use the language of the Regs.

1157 MS RATHWELL: Yes.

1158 COMMISSIONER WYLIE: You know that we always want to listen to panels and see if we can make changes to what is generally applicable, so we usually add "except as otherwise provided by condition of licence", which is not there in Section 44.

1159 So on a going forward basis, what is your view as to the Commission's ability to accommodate an exception?

1160 MR. JOHNSTON: Maybe I could try that, Madam Wylie.

1161 The section does start with very unusual wording: If a licensee is required under this section to make a contribution.

1162 Our view has been, historically, the requirement was under the condition of licence. If the condition were amended in the way we are seeking, then we would interpret this section not to apply, because the obligation arises under condition of licence, not under this section.

1163 COMMISSIONER WYLIE: I looked at your annual returns for 1998, 1999, 2000, 2001 and 2002, and it indicates that 80 per cent of the contribution was directed to the CTF and 20 per cent to other funds, except for one slight variant in one year where it was 19.2 per cent, I think, to other funds.

1164 Have you in fact remitted funds to broadcasting undertakings that were outlined when that amendment was made to your requirements?

1165 Your annual returns don't seem to show -- it says to funds, not to broadcasting undertakings. Is that just the way it was filed?

1166 MS RATHWELL: Yes. I agree it probably was filed that way, but we have been making contributions.

1167 COMMISSIONER WYLIE: Since it is not 20 per cent -- and for 2000, 19.2 per cent -- to other funds, was there some of the 20 per cent going to undertakings and some to funds other than the CTF?

1168 MS RATHWELL: Yes.

1169 COMMISSIONER WYLIE: What was the relationship? How much was the percentage?

1170 MS RATHWELL: I don't have the percentages at this time. I could undertake to file them.

1171 COMMISSIONER WYLIE: It would be helpful for us to know what these amounts are to see whether it warrants an exception -- possibly requiring three lawyers to interpret Section 44 -- to do something that may have been really the same as everybody else from what I see in the annual returns; how you break down the 20 per cent.

1172 We may or may not agree with Mr. Johnston's interpretation as to how it should go. So we certainly would like to know how important it would be to these undertakings.

1173 I have a few questions about what I call access questions for the visibly impaired, et cetera. You have given us some reasons in deficiency 1 about the difficulty of providing SAP signals.

1174 Can you tell us what the problem is with not being able to pass through descriptive video, if in fact that is what is occurring right now, and what would be required and in what timeframe to get over those hurdles.

1175 MR. BISSONNETTE: I will answer that.

1176 Currently, I think it really comes down to the amount of programming -- and we are talking about described video here. The audio track that is necessary to provide for described video, there would have to be incremental capacity or spectrum allocated to that audio, as opposed to what we call a traditional channel that is carried on Star Choice has this audio allocated to it.

1177 So there would have to be an additional amount of spectrum allocated to this described video that we understand would be used maybe three hours a week. It would be unused spectrum and the receivers that we have currently do not provide for that described video to be past.

1178 We are working with Motorola to work on what we have called a dynamic allocation described video audio, and they have said to us that this may take a year or two in order to do this, because it essentially goes to the whole design of the way audio is carried with video through our box.

1179 So it is a manufacturing challenge. They tell us that it will take a year to two years in order to address that challenge.

1180 COMMISSIONER WYLIE: I may not have understood. Is it a question of right now you would have to allocate on an ongoing basis capacity to pass it through? And what you are looking for is to have the intelligence for the reception of it in the receiver so that you don't have that loss of capacity or poor use of capacity for three hours a week?

1181 MR. BISSONNETTE: I guess it is both. Right now the box cannot handle described video -- our receiver. In order for it to be able to do that, it would have to be modified.

1182 COMMISSIONER WYLIE: Modify each receiver.

1183 MR. BISSONNETTE: Each receiver. So that is one challenge.

1184 What they are looking at is maybe being able to develop a dynamic allocation of that described video which better utilizes spectrum but would also pass it.

1185 So it can't pass it now, and they are looking for an efficient way of passing it.

1186 COMMISSIONER WYLIE: But you still have the receiver.

1187 MR. BISSONNETTE: Yes. The Smarts associated with that receiver would have to be designed into the receiver.

1188 COMMISSIONER WYLIE: So the receiver that one has would have to be altered or would have to be different?

1189 MR. BISSONNETTE: Yes, it would have to be different.

1190 COMMISSIONER WYLIE: But you would presumably only make it available to those who need it.

1191 MR. BISSONNETTE: It is the same as we do right now with our decoders. If somebody wants it, we provide it to them.

1192 We are looking at a software solution that we would be able to download into certain boxes as well.

1193 COMMISSIONER WYLIE: Without actually physically handling the equipment.

1194 MR. BISSONNETTE: Yes.

1195 COMMISSIONER WYLIE: And you think that that is what, a year away?

1196 MR. BISSONNETTE: We have presented the challenge to our folks at Motorola, and they have said that they will take that up.

1197 COMMISSIONER WYLIE: What other mechanism has the company developed to facilitate access?

1198 For example, we usually discuss with BDUs billing, customer information, complaint response, program guides, et cetera. What efforts have been made by Star Choice to make these mechanisms available to subscribers who have I guess limitations?

1199 MR. SHAW: Well, we have the hearing.

1200 MR. BISSONNETTE: Yes.

1201 MR. SHAW: Internet access.

1202 MR. BISSONNETTE: We have Internet access. We have online access to our services. So if a customer wants to change the level of service, if they want to make a payment online, they certainly have that capability.

1203 We have a Web page that they can use to navigate, if you will, through the various packaging options and payment options.

1204 MR. SHAW: And we have a good diversity of languages across our board in our customer service centres to facilitate what we would call a newer Canadian trying to navigate through the system.

1205 Gary, does anything come to mind?

1206 MR. PIZANTE: No. I think that is really the scale of things.

1207 COMMISSIONER WYLIE: Have there been services that have been requested and are not available, other than the technical difficulty of passing VSAP signals?

1208 MR. BISSONNETTE: I'm not aware of any.

1209 MR. SHAW: Not that I know of.

1210 COMMISSIONER WYLIE: The V-Chip, are you currently able to pass through the V-Chip information, the coding provided by broadcasters?

1211 MS RATHWELL: Yes. Currently we do pass through V-Chip encoding. So if a subscriber has a V-Chip ready television set, those codes will not be affected.

1212 In addition to that, on our own system our new receivers are being equipped with the Canadian encoding system and our sort of legacy receivers are encoded with MPAA system. So that can display both ratings information and blocking capabilities to the subscriber.

1213 COMMISSIONER WYLIE: Some of this is currently being developed.

1214 MS RATHWELL: No. It is there.

1215 COMMISSIONER WYLIE: Or are you passing through now all V-Chip information?

1216 MS RATHWELL: All V-Chip information is passed through that is in the signal already. In addition to that, our current receivers have the MPAA rating system, which will enable them both to view ratings and to block on the basis of those ratings.

1217 Going forward, our new receivers embody the Canadian rating system.

1218 COMMISSIONER WYLIE: Right in the receiver.

1219 MS RATHWELL: Yes.

1220 COMMISSIONER WYLIE: We have had in the past conditions of licence to make sure that Star Choice and Cancom had some measure of separation between the two, and these were more restrictive and then were relaxed in Decision 2002-84 where basically they became more a question of maintaining separate sales, marketing and customer service functions between the family of companies, including the important part here I guess would be Star Choice and Shaw Cable.

1221 What measures have you put in place to make sure that these conditions and the associated confidentiality procedures which the Commission asked you to file and which you did file -- what measures have been put in place by the company to ensure that this was respected?

1222 MR. BISSONNETTE: Our sales marketing and customer service groups are segregated as amongst Shaw, Cancom and Star Choice. Each of these three divisions maintains separate confidential and secure databases.

1223 Affiliation agreements are negotiated separately and kept in confidence by the personnel involved except in cases where the programming services themselves request joint Star Choice-Shaw Cable negotiations for reasons of efficiency and expediency.

1224 Our confidentiality procedures have been explained by the managers of the employees involved in sales, marketing, customer service and affiliation arrangements and made reasonable efforts to obtain such employee signatures; in fact, those have all been done.

1225 Information which is supplied to senior officers of Shaw is only on a need to know basis.

1226 We have separate buildings which house our Star Choice call centres, our Star Choice marketing and customer service areas.

1227 COMMISSIONER WYLIE: Separate from Shaw.

1228 MR. BISSONNETTE: That is correct.

1229 COMMISSIONER WYLIE: You say you have separate negotiations as well, with programmers who want either to negotiate for the distribution on cable and distribution on DTH.

1230 MR. BISSONNETTE: Yes. It is absolutely at their discretion.

1231 COMMISSIONER WYLIE: How prompted are they?

1232 MR. BISSONNETTE: They are not prompted. Our direction is very clear. If you wish to negotiate separately, you may; if you wish to negotiate as one, you may also.

1233 COMMISSIONER WYLIE: Is there at the end of the day any advantage in negotiating jointly?

1234 MR. BISSONNETTE: If you look at the packages that Star Choice provides to its customers and you look at the packages that our cable division provides to its customers, they are actually quite different.

1235 In Star Choice we have thematic packages; on the cable side we essentially have à la carte pick-and-pay. To the extent that when we are negotiating that makes a difference to the programmer, then knowing what the lay of the land is and the way we offer our services, they can choose to negotiate independently or together.

1236 COMMISSIONER WYLIE: I have just a few remaining questions on what you see as the financial future. I hope you don't think that is indicating we have no interest in whether your finances are good or bad.

1237 You have experienced a fair amount of growth, as you outlined to us in your presentation. What do you see for the upcoming licence period for DTH in general and for Star Choice in particular in that regard?

1238 MR. SHAW: I guess when you look at the industry overall, it has come through some pretty heavy financial challenges in its first licence cycle. It has overcome a lot of problems.

1239 I see it maturing now. We are going to have our first cash flow positive quarter some time this year, which everybody at Shaw will be going "Hooray. Finally".

1240 I think when you look at it we are seeing DTH growth slow across Canada right now, maybe in flux with the economy to some degree as the economy kind of tightens up here. I think you are seeing satellite growth for both the satellite companies slow to some degree.

1241 I would think they are starting to deal with competition pretty heavy. There is a lot of competition in the field right now: one between the two satellite providers, the incumbent video provider, the cable. We are seeing a lot of bundling. We are seeing new VDSL applications fire up all across Canada.

1242 The one thing you know about these licences is that they are going to be very, very competitive which will continue to hold prices down, I would think, across the board as you have maybe three to four ways of getting your video service in your home.

1243 I think we are here with the competition. I would hope that the obligations that we have is our support for the system wouldn't encompass us too much and would allow the distributor to make some money so he will continue to re-invest, because we are here and we have shown we are.

1244 I think in the first licence term there were a lot of critics who said that we were here doing this for some reason that was diabolical, or something like that. I think we have proven that wrong. I think we have put our money where our mouth is.

1245 COMMISSIONER WYLIE: Who could have possibly thought that?

1246 MR. SHAW: I don't know.

1247 I'll just look in the room here.

--- Laughter / Rires

1248 MR. SHAW: I think if you look at it overall, we have stepped up there. We are competitive. We are very competitive in our own areas, as in others.

1249 I am sure you will have Cogeco or Rogers up here, and you can ask them if Shaw is competitive in there. If you look at a couple of our commercials, you will know we really are.

1250 I think when you look at it, we feel that if the financial matrixes are right, there can maybe still be two satellite providers in Canada long term. You never know if that will have to change. And that will be more of a financial change than anything else.

1251 Maybe it gets more competitive if there is only one satellite provider.

1252 COMMISSIONER WYLIE: And of course your hope is that it is not three or four.

1253 MR. SHAW: If it is --

1254 COMMISSIONER WYLIE: No, no, you have right now possibly more than two.

1255 MR. SHAW: Yes, right now. It just couldn't be any more.

1256 COMMISSIONER WYLIE: I mean the piracy issue.

1257 MR. SHAW: Yes, the piracy issue; that's right.

1258 COMMISSIONER WYLIE: Yes. You have more than two, because you have to compete with --

1259 MR. SHAW: Canada could never survive with a third Canadian DTH provider.

1260 COMMISSIONER WYLIE: No, that is not what I was trying to get at.

1261 MR. SHAW: Okay, perfect.

1262 COMMISSIONER WYLIE: Maybe my colleagues are --

1263 MR. SHAW: Listen, I think the policies that you guys have put in place to date have worked out well. You have given us some flexibility to be competitive also, and that is what we need.

1264 Others will have different tools to be competitive. We just need a couple too.

1265 COMMISSIONER WYLIE: Wasn't that a good question.

1266 MR. SHAW: It was a great question.

1267 COMMISSIONER WYLIE: There are statements on the record -- and you have made it yourself this morning -- that indicate that it costs more than $700 to acquire one customer. Those costs, coupled with the need for very high capital expenditures, I gather it is $700 over and above the subsidization of the equipment?

1268 Or would that be a capital expenditure --

1269 MR. SHAW: That is included.

1270 COMMISSIONER WYLIE: That is included.

1271 MR. SHAW: Yes.

1272 COMMISSIONER WYLIE: So that would be considered an expense.

1273 What else is in this amount?

1274 MR. BISSONNETTE: Well, if you look to the retailer, there is a commission for the sale of the receiver. There is the marketing cost associated with both our contribution to the marketing for the retailer as well as our own marketing cost associated with promoting the services.

1275 There is the installation charge of about $150. Then there is the sales commission. If the sale is made by a direct sales person, there is a sales commission associated with that as well.

1276 COMMISSIONER WYLIE: If I look at your sales and promotion expense -- don't worry, I won't disclose amounts -- depending on the year it is a relatively high proportion of your total expenses are for sales and promotion.

1277 Is that where a lot of the $700 would be?

1278 MR. SHAW: Yes. A lot of it would be there. As you know, whether it is telecom or in video, when you are trying to bump the incumbent out you have to go at him pretty hard onward and onward and work on those retailers. We have to really develop it.

1279 So it costs a lot to get these subscribers, to provide him the choice.

1280 COMMISSIONER WYLIE: I notice that that percentage devoted to sales and promotion as a percentage of your total expenses has decreased quite dramatically since 2000.

1281 Is it your experience then the growth of your subscriber base is affected by reducing those expenses?

1282 MR. BISSONNETTE: We are looking at all of our costs, as you know, in providing our services to our customers. We have moved from a fully 100 per cent retail sales model to one now that includes lower cost of acquisition sales, whether through our customer service group or through a direct salesman.

1283 So that has had the effect of reducing it somewhat.

1284 COMMISSIONER WYLIE: Do you see the $700 reducing in time?

1285 MR. BISSONNETTE: We have been trying to get it to $500, I can tell you. This is certainly one of our challenges. If we could get our cost of acquisition to $500, it would be significant.

1286 There are pressures out there, market pressures. The retailers certainly still play a role in the way that we promote and sell our devices. There is also a competitor in those same retailer areas.

1287 So to the extent that we can manage that, we do.

1288 We see it in that range of $600 to $700.

1289 COMMISSIONER WYLIE: Has that expense increased as you -- first let me ask you: Would it be fair to say that the growth of your subscriber base now will depend more and more on penetration in the urban areas?

1290 Is the cost of acquiring subscribers higher rather than lower as you move into the urban landscape?

1291 MR. BISSONNETTE: As we mentioned in our response, there is an additional cost when you get into multi dwelling units because you have to build different infrastructure. You have to essentially build a backbone in each apartment unit, so there are incremental costs with that.

1292 The other thing that has changed over time is that when we were growing as rapidly as we were, our cash-and-carry price was probably $100 more. Customers were prepared to pay $250.

1293 If you look at some of the U.S. programming or programming that is promoting Directv at zero, there were some forces to try and push that initial cost down to a lower price. And of course that goes to the cost of acquisition.

1294 COMMISSIONER WYLIE: I was more curious about whether to dislodge a customer as a subscriber already of a BDU would cost more than to get one in a rural area where there is no cable or where cable is not up to the level of megahertz that makes an attractive service.

1295 MR. BISSONNETTE: Yes. And there is also more aggressive --

1296 COMMISSIONER WYLIE: It is another pressure as well.

1297 Those are my questions, Mr. Chairman.

1298 Thank you very much for your cooperation, Ms Rathwell and gentlemen.

1299 THE CHAIRPERSON: Thank you.

1300 Commissioner Williams.

1301 COMMISSIONER WILLIAMS: You stated in response to Commissioner Wylie that your acquisition cost was $700 per customer, but you have invested $1.2 billion. So that would be almost twice that amount, I would guess, per customer.

1302 ExpressVu currently carries APTN's northern signal. Does Star Choice intend to carry APTN's northern signal once your capacity issues have been addressed and is this also the case for Global's Quebec signals?

1303 MR. BISSONNETTE: We carry APTN. In fact, we have certainly an uplinking arrangement with them.

1304 COMMISSIONER WILLIAMS: They have more than one signal.

1305 MR. BISSONNETTE: Yes.

1306 COMMISSIONER WILLIAMS: They have a northern specific signal.

1307 MR. BISSONNETTE: We don't carry the northern signal.

1308 MR. STEIN: We have not yet developed a plan to carry the Northern Service. There are the two Northern Services, and what we are trying to do in terms of trying to respond to the market and the services there is to look at those two services, but we haven't made a decision about that.

1309 COMMISSIONER WILLIAMS: You are aware that those northern signals carry the equivalent of parliamentary-type channels, the Legislative Assembly out of Iqaluit and the same out of Yellowknife?

1310 MR. STEIN: Yes. They have made it very clear what they carry.

1311 COMMISSIONER WILLIAMS: All right. Fair enough.

1312 Thank you.

1313 THE CHAIRPERSON: Commissioner Noël.

1314 COMMISSIONER NOËL: Maybe just some detail of the cost of acquisition, of $700. How much is the cost of the actual dish and what is the cost of the box?

1315 MR. BISSONNETTE: I don't want our competitors to know that. But the dish --

1316 COMMISSIONER WYLIE: You thought I was mean.

1317 MR. BISSONNETTE: The dish is in the order of magnitude of $100 or so.

1318 COMMISSIONER NOËL: $100. So it is not worth taking it down when people move. That is what you are telling me?

1319 MR. BISSONNETTE: We have a simple satellite approach that we like to leave them there when customers move, and then we will put a new one into their new home when they move to a new home.

1320 COMMISSIONER NOËL: Then I am putting down my building and I am stuck with my tenant's dish that I have to pay the freight to take down.

1321 MR. SHAW: We will always come by and take it down.

1322 COMMISSIONER NOËL: Thank you.

1323 THE CHAIRPERSON: Thank you.

1324 Counsel?

1325 MR. WILSON: Thank you. I just have a few questions.

1326 With respect to the percentage breakdown in contributions that Vice-Chair Wylie had asked you to provide, two things: When you provide that, would it be possible to identify, in terms of the broadcasting undertakings, which individual broadcasting undertakings have received funding in terms of that; and if possible, break down what dollar amounts they have received in each year since that condition of licence took effect?

1327 MS RATHWELL: Yes.

1328 MR. WILSON: Would you be able to provide that to Mr. LeBel by the end of tomorrow?

1329 MS RATHWELL: Yes, I imagine. Yes.

1330 MR. WILSON: Thank you.

1331 Just to touch again briefly on some of the issues surrounding the Anik satellites -- and you have provided the charts showing the various delays in getting the F2 satellite.

1332 What is the impact on Star Choice if there is yet again a further delay, which I suppose is not beyond the realm of possibility?

1333 MR. SHAW: I don't want to be sitting back here again. That would be one thing I wouldn't want to do.

1334 Listen, these things are going to happen. Nobody can pick the timeframe. You are going to have Telesat up here. Maybe they will have a better idea for me.

1335 I think to contemplate nothing is going to happen wouldn't even be in the realm.

1336 MR. WILSON: And somewhat along the same line in your presentation today you had mentioned that F1 has begun to experience some degradation. You have a plan to have F1R in place for 2005.

1337 Do you have a plan? Or what is your plan if again there is a delay for F1R and you have this continuing degradation for F1?

1338 MR. FLETCHER: Basically we count on Telesat to provide continuity and back-up plans and so on and so forth. So we work with them. They understand our requirements for capacity.

1339 They often times have alternatives and have arrangements with other satellite operators to acquire satellites. For example, with the situation with Anik E2 and F2, with the gap, they were able to acquire in orbit spare for that requirement. So we trust in their capabilities there.

1340 MR. WILSON: Just looking at the chart that you provided with your remarks today, I am looking at the one entitled "Anik F2 Construction Delays" and I see you have a line saying "F2 forecast in-service dates".

1341 Does that mean the same thing as commercial deployment or does that mean something different?

1342 MR. BISSONNETTE: The in-service date is our commercial deployment.

1343 MR. WILSON: I have one final question of clarification, and this relates to your discussion with Vice-Chair Wylie with respect to high definition TV and the three channels that you have: your HD1, 2 and 3.

1344 I think in response to one of Vice-Chair Wylie's questions it was mentioned that the programming is drawn from six channels, I think was the answer.

1345 What are those channels and how do you decide which of the HD1, 2 and 3s they go on? And does that sort of happen consistently?

1346 For example, if it is a movie from The Movie Network, is it always on HD1?

1347 MR. BISSONNETTE: Yes. There is one channel that is dedicated to movies. There are actually six channels.

1348 There is one channel allocated to ABC, one to NBC, one to CBS, one to PBS.

1349 MR. WILSON: Thank you. I have no further questions, Mr. Chairman.

1350 THE CHAIRPERSON: Thank you.

1351 Thank you very much.

1352 Mr. Secretary.

*PHASE II

1353 MR. LeBEL: Thank you, Mr. Chairman.

1354 We have now reached Phase II of the consideration of this application in which appearing intervenors will be presenting their appearing interventions.

1355 The first appearing intervention will be presented by the Canadian Film and Television Production Association.

1356 Appearing for the Association is Mr. Guy Mayson.

1357 This intervention will apply at this time to Items 2, 3, 4 and 5 on the agenda.

1358 Mr. Mayson, you have 20 minutes to make your presentation -- make that 10 minutes.

INTERVENTION

1359 MR. MAYSON: It had better be ten.

1360 Good afternoon, Mr. Chair, Vice-Chair and Members of the Commission.

1361 My name is Guy Mayson and I am the Acting President and CEO of the Canadian Film and Television Production Association.

1362 The CFTPA represents over 400 companies that finance, produce, distribute and market feature films, television programs and multi-media products in English. Our members are present in every region of Canada. Our members create stories and invest in the development of program concepts. We employ writers to prepare screenplays, hire directors, actors and craftspeople to make the stories into programs and conduct all the business dealings to finance the provision of these stories to Canadian and foreign audiences.

1363 As such, we have a vital interest in the contributions that broadcast distribution undertakings make to the creation of Canadian programming.

1364 The Association has reviewed the files of five of the applicants before you at this hearing -- Star Choice, Bell ExpressVu, Craig Wireless, Look Communications and Image Wireless -- and, as stated in our written remarks, supports the renewal of each of these licences.

1365 We have restricted our comments to the obligation of these BDUs to contribute to Canadian programming and have made several recommendations in this regard.

1366 In Public Notice 1997-25, New Regulatory Framework for Broadcast Distribution Undertakings, the CRTC set out how distribution undertakings would be required to meet the Broadcasting Act's objective that each element of the broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming.

1367 This requirement was further elaborated in Public Notice 1997-98, Circular No. 426 and the revised BDU regulations which were published in December 1997 and came into force on 1 January 1998.

1368 The requirement is that all distribution undertakings, with the exception of the smallest terrestrial BDUs, must contribute 5 per cent of annual gross revenues derived from broadcasting activities to Canadian programming, including contributions to qualified funds that help finance and broadcast high quality Canadian television productions.

1369 Terrestrial BDUs are permitted to make an allocation to a community channel for local expression. The specific allocations established between support for community programming and contributions to one or more programming funds depend upon the class of the undertaking and the number of subscribers.

1370 Given the national reach of DTH undertakings, ExpressVu and Star Choice are required to allocate the full 5 per cent to eligible independently administered production funds. Eighty percent of this must be directed to the Canadian Television Fund.

1371 ExpressVu has allocated the remaining "discretionary" allocation to the Bell New Media Fund, while Star Choice has supported Shaw Children's Programming Initiative, the Canadian Independent Film and Video Fund and The Harold Greenberg Fund.

1372 CFTPA acknowledges the importance of BDU contributions to the development, creation and distribution of Canadian programming. The CTF has been the major designated recipient of these contributions. In the year 2001-2002, CTF received $100 million from cable, DTH and MDS contributors, twice the amount contributed five years earlier.

1373 In the year 2000, DTH subscribers constituted less than 10 per cent of all BDU customers. In keeping with the rapid growth of this sector, DTH contributions to the CTF have increased from $23 million in 2001 to $32.5 million in 2002, while the cable industry's contribution has remained stable at just under $68 million.

1374 The contribution of the MDS sector is significantly less, proportionate to its share of the BDU subscriber base.

1375 First, with respect to the DTH operators, CFTPA is asking the Commission for clarity as to whether the new obligation imposed on ExpressVu and Star Choice, in Decisions 2003-257 and 2003-258, to contribute to a fund to support the activities of small market local television broadcasters is to be made at the expense of these operators' current financial commitments to eligible independent production funds.

1376 We ask this because of Star Choice's specific request to reduce that portion of its contribution that is not designated to the CTF by the amount that it is now required to allocate to the new fund, announced in Public Notices 2003-37 and 38.

1377 CFTPA's intervention to the DTH applicants' requests last fall, that they be granted relief from the requirement that they effect program deletion, expressed strong reservations about the DTH operators' proposals to provide financial assistance for local and regional programming. We were particularly concerned about the approach proposed in the Memorandum of Understanding between ExpressVu and the Canadian Association of Broadcasters to link such support to the totally separate and distinct requirement that BDUs contribute to the creation of Canadian programming.

1378 We said that "the sole reason for such a connection is, it appears, to avoid having to incur additional financial obligations".

1379 Ironically, it is now Star Choice that is attempting to make this direct connection as it is seeking to reduce its contribution to funds other than the CTF by 40 per cent.

1380 Following the release of these decisions, CFTPA expressed concern to the Commission that the requirement for funding support to small market TV stations should not create unintentional harm to the private independent funds. The Commission's reply, advised us that "the decisions ... do not obligate Bell ExpressVu or Star Choice to reduce their contributions to independent funds".

1381 However, this is exactly what it seems Star Choice is now asking.

1382 ExpressVu has not made a similar request. This may mean that it intends to honour its existing commitment to the Bell New Media fund, or it may be waiting to see the outcome of its competitor's request.

1383 In light of the fact that the DTH contribution to Canadian program creation is now captured in the BDU regulations, ExpressVu has requested to have the existing condition of licence removed. CFTPA does not object to this, provided the Commission stipulates that the remitting of contribution payments continues at the current rate, in the form of monthly instalments within 45 days of month's end.

1384 The Canadian programming obligations of the MDS systems were established by condition of licence and vary in accordance with commitments made at the time of their original licensing. Our recommendations are made in the context of standardizing and simplifying this aspect of their operation.

1385 First, we concur that the percentage requirement should be standard for all MDS operators, at the 5 per cent level specified in the regulations.

1386 Second, we recommend that all the MDS operators should be subject to the same payment schedule that is required of cable operators and DTH undertakings. We reject Look's proposal that it not be obliged to fulfil this requirement until its systems attain revenues of $25 million.

1387 We note that all three MDS operators have experienced difficulty in providing community programming.

1388 Craig has admitted that it has never implemented a community channel and is asking to be relieved of this obligation.

1389 Look has made some contributions to local expression, but has maintained its obligation to contribute to the CTF.

1390 Image's application states that it has insufficient revenues to provide five hours of community programming a week and that it is reluctant to allocate a dedicated channel to such a purpose. It has asked that it not be required to provide both a community channel and to contribute to the CTF.

1391 In the absence of compelling reasons otherwise, CFTPA recommends that each of the MDS licensees be directed to allocate 5 per cent of revenues to the CTF, or to the CTF and other eligible independent funds, on the 80:20 basis that the Commission has established as appropriate for cable and DTH operators.

1392 We consider this the most appropriate means by which MDS services can contribute to the creation of Canadian programming.

1393 CFTPA has also stated that it would support the notion that MDS undertakings with fewer than 6,000 subscribers could be permitted to operate on the basis of an exemption order. Relieving small MDS systems of the need to comply with all of the obligations required of larger competitors would enable them to operate with increased efficiency and reduced expenses.

1394 I would like to take just one moment more to elaborate upon the importance of maintaining BDU contributions to the CTF and the other eligible independent funds.

1395 The Canadian independent production sector is recognized in the Act as a key contributor to the programming provided by the broadcasting system. The CBC, private conventional television broadcasters and specialty and pay television services rely on independent producers to achieve their Canadian content programming requirements. It is independent producers who provide the high-cost drama, documentary, children's, performance/variety, regional, and new media programming that broadcasters need to fulfil their obligations to air priority Canadian programming in prime time. Producers have become instrumental to achieving the content objectives of the Broadcasting Act.

1396 The licensing of additional television and specialty services over the past ten years has greatly increased the demand for such programming. This has put added pressure on the funding sources that support the creation of this type of programming. Contraction in the international market has also made it increasingly difficult to find other funding sources abroad.

1397 Simply put, it has never been more difficult to finance Canadian productions -- and the role of the CTF has never been more important.

1398 The CTF and the other eligible independent funds that are the beneficiaries of BDU contributions to Canadian programming play an essential role in bringing Canadian programming to Canadian audiences. Yet, as demand grows, these funds are constantly oversubscribed. Worthy Canadian programming is not being made because of a lack of funding.

1399 The CRTC has long recognized the difficulty of creating quality Canadian programming capable of attracting viewers who are inundated with U.S. drama series, sitcoms and made-for-TV movies on a nightly basis.

1400 In fact, the Commission has recently called for comments on how to support the production and broadcast of high quality, original English-language Canadian drama and to attract larger audiences to such programming -- a process that we welcome.

1401 On behalf of our membership, the CFTPA implores the Commission to protect the ability of the designated funds to continue to contribute to Canadian programming.

1402 Mr. Chair, Members of the Commission, thank you for your attention. I did group my comments on all of the applicants in one submission. Although we are down to appear several times, this will be our sole appearance. I appreciate your attention on that.

1403 I would be pleased to answer any questions that you may have. Thank you.

1404 THE CHAIRPERSON: Thank you, Mr. Mayson.

1405 Commissioner Pennefather.

1406 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

1407 Good afternoon, Mr. Mayson.

1408 I would like to ask you to expand on a few points from your written intervention, some of which are repeated in this afternoon's presentation.

1409 Were you here earlier for the discussion with Star Choice regarding the contribution to Canadian programming?

1410 MR. MAYSON: I believe I heard some of it, yes.

1411 COMMISSIONER PENNEFATHER: I was wondering because in your written intervention you have stated some confusion about the 1 per cent of the 5 per cent.

1412 Is it clear now that in fact there are broadcast undertakings involved?

1413 MR. MAYSON: We were just discussing that before I came up, and it does add some clarity to that reference. The language in the original brief actually confused us. So it does provide some clarity on what the 1 per cent is about.

1414 COMMISSIONER PENNEFATHER: Where the 1 per cent has been.

1415 MR. MAYSON: Yes.

1416 COMMISSIONER PENNEFATHER: Further to that discussion this afternoon you make the point in your written brief that your concern is obligation to direct at least 4 per cent of annual revenues to the CTF.

1417 Were you satisfied with the discussion this afternoon with the applicant in that regard?

1418 MR. MAYSON: I think we would be interested in seeing -- I think I followed the questions that the Commission was asking, and I think we would be interested in seeing further information on that.

1419 Certainly our basic view is that the 4 per cent should be sort of a solid number. I would have to look at the transcript and the detail more carefully, but it sounded as though the contribution was being spread to a certain extent on a variety of things.

1420 I would want to make sure that the contribution to the CTF was as was intended.

1421 COMMISSIONER PENNEFATHER: We will be getting further information, but it was my understanding that the 4 per cent, or 80 per cent -- it is difficult with all these different percentages -- would in fact mirror the 80 per cent requirement and that the balance 20 per cent, or 1 per cent, would be split, as it is currently at least, amongst funds and broadcasting undertakings. Then we have inclusive of the new fund.

1422 I further wanted to go on to your comments on MDS operators.

1423 In your written comments you say there is some merit to the argument that MDS systems be exempted, MDS systems "with fewer than 6,000 subscribers could be permitted to operate on the basis of an exemption order".

1424 Can you expand a little bit on that proposal for us?

1425 What do you feel the impact would be on contributions to Canadian programming if that were to occur and on services to subscribers? What would be the impact of your proposal?

1426 MR. MAYSON: Briefly, we propose that more in the interests of expediency and efficiency the analysis that we had done seemed to indicate that the dollar value gained from a contribution from subscribers of that size would not be large.

1427 So it was basically an issue of we saw some efficiencies to be gained in simply allowing them to function under the benefit of an exemption order.

1428 COMMISSIONER PENNEFATHER: You note in your written intervention that it is already a more relaxed regime. Do you have any way to quantify that for us?

1429 MR. MAYSON: I apologize. We maybe should have tabled that work. We did do some work looking at the possible economic estimates. It seemed very, very low.

1430 I would have to go back and look at it carefully, but I believe it was less than $100,000 in terms of a contribution to the fund.

1431 That is something we can actually double-check and provide that to the Commission if it is useful.

1432 COMMISSIONER PENNEFATHER: Community programming you raise, what is your comment on the place of community programming in the MDS world?

1433 In other words, I am thinking about Canadians, subscribers, audiences. Are you saying to us that community programming is not something that MDS operators should offer?

1434 MR. MAYSON: I think community programming generally is very important. Our general view is that it is a very important service, but it should not be at the expense of perhaps other contributions that are made to the system.

1435 In the area of MDS, it was simply a matter of -- I think the same rules should apply across the board to all operators, MDS included.

1436 The proposal for smaller operators is simply, as I said, made in the interests of efficiencies.

1437 Certainly they should be making the same kinds of contributions that everyone else is making.

1438 COMMISSIONER PENNEFATHER: Getting back to that again, just so that I understand: When you are proposing an exemption, are you proposing that as a Class 2 exemption or Class 3 as a model, for example?

1439 MR. MAYSON: It would be Class 2, I believe, yes.

1440 COMMISSIONER PENNEFATHER: Do you expect any change, then, in contribution to Canadian programming as a result of your proposal?

1441 MR. MAYSON: As I said, the way it looked, there might be some minor reductions. We would have to verify that.

1442 That was sort of the analysis we had done, yes.

1443 COMMISSIONER PENNEFATHER: That would be interesting because certainly that exemption order still requires the contribution to Canadian programming. But there is a difference between Class 2 and Class 3.

1444 In saying that there are merits to the proposal, it would be interesting to have more detail.

1445 Finally, you certainly make it clear in your intervention that you are not comfortable with the idea of payment of this contribution over a licence term as opposed to yearly, as is normally the case. In other words, the relaxed regime doesn't go quite that far.

1446 Can you explain what, in your view, would be the impact if the Commission were to approve such an approach of payment over the licence term as opposed to the broadcast year?

1447 What, in your view, would be the impact if we were to go ahead with such a proposal?

1448 MR. MAYSON: In terms of impact, it strikes me as a lack of predictability in terms of funding. I think one of the benefits of a requirement to provide funding in a certain period in the course of a year is much more predictable for the funds involved.

1449 If it is done in the course of a licence term, it may bear some analysis. But it strikes me that it puts the actual funding bodies in a very difficult position of not knowing when the funding is available.

1450 Production is very obviously funding driven, and this is a huge debate within the Canadian Television Fund right now. Predictability is very important for broadcasters as well as producers in terms of wanting to move ahead with the production. Ideally, the funds should be there, if approved, to proceed.

1451 If private funds, independent production funds are sort of moving in a way that they are not able to predict when funds are available, it puts them in a very difficult position and I think puts their clients in a very difficult position as well.

1452 COMMISSIONER PENNEFATHER: Those are my questions, Mr. Chairman.

1453 Thank you very much, Mr. Mayson.

1454 THE CHAIRPERSON: Thank you very much, Mr. Mayson.

1455 MR. MAYSON: Thank you, Mr. Chairman.

1456 THE CHAIRPERSON: Mr. Secretary.

1457 MR. LeBEL: Thank you, Mr. Chairman.

1458 The next appearing intervention will be presented by the Communications and Diversity Network. Appearing for the network Mr. Rubin Friedman and Mr. Raj Rasalingam. This intervention also applies to items 3, 4 and 5.

1459 Gentlemen, you have ten minutes to make your presentation.

INTERVENTION

1460 MR. RASALINGAM: Good afternoon, members of the Commission. My name is Raj Rasalingam and I am the President of the Pearson-Shoyama Institute and a member of the Communications and Diversity Network. On my left is Rubin Friedman who is also a member of the Communications and Diversity Network.

1461 The Communications and Diversity Network thanks you for the opportunity to appear before the Commission today. The network aims to modernize the portrayal of ethnic and racial minorities in Canadian broadcasting so that the multiracial and multicultural reality of Canada is reflected in Canadian broadcasting.

1462 In pursuit of its mission, the Communications and Diversity Network shares expertise, resources and models of good practice in an effort to ensure that television responds to changing demographic and consumer markets in its programming and employment policies.

1463 We view the role of the Commission as vital in ensuring that these realities are taken into account during the licensing and renewal process. Equally, we applaud the role that the Commission has played in urging Canadian broadcasters to reflect this reality.

1464 Statistics Canada reporting on September 29th of this year is quoted as saying:

"In 2002, almost one quarter, 23 per cent of Canada's population age 15 and over, or 5.3 million people, were first-generation immigrants. Not since 1931 has the proportion of people born outside this country been this high".

1465 More importantly, it goes on to say:

"Immigrants, especially those how had recently arrived, were more likely to indicate that their ethnic or cultural ancestry was important to them. Nearly three quarters, 71 per cent, of immigrations who arrived in Canada from 1991 to 2001 rated at least one of their ancestral origins as important."

1466 The numbers reflected in these statistics outline the attention that the Commission should take into account in reflecting the change that is happening around Canadian society. Our presence here today is not intended to urge the heaving hand of the regulator on those who license or are due for a renewal, but to encourage the licensees to appreciate the realities of the newly emerging communities and markets that licensees can tap into to expand their customer base.

1467 I will now hand it over to Mr. Friedman.

1468 M. FRIEDMAN: Merci.

1469 Notre soumission aujourd'hui est basée sur certains principes. D'abord il y a le premier principe que les communautés devraient avoir accès à la programmation dans la langue de leur choix, soit en hindi, tamul ou italien.

1470 Il y a un autre principe, c'est que le système canadien devrait favoriser et souligner et appuyer les services canadiens de tierce langue à cause que cela renforcera éventuellement tout le système canadien et, en même temps, l'identité canadienne.

1471 Rogers in carrying third-language services has already demonstrated that it can tap into a market that is changing, whilst maintaining a viable and profitable market.

1472 Bell ExpressVu has demonstrated its ability to be open to the same reality. If these successful models exist, there are valid reasons for other applicants to start opening up to these markets.

1473 In this submission, we call on the Commission to set clear targets with numbers and timelines. With respect to Star Choice we urge the Commission to implement the following:

by the end of 2004, 25 services;

by the end of 2005, 30 services;

by the end of 2006, 40 services;

by the end of 2008, 50 services.

1474 With respect to financial contributions under the Canadian programming, it is not unreasonable to begin examining the possibility to direct that a portion of funds be used for Canadian productions that are primarily culturally diverse in nature in English or French or in an unofficial language which could be used by third-language specialties.

1475 Whilst we appear before you with respect to Star Choice, our earlier letter to you addresses some of the other applicants as well and gives some specific targets for them as well.

1476 Thank you. That basically is the main thrust of our presentation.

1477 THE CHAIRPERSON: Thank you, gentlemen.

1478 Commissioner Pennefather.

1479 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman. Good afternoon, gentlemen.

1480 Let's look at that main point and clarify your proposal as much as we can.

1481 When you say for Star Choice and ExpressVu a certain number of services, are you talking about all kinds of services or just Canadian or just specialty? What is the panoply? The 25 are coming from where?

1482 MR. RASALINGAM: We believe that it could be the third-language categories as well as other services that reflect the diversity of the country.

1483 COMMISSIONER PENNEFATHER: So Canadian and non Canadian?

1484 MR. FRIEDMAN: Our primary concern is focused on Canadian services, and we think that that should be the focus of our efforts, to promote a Canadian view of diversity, to promote a Canadian understanding of our identity in whatever language is appropriate, and that could be in English or French or a third language.

1485 COMMISSIONER PENNEFATHER: You are aware, I assume, of how many Canadian and ethnic services are currently carried by each of the players you have intervened on.

1486 MR. RASALINGAM: We are aware to a certain extent.

1487 COMMISSIONER PENNEFATHER: The reasons I am asking that too is to be presented as not heavy-handed, as you said yourself earlier, but urging us how practical an approach it is. I am not questioning the motive, just the approach.

1488 What is the basis for the number you picked, the 25, 30, 40, 50, in relation to what is there now?

1489 MR. RASALINGAM: Well, for the larger providers we believe that, according to the Commission, your numbers state that you have licensed over 50 services, that it would be a realistic target to start achieving that within a certain timeframe.

1490 Having said that, for the smallest service providers, we would ask that the Commission look at it, cognisant of the fact that it is not the intent of the Network to ask people to be bumped off any of the existing. So we want to respect those realities as well.

1491 COMMISSIONER PENNEFATHER: So over time you are looking at a must carry situation then if you base the number 50 on the licensed -- all ethnic services. Is that what you are proposing?

1492 MR. RASALINGAM: We live it to your judgement as a Commission to see what would be reflective of the changing demographics in Canadian society.

1493 COMMISSIONER PENNEFATHER: So your number is related now. You say as well that you would limit it to two services per ethnic group or language. How do you suggest we go about doing that?

1494 MR. RASALINGAM: We did not get into the specifics of how the Commission would go into it. We do not want to direct the Commission. We believe that you are the experts in being able to arbitrate those realities, so we leave it up to you.

1495 COMMISSIONER PENNEFATHER: Thank you.

1496 One last question, again, in looking at the various systems out there. Apart from this approach that you have presented to us, have you any other comment on the ways that -- you said in a very broad statement that these broadcast technologies are an opportunity to better serve diverse needs.

1497 Have you any other ways in which this could be done, other than apposing a certain number of services?

1498 MR. RASALINGAM: Commissioner, the Network has not special knowledge in terms of what the evolving technologies are, but we are aware that new satellite services are coming on line and also the MMDS systems are also looking to expand. So we hope that these realities are taken into account in those changes.

1499 MR. FRIEDMAN: Our main thrust is not necessarily on where our programming originates, but on sort of a Canadian hand guiding them, that they somehow reflect and respond to Canadian reality and the Canadian identity.

1500 COMMISSIONER PENNEFATHER: Thank you very much. Merci beaucoup, monsieur Friedman.

1501 Thank you, Mr. Chairman.

1502 THE CHAIRPERSON: Thank you very much, gentlemen.

1503 Mr. Secretary.

1504 M. LeBEL: Merci, monsieur le président.

1505 La prochaine intervention comparante nous sera présentée par la MRC de Papineau, Mme Paulette Lalande.

INTERVENTION

1506 Mme LALANDE: Bonjour, mesdames, messieurs. Ça me fait bien plaisir d'être ici.

1507 Vous avez reçu une carte de la MRC Papineau. D'un côté on vous montre un petit peu les attraits qu'il y a chez nous si jamais il y en a qui ont le goût de venir nous visiter, et de l'autre côté vous avez le territoire.

1508 Alors pourquoi aujourd'hui je viens vous parler? Je n'ai pas de texte. Je représente un territoire de 3 000 kilomètres carrées. Je suis préfet d'une MRC qui comprend 24 municipalités et nous avons une population de 20 000 habitants durant l'année, et au cours de l'été, parce que c'est une région touristique, nous en avons une quarantaine de milles au cours de l'été.

1509 Dans notre MRC qui comprend la Petite-Nation et la Vallée de la Lièvre, nous avons un grave problème parce que tous nos abonnés qui sont avec ExpressVu et Star Choice ne peuvent pas capter les nouvelles locales de Radio-Canada.

1510 La Petite-Nation et la Lièvre ont toujours eu avec Radio-Canada des échanges et je dois dire qu'ils nous ont toujours soutenus depuis tous les temps. A chaque fois qu'on appelle Radio-Canada ils sont toujours là. Ils viennent chez nous. Ils font des reportages extraordinaires et malheureusement ce n'est pas tout le monde qui peut les voir et je trouve ça très malheureux.

1511 D'abord notre télévision de Radio-Canada, je pense que je ne vous apprends rien en vous disant que c'est tellement une télévision de qualité qui nous donne des reportages extraordinaires, qui sont faits dans un français extraordinaire aussi. Je pense que ça il faut le reconnaître, il faut le reconnaître jusqu'au bout.

1512 Vous savez, quand on entend les statistiques qui disent que, par exemple, tel poste de télévision a eu la meilleure cote d'écoute pour les nouvelles, je comprends; chez nous il y 50 pour cent des gens qui ne sont pas capables de les capter. Alors si c'est sur ça qu'on se base, je pense qu'on ne leur rend pas vraiment justice.

1513 Je sais qu'au printemps Star Choice et ExpressVu vont demander des renouvellements de licences, et en tant que préfet, et comme je représente une population rurale, et vous savez que le monde rural, on est important. On n'est peut-être pas beaucoup et souvent ces grosses compagnies-là disent, « Mais oui, mais écoutez, madame Lalande, vous êtes si peu. Ce n'est pas rentable ».

1514 Moi je pense qu'au niveau de notre pays on se doit de protéger aussi les petites communautés francophones qui sont dans certains secteurs, et vous là, vous représentez... vous allez être notre voix en quelque sorte pour dire à ces compagnies-là, « Il faut absolument que vous fournissiez à tout le monde un service de qualité indépendamment de l'endroit où ils se trouvent ».

1515 Quand on est sur la 148, d'après la carte que vous avez, ça va bien. On a Vidéotron. Moi j'ai la chance de capter les nouvelles de Radio-Canada, c'est pour ça que je peux en parler, mais aussitôt qu'on s'en va dans le nord, les personnes n'ont pas de choix. Il faut absolument qu'ils aient une soucoupe pour pouvoir vraiment écouter les nouvelles.

1516 Dans le monde rural, mesdames et messieurs, vous savez on a l'impression souvent d'être loin des autres mais on est près. Quand on a une télévision, quand on a une radio, quand on a des systèmes de communication qui nous permettent peut-être d'échanger de vive voix, mais au moins d'entendre ce qui se passe chez nous. A chaque fois que Radio-Canada vient chez nous -- et ils viennent régulièrement et ça ça fait des années -- ils font partie de notre quotidien et à chaque fois qu'ils font des reportages il y a 50 pour cent qui ne sont pas capables d'écouter ce qui se passe dans leur communauté.

1517 Mesdames et messieurs, je vous le dis, soyez notre voix et dites à ces gens-là que c'est une obligation. Il faut absolument qu'on étende ces services-là et les nouvelles locales ça rapproche le monde. Ça rapproche le monde et c'est aussi ce qui fait que nos gens restent chez nous.

1518 Vous savez quand on est isolés et qu'on n'a pas de moyens de communication adéquats bien des fois c'est ce qui fait que les gens, par exemple, sont plus déprimés, ou qu'ils décident tout simplement de quitter le monde rural et de s'en venir en ville. On ne peut pas faire la comparaison. C'est certain que quand vous arrivez dans la grande ville où vous avez des abonnés, il y en a énormément. C'est certain qu'à ce moment-là on ne parle pas du tout de la même chose.

1519 Mais le monde rural c'est important et je suis ici pour les représenter et j'espère que je vous aurai convaincus et que vous serez notre voix vis-à-vis ces compagnies-là pour qu'elles puissent nous offrir les nouvelles locales régionales de Radio-Canada.

1520 Merci beaucoup de m'avoir écoutée.

1521 LE PRÉSIDENT: Merci beaucoup, madame Lalande.

1522 CONSEILLÈRE NOËL: Bonjour, madame Lalande.

1523 Mme LALANDE: Bonjour.

1524 CONSEILLÈRE NOËL: Peut-être une question. Quand vous dites que les gens ne peuvent pas capter les nouvelles, vous parlez de la station régionale d'Ottawa de la SRC.

1525 Est-ce qu'il y a un problème au niveau de la captation hertzienne parce que moi j'ai le câble depuis très peu longtemps à la campagne. Moi aussi je vis à la campagne et le câble ne se rendait pas chez moi, mais j'avais des oreilles de lapin et je prenais des postes avec mes oreilles de lapin.

1526 Alors est-ce que les gens peuvent capter un signal de Radio-Canada Ottawa en utilisant la bonne veille méthode des oreilles de lapin ou de l'antenne. On avait une espèce d'affaire qui ressemblait à une corde à linge avec des piquants partout et on avait un petit moteur et on faisait tourner ça.

1527 Est-ce que c'est encore disponible ou bien s'il n'y a plus de transmission hertzienne?

1528 Mme LALANDE: Dans certains secteurs, non. Moi je sais bien que chez moi j'ai une tour, donc je n'ai pas de problème, mais dans certains secteurs aussitôt que tu t'en vas vers le nord alors ce n'est pas possible pour les autres.

1529 CONSEILLÈRE NOËL: Le signal de ne rend pas...

1530 Mme LALANDE: Tous ceux qui sont avec ExpressVu et Star Choice nous disent tous la même chose. Ce matin avant de quitter il y a quelqu'un qui m'a demandé quand on va avoir les nouvelles de Radio-Canada? Là j'ai dit, « Peut-être pas ce soir... ».

1531 CONSEILLÈRE NOËL: C'est qu'il existe aussi un système qui permet de passer des ondes hertziennes à la coupole, à la petite soucoupe si vous voulez. C'est un commutateur qui est installé et qui est disponible pour environ 20 dollars apparemment sur le marché. Alors en attendant, est-ce qu'il y a des gens qui sont au courant que ça existe ça?

1532 Mme LALANDE: Sûrement, sûrement.

1533 CONSEILLÈRE NOËL: Et est-ce qu'on s'en sert?

1534 Mme LALANDE: Écoutez, moi disons que ce que j'entends c'est qu'on ne l'a pas, et je veux dire est-ce que c'est parce qu'ils ne veulent pas ou ils ne le savent pas. Je ne crois pas. J'ai l'impression que ce n'est pas possible de l'avoir.

1535 CONSEILLÈRE NOËL: Maintenant est-ce qu'un solution en attendant que les problèmes de capacité soient résolus, une solution comme celle qu'on a entendue ce matin -- ce matin ou cet après-midi, je ne pourrais pas me rappeler -- le poste 298 de... prenons Star Choice parce que c'est eux qui sont passés ce matin. Ils disent pouvoir éventuellement offrir la partie de nouvelles locales de toutes les stations régionales dans les différents fuseaux horaires un à la suite de l'autre sur leur poste 298 étant donné que le reste de la programmation est une programmation presqu'entièrement réseau.

1536 Est-ce que ça serait une solution alternative en attendant qu'il y ait de la disponibilité sur les transpondeurs pour monter le signal de Radio-Canada Ottawa?

1537 Mme LALANDE: Moi je pense que les nouvelles on doit les prendre au moment où elles passent.

1538 CONSEILLÈRE NOËL: Mais c'est justement ce que ces gens-là proposaient, c'est qu'à l'heure où la nouvelle est diffusée sur le poste régional, sur la station régionale de Radio-Canada, elle est reprise sur ce canal 298...

1539 Mme LALANDE: En même temps?

1540 CONSEILLÈRE NOËL: En même temps et ensuite à Winnipeg une heure plus tard, à Edmonton deux heures plus tard, à Vancouver trois heures plus tard... plus tôt. Je m'en allais vers l'est là moi.

1541 Alors est-ce que vous pensez que c'est une solution qui à moyen terme en attendant que la capacité soit disponible sur les transpondeurs... vous avez entendu ces gens-là. Je ne sais pas si vous étiez ici ce matin.

1542 Mme LALANDE: Non, je n'étais pas là.

1543 CONSEILLÈRE NOËL: Ils nous ont parlé de la Ferrari qu'ils avaient achetée en l'an 2000 et qui n'a pas encore été livrée et pour laquelle ils ont payé 42 millions. Vous comprenez que le satellite est encore dans les ateliers de construction de Boeing â Seattle. Alors quand ça va être lancé, il y aura éventuellement de la capacité additionnelle, mais entre-temps qu'est-ce que vous voyez comme solution intérimaire?

1544 Mme LALANDE: J'imagine que ça s'applique avec ExpressVu aussi ça?

1545 CONSEILLÈRE NOËL: Bien ExpressVu leur deuxième oiseau est déjà dans les airs. Malheureusement, il lui manque quelques plumes. Il a perdu des plumes dans son envol. Apparemment sa capacité est handicapée par des pannes qui sont irréversibles parce qu'on ne peut pas envoyer quelqu'un. Le réparateur Maytag ne se rend pas tellement dans ce coin-là. Il n'y pas beaucoup de capacité de se rendre. Alors leur capacité aussi est moindre que celle qu'ils avaient envisagée, mais je vous parle de Star Choice parce qu'on a parlé de Star Choice ce matin.

1546 Mme LALANDE: Moi je pense que ces grosses compagnies-là, je crois qu'ils vont inventer toutes sortes de choses pour ne pas le donner. C'est ma version à moi. C'est tellement facile de dire, « Je ne suis pas capable. Je vais être capable plus tard. Est-ce qu'on peut faire ci? Est-ce qu'on pourrait passer par tel moyen? ».

1547 Quand on veut quelque chose et si on veut répondre à une population qui en a besoin, moi je pense qu'on peut le faire. Maintenant je dis ça peut-être pas en connaissance de cause parce que dans ce domaine-là vous accepterez mon ignorance. C'est certain que je ne suis pas une spécialiste, mais moi j'ai appris dans mon bon sens de préfet que quand on veut avoir quelque chose et quand on veut répondre à une population francophone qui le demande, qui en a besoin et il faut leur fournir ce dont ils ont besoin dans le monde rural. Vous avez certainement un rôle majeur à jouer. Ce n'est pas pour rien que vous vous appelez le CRTC. Le « C » il me semble que ça veut Canada, donc à ce moment-là vous êtes sensés être capables d'inciter ces compagnies-là à trouver des solutions.

1548 On peut en trouver toutes sortes de petites choses, mais moi je crois qu'il y a certainement une possibilité de le faire et il faudrait pousser pour que ce soit la bonne façon de le faire et non pas passer par toutes sortes de...

1549 CONSEILLÈRE NOËL: Maintenant, madame Lalande, je vous ai entendu me dire tout à l'heure que vous aviez une tour avec un petit moteur. Donc...

1550 Mme LALANDE: Non, moi j'ai l'ancienne tour. C'est celle...

1551 CONSEILLÈRE NOËL: Accrochée après la maison qui a l'air d'une corde à linge.

1552 Mme LALANDE: Moi j'ai celle-là.

1553 CONSEILLÈRE NOËL: Mais il n'y pas de petit moteur. Vous n'avez pas besoin d'un petit moteur.

1554 Mme LALANDE: Non, j'en n'ai pas besoin. Je capte les nouvelles de Radio-Canada.

1555 CONSEILLÈRE NOËL: Madame Lalande, si vous étiez d'une abonnée d'une des deux entreprises...

1556 Mme LALANDE: Je ne serai jamais une abonnée ni de l'une, ni de l'autre.

1557 CONSEILLÈRE NOËL: Mais si vous étiez une abonnée d'une des deux entreprises de satellite, est-ce que vous accepteriez volontiers qu'on enlève une chaîne de programmation pour la remplacer par la chaîne régionale de Radio-Canada Ottawa?

1558 Mme LALANDE: Qu'on conserve les chaînes francophones chez nous. On en a besoin. On n'en a pas beaucoup, vous savez. Il y a beaucoup plus de chaînes anglaises qu'il y a de chaînes françaises.

1559 CONSEILLÈRE NOËL: Je suis d'accord. Mais supposé que vous étiez abonnée...

1560 Mme LALANDE: Je ne veux pas qu'on m'enlève rien, madame. Je veux qu'on me donne en plus les nouvelles régionales de Radio-Canada.

1561 CONSEILLÈRE NOËL: C'est ce que je voulais savoir.

1562 Je vous remercie.

1563 Mme LALANDE: D'autres questions?

1564 LE PRÉSIDENT: Merci beaucoup, madame Lalande, et merci pour les cartes.

1565 Le prochain article, monsieur le secrétaire.

1566 M. LeBEL: Merci, monsieur le président.

1567 L'intervention comparante de la commissaire aux langues officielles nous sera présentée par M. Michel Robichaud et s'appliquera aussi aux articles 2 et 3.

1568 Monsieur Robichaud, vous disposez de dix minutes pour faire votre présentation.

INTERVENTION

1569 M. ROBICHAUD: Mesdames, messieurs. Je vous remercie de me recevoir à cette audience et d'avoir accepté d'entendre l'avis du Commissariat aux langues officielles.

1570 La commissaire aux langues officielles a pour mandat, en vertu de la Loi sur les langues officielles, de prendre toutes les mesures visant à assurer le maintien et l'épanouissement des collectivités de langues officielles au Canada et l'égalité du français et de l'anglais dans la société canadienne.

1571 Dans ce contexte, la commissaire veut donner suite aux doléances d'abonnés de Bell ExpressVu et de Star Choice qui n'ont pas accès à leur canal régional de Radio-Canada.

1572 Au nom de la commissaire aux langues officielles, je voudrais faire part au Conseil de la radiodiffusion et des télécommunications canadiennes de nos commentaires et recommandations concernant le renouvellement des licences de radiodiffusion de Bell ExpressVu et de Star Choice.

1573 Le Commissariat aux langues officielles voudrait attirer votre attention à une situation inéquitable qui touche un grand nombre de francophones et de francophiles d'un bout à l'autre du pays, soit l'absence de nombreux signaux régionaux de la Société Radio-Canada dans les programmes diffusés par satellite.

1574 Comme vous le savez, pour se développer et s'épanouir une communauté a besoin d'avoir accès à des services de qualité administrés dans sa langue. En particulier, elle doit disposer d'instruments culturels propres au maintien de son identité collective.

1575 Ce besoin s'accroît davantage lorsque cette communauté vit en situation linguistique minoritaire. Au nombre de ces instruments essentiels, l'on retrouve en premier lieu les médias de communication et, plus particulièrement, la radio et la télévision.

1576 Pour la majorité des francophones vivant en milieu minoritaire, la station locale de Radio-Canada est la seule à produire un bulletin de nouvelles régionales, à faire la promotion des événements de la communauté et, plus généralement, à participer à la vie de celle-ci.

1577 En effet, Radio-Canada, en tant que radiodiffuseur national, est l'une des principales institutions culturelles du pays et un pôle d'identification fondamental. Dans le cadre de son mandat, il lui incombe de promouvoir les cultures canadiennes françaises et anglaises.

1578 Ainsi, Radio-Canada tend à assurer le rayonnement de l'identité et de la diversité canadienne tout en répondant aux besoins particuliers des différentes régions. Radio-Canada jette des ponts entre les Canadiens et les Canadiennes, entre les régions et entre les deux communautés linguistiques.

1579 Pourtant, seule une faible partie des stations régionales est disponible par satellite. Trois des sept stations régionales situées à l'extérieur du Québec sont offertes par Bell ExpressVu. Quant à Star Choice, à notre avis, la situation n'est pas acceptable. Seulement deux signaux locaux sont offerts dans tout le Canada.

1580 Cette situation oblige les francophones vivant en milieu minoritaire de faire un choix difficile. Voulant bénéficier du satellite, notamment pour accéder à une plus grande variété de chaînes, ils sont forcés d'abandonner l'accès à la chaîne qui reflète le mieux leurs réalités régionales et l'identité canadienne.

1581 Nous sommes heureux de constater que la nouvelle programmation de Bell ExpressVu comprend désormais les signaux régionaux de Radio-Canada diffusés à partir de Québec et de Winnipeg et qu'elle est actuellement en pourparlers avec SRC afin d'y joindre les signaux régionaux en provenance d'Ottawa-Gatineau, d'Edmonton et de SRC Ontario à Toronto.

1582 Pourtant Bell ExpressVu avait déclaré en l'an 2000 qu'elle envisageait de diffuser avant la fin de l'année 2001 les signaux en provenance de Vancouver, de Gatineau, de Québec et des provinces atlantiques.

1583 Or, nous arrivons à la fin de l'année 2003 et les signaux régionaux de la SRC en provenance de la Capitale nationale ne sont toujours pas disponibles. La région de la Capitale nationale compte pourtant une large population francophone et bilingue. Vous conviendrez avec moi qu'il est tout à fait inacceptable qu'au sein de la capitale d'un pays officiellement bilingue les résidents n'aient accès aux signaux locaux de leur radiodiffuseur national qu'en anglais seulement.

1584 Nous avons d'ailleurs reçu des lettres de protestation à ce sujet de citoyens de Chelsea et de Papineauville. De même, le signal local de Toronto où vivent de nombreux francophones n'est pas toujours diffusé. La région de Québec, quant à elle, vient tout juste d'obtenir la transmission du canal local de Radio-Canada à la suite, entre autres, d'interventions répétées de la commissaire aux langues officielles, et du maire de la Ville de Québec, pourparlers qui se sont déroulés sur plus de quatre ans.

1585 Devant la lenteur de Bell ExpressVu à s'acquitter de ses propres engagements, nous pouvons craindre que si la transmission de l'ensemble des signaux régionaux ne fait partie des conditions de renouvellement de sa licence, les projets d'élargissement de l'offre de Bell ExpressVu ne se concrétiseront pas avant plusieurs années.

1586 As for Star Choice, the Commissionaire of Official Languages notes that little progress has been made. In Public Notice 2001-25 published on February 12, 2001, the CRTC stated that it expected satellite service providers to offer CBC regional signals in both official languages and that it would take their efforts into account when the time comes to renew their licences.

1587 In spite of this notice, Star Choice added only one signal to its basic package, bringing the number of CBC regional signals in French to two: One from Montreal and one from Moncton. In its application to review its licence, Star Choice has not committed to improve the situation.

1588 In its report dated February 2003, the role and responsibilities of the CRTC in developments in the area of official languages in Canada, the House of Commons Standing Committee on Official Languages also pointed out the shortcomings of the French-language services offered to francophones outside Québec and requested that the CRTC work with satellite service providers to correct the situation. I quote:

"In order to preserve, develop and ensure the vitality of minority official language groups, regional programming of the public broadcaster, both on radio and television, must be made available. The Committee expects satellite broadcast service providers to offer signals to the national public broadcaster in both French and English."

1589 In its response to the Standing Committee report, the Government of Canada agreed that Bell ExpressVu and Star Choice should distribute signals from all French CBC regional stations since this recommendation is in response to one of the most common complaints by subscribers who are unable to receive the French CBC regional service closest to them.

1590 The government also supported the Standing Committee's recommendation that the CRTC, like the CBC, be added to the list of designated federal institutions for the implementation of section 41 of the Official Languages Act because of the influential role of the media in Canadian society and the influence the CRTC has through its regulations.

1591 The CRTC, in our view, should seize this opportunity provided by the renewal of Bell ExpressVu and Star Choice broadcasting licences to correct the inequity that French-language speakers have to face and to take a significant role in the promotion of Canadian identity.

1592 Given the slow progress in the matter, the Commission of Official Languages recommends that the CRTC require Bell ExpressVu and Star Choice to transmit regional signals from all French CBC regional stations and that this clause be added as a condition for renewing their licences.

1593 Merci.

1594 LE PRÉSIDENT: Merci.

1595 Madame Noël.

1596 CONSEILLÈRE NOËL: Bonjour, monsieur Robichaud.

1597 M. ROBICHAUD: Bonjour, madame.

1598 CONSEILLÈRE NOËL: Est-ce que vous avez assisté à l'audience ce matin?

1599 M. ROBICHAUD: Non, madame.

1600 CONSEILLÈRE NOËL: Vous venez tout juste d'arriver. Alors je vous ai entendu dire dans votre présentation orale que les abonnés de Star Choice et d'ExpressVu ont été forcés d'abandonner l'accès à leur chaîne SRC locale.

1601 Est-ce que... je trouve que c'est fort comme affirmation. Vous n'êtes peut-être pas un technicien, mais est-ce que vous savez que la SRC locale peut toujours être captée par voie hertzienne, c'est-à-dire qu'il y a des gens qui n'ont aucun système de distribution et qui captent les signaux de la SRC avec des oreilles de lapin ou avec une antenne un petit peu plus grosse qui ressemble à un paratonnerre. Il y en a même avec de petits moteurs, moi ce que j'avais chez moi.

1602 Je ne pense pas que le fait d'avoir une coupole sur le toit de la maison nous empêche de capter les signaux pas ondes hertziennes. Il suffit d'avoir un petit appareil avec un petit bouton, un interrupteur, ou un commutateur, dans ce cas-là c'est vraiment un commutateur, pour pouvoir passer de la captation par satellite à la captation par voie hertzienne. Alors c'est pour ça que je trouve ça un peu fort quand vous dites qu'ils sont forcés d'abandonner l'accès à leur signal.

1603 Pouvez-vous commenter là-dessus?

1604 M. ROBICHAUD: Oui. Une fois qu'ils ont pris la décision de vouloir capter plus de signaux, plus de canaux et que dans ce contexte-là on veut améliorer la réception ou qu'on veut avoir plus de choix, à ce moment-là on vit avec ce qui est présenté. Nous ce qu'on dit c'est qu'on ne devrait pas être obligés dans un contexte de ne pas avoir accès quand on l'a de façon régulière en ayant une technologie un peu plus ancienne, si vous voulez, mais chacun a la respectabilité, je crois, dans le réseau de fournir, selon les façons de faire, soit satellite ou par signaux normaux, de fournir la programmation dans les deux langues selon la réglementation qui est produite.

1605 CONSEILLÈRE NOËL: Qu'est-ce que vous faites de la question de capacité des systèmes actuels? Ce sont des transpondeurs. Il y a un nombre X sur le satellite. On ne peut pas en rajouter.

1606 M. ROBICHAUD: Je ne peux pas commenter sur la capacité, madame. Je ne connais pas les raisons qu'on vous donne, mais quand on fait des engagements -- et on en a fait des engagements -- et qu'on ne les respecte pas, je me demande si c'est une question de capacité.

1607 CONSEILLÈRE NOËL: Qu'est-ce que vous pensez de l'approche qui a été suggérée ce matin par Star Choice qui, depuis l'an 2000, attend le lancement, d'après ce qu'ils nous ont dit, du satellite Anik F2. Pour augmenter leur capacité et pouvoir diffuser d'autres stations, ils proposent de regrouper la partie purement régional de la diffusion de la SRC sur un canal qui serait le 298, et qui reprendrait à l'heure des nouvelles régionales d'Ottawa, par exemple, la programmation de la SRC Ottawa, qui ferait la même chose à l'heure des nouvelles régionales de Winnipeg ou d'Edmonton ou de Vancouver.

1608 Est-ce que dans l'intérim, en attendant qu'Anik F2 sorte des usines de Boeing et fasse son grand voyage dans le ciel, est-ce que ça vous semble une solution qui est acceptable?

1609 M. ROBICHAUD: C'est certain que c'est un progrès par rapport à la situation actuelle, mais ce que je crains c'est que ça devienne la façon de faire et, dans ce sens-là, avec une réglementation qui donnerait un délai assez ferme, on pourrait à ce moment-là envisager une situation beaucoup plus normale.

1610 CONSEILLÈRE NOËL: Est-ce que vous pensez que c'est absolument nécessaire que toutes les stations régionales de la SRC, dont une partie seulement de la programmation se différentie de la programmation réseau, est-ce que c'est absolument nécessaire que toute la programmation de toutes les stations régionales soit reprise au complet? Parce qu'une fois que c'est sur le satellite, vous pouvez choisir d'écouter Radio-Canada Montréal, Ottawa, Winnipeg, Edmonton, Vancouver.

1611 Est-ce que c'est nécessaire qu'il y ait une duplication complète de tous ces signaux-là d'après vous?

1612 M. ROBICHAUD: Nous on parle de la programmation régionale ou locale, et dans ce contexte-là je crois que chacune a sa spécificité. Pour ce qui est de la programmation plus nationale, à ce moment-là il y a d'autres solutions mais je ne connais pas la technologie à ce point-là pour pouvoir trouver une solution à ces questions-là.

1613 Nous ce qu'on veut et ce qu'on dit c'est que dans les communautés et dans les régions qui sont éloignées en particulier, qu'on puisse avoir accès à la programmation locale par l'entremise du satellite.

1614 CONSEILLÈRE NOËL: Je n'ai pas d'autres questions. Je vous remercie.

1615 LE PRÉSIDENT: Merci.

1616 Mr. Robichaud, this morning I gather you weren't here. We did ask Star Choice to provide a report to us at the reply stage in this proceeding which we will be later this afternoon on their plan for carrying SRC signals.

1617 MR. ROBICHAUD: Thank you very much.

1618 THE CHAIRPERSON: So you may be interested in that.

1619 Thank you very much.

1620 We will take a break now for 15 minutes. I should advise you that it's our intention to complete all phases of the Star Choice application today which may go beyond six o'clock.

1621 We will start with the ExpressVu application tomorrow morning at 9:30, so for purposes of your planning.

1622 Nous rependrons dans 15 minutes.

--- Upon recessing at 1620 / Suspension à 1620

--- Upon resuming at 1645 / Reprise à 1645

1623 LE PRÉSIDENT: A l'ordre, s'il vous plaît. Order, please.

1624 Monsieur le secrétaire.

1625 MR. LeBEL: Thank you, Mr. Chairman.

1626 The next appearing intervention will be presented by Pelmorex Communications, M. Pierre Morrissette et M. Luc Perreault. Vous disposez de dix minutes pour faire votre présentation.

INTERVENTION

1627 M. MORRISSETTE: Merci.

1628 Good afternoon, Mr. Chairman, Commissioners, members of the Commission. My name is Pierre Morrissette and I am the President and CEO of Pelmorex Communications Inc. With me today is Luc Perreault, our Vice-President, Affiliate and Government Relations.

1629 Our appearance today, as well as our appearance before you later in these proceedings, is quite out of the ordinary for Pelmorex.

1630 I am hard pressed to recall when we have ever filed comments on matters related to another licensee's renewal. The fact that we are here today speaks to the importance of the issues we will be raising with the Commission.

1631 The Commission should note that the issues we want to address are more closely related to good governance and the establishment of a level playing field between not only cable and satellite distribution undertakings, but also between BDUs and programming services.

1632 During this presentation, we will focus on issues concerning carriage, distribution and audit rights. Our comments will apply to each of Star Choice and ExpressVu.

1633 Later, after the ExpressVu presentation, we will appear a second time to address issues that are more relevant to ExpressVu's licence renewal. I hope this clarifies our plans.

1634 Dans un premier temps, je voudrais souligner que Pelmorex appuie spécifiquement les positions et commentaires de l'ACR sur les points suivants : : les droits de vérification, les règles de distribution et d'assemblage, la lutte au piratage et l'interactivité.

1635 Before I begin addressing these issues, I would like the Commission to know that we value our relationship with Star Choice and that we wish that they will succeed in the future in growing their company with the help of content providers like ourselves.

1636 Pelmorex is fully prepared to develop and implement innovative approaches with Star Choice in order for both companies to enjoy the success that can grow from the establishment of win-win strategies.

1637 As a general principle, Pelmorex believes that the rules governing distributors should apply to all, regardless of the technology used by the BDU. In short, distribution should be technology neutral. We believe that all BUDs should be treated fairly and should have the same obligations to support the Canadian broadcasting system.

1638 However, our support for regulatory symmetry between BUDs is conditional that it does not become a strategy to move to the lowest common denominator in terms of regulatory responsibilities.

1639 We believe the carriage, distribution and linkage rules for terrestrial distributors, which have been developed over many years, and with compromises and concessions by all parties, be the starting framework.

1640 The more relaxed framework under which Star Choice and ExpressVu operate was established so as to kick-start competition. That competition has indeed been kick-started and the relaxed framework should now be phased out.

1641 Mr. Chairman, we do not intend to address all the regulatory differences between terrestrial and DTH operators, but do wish to focus on one item of particular importance to Pelmorex, which is the matter of dual status carriage.

1642 As you know, Pelmorex owns and operates two services, The Weather Network and MétéoMédia, under a single CRTC licence. These services were first licensed in 1987 as dual status specialty services. Together they are among the most broadly distributed Canadian specialty services in Canada.

1643 The Weather Network and MétéoMédia are, and always have been, distributed on the basic service by all of our cable, DTH and MMDS affiliates. We are on basic everywhere because this is logically where our services belong. However, the privileges we enjoy do not come without their obligations.

1644 Our programming is live and, by condition of licence, 100 per cent Canadian. Also by condition of licence, we must spend 37 per cent of prior year's net revenues on Canadian programming. Our basic wholesale rate remains unchanged since 1993 at 23 cents, one of the lowest rates for a dual status basic service.

1645 Within these obligations, we operate two national services, incurring the costs of separate programming operations so as to better serve all Canadians in both official languages. The use of our own patented technologies enables The Weather Network and MétéoMédia to send unique local weather information to approximately 1,300 different locations across Canada simultaneously.

1646 To accomplish this, Pelmorex must supply and install capital equipment, at our cost, in each and every one of the BDU head ends. No other programming service is so technically complex. No other programming service, in our view, offers such value to Canadians and to the Canadian broadcasting system.

1647 We believe this contribution wold be seriously jeopardized, however, if Star Choice and ExpressVu were permitted to unilaterally move our or any other services to a tier and re-package them as they wish.

1648 Because of the size of these distributors, any change in our carriage status on DTH would have a material and precedent-setting impact on the ability of Pelmorex to meet its regulatory obligations as outlined above.

1649 In our view, it could also set off a chain reaction, with the larger cable operators demanding the same latitude in distribution. The CCTA intervention suggests as much. The end result would inevitably be a reduction in viewers and a compounding effect on the revenues of The Weather Network and MétéoMédia, potentially undoing the progress we have made over the years in building up our advertising revenues.

1650 If Pelmorex is to continue to invest and improve The Weather Network and MétéoMédia, there must be some reasonable expectation of stability. Our business plan, as filed with the CRTC in December of 2000 as part of our licence renewal application, made very clear our expectation of continued carriage on the basic service offering of all BDUs, including DTH operators.

1651 This, Mr. Chairman, was a fundamental assumption to our ability to continue our contributions to the system.

1652 Claims by ExpressVu that "the inherent advantages and flexibility of digital technology will be hobbled" by adoption of cable's carriage and distribution rules are exaggerated.

1653 To the contrary, Pelmorex believes that there is the opportunity to harness the advantages and flexibility of DTH's digital technology by working with programming services such as ours, not against them.

1654 Similarly, claims that the adoption of dual and modified dual status requirements would increase prices to consumers are again exaggerated. Several of the dual status services are already carried on the basic service offerings of both DTH operators. Those that are not are most often the same dual status services that have, for their own business reasons, also agreed to carriage in discretionary tiers on cable. We see very little impact on consumers, if any. What we do see, however, are large DTH operators and programming services such as ourselves on much more equal footing when it comes time to negotiate affiliation agreements.

1655 Therefore, Pelmorex is urging the Commission to implement the same carriage and linkage rules for DTH distributors as are applied to Class 1 cable undertakings.

1656 M. PERREAULT: Finally, I would just like to add a few comments concerning the issue of audit rights. We have carefully reviewed the CAB's audit framework proposal and see no reason why ExpressVu and Star Choice, or any other BDU for that matter who is acting in good faith, would not agree to the proposal.

1657 In the reply comments to interveners on this issue, ExpressVu and Star Choice characterize the audit framework as "unnecessary, or "premature" or "more properly a matter for negotiation", but they seem silent on the content of the proposal itself. So, Mr. Chairman, what is the real issue?

1658 Our own experience has shown that in almost every BDU audit undertaken by Pelmorex we have found material discrepancies. This problem is not limited to Star Choice or ExpressVu, although we have experienced considerable difficulties on occasion with each of thee operators in matters relating to audits.

1659 Given the size of Star Choice and ExpressVu, these "difficulties", if I might call them that, can represent hundreds of thousands of dollars. That has a significant and material impact on our company.

1660 The simple fact of the matter is that in the regulated marketplace in which we all operate, programming services must rely on BDUs to accurately and fairly remit payment to them after the product has been consumed by the purchaser. In these circumstances, the security we seek as a programming service under the audit framework is fair and, we are convinced, places no unwarranted burden on the BDU.

1661 Our experience has clearly demonstrated to us that audits are an essential tool to ensure we receive fair compensation. This is what we describe as good industrial governance.

1662 M. MORRISSETTE: In conclusion, Mr. Chairman, we believe that the matters we have raised today before you are vitally important to Pelmorex.

1663 As you know, we are not affiliated through ownership or otherwise with any Canadian distributor, broadcaster or program production company. We do not have a portfolio of programming services over which to spread our costs or cushion the impact of late or understated affiliation payments.

1664 We do not have ties to distributors that will help make us whole should we suffer changes in packaging and carriage. Instead we must rely on fair and equitable rules to ensure that The Weather Network and MétéoMédia are able to fulfil their obligations.

1665 For these reasons, we respectfully ask that:

the Commission establishes the same carriage and distribution rules for DTH distributors as are currently applied to Class 1 cable operators; and

1666 that Star Choice and ExpressVu be bound, either voluntarily or by condition of licence, to the CAB's proposed audit framework.

1667 Mr. Chairman, Commissioners, we appreciate this opportunity to express our views and would welcome any questions you may have.

1668 THE CHAIRPERSON: Thank you very much.

1669 Madame Wylie.

1670 CONSEILLÈRE WYLIE: Bonjour, messieurs, monsieur Morrissette, monsieur Perreault.

1671 Vous seriez d'accord avec moi que vous avez des préoccupations très particulières vis-à-vis Star Choice concernant l'interactivité si et quand la compagnie distribuera du contenu interactif, et vous avez des inquiétudes particulières sur les droits de vérification.

1672 Ensuite, les règles de distribution et d'assemblage, le statut, et cetera, sont des questions de politique très générale qui ne seront sans doute pas réglées cette fois-ci.

1673 Je suppose que vous êtes encouragés parle fait qu'à votre dernier renouvellement, si je me souviens bien, vous étiez la compagnie qui avez soulevé les problèmes d'interactivité et que le Conseil a pas longtemps après émis un avis public pour justement examiner cette question.

1674 Vous me suivez?

1675 M. MORRISSETTE: Oui, on vous suit.

1676 CONSEILLÈRE WYLIE: Alors je crois qu'aujourd'hui je veux surtout vous poser des questions sur les inquiétudes qui sont plus particulières ou plus spécifiques à votre compagnie qui est, premièrement, la mise en oeuvre de l'interactivité par Star Choice et l'inquiétude que vous avez que vous soyez assurés que la livraison du contenu interactif aux abonnés, du contenu interactive de MétéoMédia et du Weather Network soit de fait livrable à l'abonné par Star Choice quand et s'ils sont prêts à donner des contenus interactifs. Ça va?

1677 M. PERREAULT: Nos commentaires, madame Wylie, s'adressaient, comme on l'a dit au début, et pour Star Choice et pour ExpressVu.

1678 CONSEILLÈRE WYLIE: Oui, oui, je comprends, mais je ne sais pas si vous étiez là mais Star Choice a dit qu'ils n'offraient pas de contenu interactif en ce moment.

1679 Alors ce que vous soulignez dans votre mémoire écrit c'est que vous voulez vous assurer que le Conseil exige que quand et s'ils livrent des contenus interactifs, ils vous donnent le même accès que la compagnie se donnerait à elle-même ou ses affiliés et mettent à la disposition de votre service une capacité comparable et équitable.

1680 M. MORRISSETTE: En premier lieu, je voudrais juste citer qu'on prévoyait peut-être parle de façon un peu plus détaillée sur le sujet d'interactivité tel qu'il s'applique aux deux appliquants lors de notre intervention de demain.

1681 Malgré ça, nous reconnaissons que dans le cas spécifique de Star Choice qu'ils ont peut-être certaines limitations à date technologiques qui auraient peut-être retardé l'introduction d'un service interactif tandis ExpressVu, étant donné qu'ils opèrent déjà des services interactifs cela démontre que leur capacité technologique est en place actuellement.

1682 J'étais heureux ce matin d'entendre les représentants de Star Choice indiquer qu'ils voyaient le secteur d'interactivité comme étant une opportunité pour le futur. Ils ont même fait mention d'un service météorologique ce qui est naturel parce qu'un service météorologique c'est probablement une des premières applications logiques et populaires auprès des abonnés du côté interactivité.

1683 Alors on espère pouvoir travailler étroitement avec eux pour lancer des services météorologiques via l'interactivité dans le futur. Notre préoccupation, comme on va détailler un peu plus demain, c'est du côté des services interactifs face à ExpressVu.

1684 Aujourd'hui nos commentaires se concentrent sur deux sujets en particulier : les règlements qui s'appliquent au service DTH qui sont plus favorables que ceux qui s'appliquent du côté câble et dans notre cas on concentre surtout sur la question de « dual status » et « modified dual status ».

1685 Le deuxième sujet qu'on voulait mettre en phase aujourd'hui c'est du côté des droits de vérification.

1686 CONSEILLÈRE WYLIE: Évidemment, du côté de Star Choice si vous demandez au Conseil de s'occuper de cette question-là ou de cette préoccupation-là vous n'auriez peut-être pas les problèmes que vous allez nous dire demain dont vous avez eu l'expérience avec ExpressVu.

1687 Voilà pourquoi je vous posais des questions sur la question d'interactivité parce est-ce qu'il y a possibilité? Vous dites que vous avez eu des discussions, ou vous allez en avoir avec Star Choice. Est-ce qu'il y a des possibilités en aval de minimiser les conflits après au niveau technique? Parce que si je comprends bien vous utilisez une technologie qui vous est propre et dont vous détenez le brevet.

1688 Est-ce que c'est ça qui cause un problème, que le distributeur lui a une technologie autre?

1689 M. MORRISSETTE: Pour nous l'interactivité ça représente l'habilité d'offrir de la programmation locale à nos abonnés.

1690 Dans le monde de la câblodistribution on accompli ça via notre technologie qui est brevetée qui est de la technologie PMX qui nous permet d'offrir des services locaux dans les 1 300 systèmes qu'on dessert.

1691 L'information locale c'est l'essence de notre service. C'est l'équivalent de toute la programmation « prime time » d'un service national. Nos abonnés pour eux l'information qu'ils reçoivent de nous qui est la plus populaire de façon très considérable c'est l'information locale.

1692 Dans le monde numérique, la solution pour nous d'offrir de l'information locale c'est via l'interactivité et donc c'est évident qu'étant donné la prépondérance de le monde numérique des joueurs de DTH l'interactivité c'est la solution d'offrir l'information locale à nos abonnés de DTH. Alors c'est essentiel pour nous d'offrir l'information la plus populaire à ces abonnés-là.

1693 CONSEILLÈRE WYLIE: Mais, monsieur Morrissette, je comprends très bien l'importance. Ce que j'essaie d'adresser c'est, vous dites à la deuxième ou troisième page de votre document que « distribution should be technology neutral ». Donc vous ne voulez pas que la technologie que vous utilisez ou que le distributeur utilise soit un obstacle à la distribution.

1694 So I am asking whether technologically the fact that you have your own technology, is that what creates problems and can those problems be avoided by having discussions ahead of time? Is it because it's difficult for the distributor to work with your own proprietary technology?

1695 MR. MORRISSETTE: Our comments with regards to regulation being technology neutral in this instance has to do with in the context of our dual status carriage rules which have been relaxed with regards to direct-to-home services.

1696 COMMISSIONER WYLIE: Oh, it's not related to --

1697 MR. MORRISSETTE: It's not related to ITV.

1698 COMMISSIONER WYLIE:  -- the distribution or delivery of interactive --

1699 MR. MORRISSETTE: No. That quote relates specifically to the relaxed regulatory framework that relates to dual status services.

1700 COMMISSIONER WYLIE: As I explained earlier, your submission has very general comments, propositions that involve policy changes and, of course, we always are ready to hear you and two other matters are more specific. One is the importance to you of the delivery of interactive content in an equitable fashion by the distributor if the distributor is delivering contents of its own or of its affiliates, and the other is the audit rights. So these are the two I would like you to talk about.

1701 I know you say you are going to talk more tomorrow about the interactivity preoccupation you have, but you also say that if Star Choice starts delivering interactive content you don't want to experience inequity with them either.

1702 So I want to understand better what creates that inequity. Is it because the technological ability to deliver interactive content by the distributor is rendered difficult because your technology is different? That's why I was referring to technology neutral.

1703 MR. MORRISSETTE: I guess to preempt some of our comments from tomorrow --

1704 COMMISSIONER WYLIE: You don't have to engage in this conversation if you don't want to. I am following your comments that if and when Star Choice starts delivering interactive content, you want them to do it in an equitable fashion, and I am trying to understand what that goal is with regard to Star Choice hypothetically when they do offer interactive content. But if you want to wait until tomorrow, that's fine.

1705 MR. MORRISSETTE: No, I would be pleased to get into that today.

1706 For us, as I said before, distributing local information via direct-to-home satellite services is fundamental to us providing a complete service to our subscribers.

1707 The way to accomplish that is by way of ITV. Interactive television on direct-to-home would take two forms. The first has been labelled in the past as "walled garden" services. This is a package of services offered by the distributor compiling their own content and making it available to their subscriber base.

1708 The second form of interactive television is what has been called enhanced ITV, where as you go through a channel such as ours, which is The Weather Network or MétéoMédia that you can access an interactive menu behind that channel which would enable us through our own channel to provide local information to the subscribers on demand.

1709 When we look at our own services today through cable distributors, by far the most popular content is local content. When we look at ratings as provided by the audience rating firms such as Nielsen, recently they separated ratings between our cable universe and the direct-to-home subscriber universe.

1710 Because of the lack of localisation through direct-to-home our ratings on direct-to-home packages are about a quarter to a third of what they are through cable. Why? Because of the inability for us to provide the core content that we offer to our subscribers and that's local content.

1711 It just confirms the importance that local is what it's all about in our national service and the solution on digital direct-to-home services is by way of ITV.

1712 Now, in the case of Star Choice we understand that they are not there yet with ITV. We expect them to be there down the road. We don't have a problem with a distributor such as Star Choice or ExpressVu to provide content which includes weather in their walled garden package.

1713 What we want -- which is reasonable because our service, our licence is to provide local, regional, national and international weather information, weather-related information. It includes local road conditions; it includes local air quality conditions; it includes local warnings; it includes all kinds of local information pertinent to the needs of the local viewers.

1714 For us to be able to do that is through the form of enhanced ITV services. So we are hopeful that as Star Choice develops its interactive capabilities that we will be able to work with them not just on our own enhanced ITV services, but we would gladly work with them also in terms of supporting their walled garden services, but the basic minimum that we require is to provide enhanced ITV.

1715 You know, our service, which includes local, regional, national information, is offered to subscribers for 23 cents per month. That's our offering. That's our proposal. It's not to offer regional -- not even regional, just national programming for 23 cents, separate the core of what they want and offer it to them at a premium on a discretionary basis. Our offering is to all subscribers at 23 cents the full-meal deal which includes local.

1716 Our issue in the case of the ExpressVu service today is --

1717 COMMISSIONER WYLIE: You can talk about ExpressVu tomorrow, but you are getting a trial, so tomorrow you will be even more persuasive.

1718 Mr. Morrissette, what I am doing is looking at paragraph 15. I have read your entire submission and we will see you tomorrow, of course, after ExpressVu. In paragraph 15 in the written submission, at the second last sentence you say that you want fair and equitable access to the distribution system and you want the Commission to do something about it and you say:

"Such fair and equitable access should specifically include a requirement that ExpressVu provide licence programming services in an interactive capability that is comparable to the interactive capability that the DTH distributor has bestowed on its own or affiliated services."

1719 Now, what concerns me today is the next sentence:

"A similar obligation should be placed on Star Choice if and when they offer interactive services."

1720 I am trying to understand if we retained your preoccupations and tried to meet them what it is that we would require of Star Choice, if they have a seven-year licence. So that was my question.

1721 I know you are experiencing actual problems with ExpressVu, but you want the establishment of some type of commitment or expectation by the Commission.

1722 It's difficult because you know that there is a process going on at the Commission which was probably very much the result of your difficulties when you were here for renewal. So it would kind of trying to establish can we do something in this context and what should it be, or should it be in the context of the other process?

1723 MR. MORRISSETTE: With regards to Star Choice, our expectation and wish is that when they have an interactive television capability that we are provided access to provide enhanced interactive television services through our Weather Network and MétéoMédia channels when that capability is available.

1724 COMMISSIONER WYLIE: If I recall the process that is before us now is to try to define what part of the program which we hear from you is central to your service, what part of the programming should be considered interactivity that must be passed through.

1725 So I think I understand.

1726 MR. MORRISSETTE: In our case the programming that is pertinent is the programming for which our services have been defined which is weather-related local, regional, national information.

1727 COMMISSIONER WYLIE: Did you have the opportunity to have des discussions préalables avec ExpressVu à mesure que votre capacité interactive a grandi? Est-ce que vous avez eu la chance de discuter de vos attentes avec eux, comme vous en avez maintenant avec Star Choice?

1728 M. MORRISSETTE: Nos discussions avec ExpressVu ont commencé il y a plus de deux ans. Leur service a été lancé il y a environ, j'estime, un an et demi. Nos discussions continuent mais à date nous n'avons pas rencontré le succès de pouvoir fournir le service interactif qui complète notre service de télévision qui est distribué actuellement.

1729 CONSEILLÈRE WYLIE: Etes-vous d'avis que des discussions préalables avec Star Choice pourraient être fructueuses et minimiser ces problèmes-là ou est-ce que vous vous attendez à ce que le Conseil s'en mêle maintenant?

1730 M. MORRISSETTE: On croit que ça simplifierait les choses si des règles pour l'interactivité devenaient plus précises permettant l'accès à un service de programmation pour le nôtre, pour lequel l'interactivité est essentielle pour faciliter l'accès.

1731 Vous savez, la semaine dernière nous avons conclu une entente de principe avec Vidéotron pour fournir l'interactivité de la façon dont je viens de décrire tout à l'heure. C'est un genre de partenariat qui implique l'information météorologique sur leurs services de « walled garden », si vous me permettez de l'appeler ainsi, et qui nous permet d'offrir un service de « enhanced ITV » via des services MétéoMédia et de Weather Network.

1732 Tout cela c'est de la façon dont nous l'avons décrit lors de notre renouvellement de licence il y a deux ans, de la façon dont on a discuté avec ExpressVu depuis deux ans, et qu'on a décrit dans notre processus réglementaire récent face à ExpressVu.

1733 Alors nous avons réglé une entente de principe avec Vidéotron qui satisfait entièrement nos besoins.

1734 Également, nous avons conclu une entente il y a plus d'un an avec Rogers qui, encore une fois, rencontre entièrement nos besoins de ce côté-là. Alors le plus grand distributeur au Canada c'est conclu. Le troisième plus grand distributeur au Canada c'est conclu. Dans le cas de Shaw lorsque la possibilité va être disponible nous espérons pouvoir conclure une entente.

1735 Dans le cas d'ExpressVu, il y a eu des problèmes et des empêchements malgré notre volonté de pouvoir travailler avec eux.

1736 C'est la situation de notre progrès du côté de « interactive television » au Canada.

1737 COMMISSIONER WYLIE: That helps me understand. You are not necessarily opposed to the deployment of walled gardens. You just want equitable access to deliver enhanced, in your case local -- du contenu local -- which necessitates access to interactive even if it's the same area like weather. And so you have already some success or pattern as to what is acceptable.

1738 MR. MORRISSETTE: We have two concrete cases in hand contracted, negotiated, and one is fully implemented and one is the process of being implemented.

1739 In addition, I should say, we have had very positive discussions with Cogeco along the same lines. We only have one issue today in this whole area.

1740 COMMISSIONER WYLIE: And one that you may have, is what I was trying to get at, that it would be a good idea to negotiate before there is a problem with Star Choice as well.

1741 MR. MORRISSETTE: Absolutely. It becomes a question of having access when the capability is available.

1742 COMMISSIONER WYLIE: In a manner which you feel is equitable which you have defined a little more closely today.

1743 The other issue that is specific to Star Choice's renewal is this question of audit rights. I am aware that the CAB and some, I believe, programmers, including you, I suspect, have forwarded to the BDUs a plan, a ten-point plan, if I recall, which I believe is appended to the CAB intervention, to maybe regularize or normalize across the board audit rights and affiliation agreements, I suppose in the belief that that would go some way to minimizing the number of disputes that occur.

1744 Have you had any feedback or responses from the parties to whom you have forwarded this proposal? At least a reaction, even if they wanted nine points instead of ten.

1745 MR. MORRISSETTE: This ten-point program has been developed by the CAB and it has forwarded this to BDUs. We have taken note of the points that are raised and they are quite benign. They summarize practices that have been going on for many years.

1746 They just formalize what is a straightforward standard practice. You know, in our experience in the 15 years that our services have existed, we have been conducting audits on a regular basis and the track record is 100 per cent that through the course of audits discrepancies are identified and the track record has been such that they have been identified and resolved expediently.

1747 One of the reasons why we have included the mention of audit rights in these particular interventions is that it has been a little bit more challenging in the past few years in terms of applying audit rights which are contracted through our affiliation agreements with these two particular applicants.

1748 Now, I should note that we are very pleased to have resolved our audit matters with ExpressVu in the recent past but, you know, in order to be able to initiate our audits in both cases we had to seek regulatory support in order to enter the premises.

1749 In the case of Star Choice, the discussions in order to initiate the audit are still going on. We are patient and we are hopeful that they will be resolved, but it's a long arduous process.

1750 In the meantime, we have very clear clauses in our affiliation agreements that allow for audits and to have such tedious experiences in order to initiate these audits which have not been the case with all our other distributors in the past is interesting and has probably contributed to formulating -- because we are not the only ones experiencing these challenging experiences, has probably led to the formulation of these ten audit points and wanting to formalize this particular process which is fundamental to many, if not most, affiliation agreements already.

1751 COMMISSIONER WYLIE: When you say that you have contractual provisions in your agreement already, would you say that those ten points are already in your affiliation agreement, so it's just a question of how they are interpreted, or would it be helpful if they were integrated as proposed?

1752 MR. PERREAULT: To answer your question, Vice-Chair Wylie, in all of our affiliation agreements we have an audit clause. This audit clause survives the contract for a few years and it gives us the right to audit the BDU at least once a year.

1753 What we rely on are the generally accepted accounting practices. Since we have had problems with those two BDUs in defining what those practices were, the CAB has struck a committee to basically come down with a ten-point process and, as Pierre said earlier, I believe that this is fair and equitable for every party and it doesn't place any undue burden on the BDU because the service pays for all the audit fees, and what have you.

1754 COMMISSIONER WYLIE: But this framework would be in addition to your contractual provisions.

1755 MR. PERREAULT: Correct.

1756 COMMISSIONER WYLIE: What is it you would expect?

1757 MR. MORRISSETTE: It could be in addition or a substitute for it.

1758 COMMISSIONER WYLIE: Yes.

1759 MR. MORRISSETTE: You know, auditing a transaction is a business fundamental that exists everywhere. Individuals that go through the check-out counter, you compare the price paid versus the merchandise. Revenue Canada has a right to audit. A business that ships goods to a company, the receiving company will compare the goods against what was agreed upon. It's something that is fundamental in very business transaction, whether it's by a consumer or another business, that I know of without any exception.

1760 In the case of our industry, the means through which you confirm a transaction is through the audit rights. So it's exactly the same as what takes place at every check-out counter across Canada every day.

1761 So it's a fundamental. It should be something that everybody in our industry has a right to expect and to have a simplified set of ground rules that formalizes it just implements what should be a standard practice to begin with. As to why it's a standard practice with the vast majority of BDUs without any issue and a problem with a few exceptions is something that I guess is being addressed through this particular proceeding.

1762 COMMISSIONER WYLIE: So what you would envisage is what is called the framework for affiliate BDU audits to spell out the contractual rights you say you have in your agreement and perhaps for the Commission to require that any affiliation agreement have this, as amended or as enriched, whichever.

1763 Are you aware of whether BDUs have responded -- I guess we can hear from the CAB on that matter -- but have responded to the -- well, I have read replies, so I have a bit of an answer to my question.

1764 MR. MORRISSETTE: I am not aware of that, but I think if you had a straightforward, clear, simple set of rules, then it might reduce the number of occasions and the need for mediation before the CRTC with respect to audits.

1765 COMMISSIONER WYLIE: Thank you.

1766 I hope, Mr. Morrissette, I haven't made you tell ExpressVu ahead of time what it is you want to say tomorrow, but it may help.

1767 MR. MORRISSETTE: No, I have managed to, despite myself, save the best for last.

1768 COMMISSIONER WYLIE: You will have had a rehearsal, so you can't be completely angry with me.

1769 Thank you. These are the two matters that are more specific to Star Choice's renewal. Of course, we take notice of the other matters that are brought before us, but this is a particular process and I think it's important for us to stay within those parameters at this time.

1770 I seem to have talked more than you. Do you have anything else to say?

--- Laughter / Rires

1771 MR. MORRISSETTE: No. I guess with respect to the matter of the dual status matter, which I was not going to talk about tomorrow, we don't have an issue with regards to Star Choice in that respect, but the reason why we have raised that is that I guess when we signed our original affiliation agreement with ExpressVu it provided for basic carriage.

1772 Despite that, we were placed on a tier without having sought our consent. We resolved that matter, but after mediation with the CRTC process.

1773 ExpressVu in their written comments in this proceeding had indicated their intention about moving specialty services currently carried on basic to a tier. That's their stated goal. It's in writing. It's a clear indication and signal that they have given to us in the past.

1774 Our fundamental business model is to provide the widest distribution possible because of the nature of our service which is providing weather information, safety information, health information, information that is of not only great interest to the public but in the public interest and making it available to all subscribers through basic carriage.

1775 By doing that, we maintain a low rate because we offset that with a large volume. Because we are everywhere, our job and responsibility is to then grow our audiences and grow our revenues not through our fixed rate, because that's fixed, and we are not going to grow subscribers because the population is growing very slowly. So it's entirely through growing our ratings and growing our audiences.

1776 We are concerned that ExpressVu's intention is when they have the chance to eventually move us off basic and unless we have a dual status carriage, we have no leverage. We are one of the smallest players in the industry and we know that we are dealing here with the largest Canadian corporation in Canada. So we don't have a whole bunch of leverage.

1777 So for us the regulatory framework, particularly dual status, is ultimately a matter of very material importance to us, and not just to us, but to the subscribers that have access to our service.

1778 Not everyone of our subscribing households uses our service every week. Eighty or 85 per cent do, but in the course of a month or several months 100 per cent of our subscribing households use our service. So we are the most widely distributed service in Canada and because of the kind of information we provide, we are the most often consulted service of all the specialty television networks. It's because of the content we provide.

1779 So it gives us great concern to see in these written proceedings ExpressVu's intention to eventually try to move us off basic and without any leverage the only possibility is to having what exists with all other BDUs, excluding DTH, and that is dual status carriage so we can have a say in the matter.

1780 COMMISSIONER WYLIE: Thank you, Mr. Morrissette. You say that at least every month 100 per cent of the subscriber base watches you.

1781 I often worry about you because you are probably the service sworn at most often when you deliver bad news and rain on our picnics.

1782 Thank you, gentlemen.

1783 MR. MORRISSETTE: Yes, shoot the messenger is something that we hear often.

--- Laughter / Rires

1784 COMMISSIONER WYLIE: Not us. We never have that problem!

1785 MR. MORRISSETTE: But we aren't the recipient of that.

1786 COMMISSIONER WYLIE: Thank you, gentlemen.

1787 THE CHAIRPERSON: Commissioner Noël.

1788 CONSEILLÈRE NOËL: Peut-être juste pour mieux comprendre l'aspect de télévision interactive.

1789 Vous avez eu votre licence originale en 1987. A cette époque-là la distribution se faisait, si je comprends bien, la distribution ne se faisait qu'en mode analogique.

1790 M. MORRISSETTE: C'est un fait.

1791 CONSEILLÈRE NOËL: Je veux juste replacer pour être sûre de bien comprendre. Les techniques brevetées que vous avez développées vous ont permis d'offrir, par exemple, la météo locale de Sherbrooke à Sherbrooke; celle de Victoriaville à Victoriaville, et cetera, mais toujours avec le signal qui provient de la station -- je vais parler de MétéoMédia parce que j'écoute les mauvaises nouvelles en français seulement. Je n'ai pas besoin qu'on me les répète en anglais. Tous ces signaux-là proviennent de votre station-mère de Montréal et sont retransmis via ces technologies que vous avez développées pour distribution dans le système analogique. Ça ne fonctionne pas en numérique. Est-ce que c'est bien ce que j'ai compris? Ça ne peut pas fonctionner en numérique.

1792 M. MORRISSETTE: Ça fonctionne sur le câble en numérique tandis qu'ils offrent des services analogiques. Alors le service de météo peut capter quand même l'information locale qui a notre technologie brevetée.

1793 CONSEILLÈRE NOËL: Sur le câble numérique.

1794 M. MORRISSETTE: Sur le câble numérique. La contrainte c'est sur un service qui est 100 pour cent numérique comme le DTH et la solution c'est la télévision interactive.

1795 CONSEILLÈRE NOËL: Alors le câblodistributeur qui distribue des signaux numériques distribue également votre signal analogique. Donc on peut quand même capter à Sherbrooke, si j'étais abonnée numérique de Vidéotron à Sherbrooke, je pourrais capter l'information pertinente pour Sherbrooke.

1796 M. MORRISSETTE: C'est exact.

1797 CONSEILLÈRE NOËL: Mais comme Vidéotron n'est pas encore à Magog et qu'il n'y a pas de distribution en numérique je me contente d'un signal analogique à Magog. Par contre, si j'avais une coupole au lieu du câble du câblodistributeur j'aurais un service qui me donnerait la météo nationale.

1798 M. PERREAULT: C'est exact. Dans le cas de MétéoMédia c'est une météo disons nationale/régionale qui couvrirait essentiellement le Québec et le Nouveau-Brunswick francophone.

1799 CONSEILLÈRE NOËL: Je ne saurais pas qu'il fait moins 40 en me levant.

1800 M. PERREAULT: Vous le sauriez, mais ça vous prendrait beaucoup plus de temps parce que la programmation est beaucoup moins locale, donc le délai d'attente est un peu plus long que ce que vous avez sur MétéoMédia.

1801 CONSEILLÈRE NOËL: Un risque élevé pour ma santé personnelle.

1802 M. PERREAULT: Tout à fait.

1803 CONSEILLÈRE NOËL: Je vous remercie.

1804 M. PERREAULT: Merci.

1805 M. MORRISSETTE: Merci.

1806 LE PRÉSIDENT: Merci beaucoup, messieurs.

1807 Monsieur le secrétaire.

1808 MR. LeBEL: Thank you, Mr. Chairman.

1809 Global Television Network indicated that they will not be appearing. So that intervention will remain on file as a non-appearing item.

1810 Alors nous entendrons maintenant l'intervention déposée par Impératif français, M. Jean-Paul Perreault, Robert Bélanger, Céline Châteauneuf, Paul Morissette, Claude Lafrenière.

1811 Vous disposez de dix minutes pour faire votre présentation.

INTERVENTION

1812 M. PERREAULT: Bonjour, messieurs, bonjour mesdames.

1813 D'abord, dans un premier temps, j'aimerais vous présenter certains membres du conseil d'administration d'Impératif français.

1814 Vous avez ici à ma droite, M. Claude Lafrenière; M^e Robert Bélanger et Mme Céline Châteauneuf, tous membres du conseil d'administration.

1815 On tient d'abord à vous remercier d'avoir accepté de nous accueillir aujourd'hui et nous allons sans plus tarder débuter, si vous n'y voyez pas d'objection, notre présentation.

1816 Madame Françoise Bertrand déclarait en 1998, au mois de mai 1998, au Comité permanent des langues officielles :

« Lorsque la capacité numérique aura été déployée, les distributeurs seront en mesure d'offrir un plus grand nombre de bouquets de services et les abonnés pourront de leur côté choisir tous les services qui les intéressent dans la langue de leur choix, incluant, bien sûr, le français ».

1817 L'Article 3(1)(k) de la Loi sur la radiodiffusion déclare ce qui suit :

« Une gamme de services de radiodiffusion en français doit être progressivement offerte à tous les Canadiens au fur et à mesure de la disponibilité des moyens ».

1818 Si vous voulez, nous allons examiner la situation telle qu'elle existe dans le cadre des deux compagnies dont il est question aujourd'hui ici, Bell ExpressVu et Star Choice.

1819 Il est évident que Bell ExpressVu et Star Choice diffusent plus facilement et avec plus d'empressement les stations de langue anglaise que celle de langue française.

1820 Comparons, par exemple, la distribution des stations de la Société Radio-Canada à celles de la CBC. Ni Star Choice, ni Bell ExpressVu ne diffusent CBOFT, station desservant les régions de Gatineau et d'Ottawa. Quant aux stations de la SRC en provenance de Winnipeg, Regina, Edmonton, elles sont oubliés quoique ExpressVu annonce cette année l'ajout de la station de Winnipeg à sa grille.

1821 Pourtant, les deux titulaires diffusent la station de CBC d'Ottawa, CBOT, ainsi que les stations régionales de la CBC à partir de centres comptant moins de 10 000 habitants comme Dawson Creek et Terrace Kitimak.

1822 Vous remarquerez aussi que les deux titulaires diffusent -- et je vous demande de regarder le tableau qui apparaît ici là sur l'écran -- plus de stations états-uniennes que de stations canadiennes de langue française. Si vous portez attention, vous verrez, par exemple, que Bell ExpressVu, 232 stations de langue anglaise, si vous descendez en bas du tableau, dont 49 en provenance des États-Unis alors qu'elle ne diffuse que 48 stations de langue française.

1823 Star Choice, évidemment la situation est pire, 181 stations de langue anglaise, dont 45 en provenance des États-Unis, alors qu'elle ne diffuse que 38 stations de langue française.

1824 Ce qui saute aux yeux c'est que le nombre de stations états-uniennes, donc en provenance d'un pays étranger, dépasse toujours le nombre de stations canadiennes de langue française. C'est d'autant plus navrant qu'il y a déjà un contenu états-uniens très élevé dans la programmation de presque toutes les stations canadiennes de télé de langue anglaise, tant pendant les heures de grande écoute que pendant le reste de la journée.

1825 Le rôle du CRTC n'est-il pas d'encourager les réseaux à offrir un contenu canadien en toute logique? On s'attendrait que cet organisme encourage la diffusion de chaînes de télé canadiennes y compris celles de langue française, à commencer, bien sûr, par celles de la Société Radio-Canada.

1826 Les distributeurs allèguent la capacité ou, si vous voulez, le manque de place pour les canaux de langue française. Pourtant, ExpressVu a récemment trouvé pour élargir sa gamme de canaux en provenance des États-Unis, a trouvé de la place, sans compter les nouveaux canaux en hindi, en penjabi, en tamul, en polonais et en grec. Star Choice, de son côté, diffuse déjà les canaux en grec et en penjabi.

1827 De plus, la gamme des stations privées de radio de langue française n'est dans aucun cas très large. Star Choice n'en diffuse que six contre 45 de langue anglaise. Bell ExpressVu ne diffuse que deux stations privées de radio de langue française pour 12 de langue anglaise, et si vous regardez le tableau qui est projeté sur l'écran, vous remarquerez ce que nous venons de dire.

1828 Les observations suivantes portent particulièrement sur Star Choice qui devrait recevoir une attention plus particulière de la part du CRTC.

1829 Star Choice ne diffuse que deux stations de télé de la SRC, celle en provenance de Montréal et celle de Moncton. CBC Radio One est diffusée à partir de trois fuseaux horaires, par contre Star Choice ne réserve qu'une seule place à la Première chaîne de la SRC. Star Choice trouve pourtant de l'espace dans sa grille pour sept stations de radio en provenance de deux villes de l'État de Washington, Spokane et Seattle.

1830 Je vais laisser mon collègue, monsieur Bélanger, vous faire part des recommandations d'Impératif français.

1831 M. BÉLANGER: Alors quant aux recommandations, la première c'est que le CRTC exige la distribution de toutes les stations régionales de télé de la Société Radio-Canada et celles d'un plus grand nombre de stations régionales privées de langue française.

1832 Notre deuxième recommandation c'est qu'il y ait plus d'équilibre entre la diffusion de stations de télé de langue française et celle de stations de langue anglaise en provenance de l'étranger.

1833 Troisième recommandation, que le CRTC exige la diffusion de toutes les stations de radio de la Société Radio-Canada par satellite.

1834 Et la quatrième recommandation, c'est que le CRTC exige la diffusion d'un éventail plus élevé de stations privées de radio de langue française.

1835 Je vous remercie.

1836 M. PERREAULT: Il va sans dire que c'est avec plaisir que nous répondrons à vos questions.

1837 LE PRÉSIDENT: Merci beaucoup, madame, messieurs.

1838 Madame la conseillère Noël.

1839 CONSEILLÈRE NOËL: Bonjour, monsieur Perreault, monsieur Bélanger, madame, monsieur.

1840 Vous dites, monsieur Bélanger, que le CRTC devrait exiger la diffusion de toutes les stations de radio de la SRC sur les deux satellites, Bell ExpressVu et Star Choice.

1841 Est-ce que vous pouvez me dire combien il existe de stations de radio de la SRC?

1842 M. BÉLANGER: Les stations régionales.

1843 CONSEILLÈRE NOËL: Moi ce que je lis dans votre document écrit c'est toutes les stations de...

1844 M. BÉLANGER: Régionales de télé.

1845 CONSEILLÈRE NOËL: Non. Vous je vous parle de radio. Je ne vous parle pas de télé. Votre troisième recommandation c'est que le CRTC exige la diffusion de toutes les stations de radio de la SRC sur satellite. Il y en a combien?

1846 M. PERREAULT: Madame, le nombre précis je ne saurais vous le dire, néanmoins je pense qu'il est assez évident que lorsque vous avez des compagnies comme Bell ExpressVu et Star Choice qui trouvent de la place malgré le fait qu'elles invoquent des problèmes de capacité pour diffuser des stations de radio en provenance des États-Unis, et que lorsque vous regardez le tableau qui est actuellement affiché à l'écran ici présent et que Bell ExpressVu ne trouve qu'uniquement deux emplacements pour des stations privées de langue française et Star Choice cinq, alors qu'elle en diffuse 46 en langue anglaise, je pense que la recommandation d'Impératif français est facile à comprendre.

1847 Je pense qu'il y a un déséquilibre, ne serait-ce qu'en pourcentage, quant au reflet de ce que l'on ose appeler à certains autres endroits la dualité canadienne. Là il y a une sous-représentation et une sur-représentation des stations privées de langue anglaise versus celles de langue française.

1848 Quant au nombre précis, je pense que c'est une statistique que nous sommes incapables de vous fournir maintenant, mais néanmoins les statistiques que nous vous fournissons à l'heure actuelle sont en elles-mêmes assez éloquentes pour témoigner d'un manque de représentation, d'un manque de présence, d'une faiblesse d'intention de la part de ces compagnies dans la...

1849 CONSEILLÈRE NOËL: Monsieur Perreault, je vois, j'additionne les stations anglaises et françaises de radio qui sont distribuées par Bell ExpressVu et j'ai un total de 14.

1850 Est-ce qu'il n'est pas exact de dire que la SRC, la radio de Radio-Canada, la Chaîne culturelle, la Première chaîne, au total ont beaucoup plus que 14 stations de radio.

1851 M. PERREAULT: Oui. Vous savez, madame, et regardez-le de cette façon-là, regardez-le dans l'ensemble du portrait. Dans l'ensemble du portrait, si vous constatez, si vous remarquez ces deux compagnies, vous verrez qu'elles trouvent de la place pour les stations américaines. Alors que le CRTC a comme mandat de promouvoir le contenu canadien, pour quelle raison le CRTC n'utilise pas, si possible, son pouvoir pour inviter ces compagnies à accorder plus de place aux stations canadiennes de langue française, et même de langue anglaise, versus celles des stations américaines? Comme je le disais tout à l'heure, il y en a cinq, notamment chez Star Choice.

1852 CONSEILLÈRE NOËL: Chez Star Choice, mais vous n'en avez pas mentionné chez ExpressVu. Moi je vous parle d'ExpressVu. On voit qu'ils ont 14 stations de radio.

1853 Quelle capacité avez-vous envisagé qui serait disponible pour distribuer toutes les stations de radio? On parle toujours d'une entreprise de distribution de signaux principalement de télévision. Alors quelle capacité pensez-vous serait disponible pour distribuer toutes les stations de radio de Radio-Canada?

1854 M. PERREAULT: J'imagine, madame, que le CRTC n'aurait sûrement pas aucune objection, compte tenu de son mandat, de voir augmenter le nombre de stations dites canadiennes de langue française et canadiennes globalement, diffusées par ces compagnies quand on sait qu'il y a une partie de leur capacité utilisée pour diffuser notamment une très grande quantité de stations en provenance des États-Unis.

1855 Je pense que notre propos se situe en plein dans le mandat du CRTC. Ici on ne parle que de deux stations privées. Je pense qu'il y a au Canada français et au Québec sûrement des stations de langue française -- Montréal, Québec, Saguenay, Lac St-Jean, Sherbrooke, l'Estrie, Trois-Rivières, la Mauricie -- et à l'extérieur du Québec qui pourraient facilement aisément prendre la place de stations actuellement diffusées en provenance des États-Unis.

1856 Notre propos se situe en plein dans le mandat qui est celui du CRTC. Nous voulons un plus grand contenu canadien en nombre de stations ainsi qu'un plus grand contenu canadien au sein des stations existantes.

1857 Là-dessus, soit dit en passant, contenu canadien de la part de la SRC, Radio-Canada, je pense que cette chaîne est très exemplaire quant au contenu canadien, si je la compare, entre autres, à certaines chaînes ou stations, notamment par exemple de télévision de langue anglaise où le contenu américain est déjà très élevé.

1858 CONSEILLÈRE NOËL: Alors si je vous comprends bien le CRTC devrait demander aux deux entreprises de distribution par satellite de retirer de leur programmation des stations de télévision en provenance notamment des États-Unis et de remplacer le tout par la programmation... en remontant sur le satellite toutes les stations de radio de Radio-Canada.

1859 M. PERREAULT: Il n'en demeure pas moins qu'il est en soi étonnant que l'on se retrouve aujourd'hui un peu dans la même situation que celle qui a caractérisé la télévision analogique.

1860 Nous nous retrouvons, malgré le discours de Mme Bertrand en mai 1998, devant le Comité mixte, dans la même situation où on entend le CRTC invoquer le fait que déjà si les places sont occupées pour se faire refuser, ou laisser entendre qu'on pourrait se faire refuser la diffusion de stations canadiennes, et j'ajouterais parce qu'elles sont de langue française.

1861 J'ajouterais, madame, que les stations de langue anglaise étrangères qui sont diffusées chez nous, nous n'y avons pas d'objection, mais néanmoins nous avons des objections qu'elles occupent et obtiennent plus de place et d'importance en nombre que les stations canadiennes de langue française.

1862 Comment se fait-il que la station CBOFT n'est pas diffusée dans cette région-ci alors que l'équivalent anglophone de CBC, CBOt l'est? C'est une question pertinente. Pourquoi les francophones de cette région sont-ils traités comme des citoyens de second ordre ou de dernière classe alors que leurs compatriotes, et nous les félicitons, eux ont obtenu la diffusion de leur propre station de langue anglaise, et qu'en parallèle nous constatons que ces compagnies, dont une partie de leur existence relève du mandat du CRTC, continue à diffuser un très grand nombre de stations étrangères?

1863 A quelque part le problème de capacité que l'on invoque, comment se fait-il qu'il n'y a pas eu de problème de capacité, et je lisais les derniers communiqués de ces compagnies, comment se fait-il qu'elles n'ont pas invoqué le problème de capacité quand est venu le temps d'ajouter des stations en provenance des États-Unis, mais qu'aujourd'hui le CRTC, par vous, madame, invoque le problème de capacité pour expliquer le manque d'espace pour les stations canadiennes de langue française?

1864 Vous conviendrez avec nous que je suis particulièrement étonné d'entendre un propos comme celui-ci venant de la bouche d'une porte-parole du CRTC. Je m'attends, nous nous attendons davantage comme Québécois et comme Canadiens-français, à un discours favorisant la canadiennisation des ondes, et donc une place plus importante des stations canadiennes et que l'on ne nous laisse pas voir et entendre qu'elles auront moins de place parce qu'elles sont de langue française.

1865 Je regrette. Elles sont dans leur contenu très canadiennes. Elles le sont davantage, bien souvent, que les stations canadiennes de langue anglaise et elles le sont sûrement, madame, beaucoup plus que toutes les stations étrangères en provenance des États-Unis.

1866 CONSEILLÈRE NOËL: Monsieur Perreault, je ne parlais pas de stations de télévision. Je parlais exclusivement des stations de radio et je parlais de votre troisième proposition.

1867 M. PERREAULT: Oui.

1868 CONSEILLÈRE NOËL: Les stations de radio.

1869 M. PERREAULT: Nos interventions se situent dans l'ensemble de ce que nous offrent ces deux compagnies, madame, et dans le domaine de la télévision on ne peut quand même pas l'écarter. Moi je ne peux pas l'écarter. Ça fait partie de notre propos aujourd'hui.

1870 Dans le domaine de la télévision publique, il y a des stations régionales de Radio-Canada qui ne sont pas diffusées. Comment se fait-il qu'ici dans la région -- et je vous entendais tout à l'heure poser des questions en disant, « Oui, mais les gens peuvent utiliser des oreilles de lapin ».

1871 Madame, ce commentaire m'a tellement choqué que je me demande si demain le CRTC va offrir à ceux qui utilisent des oreilles de lapin la laine d'acier pour leur permettre de bien capter leurs stations de télévision ici dans la région. Ce propos me surprend tellement qu'en parallèle je sais que les gens de la région peuvent capter des stations en provenance des États-Unis, que nos compatriotes de langue anglaise, et bravo pour eux, peuvent capter le CBC, le CBOT et que nous on nous invoque des oreilles de lapin. Madame...

1872 CONSEILLÈRE NOËL: Monsieur Perreault, je parlais d'une solution intérimaire pour résoudre le problème de manque d'espace sur les transpondeurs qui existent à l'heure actuelle selon les entreprises qui sont devant nous aujourd'hui.

1873 Le fait que le satellite Anik F2 ne soit pas encore lancé et qu'il ne sera vraisemblablement pas en opération avant le mois d'août 2004. J'ai suggéré cette avenue-là pour comme solution intérimaire. Est-ce que c'est une solution intérimaire en attendant que les transpondeurs soient disponibles parce que, malheureusement, le satellite qui devait être lancé en 2000 est encore dans les ateliers de Boeing â Seattle à l'heure où on se parle.

1874 Est-ce qu'une solution intérimaire qui permette aux gens d'utiliser un commutateur A-B, ou une autre technologie leur permettant de capter leurs stations régionales tout en bénéficiant d'un service de distribution par satellite est envisageable, selon vous?

1875 M. PERREAULT: Madame, moi ce qui m'étonne c'est qu'on en soit rendus là. Comment se fait-il, et bravo CBOT, que l'anglophone de Vancouver peut capter CBOT et avec tout l'effet de rayonnement de cette station et de la région à l'extérieur de la région pan-canadienne? Comment se fait-il que la région en développement régional du côté de langue anglaise bénéficie de cet avantage-là alors que nos commerçants, nos gens d'affaires, eux doivent se limiter à une solution de ghettoïsation comme celle que vous proposez, un petit moment sur une chaîne ou encore des oreilles de lapin où ils auront peut-être la chance de voir les joueurs de hockey deux fois dans la même équipe parce qu'ils vont voir en double?

1876 Non, madame. Je n'achète pas ça. Je ne peux pas acheter ça et d'aucune façon que cette solution-là est de nous amener dans cette orientation, non, non. Je pense qu'on doit aller dans un discours de canadiennisation des ondes qui est celui du CRTC et ce que nous demandons et que l'on devrait, à mon avis, obtenir, c'est que les stations canadiennes régionales de langue française obtiennent de la part du CRTC et de ces compagnies canadiennes un traitement comparable à ce que les stations canadiennes de langue anglaise obtiennent et sûrement prioritaire par rapport aux stations étrangères.

1877 C'est ce que nous demandons et je pense que notre recommandation, notre propos, se situe en plein dans celui du mandat du CRTC.

1878 L'autre chose, quand vous nous parlez de cette solution, qui pour nous est carrément inacceptable, vous nous parlez du bulletin de nouvelles, mais qu'en est-il des émission de Radio-Canada, ici CBOFT, des émissions comme Impact, madame, des émissions comme Vue d'artistes, des émissions très canadiennes, à contenu très canadien, le Garage, Oh! en couleur, Magasine socioculturel, des Mots et des Mots? Ces émissions dans cette solution que vous nous offrez, parce qu'il y eu un manque de régulation dans les priorités accordées dans les diffusions en provenance des satellites par ces compagnies-là, vous nous proposez aujourd'hui une solution de ghettoisation à l'intérieur d'une chaîne où tous les bulletins de nouvelles se succéderaient.

1879 Vous conviendrez avec nous, madame, que moi je ne peux pas être très réceptif. Au nom des gens que nous représentons, je ne peux pas être très réceptif à cette solution-là. Si on en arrive là c'est parce qu'il y a eu un problème de régulation, et un problème de la part de ces deux compagnies-là.

1880 CONSEILLÈRE NOËL: Est-ce que vous êtes au courant, monsieur Perreault, que depuis le 15 octobre -- ça fait cinq jours -- on a trois nouvelles stations françaises disponibles sur le satellite de Bell ExpressVu?

1881 M. PERREAULT: Oui, bien sûr, on a pris connaissance du communiqué à l'effet de Bell ExpressVu et à l'effet d'augmenter. On a d'ailleurs indiqué par communiqué que c'était un pas dans la bonne direction, mais vous conviendrez avec nous, carrément insuffisant. Il y a encore des stations régionales de la SRC, il y a encore des stations de télévision privées qui ne sont pas diffusées par Bell ExpressVu, et je le mentionne en passant. Bell ExpressVu offre un meilleur service en français que Star Choice. Star Choice c'est lamentable.

1882 Bell ExpressVu offre un meilleur service, et je dois dire que le dernier communiqué de Bell ExpressVu a comme effet d'augmenter, et c'est un pas dans la bonne direction mais insuffisant. Il en manque encore. Il y a encore des gens qui ne peuvent pas capter dans leurs régions et à l'extérieur de leurs régions les nouvelles régionales de la Société Radio-Canada. C'est une télévision publique. Je pense qu'à mon avis, le CRTC par son mandat doit trouver une façon d'exiger de ces compagnies, si elles ne le font pas d'elles-mêmes, priorité aux stations canadiennes.

1883 CONSEILLÈRE NOËL: Je vous remercie, monsieur Perreault. Je n'ai pas d'autres questions.

1884 M. PERREAULT: Madame Noël, merci.

1885 LE PRÉSIDENT: Merci, madame, messieurs.

1886 Monsieur le secrétaire.

1887 MR. LeBEL: Thank you, Mr. Chairman.

1888 The next appearing intervention will be presented by Telesat Canada, Mr. Robert Power and Mr. Paul Bush.

INTERVENTION

1889 MR. BUSH: Telesat does not have a formal presentation. We, as requested by the Commission, are quite willing to answer any questions as DTH is a critical part of our business now and certainly into the future.

1890 THE CHAIRPERSON: Thank you, gentlemen.

1891 A few questions pertaining to an issue of capacity, availability, and so forth, that you, no doubt, overhead became issues in the Star Choice presentation.

1892 First of all, I don't know whether you have a copy of the Star Choice oral presentation.

1893 MR. BUSH: Yes, we do.

1894 THE CHAIRPERSON: There are a number of diagrams that are attached to it. I would ask you to turn to the -- first of all, actually on pages 8 and 9 there are descriptions, last bullet on page 8 and the first one on page 9, which describe the need for Star Choice to move from Anik E2 to E2R and then possibly the future move from F1 to F1R. Are those generally your understanding, not that we doubt Star Choice, but I just wanted to have a comment starting.

1895 MR. BUSH: Yes. Telesat procured a back-up satellite, an interim satellite prior to the launch of Anik F2 realizing there was going to be a delay and there were certain moves associated with DTH Star Choice in terms of shifting traffic and certainly costs associated with doing that.

1896 THE CHAIRPERSON: Where was that E2R satellite before?

1897 MR. BUSH: E2R is a satellite that is owned by Panamsat which is an American carrier, and we have leased the satellite for at least 12 months as a back up and a gap filler.

1898 THE CHAIRPERSON: And have you any plans with regard to F1R? What would that satellite be?

1899 MR. BUSH: Where would that satellite be?

1900 THE CHAIRPERSON: Which satellite would it be?

1901 MR. BUSH: That satellite is being manufactured by ASTRIAM, so a European consortium is building that now and that satellite will be replacing Anik F1 and that will be launched in the September timeframe of 2005.

1902 THE CHAIRPERSON: Now, if you could turn to the diagram called "Anik F2 construction delays". It represents a fairly accurate picture of the situation, would you say?

1903 MR. BUSH: I think the only thing I would do -- yes, what you see is that there are quarterly updates. Certainly we work very closely with Star Choice. It's critical and clearly a delay of a satellite has a major impact on their plans. So I think the top line indicates the meetings where we would have sat down, the original date being in early 2003, that we expected it to be in service.

1904 They are linked, Mr. Chair, in that the failure on Anik F1 that necessitated the need for us to build Anik F1R was detected, and at that point we delayed the launch until you see September 8th, September 27th, October 22nd. We were essentially looking at the third or fourth quarter of 2003.

1905 At that point, Boeing advised us that they required additional time in terms of quality assurance and testing and from our standpoint we had to make a change on the satellite and we certainly opted for a satellite that works and works well as opposed of rushing it through the factory.

1906 THE CHAIRPERSON: I see. So the current best estimate date for the operation date of F2 would be when?

1907 MR. BUSH: Is August of next year.

1908 THE CHAIRPERSON: What is your confidence level?

1909 MR. BUSH: Well, this week is the vibration testing on the satellite. So when you actually see the satellite everything is put together, and certainly from a marketing perspective you say, "Why can't that be launched?". There is a lot of testing. It's a lot of satellite. To provide DTH requires a fair amount of power, more power than we have seen before and as a big satellite there is a lot of testing and quality assurance that goes on between now, coupling with the launch vehicle, which will take place in the March timeframe next year and looking for an end of April, 1st of May launch.

1910 THE CHAIRPERSON: And then in operation by August.

1911 MR. BUSH: In operation by August, and to clarify the satellite, because we have services operating for Star Choice at both of the positions where Anik F1 and where Anik E2 are at, currently you have to launch it into another orbital slot and test. So we launch actually into another orbital slot, test, drift the satellite over, do all of the traffic transfers. So it is about a three-month or a 90-day period, as was discussed this morning with the Star Choice panel.

1912 THE CHAIRPERSON: So you are aware that there is a condition of licence deadline affecting Star Choice, December 31st of this year, with regard of the uplinking of small market stations.

1913 So your best estimate of the time period that would need to be bridged until F2 is available would be from the end of that condition of licence through August 2004?

1914 MR. BUSH: Yes, that's our plan, is to have the satellite in position by the end of August.

1915 THE CHAIRPERSON: Approximately eight months.

1916 MR. BUSH: Yes.

1917 THE CHAIRPERSON: Right. What other capacity would you have available for them for that eight-month bridging period?

1918 MR. BUSH: Well, E2R is a satellite that we have that we have that is bridging between Anik F2. It's fully loaded today and I think, as was answered this morning, there could be some shuffling around of traffic.

1919 We do not hold capacity open. Our job is to fill up the satellites. So what we do is actively market and sell the services on the satellite. If there was a requirement for capacity in the near term, we had looked at the potential of shuffling traffic around to be able to free up some capacity and that would probably be a maximum of two transponders that could be available between now and Anik F2, but it would require some shuffling of traffic. It would not happen overnight.

1920 THE CHAIRPERSON: Right. I don't know whether you have had the chance to examine the TQS intervention in this proceeding. I am thinking particularly of paragraph 30 of that presentation where they suggest a scenario of availability on Anik E2R.

1921 MR. BUSH: Yes. As I understand what TQS is saying, is that they have looked on a transponder-by-transponder basis and tried to assess what capacity would be or could be available.

1922 You can certainly look on a transponder-by-transponder basis and break out what is being used. What I don't understand is these are statistical multiplexers that are being used. So if we take a look today at what is being used, it might be different than what is being used in an hour or it might be different certainly than what is being used next week.

1923 So I can't comment beyond that, Mr. Chair, other than saying you certainly are able to look within signals, but in the case of Star Choice, because they do use statistical multiplexing, I am not sure what value that adds.

1924 THE CHAIRPERSON: Did I hear you say before that you thought there would, with shifting of traffic, be one to two transponders available?

1925 MR. BUSH: Yes, with some occasional use traffic that we would move off, we would lose that business. We would probably move it onto an American satellite with some shuffling of traffic that are currently on other transponders.

1926 We looked at the potential to squeeze and free up an additional two until Anik F2 was on station.

1927 THE CHAIRPERSON: I note in paragraph 39 of Star Choice's response to interventions that there is a statement that they have:

"... pre-paid Telesat for their capacity on Anik F2 and the acquisition of any additional capacity on E2R cannot be offset against such pre-payment, notwithstanding the delayed launch".

1928 Is that your understanding?

1929 MR. BUSH: Yes, they are two separate assets. I might add that in terms of the Canadian broadcasters that, unlike American counterparts that purchase protected space segment, where there a fairer premium for protected space in the U.S., in Canada all of the broadcasters, without exception, buy unprotected. So Telesat by virtue of its contacts and operating record has been able to provide back up, but that back up is not paid for by the broadcasters. It's a matter of us providing that in the event of a delay or a failure like we have seen in the case of E2.

1930 THE CHAIRPERSON: And the basis for pricing of the capacity that you are speaking of, what is that basis?

1931 MR. BUSH: The pricing of capacity that is mentioned here, is there is a condo arrangement that was struck with Star Choice. That condo arrangement was filed with the Commission, it was approved by the Commission and that is what we operate under.

1932 In the case of an E2R where it would be a short-term arrangement, we would really be leasing on terms and conditions associated with the spot market as to how transponders were selling, and rates for transponders go up and down depending on how much capacity we have and what the demand is.

1933 THE CHAIRPERSON: Right, and those market are set by demand in the market, in the North American market.

1934 MR. BUSH: Yes.

1935 THE CHAIRPERSON: At any given time?

1936 MR. BUSH: Yes. We certainly are under a price cap regime in Canada in terms of how we lease transponders, and certainly that is what guides us in terms of how we lease the existing transponders.

1937 THE CHAIRPERSON: But presumably any revenues that you might obtain for one to two transponders during the eight-month bridging period wouldn't push you seriously up against the price cap, would they?

1938 MR. POWER: You are correct because the price cap actually applies to one class of RF channel service, which is contract lengths of five years of longer.

1939 THE CHAIRPERSON: Right. I remember that.

1940 So the methodology is set by market. You presumably take into account the fact that you have, if you like, a diminishing asset, the satellite life, I suppose, and presumably dollars in above incremental costs are net contribution, are they not?

1941 MR. BUSH: Yes. I mean, obviously we are looking at the life of an asset. The biggest challenge is to try and get as high a fill factor as you can for as long a period on the satellite's life as possible.

1942 THE CHAIRPERSON: And you factor section 28 of the Telecommunications Act into your dealings with the broadcasters.

1943 MR. POWER: Section 28 in that it deals with the allocation of capacity amongst broadcasters?

1944 THE CHAIRPERSON: I wasn't thinking of that. I was thinking of the first part where essentially it's a defence against unjust discrimination that you are pricing in a manner that fulfils the objectives of the Broadcasting Act.

1945 MR. POWER: Paul, you can correct me if I am wrong, but the pricing that was discussed this morning is a part of the contract, I believe, for Anik E2R and so it's in line, I believe, with the contract prices that are currently being paid for the other channels on E2R. Now, in terms of additional capacity, as Paul said, there is some traffic that could be shuffled around to make transponders available, but insofar as section 28 is concerned, I think it would be a question of have we discriminated between one broadcaster and the other, and I don't believe this is really --

1946 I think the only other broadcasting type of user in this case would be occasional use customers.

1947 THE CHAIRPERSON: Right.

1948 MR. BUSH: Another thing I might add, Mr. Chair, is that when we procured this satellite that the best satellites that work for Canada are satellites that are designed for Canada. So when we went from -- F2 has 32 units to be used; E2R has 24. So we had to squeeze, cajole, move already to be able to fit in, even for the short period of time. So moving F2 from a Telesat perspective is absolutely critical as well. This is costing us money on a monthly basis. Leasing the satellite costs us capitalized interests. So by the time all is said and done, this satellite will be far in excess of what we ever thought it was going to be in terms of our cost base for that asset.

1949 So having said that, we did have to draw up the number of transponders and squeeze. It's not just a like for like. So we had to work with everyone of the customers on the satellite to be able to shift and move them around. Star Choice being the major one was certainly receptive to moving and squeezing their traffic and putting them in, but clearly we have not been able to deliver them the capacity that they would have wanted in 2003.

1950 THE CHAIRPERSON: For this bridging period, do you have any other method, other than your occasional use charges? Are there simply ad hoc arrangements that you would do for, as you say, spot market? Is stop market subsumed under occasional use, or is it a different --

1951 MR. BUSH: To put it in perspective, we have one transponder of occasional use.

1952 THE CHAIRPERSON: I see.

1953 MR. BUSH: And occasional use is sold by the 15-minute increments, so clearly if you have a full-period user, we would try and put a full-period user up, but even moving that occasional use off of a Canadian facility, they would most likely go to an American facility at that point. It would only free up one transponder. Out of the 24 transponders on Anik E2R, 12 of them are being used by Star Choice. In the other 12 we squeezed the remainder of our traffic that was carried on 32 transponders, we were able to squeeze in.

1954 THE CHAIRPERSON: Have you other contracts where you have full periods of months, less than a year?

1955 MR. BUSH: Not usually. Most of our contracts are longer term now, certainly with the Canadian broadcasters. The bulk of the broadcasters have signed up for long term.

1956 THE CHAIRPERSON: So it would basically amount to a negotiation between the two of you.

1957 MR. BUSH: For a shorter term lease, yes.

1958 THE CHAIRPERSON: And I certainly don't want to enter into the midst of that at this point.

1959 Thank you very much. That has been very helpful.

1960 MR. BUSH: Thank you.

1961 Monsieur le secrétaire.

1962 M. LeBEL: Merci, monsieur le président.

1963 La prochaine intervention comparante nous sera présentée par TQS Inc., M. Michel Carter, M. Guy Simard et M. Jean-Marc Fortier.

--- Pause

1964 M. LeBEL: Monsieur Carter, vous disposez de dix minutes pour faire votre présentation.

1965 Merci.

INTERVENTION

1966 M. CARTER: Merci beaucoup.

1967 Bonne soirée, monsieur le président, mesdames et messieurs les conseillers, et le personnel du CRTC. Mon nom est Michel Carter, président et chef de la direction de TQS.

1968 A ma droite, je vous présente M. Guy Simard, directeur général de TQS Saguenay, et à ma gauche, M. Jean-Marc Fortier, vice-président exécutif, services corporatifs de TQS.

1969 Nous vous remercions de l'opportunité qui nous est donnée d'exprimer nos demandes dans le cadre du renouvellement des licences de Star Choice.

1970 Permettez-nous de résumer nos représentations de la façon suivante :

1971 Star Choice doit distribuer les stations locales des grands groupes de radiodiffusion, et ce, en raison de l'économie générale de le Loi sur la radiodiffusion, de la décision récente du CRTC concernant la distribution équitable des stations locales et, enfin, du précédent découlant du protocole intervenu entre Bell ExpressVu et l'ACR.

1972 De plus, vu les débats ayant entouré les multiples demandes de TQS, notamment quant à la distribution de ses stations au Saguenay, la seule voie, selon nous, constitue l'imposition de conditions strictes avec une exécution immédiate.

1973 Dans le mémoire déposé par TQS, nous avons insisté sur le rôle important des régions dans le système de radiodiffusion canadien. Cette importance se manifeste dans les diverses dispositions législatives et réglementaires applicables à tous les acteurs de la radiodiffusion au sens large, incluant les câblodistributeurs et les services de distribution directe par satellite.

1974 La priorité des régions a d'ailleurs été reconnue par le CRTC dans sa politique télévisuelle de 1999 où l'on attribue aux émissions régionales le statut d'émissions prioritaires.

1975 Ceci étant dit, pour accomplir pleinement leurs missions, les stations régionales et locales doivent être accessibles tout au moins dans leur province d'origine, et ce, sans égard aux modes de distribution.

1976 Star Choice doit respecter, et le CRTC doit faire en sorte que Star Choice respecte son obligation légale de donner priorité à la fourniture des services de programmation canadienne, et en particulier aux stations locales canadiennes, le tout tel qu'énoncé à l'article 3(1) de la Loi sur la radiodiffusion.

1977 Si Star Choice a fait de mauvais choix dans ses priorités de distribution (par exemple, en diffusant un trop grand nombre de canaux américains) c'est à elle d'en assumer les conséquence et de corriger la situation sans délai pour respecter les normes canadiennes.

1978 Le 25 septembre dernier, le Comité sénatorial permanent des transports et des communications se réunissait pour faire l'état des industries de médias canadiennes, des tendances et des développements émergents au sein de ces industries, et pour discuter du rôle, des droits et des obligations des médias et des politiques appropriées par rapport à ces industries.

1979 A cette occasion, le comité sénatorial a entendu les représentants du CRTC. Dans son allocution d'ouverture, M. Dalfen, président du CRTC, soulignait l'importance accordée dans la Loi canadienne sur la radiodiffusion au système de radiodiffusion canadien qui doit permettre la sauvegarde, l'enrichissement et le renforcement du tissu social, économique et culturel au Canada.

1980 Les présentes audiences constituent une occasion sans précédent pour le CRTC d'appliquer ces principes et de venir en aide concrètement aux stations régionales et locales qui en ont grand besoin.

1981 Les principes concernant l'importance d'assurer la vitalité des stations locales et régionales sont reflétés dans l'avis public 2003-37 et dans les décisions 2003-257 et 258 par différentes obligations de distribution des stations de télévision indépendantes des petits marchés, d'une part, et par des obligations de distribution équitable de stations de télévision appartenant à des grands groupes de radiodiffusion, d'autre part.

1982 Cette distinction fait en sorte que les stations de TQS à Trois-Rivières, à Sherbrooke et au Saguenay doivent dorénavant bénéficier d'une distribution équitable au même titre que les autres stations régionales au Québec qui sont portées par satellite.

1983 Selon nous, le précédent créé par le protocole contenu par Bell ExpressVu avec l'ACR fixe les paramètres minimaux qui permettent de déterminer ce qui constitue une distribution équitable dans les différents marchés où l'on retrouve des stations locales.

1984 Or, en vertu de ce protocole, une des stations de TQS au Saguenay, ainsi que les deux stations de TQS à Sherbrooke, sont désormais distribuées par Bell ExpressVu. Quoique insatisfaisant puisqu'il ne permet pas encore une distribution complète de tous les signaux locaux, ce protocole représente néanmoins une nette amélioration sur la situation qui prévalait précédemment.

1985 Vu le refus de Star Choice de conclure une entente semblable à celle signée entre Bell ExpressVu et l'ACR, et de préciser quelle application elle entend donner au principe de la distribution équitable, notamment pour les stations de TQS au Saguenay, nous recommandons que la seule solution qui puisse rendre exécutoire le principe de la distribution équitable passe par l'introduction d'une condition de licence. Cette condition devrait prévoir un engagement spécifique de la part de Star Choice quant à la distribution des stations de Saguenay, de Trois-Rivières et de Sherbrooke de TQS.

1986 Dans la présente demande de renouvellement de licence, Star Choice invoque des problèmes de capacité sur les satellites pour demander au CRTC que l'entrée en vigueur de ses obligations de distribution de télévision indépendantes des petits marchés soit retardée au-delà du 31 décembre 2003 en attendant la mise en service du nouveau satellite prévue à une date encore imprécise en 2004.

1987 Nous croyons que Star Choice ne peut de bonne foi invoquer cet argument puisqu'il a déjà été débattu devant le CRTC à l'occasion des audiences ayant mené aux décisions rendues par le CRTC le 16 juillet dernier.

1988 Nous avons présenté au Conseil dans notre mémoire écrit plusieurs alternatives pour permettre à Star Choice de solutionner son prétendu problème de capacité au bénéfice des stations régionales.

1989 Nous vous soumettons que ces alternatives devraient pouvoir s'appliquer dès maintenant, et que Star Choice a les moyens techniques de procéder à la distribution des canaux de TQS de façon équitable par rapport à ceux de TVA. Star Choice doit agir sans délai et respecter scrupuleusement les engagements pris devant le CRTC dans le cadre de la décision 2003-258.

1990 En outre, l'absence de collaboration de Star Choice et d'engagements spécifiques à l'endroit de TQS depuis l'été dernier justifie l'utilisation dès maintenant par le CRTC de la principale arme à sa disposition, à savoir une condition de licence.

1991 Dans sa décision 2003-257, le Conseil convient que le protocole d'entente intervenu en août 2002 entre Bell ExpressVu et l'ACR est très approprié « dans le cadre d'un ensemble de mesures constituant une solution de rechange aux conditions de licences actuelles de la requérante concernant le retrait de la programmation ».

1992 Ces dispositions deviennent donc de nouvelles conditions de licence pour Bell ExpressVu et lui permettent d'être dispensée de ses conditions de licence visant le retrait de programmation. De façon concrète pour TQS, ce protocole a permis la distribution de ses deux stations à Sherbrooke et de l'une de ses deux stations à Saguenay.

1993 Dans les circonstances, les modalités de ce protocole et les termes de la décision 2003-257 doivent servir de barème pour l'application à Star Choice de la notion de distribution équitable en l'absence de protocole semblable entre Star Choice et l'ACR et doivent être reflétées comme condition de licence. Il en va également de l'équité entre les deux distributeurs satellitaires.

1994 En réponse à l'argument de capacité sur les satellites, nous croyons qu'il est tout à fait possible pour Star Choice de revoir son offre de canaux sans pour autant subir des inconvénients d'affaires.

1995 En effet, les réajustements d'offres de canaux sont relativement fréquents chez les distributeurs. Pour parler en termes plus juridiques, nous ne croyons pas que la balance des inconvénients penche en faveur de Star Choice. Bien au contraire, ceux-ci sont bien modestes à comparer aux inconvénients commerciaux majeurs subis par les stations locales de TQS depuis que celles-ci se trouvent isolées par rapport à celles de son principal compétiteur, TVA.

1996 Sur ce point, M. Guy Simard élaborera sur les conséquences graves de cette situation et sur le préjudice irréparable déjà subi par ces stations locales, tout particulièrement au Saguenay.

1997 Nous estimons que Star Choice doit dès maintenant devant vous prendre les mêmes engagements que ceux souscrits par Bell ExpressVu et à les rendre exécutoires avant le 31 décembre 2003. TQS a été particulièrement diligente sur ce point et a utilisé tous les moyens qui étaient à sa disposition pour convaincre Star Choice d'aller de l'avant.

1998 Ainsi, comme vous le savez, notre plainte en vertu de l'article 9 du règlement sur la distribution est toujours pendante devant vous. La situation a assez duré et nous vous invitons à profiter des présentes audiences pour imposer à Star Choice les conditions de licence qui sont requises dans les circonstances, et ce, conformément au principe fondamental de l'article 3(1) et de l'article 9(b) sur la Loi sur la radiodiffusion

1999 M. Guy Simard élaborera maintenant sur des constats semblables dans les opérations de nos stations au Saguenay.

2000 M. SIMARD: Lors d'une récente interview à la télévision, M. Paul Tellier, grand patron de Bombardier disait ceci, et je cite :

« Je dois être dans les mêmes règles de jeu que la concurrence ».

2001 Et, justement, si tu n'es pas dans ces mêmes règles de conformité, voici ce qui arrive.

2002 TVA (CJPM), notre concurrent local, est distribué par Star Choice depuis septembre 2001. Ce compétiteur n'a jamais cessé de cogner sur le fait qu'il était le seul média local télé à être présent sur les coupoles au Saguenay Lac St-Jean. Nous avons même vu un client, distributeur d'antenne satellite, faire la promotion de TVA comme étant le seul dans son marché à être présent sur les antennes. L'impact n'a pas tardé à venir et notre concurrent a très bien réussi puisqu'il a été avantagé au détriment de TQS.

2003 La télévision par satellite a connu une percée spectaculaire au Saguenay Lac St-Jean. Des détaillants affirment qu'il s'installe plus d'une centaine de soucoupes par semaine dans le secteur du Saguenay, et contrairement à ce qui se passait il y a à peine deux ans, 95 pour cent des nouveaux abonnés à la télévision habitent en milieu urbain.

2004 Or, c'est justement là que se trouve la plus grande majorité des abonnés à la télévision par câble. Plusieurs abandonnent le câble pour passer au satellite. Conséquemment, ce sont nos annonceurs que l'on a perdu.

2005 C'est au cours de l'exercice financier 2002-2003 que TQS a subi l'impact de la présence de TVA sur Star Choice par une perte de 12 pour cent, soit un demi million de dollars, comparativement à l'exercice 2001-2002. C'est une perte significative. Je vous épargne toutes les conséquences reliées à cette situation (pertes de revenus, diminution d'effectifs dans l'équipe de ventes). Dans mes 37 années de service dans le milieu, je n'ai jamais eu à vivre des pertes aussi importantes.

2006 Entre autres, nous n'avons plus un seul client dans l'agglomération du Haut du Lac St-Jean (St-Félicien, Dolbeau, Robertal). Cette partie du territoire que nous desservons représente à celle seule des pertes d'un quart de million de dollars. La pénétration du service satellite y dépasse le 40 pour cent et Star Choice y possède 52 pour cent des parts de marché. Dans ce coin de pays la télévision par satellite s'affiche presque sur un toit sur deux.

2007 La raison invoquée par nos clients : «  Vous viendrez nous voir lorsque vous serez présents sur les coupoles ». On le sait tous, on ne regagne pas un client du jour au lendemain, le plus fidèle soit-il.

2008 Dans la plainte déposée par TQS en novembre 2002 concernant la distribution du signal de TVA par Star Choice, je vous rappelle la soixantaine de lettres de nos clients qui ont pris le temps de nous écrire pour manifester leur insatisfaction. De plus, nous recevons régulièrement des appels téléphoniques de nos téléspectateurs qui nous demandent instamment d'expliquer les raisons de notre absence sur Star Choice, le signal de la station locale de TVA y étant présent depuis plus de deux ans.

2009 Nous sentons déjà la réaction positive de nos clients suite à notre arrivée sur Bell ExpressVu le 14 septembre dernier. Nous leur offrons une ouverture supplémentaire pour se présenter sur un marché qui ne leur était pas accessible. Notre présence sur Star Choice ne pourra que répondre et rencontrer leurs attentes.

2010 TVA et sa station locale ont l'avantage d'être portés à 100 pour cent sur les deux services satellites, Star Choice et Bell ExpressVu, et ce point lui sert considérablement dans son argumentation des ventes.

2011 M. Michel Carter va maintenant conclure notre présentation.

2012 M. CARTER: Merci, Guy.

2013 En résumé, les demandes de TQS sont les suivantes :

Limiter la durée du renouvellement de licence à deux ans en raison du très mauvais bilan de Star Choice, notamment du point de vue du respect de ses conditions de licences dans le passé.

2014 A cet effet, nous vous référons de nouveau aux déclarations du CRTC devenait le comité sénatorial où M. Dalfen soulignait que l'octroi de licences de courte durée était un des moyens dont disposait le CTRC pour faire un suivi plus serré de titulaires de licences ayant un mauvais bilan;

2015 Deuxièmement, imposer à Star Choice au moyen d'une condition spécifique à cet effet l'obligation de distribuer sans délai un nombre minimal de stations régionales appartenant aux grands groupes à l'instar de ce qui est prévu dans le protocole Bell ExpressVu/ACR, ce qui devrait inclure une condition spécifique relative à la distribution des stations de TQS au Saguenay, à Sherbrooke et à Trois-Rivières.

2016 Nous vous remercions de votre attention et nous sommes disposés à répondre à vos questions.

2017 LE PRÉSIDENT: Merci, monsieur Carter, messieurs.

2018 J'ai peu de questions parce que vos présentations écrite et orale étaient très claires, mais j'en ai quelques-unes.

2019 M. Simard a dit qu'il y a une percée spectaculaire au Saguenay Lac St-Jean de télévision par satellite.

2020 Quelles sont les raisons pour lesquelles on trouve une telle situation, monsieur Simard, quant à vous?

2021 M. SIMARD: Notre région est très rurale. En fait, le Haut du Lac est très rural. Donc ça donne de petites agglomérations accompagnées de petites municipalités qui les suivent. C'est la raison pour laquelle le satellite est venu par le déploiement de bouquets de canaux. Alors naturellement les gens veulent avoir ces différents canaux-là, bien sûr, avec les nôtres, un complément nécessaire.

2022 LE PRÉSIDENT: Ce câblodistributeur-là est-ce Vidéotron?

2023 M. SIMARD: Pour le Saguenay c'est Vidéotron, la région de Dolbeau c'est Vidéotron. Il y a Cogeco et le reste des petits distributeurs de câble.

2024 LE PRÉSIDENT: Est-ce que c'est peut-être que Cogeco ne satisfait pas ses abonnés?

--- Rires / Laughter

2025 M. CARTER: Je suis sûr que Cogeco fait tout ce qu'il faut pour satisfaire ses abonnés.

2026 LE PRÉSIDENT: Combien d'abonnés à la télévision par câble existent dans le Saguenay?

2027 M. SIMARD: Pour le Saguenay, 80 pour cent des gens sont câblés.

2028 LE PRÉSIDENT: Combien?

2029 M. SIMARD: Quatre-vingts pour cent des gens pour le Saguenay.

2030 LE PRÉSIDENT: Pour le Saguenay, et ça fait combien de gens?

2031 M. SIMARD: Aux environs de 160 000.

2032 LE PRÉSIDENT: Y inclus les systèmes de Vidéotron et de Cogeco?

2033 M. SIMARD: Non. Je parle ici uniquement du Saguenay, donc de Vidéotron.

2034 LE PRÉSIDENT: De Vidéotron seulement. Et combien d'abonnés à la télévision par satellite est-ce qu'on a maintenant dans deux systèmes?

2035 M. SIMARD: Je n'ai pas le nombre.

2036 LE PRÉSIDENT: A peu près?

2037 M. SIMARD: Non. Je n'ai pas le nombre.

2038 LE PRÉSIDENT: Vous ne le savez pas. D'accord.

2039 M. CARTER: Ce qu'on sait, monsieur le président, c'est que dans la région du Lac St-Jean, plus particulièrement dans le Haut du Lac St-Jean, la pénétration du satellite arrive à 50 pour cent. C'est de la région plus rurale à laquelle Guy faisait référence un peu plus tôt.

2040 LE PRÉSIDENT: J'ai demandé aux représentants de Telesat de commenter sur votre paragraphe 30 et je ne sais pas si vous avez des commentaires ayant entendu ce qu'ils ont dit.

2041 M. CARTER: On n'a entendu, monsieur le président, ni les gens de Star Choice, ni les gens de Telesat réfuter qu'il y ait une certaine capacité flottante sur les satellites.

2042 Ceci étant dit, je pense que l'essentiel de notre argumentaire ne porte pas que sur la capacité flottante restant sur les satellites, mais sur le grand nombre de canaux américains et/ou autres pay-per-view portés par Star Choice au détriment des canaux canadiens alors que la loi est très claire là-dessus, qu'on doit donner prépondérance aux canaux canadiens. A notre avis, ce n'est pas le cas qui se produit pour Star Choice.

2043 LE PRÉSIDENT: Ça c'est compris.

2044 Questions? Non?

2045 Ce sont nos questions. Merci beaucoup, messieurs.

2046 M. CARTER: Merci.

2047 LE PRÉSIDENT: On va prendre une pause pour 15 minutes.

2048 We will resume in 15 minutes with the next intervention which, I take it, will be the CAB.

--- Upon recessing at 1830 / Suspension à 1830

--- Upon resuming at 1845 / Reprise à 1845

2049 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.

2050 Monsieur le secrétaire.

2051 M. LeBEL: Thank you, Mr. Chairman.

2052 The next appearing intervention will be presented by the Canadian Association of Broadcasters, Mr. Glenn O'Farrell.

2053 Mr. O'Farrell, you have one minute to make your presentation.

--- Laughter / Rires

INTERVENTION

2054 MR. O'FARRELL: That will suit us just fine.

2055 Mr. Secretary, thank you very much for the one-minute time allocation. We will try not to abuse of it.

2056 Mr. Chair, Madam Vice-Chair, conseillers, conseillères et membres du personnel, mon nom est Glenn O'Farrell. Je suis le président et chef de la direction de l'Association canadienne des radiodiffuseurs, et vu l'heure je vais essayer d'être très court, très bref mais, dans la mesure du possible, très percutant.

2057 Nos commentaires, comme vous avez vu dans les propos qui vous ont été soumis par écrit, ont porté à la fois sur les préoccupations des services de télévision conventionnelle, d'une part, et ensuite des services de télévision spécialisée et payante, d'autre part.

2058 Dans le cadre de nos commentaires aujourd'hui, on voudrait vous rappeler peut-être certains principes et élaborer un peu au-delà de ce qui a été dit dans les interventions écrites.

2059 In terms of the priorities of our intervention here before you today with regard to the renewal of Star Choice, we have sectioned off our priorities in terms of the Television Board's comments and views as they were posed and complemented by the Specialty and Pay Television Board's views and comments.

2060 From a specialty and pay point of view, our first preoccupation is that you conduct this hearing to renew the licences of Star Choice with a view to ensuring that equitable carriage regimes amongst BDUs exist on a going-forward basis.

2061 We consider this to be absolutely fundamental to the integrity of the system on a going-forward basis, and that is for reasons that I don't have to remind you of that relate to, of course, the particularly successful deployment of DTH in Canada, the market share that they enjoy today, as opposed to the forecasts that were made at the time of licensing and the formidable role they play in reaching Canadian households in the BDU universe today.

2062 Our second principle is that of a BDU audit framework. As you discussed with other intervenors, we see this as a necessary instrument to assist the process by which programmers supply their programming services to BDUs and, as you know, we took the initiative of creating a committee and sending a 10-point plan to the various BDU partners with a view to commencing a dialogue that we hope will engage the Commission as well in developing an instrument, if not necessarily along the lines that we have articulated, because we don't think that there may not be other very relevant views to consider as well, but we thought we would launch that discussion with the 10-point plan and we have sent it to third parties for the views and some have indeed commented.

2063 We believe that the Commission should be looking at this as an instrument that it could see developed over the course of the next little while to assist in making the relationship between program services and distributors more harmonious.

2064 The third point relates to the matter of financial information and DTH penetration estimates. As you know, the public record with regard to Star Choice does not allow any intervenor much latitude or much insight with regard to the financial picture of the past years' performances and the situation other than what is provided in the rather consolidated statements and financials that are on record.

2065 Consequently, we are without any real instrument of insight to bring any particular financial comment to bear on these proceedings, other than to say on a going-forward basis we strongly believe that there should be a requirement that the licence holder provide DTH penetration estimates. That would be kind of be a counter point or a balancing element to the financial information that, as you know, for every specialty and pay services is on the record as a matter of annual reports and that is published by the Commission, in fact, on an annual basis. That would create a little bit of a better relationship again in harmonizing the partnership between programmers and distributors.

2066 On the television side, clearly the issue that we are focusing on is the primacy of programming rights in the Canadian broadcasting system.

2067 We feel that when we look back at the initial direction from government, the initial policy, there was great emphasis made on programming rights without discretion, without adopting discretionary attitudes or picking and choosing whose program rights could be or should be protected, but articulating a principle that program rights across the system by all rightsholders must be protected in the name of the integrity of the system, which is why we advocate, as we have said in our written submission, a "take one, take all" policy for the carriage of local stations in a given market.

2068 We also believe that compensation for the non-carriage of local television stations is essential. We believe that compensation for the carriage of out-of-market Canadian stations in local markets be imposed, similar to the regime that is place for cable.

2069 We also believe that compensation for the carriage of a second set of U.S. 4+1 network signals is appropriate and must continue, and we also believe that the Commission has to articulate a view on the concept of equitable carriage for larger broadcast groups. That is of significant concern, beyond the small independent broadcasters who were addressed in a decision earlier this year.

2070 Finally, we believe that there is no doubt in our minds that compensation for delays in uplinking local service must also be on this hearing's agenda.

2071 Finally, with regard to Star Choice, we have submitted a view that a short-term licence would be appropriate under the circumstances and we believe this to be motivated by four primary points.

2072 First of all, we feel that there has been non-compliance with structural-separation COLs by the licence holder.

2073 We believe that there has been systemic refusal to undertake program deletion by filing an application to be relieved of the condition of licence as a means of not complying with the condition of licence.

2074 Thirdly, there is the matter of what we believe to be the operation of an unlicensed programming undertaking by way of the HDTV signals that Star Choice currently offers.

2075 And finally, there is the failure to pass through V-chip or described-video encoding.

2076 These are all serious transgressions. We don't take the matter of suggesting a shorter than a full seven-year licence term lightly. We suggest that it's a signal that the Commission has that is available to it to ensure that all licensees in the system do comply with not only conditions of licence, but important regulatory and structural requirements of their conduct and, consequently, we submit that for your review.

2077 I am available to answer any questions you may have at your leisure.

2078 Thank you very much.

2079 THE CHAIRPERSON: Thank you.

2080 I do have questions on three areas and if we use the bullets in your presentation they are on the second set of bullets, under "Television", the third bullet: Compensation for the carriage of out-of-market stations; compensation for the carriage of a second set of 4+1 and then, finally, compensation for delays. So I will have questions on each of these that you can perhaps help me with.

2081 Turning to the first, I guess the first question is: What do you regard as appropriate compensation?

2082 MR. O'FARRELL: Mr. Chairman, we are of the view that the DTH policy that was enunciated initially by a government order to the Commission, that the Commission acted upon in licensing DTH operators in the mid-1990s that were ultimately launched in 1997, was very clear with regard to the concept that -- and I believe that it is stated very eloquently in that original introductory licensing decision -- programming rights and the protection of programming rights was an integral matter to the system's best interests going forward.

2083 Over the course of time, I think that we have found ourselves perhaps in a position where, as a result of certain assumptions that were made at the time of the initial licensing and the initial introduction of DTH, that certain consequences that were anticipated resulting from the operations of the DTH players perhaps would not amount to quite as much harm as they have amounted to in fact.

2084 By that what we mean is essentially the distribution of distant Canadian signals into Canadian markets where the local program rights are undermined and the value of those rights is also undermined as a result of distant Canadian signal distribution. I think most people call it time-shifting programming, and we all know what that means so I won't defer on that any further.

2085 The reason why I think that it's possible to point to the fact that without malice and without any particular --

2086 THE CHAIRPERSON: Mr. O'Farrell, I don't want to interrupt you, but my question was a simple one: What compensation are you looking for?

2087 MR. O'FARRELL: Compensation for harm.

2088 THE CHAIRPERSON: What is the amount?

2089 MR. O'FARRELL: The compensation for harm, as evidenced by a study that was filed with the Commission by Strategic Inc., was evaluated as $18 million for the year 2002 and, I believe, over the course of the next seven years it was evaluated at $50 million by the same Strategic --

2090 THE CHAIRPERSON: I have serious problems with this study. Who is here to answer to that study? Are you able to do that?

2091 MR. O'FARRELL: Yes, and we would like to note -- and we are happy to answer the questions to the extent that we can now -- if there are questions that I can't answer, I would be happy to undertake to provide you written answers within the timeliest manner possible.

2092 THE CHAIRPERSON: Okay.

2093 This is a licence renewal hearing. You are putting forward a proposal for compensation. What would be your method of giving effect to that proposal were it to be adopted?

2094 MR. O'FARRELL: Well, if I can ask you for one more minute's indulgence perhaps on why we feel the way we do. It might help understand where this discussion goes, at least from our point of view, or at least better articulate our position.

2095 In the context of the initial policy, program deletion was the key cornerstone that program rightsholders had to effect program harm offsetting. In other words, if they did not want to have the other signal enter into their program territory, they had the right to program deletion.

2096 Over the course of time, the Commission encouraged broadcasters and the DTH operators to look at alternatives. In fact, the original policy said so.

2097 In that context, there was an assumption made as to what harm would flow from distant Canadian signal distribution because up until the time of DTH, as this Commission well knows, the distant signal distribution policy was applied very, very sparingly.

2098 In fact, there was very little distancing of distribution outside of certain very clear exceptions.

2099 What happened in the late 1990s was an agreement was made where the DTH operator, ExpressVu and the CAB at the time, agreed that there could be compensation for a certain category of broadcasters, those called the affected broadcasters, on the basis that they were the only ones who really could, based on the assumptions and the forecasts of harm that were foreseen at that time, logically claim some form of monetary compensation resulting from the distant signal distribution.

2100 But what has happened, in fact, as is evidenced by the Strategic Inc. document that I was just referring to, is that the harm resulting from distant Canadian signal distribution has amounted to much, much more.

2101 Consequently, we stand before you today, yes, indeed at the time of a licence renewal hearing, but for the first time really since the initial policy was articulated with a view to engaging with the Commission in a dialogue about an issue that won't go away unless we frankly resolve it and talk about it in the most open and transparent way possible and seek solutions.

2102 The reality is there is harm. We have evaluated it the way the study has articulated. No intervenor has contested it. No intervenor has spoken to its merits or lack thereof. We consider it uncontested. If there are questions the Commission has about it, I will happily answer them to the extent that I can or provide you a written undertaking to satisfy you, hopefully.

2103 Fundamentally, we are not here to say that anybody, maliciously or intentionally, deviated from the path of program right protection. I think we found ourselves into that stream of thought as a result of some assumptions at the time.

2104 THE CHAIRPERSON: Again, as you said, the hour is moving on. I am trying to get a handle on your proposal and I am having a hard time doing it.

2105 Would it be fair to say that you are putting forward a proposal that would be a subject for a policy hearing at some point?

2106 MR. O'FARRELL: No. We feel, Mr. Chairman, respectfully, that if we don't deal with it in the context of the discussion that you are having with the operators requesting seven years of licence renewal-- reminding the Commission, not that we feel that there is any need to, but for the sake of the record, that this is occurring after two administrative renewals have been given to these operators -- if we don't have the opportunity to at least raise it here -- and if you feel that it's inappropriate, my question to you is: Where else do we find the opportunity to do so?

2107 THE CHAIRPERSON: I am not saying it's inappropriate. I am trying to find out what you are asking us to do.

2108 MR. O'FARRELL: We are asking you to recognize that harm has occurred as a result of distancing of distribution across every market because we don't believe that distant signals affect only certain markets based on the ownership groups or the ownership interests that operate those stations.

2109 Furthermore, we feel that this is the appropriate time, Mr. Chairman, because in the case of those large broadcast groups who do not currently receive compensation, based on the assumptions that they have the scope and scale to absorb these harm elements, whatever they may be -- we have quantified them for you -- we take exception to that, respectfully, because we feel that in the instance of all of these large broadcast groups they have come before you for licence renewal and you have looked at them on an individual station basis and, in fact, you have looked at them as a group and you have determined what their contribution should be.

2110 To layer on an additional burden, financial burden, would be to layer on an additional layer of financial requirements without due process.

2111 THE CHAIRPERSON: Sorry. I guess we can't take it any further. I don't know who you are asking pay compensation, to whom, on what basis, what amounts. I don't have any of those answers, so it's very difficult to deal with your proposal.

2112 Even if one, for argument's sake, were to acknowledge some form of harm, which we can get into as the basis for it, I have no idea what you are asking us concretely in this licence renewal hearing to do.

2113 MR. O'FARRELL: Respectfully, Mr. Chairman, we are asking that you consider first and foremost that harm exists across all conventional broadcast stations where there is distant signal distribution in their markets. That is the first request.

2114 The second one is that you quantify that harm by virtue of the methodology that is on file with the Commission in two separate files: The Strategic Inc. file that leads you up to the 2002 estimates, and then the Strategic Inc. study that is on file with the Commission in this particular proceeding that gives you the estimates going forward in the absence, frankly, of any penetration estimates or penetration forecasts from DTH operators because we don't have them because they are not available, so we have to make our own assumptions about DTH growth. We have tried to do so conservatively.

2115 As to whom the payments should be made, they should be made to broadcasters on the basis of the formula that is in the Strategic Inc. document that specifies that it can be brought down to, and pointed to, the singular matter of rating points lost per station per market. To put a value on -- and a value has been ascribed, one that we feel is appropriate -- a station-per-station basis on a market-for-market basis.

2116 By whom? Mr. Chairman, in the decision that you rendered this summer on the suggestion that some of the funds contributed from the 5 per cent of gross revenue by the DTH operators be diverted, we would consider it's an overpayment to the Canadian Television Fund because it would simply replicate the amount that notionally cable pays to the Fund versus what cable pays to a community programming channel.

2117 In this instance the DTH operators would take the amount that cable pays to a community channel and diverted to local and regional programming. We believe that in the event that -- well, you found very clearly that that source of funding was not appropriate because you felt, for reasons that we won't qualify or question today, it was inappropriate.

2118 The harm has not gone away and the problem has not gone away and the issue hasn't dissolved. It has just been added on as an additional layer of regulatory financial requirements on broadcasters who have not been captured in the decision of 2003 who still have to absorb that station by station, market by market.

2119 THE CHAIRPERSON: I guess we will move on.

2120 Your proposal, in essence, when you talk about the harm, is based on I suppose this graph on 3B of the Strategic Study, "Satellite penetration versus conventional station share". This is page 6 of the Strategic Incorporated study.

--- Pause

2121 MR. O'FARRELL: I'm sorry.

2122 THE CHAIRPERSON: I mean, the basis, I take it, for the argument is that there is argument made that conventional station share has gone down as a function of satellite penetration.

2123 MR. O'FARRELL: That is correct.

2124 Excuse me. The assumption is that Canadian local television stations' market share is undermined by the distribution of Canadian distant signals, after having subtracted and taken out of the equation whatever loss of market share would be the result of new specialty and pay services that are licensed by the Commission or non-Canadian services that are authorized for distribution.

2125 So the impact that you have there, in our view, based on this methodology, is a methodology that ascribes a value of impact resulting from distant Canadian signal distribution only.

2126 THE CHAIRPERSON: I didn't read that into the table or any of these sections. What I took from it, and I could be wrong, is that there is a correlation between the shares of conventional television stations in Canada -- which is what it says -- correlated with satellite penetration and there is a statistical relationship that is developed there.

2127 I don't see where the distant signal portion of it is carved out or where you take into account that conventional television station shares have been going down since 1993 as a result of specialty and pay services. I don't see factored into here the removal of those services as somehow contributing to the decline of conventional stations.

2128 MR. O'FARRELL: Well, maybe I can explain to help you understand.

2129 The Strategic Inc. document that you are looking at is an update of sorts with the projection going forward based on documents that are on file with the Commission that have essentially taken an historic view as opposed to a future view. So on the basis of the methodology used for the historic analysis that we have provided the Commission, we are now attempting as best we can to give you a projected future analysis.

2130 Again, and I do want to reiterate this because I feel it's important to do so so that it's perfectly clear, we have done so based on, for instance, DTH market growth assumptions that we have made as conservatively as possible in the absence of any information that we can point to to validate. We would appreciate having some. If the applicants were required to make that information available it would certainly make for a different exercise, but we have made what we consider to be very modest -- I think we have made modest satellite growth projections of 2 per cent per year.

2131 Again, that is arbitrary, but it's the best conservative estimate we could come up with given the limited information we have, but we have also done it based on what we have seen in the past, understanding that the past number of years, particularly the last four or five years, saw a burst in growth that had to kind of level off at some point in time and find itself then into a smaller pattern, or I should say a less aggressive growth pattern.

2132 But to your point, Mr. Chairman, what you are looking at now is a continuation of a methodology based on historical information that was filed with the Commission that now attempts, as best we can, to look at the future and make forecasts.

2133 THE CHAIRPERSON: I guess simply put, the graph seems to correlate conventional station shares from 1997 through 2007, the latter part being projections against satellite penetration, historical and projected. So you have a relationship, but I am not sure that causality, which is what you need to show that it's DTH that has caused this conventional station share, exists between those two. You have a statistical but not a causal correlation, as I see it.

2134 MR. O'FARRELL: Mr. Chair, the causal correlation to which you refer rightly is the causal correlation that you will find articulated and explained in the previous Strategic Inc. document that spelled out the full methodology.

2135 If that was, in our submission, a mistake not to repeat the methodology or refer you to it for greater ease of reference, we apologize for that, but that clearly was a continuation of the same methodology that was employed in the earlier submission. If that would have been easier, we are sorry for any inconvenience that causes you.

2136 THE CHAIRPERSON: No, I don't think it's a methodology problem we are having. It's an understanding problem of your point. I am just not comprehending.

2137 The other thing is when we looked at viewing statistics -- and I asked our staff to do it. It's BBM -- and whoever did this report can check that out because it keys off on some of the graphs that they put in here.

2138 We came -- and I would be interested in whether this is your experience -- to the conclusion that you can take the fall BBM surveys that you have here -- I guess some of this information is confidential to BBM, but I am sure your people have access to it -- but the general pattern in Calgary and elsewhere seems to be that viewing shares of Canadian conventional television are actually higher on DTH overall than they are on cable. It's practically the case for every market. We have looked at all the major markets and, with one or two small exceptions, that appears to be the case.

2139 So, if anything, DTH system-wide seems to be contributing more of a conventional Canadian television viewing share than does cable. You can check those out, whether that accords with your own --

2140 MR. O'FARRELL: I am not sure what that leads to in terms of the relationship that that would produce in terms of calculating harm.

2141 Harm ultimately comes down to two very simple, I guess, categories: A local station that is not carried, and a local station that is carried, and in both instances suffers the consequences of new fragmentation in the marketplace resulting from DTH distribution of multiple Canadian distant signals.

2142 THE CHAIRPERSON: I take that point, and I want to move to question you. I do take that point.

2143 As it turns out, I gather that both CKAL and CHMI are now uplinked, or about to be.

2144 MR. O'FARRELL: Sorry, I lost the call letters on the second one.

2145 THE CHAIRPERSON: Two of the three stations that were in the study which were I think at the time not uplinked, are now being uplinked.

2146 MR. O'FARRELL: I don't have any confirmation of that, but I do understand there were discussions on one of them.

2147 THE CHAIRPERSON: I take it that your point is that while overall conventional television station viewing on DTH may actually be higher than on cable, in the local market that isn't the case because most cable systems carry local stations predominantly and so this is more of a system-wide look, and the harm is to individual stations.

2148 Is that fair?

2149 MR. O'FARRELL: Well, it's fair to say that in the absence of some redress mechanism -- and by redress, I speak to the issue of qualifying the harm as best we can, and we have used the methodology quantifying the harm and then some measure of redress for that harm on a station-by-station basis on a market-by-market basis -- we are going to be faced with the problem that we are faced with today which is those conventional stations are fighting a new fragmentation layer that nobody had really properly envisaged when the whole idea of distant Canadian signal distribution was liberalized, if I can use that term.

2150 What is important to note, Mr. Chairman, and I know that you are probably aware of this, but for the sake of the record, here we are in 2003 discussing the DTH environment in Canada and we really have not had an opportunity perhaps to go back and look at some of the fundamental tenets of what was supposed to be achieved here.

2151 If I recall there were three objectives. One was to provide competition to the dominant player cable. The other one was to extend service to Canadians in underserved areas, mostly rural areas. The third one was to provide a made-in-Canada solution to the so-called Deathstar. In so doing, I believe to date we have achieved largely those objectives, but what was under those objectives, as it was clear to us at least at the time, albeit without the capacity necessarily to foresee the future as clearly as we would have liked to today, was what were the repercussions, what was going to happen as a result and where would there be consequences and damage. Frankly, people in good faith made assumptions that have proven to be wrong.

2152 It's interesting to note that in the U.S. where they have legislation since 1996 on the Satellite-to-Home Act, it was improved in 1999 because of the fact that that marketplace too is dynamic, and that marketplace too is undergoing change, and that marketplace being the model of free enterprise in the world, in the minds of many Americans at least, felt that it was appropriate and necessary to enforce a protective measure around the whole idea of program rights.

2153 In the absence of some measure of redress, we don't have that programm right protection. We need some measure of redress. We cannot continue, in our view, going down this path of fragmentation with the expectation that certain smaller players can be addressed in their needs, but large groups, because of their economies of scope and scale, can be undermined in their program rights. This is a fallacy, in our view. We honestly believe that we need to speak about this now. We feel that it is important to do so.

2154 We feel it is particularly important because, as you know, largely the administrative renewals that were given to the two DTH players I would say helped in part, if not motivated some in large part, by the fact that there were ongoing negotiations between the CAB and the DTH operators to try to find some kind of a market-driven solution.

2155 That was something that we were encouraged by the Commission to do because it was a very complex multiple time zone, small, medium and large-sized players across English and French broadcast platforms that had to be reconciled with the DTH operators' realities. We came to terms on an MOU that was submitted for your approval. We respect your decision to turn it down, however the market-driven solution was driven by the best intentions to come at, as we saw, the problem of redress by using the redress mechanism of a funding solution that was found to be inappropriate.

2156 But in the absence of that funding solution being inappropriate, or I should say given that you found that to be inappropriate, the funding need still exists.

2157 THE CHAIRPERSON: No, I understand that. I think it's probably fair to say that even though in a cable system the local stations clearly have a much higher percentage of viewing than they do, say, in a locality with DTH, but nevertheless distant signals, Canadian and foreign, have been fragmenting audiences for many years across the board.

2158 I guess you are raising this as a Canadian solution, that somehow Canadian distant signal providers should compensate, or DTH, and that is why my initial question was I am not clear who you see as compensating for this, but you see this as advisable for DTH even though there isn't any such compensation in cable.

2159 MR. O'FARRELL: In the case of cable, the distant signal distribution regime has not grown into the proportions that we now have on the --

2160 THE CHAIRPERSON: Distant Canadian signals.

2161 MR. O'FARRELL: Pardon me?

2162 THE CHAIRPERSON: The distant Canadian signals.

2163 MR. O'FARRELL: Correct, and I am speaking only of Canadian distant signal fragmentation because that is really the only thing that we feel we can rightfully address in the context of a Commission proceeding because the fragmentation that occurs to Canadian broadcasters, be they conventional or pay and specialty, resulting from signals that you license or you authorize is part of the whole idea that the system has to evolve and we have to continue offering choices so that consumers stay tuned into the Canadian system.

2164 The problem that we see is that in the absence of a solution that addresses the notion of the harm created by distant signals, Canadian distant signals, we will see an aggravating problem, not a mitigating problem. The reason for that is with the growth of DTH where it is now, and knowing that they will have to turn for more growth, rightfully so, to urban markets, the realities of the urban markets are that five markets in the country are the principal local markets and three are the principal national markets. If you are in French Canada you only have one national marketplace called Montreal that really is a must buy. If you are in English Canada, it's Toronto and Vancouver.

2165 And so we see increased pressure going into those large urban centres and we see increased fragmentation. People will tell you anecdotally that the largest competitor of a CTV station in the Atlantic is CTV Toronto, or whichever combination you want to use.

2166 The problem, as we all know, is if there were credit given by advertisers to the viewing of Canadian distant signals in other than their home markets, then you would be able to monetize that, but it's not --

2167 THE CHAIRPERSON: I want to raise that with you because I think that that is correct. If you say that DTH actually has a higher share of viewing of conventional television stations system-wide, you would think that we would be able to monetize a whole lot of money, reciprocal spillover and the like, but for some reason or other your evidence is that advertisers are not willing to pay for that.

2168 MR. O'FARRELL: There is no doubt in the minds of any of the -- and we have had lengthy exchanges with not only the people who sell advertising space for the companies that we represent, but we have spoken to agencies as well. There is absolutely no monetary value now attributed in the buy. In other words, the buy is made on the local market. You buy a spot in Calgary, you buy a spot in Vancouver, you buy a spot in Toronto, if that spot that you buy in Toronto is distributed elsewhere that is a bonus for the advertiser, that is not monetized.

2169 If we had the way of monetizing that commercial revenue stream you can be sure that it would be done, but it has not been done historically. There seems to be no way before us in the short term, or the medium or long term, but certainly not the short term, to monetize that.

2170 So in the absence of that redress formula, which could have been possibly one that we would have looked to -- there the market forces would have solved the problem for us -- we need to come back to the Commission and say the concept of program rights which was fundamental in a cornerstone to this policy has to be seen again in 2003 going forward because if you award licences to these operators that are renewed for seven years, in the event that you decide that you are going to give full-term renewals to both, we won't be here to have a discussion about these issues before 2010, and we are very concerned.

2171 THE CHAIRPERSON: The other thing is, of course, that it seems strange that although the ratings clock the eyeballs, even if they are in a different market, that no credit is given for them, or little credit is given for them.

2172 I don't think that is universal. I think there are some markets -- there was a hearing in St. John's last year where there was a sense that some of that national revenue was actually going to St. John's. But that is at the end of the line. I am not sure how universal that it.

2173 MR. O'FARRELL: Mr. Chairman, you see the annual reports of each of the conventional licensees that file their page 12s with you every year with the advertising revenue, and those who go from one year to the next from a non-distant signal distribution status to becoming a signal distributed on a distant basis, do not see any bump ups because they are just not there and they have not been there. Unfortunately, there is no likelihood of that changing, not that we can see.

2174 THE CHAIRPERSON: Well, we have talked to a number of groups who suggest that there may be some change in the offering, but it seems that there still has to be some weight brought to bear on that.

2175 I take it that this particular problem is going to be with us for a little while longer.

2176 Let me turn to the impact of conventional loss here. The methodology here, as I understand it, was you essentially calculated a market share, cost-per-share point for 2002 basically on an arithmetic basis, dividing total conventional share into total conventional television and then you projected that dollar amount forward and said: If our shares go down by the amount projected, let's multiply by that derived cost per share and you will get the net impact of the loss.

2177 Is that correct?

2178 MR. O'FARRELL: Again, attributable to only the impact that flows because the basis of this document that you are looking at is the methodology that is on record with the Commission that pinpoints impact as to distant Canadian. That is a point that we have to make time and again because --

2179 THE CHAIRPERSON: Again, you will have to help me with that because if I look at the conventional station share for 2002 of 50.5, that is the conventional station share. That is an accurate statement of what the conventional station share is of the total.

2180 MR. O'FARRELL: You are looking at what now? I am sorry.

2181 THE CHAIRPERSON: Page 6, 3C, first table, 2002.

2182 MR. O'FARRELL: Yes.

2183 THE CHAIRPERSON: Those historic numbers are accurate, as I understand them, as conventional television shares. That is the share of viewing of those stations.

2184 Now, satellite penetration is probably accurate at 19, but again I don't see the causal link between those two.

2185 MR. O'FARRELL: If I may, what I perhaps would like to undertake to provide you with is an explanation of this coefficient factor which I believe would spell that out for you.

2186 THE CHAIRPERSON: Sure. Okay, that's one, but then again calculating it, it would seem to me that to simply say: We will establish a cost per share for 2000 and then just plug that in and multiply by share loss going forward and attribute that all to DTH, there doesn't appear to be, again, a causal justification for doing that given that specialty services are going to continue to fragment, foreign services are going to continue to fragment, and the share of conventional stations will be what it is at 50.5 in 2002, and so on.

2187 So why one group should bear the responsibility for that, I am not quite clear on.

2188 MR. O'FARRELL: Mr. Chairman, predicting the future is a mugs game, we all know that.

2189 THE CHAIRPERSON: Right.

2190 MR. O'FARRELL: What you have on record though is a historical analysis of impact based on actual reporting, actual viewing, and data that is not projections. It is recorded fact. We can make projections and we can try to defend them here until eleven o'clock tonight based on what we hope or what we don't hope for the future, but we made certain assumptions here about the future. I wouldn't want to suggest that they are any more valuable than perhaps the assumptions that were made when the DTH policy was created and we thought that distant Canadian signal would not have this large an impact.

2191 We do know historically that there is and has been demonstrable harm that has been calculated by Strategic Inc. that is on record with the Commission that we do believe has a methodology which is not a perfect methodology -- any expert will tell you that there is a better way to carve that particular angle or to cut that particular equation.

2192 Just so that the record is clear, the methodology that is on record with the Commission was verified by a combination of the research and sales and marketing forces of most of, if not all of, the companies that we represented, from small, medium to large, across English and French markets so as to use the very best resources we had to make that assessment for you.

2193 THE CHAIRPERSON: Okay. That was longer on the first point than I had hoped.

2194 Let me move to the second point, which I think will be briefer. In paragraph 33 of your intervention -- and this is on the interventions to both licensees -- you advocate a rate representing the greater of 50 cents or 50 per cent of the retail rate charged by DTH operators for the second set of 4+1 signals.

2195 What do you base that number on and how did you derive it?

2196 MR. O'FARRELL: Well, it was based in part on the historical relationship that we have had in terms of compensation for U.S. 4+1s, again making projections about the future and their value on a going-forward basis.

2197 We, again, are held to the scrutiny of all of the lights that you want to shed on this, which is to show little if no information from the applicants that are here before you giving us any assistance to say, "Here are our expected penetration rates and, therefore, you can guide your expectations along at least these guidelines". We don't have that. We would be very happy to have that to further educate our own guesses and our own assessments, but we don't have that, so we have made it somewhat with the best information we had and assumptions as they seemed to be reasonable to us.

2198 THE CHAIRPERSON: Would it not be a fair statement to say that you are kind of -- I wouldn't say rearguing, but in effect you are saying, "Well, since you only gave us part of what we wanted in your July 2003 decision, make sure they give us a bit more now"?

2199 MR. O'FARRELL: No, Mr. Chair. I thank you for raising that because it is something that we do feel very strongly about. There were other avenues available to us, as you know. One could have been to possibly appeal the decision that the Commission rendered, and that was decided to be not a course of action that was appropriate because we felt that the decision had, in fact, recognized part of the problem. We saw part of the solution and being convinced that the glass being perhaps not as full as we would have liked it but moving away from empty was a good direction to be going in.

2200 We saw that this was an opportunity where you would want to look at, on a going-forward basis, a broader picture of the DTH licensees and the operating environment that they would be looking at to make your assessments about what terms and conditions should guide their renewal, that this was the right place to do so.

2201 We knew that you had invited, or were about to invite, the CBC to a discussion on its terms of carriage, but lastly, Mr. Chairman, it is because we felt that there was no other opportunity more well suited than this one where, after a full term plus two administrative renewals largely driven by an attempt at a market-driven negotiated solution that was turned down by the Commission, we felt that if we were silenced at this point in time on this very important issue of the sustenance of local and regional programming, because that is clearly what is at the heart of it, which is if these resources continue to be undermined -- and we expect that other than small independent broadcasters can continue to absorb another layer of financial regulatory burden without it having to cut somewhere, the money will have to come from somewhere, the resource will have to be drawn from somewhere -- we felt that this was the only opportunity we had and we were hoping that you would show your indulgence, as you have to at least have the discussion, and to take our views into account as you look at these licence renewals.

2202 THE CHAIRPERSON: Thank you.

2203 The third area then is compensation for delays. Again, this is specific to Star Choice and it's at paragraph 58 of your intervention where you advocate that their request for a delay not be approved, but that if it is that there be a compensation delay which you say should be increased by 5 cents per subscriber for each month Star Choice does not meet its distribution requirements.

2204 How would that work exactly? What would that mechanism be that you are proposing?

2205 MR. O'FARRELL: Well, first of all, we know that Star Choice cannot fully control the matter of the difficulties that they are having with the satellite that they would like to launch.

2206 But the question that you have to ask yourselves, that we have had asked ourselves, is: So who is going to pay for the damage and the loss to these broadcasters that your July decision required they launch so that they could continue to sustain their programming and their markets? Clearly, in our view, we don't feel comfortable in suggesting that they can sustain any more than they already have and so that if it is, in fact, impossible to obtain channel capacity -- and I would like to come back to that topic in a moment, if I may -- there has to be some at least punitive compensation measures, a combination of compensation and punitive at once, to encourage other solutions.

2207 We heard this morning about the cost of a transponder versus the cost of programming. Clearly, if it's costing $18,000 a month or so of programming, if my numbers are right, and it costs $125,000 for a transponder, I know which way the math adds up for me. I think it's pretty clear that I will cut the $18,000 cheque before the $125,000 cheque.

2208 We are not trying to put anybody into a catch-22 position here, but these broadcasters that you determined needed to be launched have to find some kind of a solution for their situation and we feel that one suggestion -- and again, we are not suggesting that it's the only one available to the Commission, but certainly it would take the road of giving them some comfort and compensation plus a punitive measure, if you will, to ensure that it would happen sooner than later.

2209 On the subject of transponder capacity, if I may for a minute, this is not something that is desirable and is far from an ideal world, but there are five HDTV channels, we believe, operating now under Star Choice that are utilizing significant transponder space.

2210 Under the heading of "makeshift, do good, find a bridge solution", would it not be possible to see in some manner those channels reallocated in part, because we know that HDTV compresses at a lower rate than conventional analog TV, so that these stations could be launched? We would hope you would consider that because we do believe that there is potential solutions within the current grid of services that they offer and, indeed, we feel the same way as, I believe, Mr. Carter of TQS said as to the question of deniability, or lack of deniability, of this floating capacity from a Telesat perspective.

2211 Again, there is a cost, but the question you have to ask yourselves is who is more appropriate to bear the costs here? These stations that were deemed to be urgent and in dire straights and the smallest independents unaffiliated or Star Choice who is facing an unfortunate technical situation but, frankly, one which needs resolution and shouldn't be resolved with the expense being passed to the programmers.

2212 THE CHAIRPERSON: Star Choice, as you know, will be providing us with a report and perhaps we will raise that with them. Thank you for that.

2213 Those are all my questions. Thank you very much.

2214 MR. O'FARRELL: Thank you.

2215 THE CHAIRPERSON: Counsel?

2216 MR. WILSON: Just two brief questions.

2217 First, you had undertaken to provide the Chair with what I believe is an explanation of the coefficient factor.

2218 Would you be able to do that by the end of tomorrow?

2219 MR. O'FARRELL: I will undertake to do that with the one reservation that I have to speak to the consultant to make sure that she is in a position to provide it by end of the day tomorrow at the latest. If not, I will get back to you to let you know when it will be, but it will be this week for sure.

2220 MR. WILSON: Okay. We will speak to Mr. LeBel about that.

2221 THE CHAIRPERSON: While we are on that, counsel, it was brought to my attention that in that CKAL table on page 3, that the CKAL share of the cable universe, 5.2, staff has a different number for that and perhaps that could be verified.

2222 There is a suggestion of a 6.1 per cent increase. Do you see where I am pointing, at 2A?

2223 MR. O'FARRELL: I don't have a sheet here. Sorry about that.

--- Pause

2224 MR. O'FARRELL: You are in section 2A?

2225 THE CHAIRPERSON: Yes, 2A, that table, Calgary.

2226 MR. O'FARRELL: Yes.

2227 THE CHAIRPERSON: The third category, CKAL share in cabling universe.

2228 MR. O'FARRELL: Yes.

2229 THE CHAIRPERSON: The second number for 2002, 5.2, our staff believes that that is wrong and that there was a decline rather than an increase of about 6 per cent. So perhaps you could just ask her to verify that as well.

2230 MR. O'FARRELL: We will verify that for sure.

2231 THE CHAIRPERSON: Thank you.

2232 Counsel?

2233 MR. WILSON: Just one final question.

2234 In your presentation dealing with your request for a short-term licence renewal for Star Choice, one of the items that you cited was the allegation of non-compliance with the structural-separation COLs.

2235 I would just like to ask you whether the CAB would propose any other specific measures beyond what you have requested in terms of a short-term licence renewal to address any concerns you may have with respect to the structural-separation COLs and Star Choice?

2236 MR. O'FARRELL: As alternatives to or in addition to?

2237 MR. WILSON: Either.

2238 MR. O'FARRELL: Well, anybody asking for or suggesting a short-term licence renewal is probably making a career-limiting statement under any circumstances.

2239 First of all, we don't take this matter very lightly. We take it very seriously because it's quite exceptional. But having said that, there may be alternatives to a shorter term licence renewal that the Commission may deem to be appropriate providing that they are not only effective, but they have to be extremely transparent and they have to allow the system to essentially absorb the same message which is conditions of licence and regulatory requirements, if not followed, bear consequences.

2240 MR. WILSON: I have no further questions, Mr. Chairman.

2241 THE CHAIRPERSON: Thank you very much, Mr. O'Farrell.

2242 Mr. Secretary.

2243 MR. LeBEL: Thank you, Mr. Chairman.

2244 Since Cogeco Inc. will only appear tomorrow after ExpressVu's presentation, the last appearing intervention will be made by the Canadian Broadcasting Association, Mr. Michel Tremblay and Steven Guiton.

2245 THE CHAIRPERSON: Do you mean the Canadian Broadcasting Corporation?

2246 MR. LeBEL: I thought that is what I said, Mr. Chairman.

2247 THE CHAIRPERSON: It's late. That's who we mean. I think they know who they are.

--- Pause

2248 THE CHAIRPERSON: Before the Secretary official calls the item, I can't help but note which the only panel being televised is.

--- Laughter / Rires

2249 MR. LeBEL: You have ten minutes to make your presentation. Thank you.

INTERVENTION

2250 M. TREMBLAY: Merci, monsieur le secrétaire.

2251 Monsieur le présidente, mesdames et messieurs les membres du Conseil.

2252 Je m'appelle Michel Tremblay, et je suis vice-président, Stratégie et Développement commercial à la Société Radio-Canada.

2253 Je comparais devant vous ce soir en compagnie des représentants de nos services locaux de télévision. A mon extrême gauche, Michel Picard, chef d'antenne du Midi et d'Aujourd'hui à CBOFT; Rita Celli, présentatrice de Canada Now à CBOT. A ma droite, Steven Guiton, premier directeur, Planification stratégique et Affaires gouvernementales. Immédiatement derrière moi, Lynn Raineault, directrice, Développement et Projets spéciaux, télévision anglaise, ainsi que Bob Rioux, chef des émissions d'information, Ontario/Outaouais.

2254 La Société Radio-Canada est reconnaissante de l'occasion qui lui est donnée d'intervenir dans cette procédure ici aujourd'hui. Star Choice est la deuxième plus importante entreprise de distribution de radiodiffusion numérique et globalement elle est la sixième plus importante EDR. Par conséquent, Star Choice joue un rôle crucial dans la poursuite des objectifs stipulés dans la Loi sur la radiodiffusion et influe considérablement sur la capacité de CBC/Radio-Canada de s'acquitter de son mandat en vertu de cette même loi.

2255 A cause du refus de Star Choice d'amorcer des discussions significatives sur la distribution de nos signaux, CBC/Radio-Canada n'a d'autre choix que de s'adresser au Conseil pour essayer d'atteindre ses objectifs en matière de distribution dans l'intérêt des Canadiens.

2256 Aujourd'hui, je m'attarderai sur quatre enjeux clés :

1. la nécessité d'imposer à Star Choice un cadre réglementaire qui corresponde à son importance;

2. l'importance d'offrir immédiatement aux stations de base de CBC/Radio-Canada une distribution équivalente à celle offerte aux principaux réseaux de télévision privés et de maintenir la distribution de Newsworld et de RDI au service de base;

3. la nécessité de mise en oeuvre de la recommandation du Comité permanent sur les langues officielles qui demande aux services de distribution par satellite d'offrir le signal de toutes les stations de télévision régionales de CBC/Radio-Canada, recommandation qui a d'ailleurs reçu l'appui du gouvernement; et finalement

4. qu'en l'absence d'engagements clairs de Star Choice, de la nécessité de lui imposer des obligations réglementaires strictes et précises.

2257 J'aborderai brièvement chacun de ces enjeux.

2258 In our view, there are two reasons why the regulatory regime for Star Choice needs to be updated.

2259 First, Star Choice is no longer a fledgling operation in need of protection and nurturing. With over 800,000 subscribers, Star Choice is now the second largest digital BDU in Canada and the sixth largest BDU overall, just slightly smaller than Cogeco.

2260 In 2000, Star Choice had revenues of $416 million and achieved a positive EBITDA in the third quarter of that year. By the third quarter of 2003, Star Choice had achieved an EBITDA of 12.5 per cent.

2261 Under the light-handed regulatory regime the Commission initially established for DTH licensees, Star Choice is required to distribute one English and one French-language television service of the CBC. These limited obligations have created a very unbalanced climate for negotiation.

2262 Star Choice has used its current light-handed regulatory regime as a way of avoiding further carriage commitments to the CBC or even responding to requests by the CBC for a discussion of carriage issues. This uncertainty must come to an end.

2263 As a result of Star Choice's unilateral decision-making, the CBC does not enjoy carriage parity with the major private television networks on either the English or the French-language side. This is unacceptable.

2264 On the French side, Star Choice carries only two Radio-Canada stations, Moncton and Montreal, as compared to five TVA and two TQS. In particular, Star Choice does not carry CBVT Quebec or any of the French-language CBC stations west of montreal, including, of course, CBOFT Ottawa.

2265 Francophone minorities are truly underserved by Star Choice and need proper access to CBC regional stations. This must change, especially when considering that Star Choice devotes 20 channels to U.S. 4+1 signals and that ExpressVu currently carries five of our French television stations.

2266 On the English side, Star Choice carries eight CBC, eight CanWest and nine CTV English-language stations. Of particular note is the fact that Star Choice does not carry either CBC North or CBWT Winnipeg, thereby denying all of its northern subscribers of the CBC special norther programming and all of its Manitoban subscribers of a Manitoba-based CBC station.

2267 In its October 6th reply Star Choice suggests that it is doing more than enough as it recently added a number of CBC English-language affiliates. This is a misleading answer.

2268 Firstly, it is clear that Star Choice is largely carrying those affiliates in response to the CAB's effort to get proper protection and compensation for small market private television stations.

2269 Secondly, it is essential to recognize that those affiliates do not carry the full CBC schedule. On average they carry about half and some as little as 33 per cent. The Commission should understand that affiliates are not a substitute for CBC O&O stations that carry the full CBC schedule.

2270 Star Choice is now a major BDU and should be subject to obligations that match its proposition in the system. Experience has clearly demonstrated that Star Choice will not voluntary take on such obligations.

2271 These two factors indicate clearly that the regulatory regime applicable to Star Choice must change. Short of clear commitments, Star Choice must be made subject to well-defined regulatory obligations set out in binding conditions of licence.

2272 Section 3 of the Broadcasting Act identified the CBC as "Canada's national broadcaster" and stipulates that the CBC's programming should "be made available throughout Canada by the most appropriate and efficient means".

2273 Given the CBC's status and mandate under the Act, it is simply not acceptable that Star Choice is providing greater carriage to private television networks than it does to the CBC.

2274 In our view, Star Choice should be required by condition of licence to immediately provide carriage parity to the CBC in respect of both English and French-language television stations.

2275 We are aware that Star Choice is suggesting that it lacks the capacity to add CBC stations. While capacity is a factor, priority is the issue.

2276 In the CBC's view, Star Choice should be required by condition of licence to provide the Commission with regular capacity reports setting out the amount of satellite capacity available to it, as well as the manner in which that capacity is used.

2277 As well, Star Choice should be required to maintain CBC Newsworld and RDI carriage on both its French and English-language basic services. Given the size of Star Choice's subscriber base, it is critical that Newsworld and RDI continue to be carried on basic.

2278 Star Choice suggests in its reply that guaranteeing Newsworld and RDI basic carriage, and I quote:

"... would cause very significant disruption to subscribers and would, undoubtedly, result in considerable consumer backlash."

2279 But Newsworld and RDI are already carried on Star Choice's basic service, so disruption to subscribers is clearly not a factor. What there would is certainty for those services and for Star Choice subscribers, certainty that these key news and information services would continue to be part of Star Choice's basic package, where they belong.

2280 The CBC has come to the conclusion that short of an absolute commitment from Star Choice, there is no practical way to resolve this important issue except by means of a condition of licence requiring Star Choice to provide basic carriage to Newsworld and RDI for the full duration of its licence term.

2281 L'hiver dernier, le comité permanent sur les langues officielles a déposé un rapport qui recommandait que les services de distribution par satellite comme Star Choice soient tenus de distribuer le signal de toutes les stations de télévision régionales de CBC/Radio-Canada.

2282 Le gouvernement a répondu au rapport du comité en août dernier. Dans sa réponse, il précisait être d'accord avec la recommandation du comité.

2283 De l'avis de CBC/Radio-Canada, la recommandation du comité permanent et la réponse du gouvernement tiennent compte du statut et du rôle que nous confère le parlement par l'entremise de la Loi sur la radiodiffusion.

2284 Cela étant dit, Radio-Canada reconnaît la possibilité que Star Choice ne dispose pas dans l'immédiat de la capacité requise pour distribuer le signal de toutes ses stations de télévision.

2285 Compte tenu de ces circonstances, nous jugerions raisonnable l'adoption par le Conseil de la démarche qui suit.

2286 Premièrement, Star Choice devrait être tenue d'ajouter à son offre le signal d'un nombre significatif de stations de langue anglaise et de langue française de CBC/Radio-Canada dans les mois qui suivront l'entrée en service d'Anik F2 selon un calendrier bien défini.

2287 Deuxièmement, il devrait être interdit à Star Choice d'ajouter un signal non canadien à son offre sauf si elle ajoute aussi au même moment le signal d'une station de télévision de CBC/Radio Canada, et ce jusqu'à ce que le signal de toutes les stations de télévision de CBC/Radio-Canada soient distribué.

2288 Troisièmement, CBC/Radio-Canada devrait fixer l'ordre de priorité dans lequel le signal de ces stations de télévision serait ajouté.

2289 D'autre part, la licence de Star Choice devrait être renouvelée pour trois ans avec une condition exigeant qu'elle présente tous les ans un rapport qui permettra au Conseil de réévaluer ses obligations.

2290 Finalement, nous voulons être clairs que les canaux dits « occasionnels » ne représentent pas une solution viable pour aucun diffuseur et encore moins pour CBC/Radio-Canada.

2291 Ces canaux n'offrent aucun lien avec la communauté, pas d'événements spéciaux, pas de messages d'intérêts publics pertinents, pas d'information communautaire, pas de publicité locale et régionale. L'expérience de CJOH-TV, tel que mentionné dans l'intervention de CTV Network, illustre clairement les faiblesses d'une telle approche.

2292 Voilà, monsieur le président, mesdames et messieurs les commissaires, qui met un terme à nos remarques. Nous sommes prêts à répondre à vos questions.

2293 Merci.

2294 LE PRÉSIDENT: Merci.

2295 Madame Wylie.

2296 CONSEILLÈRE WYLIE: Bonjour, mesdames et messieurs... ou bonsoir plutôt.

2297 A la page 8, monsieur Tremblay, quand vous parlez des « canaux dits occasionnels », vous parlez du terme qui est utilisé quand on mentionne la capacité et les contrats avec Telesat, ou vous parlez d'un canal où serait regroupée la programme locale de plusieurs stations de Radio-Canada?

2298 Comment utilisez-vous ce terme?

2299 M. TREMBLAY: Nous entendons par canal occasionnel les canaux sur lesquels on distribue une partie seulement de nos émissions comme CJOH est distribué à une position sans autre habillage d'antenne.

2300 CONSEILLÈRE WYLIE: Alors ce n'est pas pour vous une solution.

2301 Maintenant, vous avez dans votre soumission écrite établi au paragraphe 51 ce que vous croyez que nous devrions exiger de Radio-Canada, aussi bien en anglais qu'en français.

2302 Aujourd'hui, vous nous parlez à plusieurs reprises de « parity ».

2303 Est-ce que vous pouvez être plus précis sur ce que vous voudriez qui soit imposé d'ici au déploiement d'Anik F2 et après le déploiement d'Anik F2. Il semblerait que, et je me méprends peut-être, que ce que vous proposez comme solution à la page 15, au paragraphe 51 de votre soumission est plus que « parity ».

2304 M. TREMBLAY: Permettez-moi d'éclaircir la situation. Il est bien entendu que tant que F2 ne sera pas déployé, nous pensons qu'au minimum Radio-Canada et CBC devraient jouir de la parité de distribution par rapport aux autres grands réseaux.

2305 A notre avis, compte tenu de notre mandat, il nous apparaît inacceptable d'avoir deux stations de télévision du réseau français alors que TVA en a cinq, ce qui nous empêche de desservir les besoins des minorités francophones hors Québec.

2306 Évidemment, il y a pas mal moins de chemin à faire pour établir la parité par rapport au réseau anglais, mais pour nous c'est un minimum vital. Évidemment, lorsque F2 entrera en service, ce que nous souhaitons voir c'est un plan bien défini qui va permettre la distribution de tous nos signaux parce que, ultimement, ça demeure la solution mais il faut quand même être raisonnable à court terme. Il faut passer par des étapes et la parité pour nous est un principe qui devrait être mis en place de façon très, très claire.

2307 CONSEILLÈRE WYLIE: Et voilà.

2308 Parity for me, and I may be wrong grammatically, but is a concept that does not mean equality, does it? Or does it? You mean if they have five --

2309 MR. TREMBLAY: Equal treatment. I think that there are no reasons why we should have two stations being carried while other networks have more.

2310 COMMISSIONER WYLIE: So if I go at the bottom of page 4 -- the reason I am pursuing this is we have asked Star Choice to give us a plan that is more than saying, "Well, we have been discussing. They want this. We can't give that. They are unreasonable", and that is probably what I read here of your view -- qu'il y a un refus de Star Choice d'amorcer des discussions significatives.

2311 Il reste donc que...

2312 M. TREMBLAY: Et de prendre des engagements.

2313 CONSEILLÈRE WYLIE: C'est ça. Il faut qu'ils prennent des engagements et sensément à la réplique ils vont nous en donner, ou peut-être que nous allons être obligés d'en mettre un de l'avant.

2314 Lequel est le vôtre exactement parce que quand vous dites :

"On the English side, Star Choice carries eight CBC, eight CanWest and nine CTV...".

2315 What is it that you feel in the interim and after Anik F2, and in what timelines?

2316 Have you, among yourselves, come closer to a more exact requirement? Parity with TQS is two, which you already have. Right? It's not helping me, is it?

2317 M. TREMBLAY: Si vous me permettez...

2318 COMMISSIONER WYLIE: Parity with TVA, cinq. Vous en avez deux. On en ajoute trois. Est-ce que c'est dans l'interim ou après? To have something concrete for them to reply to and presumably -- it's unfortunate, but we seem to be negotiating in public for something that we say has to be done -- not that I don't enjoy it.

--- Laughter / Rires

2319 M. TREMBLAY: Ça ne fait aucun doute, c'est évident. Je pense qu'avant de passer la parole à M. Guiton pour préciser comment on verrait la parité ou un traitement équitable, une mise en place, je pense qu'il faut dire qu'effectivement si on est ici pour débattre de ces questions-là c'est qu'on fait face à un régime réglementaire qui favorise la position des distributeurs satellitaire et qui rend très, très difficile la négociation, l'ajout de nouvelles stations. Donc il y a une espèce de dichotomie, ce qui explique notre présence.

2320 Alors monsieur Guiton, s'il vous plaît.

2321 M. GUITON: Oui, certainement.

2322 The logic of the parity is to go to the level of the highest major broadcaster. And so in the case of the English, it would be adding one more CBC service and in the case of French, it would be adding three.

2323 Just returning to what you were saying at paragraph 51, the first paragraph or subparagraph in paragraph 51, deals with the immediate issue of parity. So that would mean immediately adding one more English, three more French, turning the page to the second subparagraph of 51 would be moving to once Anik F2 is launched, and the five stations identified there would be the remaining CBC signals.

2324 So the parity point is only the first sub-bullet and the second sub-bullet moving us to where the Official Languages Committee and the government's endorsement of the Official Languages Committee would be taking us.

2325 COMMISSIONER WYLIE: So after Anik F2 is operating commercially, when you say "all CBC", we would have how many CBC services uplinked?

2326 MR. GUITON: Going to the last page of our submission --

2327 COMMISSIONER WYLIE: Or paragraph 51, first bullet on page 16.

2328 MR. GUITON: The last page of our submission, which is page 18 which show all the services that would be launched.

2329 COMMISSIONER WYLIE: Yes, of the written submission.

2330 MR. GUITON: Yes.

2331 MR. TREMBLAY: We would end up with a total of 14 CBC television owned and operated stations, and eight French-language stations.

2332 COMMISSIONER WYLIE: And how many would CTV have by then according to what we have heard to date? Nine? Unless they had more. They now have nine CTV English-language stations uplinked and eight CanWest stations.

2333 MR. GUITON: Madame Wylie, if I could just add.

2334 COMMISSIONER WYLIE: Yes, go ahead.

2335 MR. GUITON: The logic of how we are breaking this down in terms of turning you to page 18. The carriage parity is an immediate issue to get the CBC on a standard with the major --

2336 COMMISSIONER WYLIE: And you want them all up.

2337 MR. GUITON: And then, we would go to where, as I mentioned, the government is proposing we go in its response to the Official Languages Committee to get the rest of them up.

2338 COMMISSIONER WYLIE: And you would suggest two per year. If I recall, but do correct me, the manner in which it could be done would be discussed as you go forward. Correct? You wouldn't identify the two per year in the manner in which it would be --

2339 MR. GUITON: The two per year, again I am going back to paragraph 51 --

2340 COMMISSIONER WYLIE: Which is after Anik F2 is in operation.

2341 MR. GUITON: Right, and just in that subparagraph where we mention the two per year, that is in the event there were any others that weren't lifted. Should it be the case between now and when Anik F2 is launched, should the table on page 18 change so that there are other CBC O&O stations that emerge, those would be launched as well.

2342 COMMISSIONER WYLIE: But parity in the interim would not give you the uplink of all the stations in the appendix of CBC stations.

2343 MR. GUITON: No, that's correct.

2344 COMMISSIONER WYLIE: So then those that are left would be those that would be added after Anik F2 at two per year. Correct?

2345 M. TREMBLAY: Nous proposons d'avoir la possibilité de choisir et de déterminer dans quel ordre ces stations seront effectivement montées sur...

2346 CONSEILLÈRE WYLIE: Vous n'êtes pas en position de nous proposer cet échéancier en ce moment.

2347 M. TREMBLAY: Cet échéancier?

2348 CONSEILLÈRE WYLIE: Comment on les choisirait, lesquels seraient ajoutés en ce moment. Est-ce que c'est basé sur le service régional, mais surtout du côté francophone.

2349 M. TREMBLAY: Normalement c'est une consultation et nous avons des consultations avec des exploitants, les responsables des réseaux, pour fixer ces priorités-là. Si le Conseil le souhaitait, on pourrait vous fournir la liste de priorités mais, évidemment, ça peut devenir variable dans le temps.

2350 Donc...

2351 CONSEILLÈRE WYLIE: Alors pour vous il serait suffisant d'avoir un projet qui serait numérique, et à ce moment-là vous choisiriez selon... et sans doute ça serait selon les lignes ascendantes et tous ces trucs-là, je suppose.

2352 M. TREMBLAY: Ce que l'on souhaite c'est que le Conseil finalement accepte ce principe et qu'il soit effectivement par la force des choses imposé à Star Choice, à moins qu'il ne l'accepte de plein gré. A ce moment-là nous fixerions les priorités, dans quel ordre les signaux seraient distribués. Évidemment, l'entrée en service d'Anik F2 va changer les questions de disponibilité.

2353 CONSEILLÈRE WYLIE: Alors voilà, monsieur Guiton et monsieur Tremblay, à la page 51 c'est votre proposition.

2354 M. TREMBLAY: Oui, essentiellement.

2355 CONSEILLÈRE WYLIE: Et essentiellement vous allez être là pour entendre celle de Star Choice.

2356 M. TREMBLAY: J'aimerais simplement, si vous me le permettez, parce que la raison pour laquelle on a amené des représentants des stations locales c'est pour aussi faire la démonstration brièvement, si vous le permettez, que ce n'est pas qu'une question de chiffres d'avoir un nombre équivalent de stations par rapport aux autres.

2357 Il y a des conséquences quand même assez néfastes sur nos émissions et notre capacité de rejoindre les populations visées. Avec votre permission, j'aurais peut-être aimé inviter soit M. Rioux ou M. Picard pour nous parler de la situation finalement dans laquelle se trouve CBOFT actuellement qui n'est pas distribuée ni sur Star Choice et ni sur ExpressVu.

2358 M. PICARD: Alors je vais parler avant le patron. Bonsoir.

2359 On a des chiffres assez révélateurs au cours des années, dans les deux ou trois dernières années. Il faut comprendre -- enfin, moi je vous parle aussi avec mon coeur -- qu'on sort beaucoup Radio-Canada des deux côtés de la rivière. On est la seule station à desservir l'Ontario au complet, dont l'est ontarien et Ottawa, et une grande partie du Québec, l'Outaouais, la Petite-Nation et la Haute-Gatineau. C'est un territoire immense par rapport à d'autres stations régionales.

2360 Il y a aussi, et je fais une parenthèse, un boom immobilier incroyable qui fait en sorte que ces gens-là, et à cause de la technologie aussi, achètent presque spontanément des coupoles ne sachant pas que le signal local n'est pas dessus.

2361 En sortant pour aller couvrir des choses qui ne sont couvertes que d'ici, pour notre marché d'ici, les gens nous disent, « On ne peut pas vous capter ». Ainsi, on ne peut pas couvrir ce que les gens font dans leurs communautés et leur dire.

2362 On parlait beaucoup ici, et vous avez posé d'excellentes questions, cet après-midi. Vous parliez des bulletins-nouvelles. Mais notre station c'est beaucoup plus qu'un bulletin-nouvelles. C'est plusieurs bulletins-nouvelles le midi, le soir, la fin de semaine. Ajoutez à cela des émissions régionales complètes d'affaires publiques, culturelles, communautaires avec un babillard. Donc les gens se retrouvent là-dedans, en plus de la publicité, comme on le signalait.

2363 Juste pour vous donner un chiffre -- et peut-être que Bob peut compléter -- dans la dernière année, par exemple si vous prenez le territoire de la Petite-Nation et de la Haute-Gatineau dans l'arrière-pays, il y a 50 pour cent des gens qui ont une coupole... une personne sur deux a une coupole. Donc ça veut dire que ces gens-là qui vivent dans les montagnes, ou, comme le disait Mme Lalande cet après-midi, le signal antenne normale est très difficilement captable. Ces gens-là ne voient plus Radio-Canada Ottawa, Outaouais, Ontario. Impossible. Une personne sur deux...

2364 Quand on regarde en périphérie dans l'est ontarien c'est 25 pour cent. Alors c'est une personne sur quatre et les chiffres sont pires dans le nord de l'Ontario où c'est à peu près je pense une personne sur trois. Alors c'est énorme.

2365 Peut-être que Bob peut compléter.

2366 M. RIOUX: J'ajouterais à ça que nous avons tissé à Radio-Canada Ontario- Outaouais, une toile importante sur le terrain, c'est-à-dire que nous avons des postes journalistiques à Hawkesbury, Kingston, Welland, Windsor, Hearst, Timmins, Sudbury, incluant un bureau plus imposant à Toronto et ici, évidemment, la maison-mère de Radio-Canada en Ontario-Outaouais à Ottawa.

2367 Sur le terrain il est évident que lors de multiples couvertures d'émissions spéciales on se fait interpeller par nos téléspectateurs qui nous disent, « On ne vous reçoit pas ». Pour nous c'est inquiétant.

2368 Juste quelques exemples, et avant les exemples je dirais que toutes les études démontrent que les gens qui reviennent à la maison en fin de journée veulent avoir des nouvelles de leur milieu, de ce qui s'est passé dans leur région et dans le monde. Alors ça c'est un service régional de proximité qui peut donner ce service-là et c'est ce qu'offre Radio-Canada ici en Ontario-Outaouais.

2369 Alors un exemple. Dans l'est de l'Ontario nous avons un bureau journalistique à Hawkesbury. Nous avons couvert la tragique disparition du sergent Marc Léger tué en Afghanistan il y a quelques mois et nous avons fait une couverture sur RDI pour les funérailles en après-midi. Quand nous sommes arrivés au 18 heures pour une couverture également en spécial, les gens de l'est ontarien, de Lancaster, ne pouvaient nous recevoir en majeure partie, si bien que nous avons eu une avalanche d'appels téléphoniques le lendemain pour avoir des copies de cette couverture-là.

2370 Ça a été la même chose pour le défilé de la Coupe Stanley à Hawkesbury il y a deux ans. Alors ça ne cesse de progresser. Quand on parle de la région de Gatineau, aux dernières élections de la Ville de Gatineau en 2001, lors de la fusion de la Grande Ville de Gatineau, nous avons battu un record d'audience avec un volume de 60 pour cent. Donc 83 000 personnes sont venues nous écouter. A ce moment-là les coupoles satellites nous affectaient environ à 7 000 téléspectateurs de moins.

2371 Maintenant dans le Grand Gatineau c'est déjà passé à 12 000, et si on compte la grande région de la Capitale nationale tous les soirs on part avec 26 000 téléspectateurs en moins. Alors c'est un peu épeurant de voir ça progresser à cette vitesse-là.

2372 Il y a d'autres exemples, mais pour l'instant j'arrêterai là.

2373 Merci.

2374 CONSEILLÈRE WYLIE: Je vous remercie.

2375 Je crois que votre position est claire. Nous avons discuté, évidemment, avec Star Choice de cette idée de faire des rapports annuels de ce qui se passe. Évidemment, il faudra, je suppose, exiger ces rapports-là en fonction de toute exigence qui serait imposée si c'est que le Conseil choisit de faire.

2376 Je n'ai plus de questions. Merci, mesdames et messieurs et monsieur le président.

2377 LE PRÉSIDENT: Merci, mesdames et messieurs.

2378 We will take a brief break of ten minutes and resume at 8:20 with Phase III.

2379 Est-ce que c'est vrai?

2380 MR. LeBEL: That's correct, Mr. Chairman.

2381 THE CHAIRPERSON: I always make sure the Secretary is on side.

2382 Thank you. Ten minutes.

--- Upon recessing at 2010 / Suspension à 2010

--- Upon resuming at 2023 / Reprise à 2023

2383 THE CHAIRPERSON: Mr. Secretary.

2384 MR. LeBEL: Thank you, Mr. Chairman.

2385 I will now ask Star Choice Television Network Inc. to respond to the intervention at this time. You have ten minutes to respond.

REPLY / RÉPLIQUE

2386 MR. STEIN: Thank you very much.

2387 I guess first I should introduce my colleagues, Chris Johnston, to my right, fresh from his victory today regarding the upholding of the CRTC's jurisdiction with respect to deregulation. So we are very appreciate of his assistance.

2388 On my left, of course, Cynthia Rathwell, Vice-President of Star Choice.

2389 We have submitted a detailed written reply to intervenors and I do not intend to repeat that. That stands, of course, as part of the record.

2390 As well, I do not think I need to reiterate our contributions to the broadcasting system that we described this morning. We think our contributions have been impressive to consumers, to broadcasters and pay and specialty services, and our contributions to the Canadian Programming Fund.

2391 We think that these contributions and the obligations should also be taken into account by the Commission when it looks at the licensing conditions that it may wish to consider as a result of this process.

2392 In terms of the intervention by the CAB, there are a few points that I think that I should make aside from our written reply.

2393 First is that regarding the "equitable carriage" for specialities, what that really seems to be is seeking cable-like dual modified or dual carriage regime, and we think that the success of the Canadian pay and specialty services within the new system under DTH absolutely proves that this kind of approach is not required. It's not friendly to consumers and it belies the very strong results of all the pay and specialty services that they have enjoyed with carriage on DTH under the current set of regime.

2394 Regarding the issue on compensation, we understood that the local carriage proceeding to address those issues -- it was a broad inquiry, it was a very balanced look. I don't think that anybody was happy with all the issues of it, but it was a decision that was taken.

2395 The Strategic study was tabled at that point. We had major questions at the time that we were in discussions with the CAB about the validity of that study, in particular that it did not take into the account the impact on the black market and did not take into account the impact on local broadcasters of the delivery of pay and specialty services.

2396 So in the end what the study did was it took the impact on the broadcasters which we did not necessarily agree with, but we agreed that there was some impact, but then whatever the agreement was on the impact, it then ascribed all of that impact to DTH and we thought that that was not valid.

2397 In terms of the proposal for a short-term renewal, we believe that that has absolutely no justification. The first is that we are in compliance with structural separation. We have reviewed it thoroughly. We have reviewed our procedures thoroughly with our counsel and we have put in place all of the appropriate procedures as per our filings with the CRTC.

2398 Second, we are not abusing the process by seeking relief in our amendment for consideration after December 31, 2003. Telesat has confirmed the delays. It's not what we want. We would much rather be able to meet our obligations and move ahead, but the situation with the satellite is problematic, as they have been over the past number of years. It's just the nature of the business.

2399 Third, regarding HDTV we see this as a competitive necessity, but our capacity must be used responsibly. We have to face the fact that we do have 59 channels less than Bell ExpressVu and we still have to be competitive in the market. We are not asking for any breaks with respect to that, but we do believe that this is something that really helps us be competitive and meet a growing demand in the marketplace. And for that we do seek permission.

2400 Finally, in terms of V-chip encoding, we do pass it through -- and there are issues there we can discuss with the broadcasters, if need be, in terms of the use of the Canadian coding and the capabilities of our new receivers.

2401 With respect to equitable carriage and the local carriage issues, as I said earlier we do believe that the CRTC dealt with these thoroughly in the local signal carriage decision and that decision, in our view, represents a balanced approach to a range of very tricky questions.

2402 Our issue on it is quite straightforward. We are committed to our obligations. We are simply asking for the amendment that we had proposed only in light of the delays to F2.

2403 The other intervention I would like to respond to is with respect to concerns with respect to our French-language offerings and the fact that many people indicated that they seem to be light in terms of what we carry in terms of English language.

2404 We are very responsive to our French-language subscribers. They represent 24 per cent of our subscriber base and we hold our own against ExpressVu and cable in the French-language markets. I am sure that Bell, Cogeco and Vidéotron will all attest to that and as, perhaps unfortunately, the TQS intervention pointed out, we are successful in those markets and I think it is because we do respond strongly to our francophone subscribers.

2405 The key concerns raised by the intervenors relate essentially, in our view, to carriage. The key challenge for us is how we deal with these carriage arrangements in the short term in view of the amendment that we have proposed.

2406 The demands, as we understand them, relate to, first, the availability of SRC signals in regions outside of Quebec, particularly with reference to local news.

2407 The second is the carriage of unaffiliated, small market broadcasters set out in Appendix A to 2003-258, the local signal carriage decision.

2408 The third issue is the equitable carriage amongst large groups.

2409 We will propose the following in response.

2410 Regarding the SCR, we are very aware of the Commission's expectations as expressed in 2001. We have been wrestling with how to deal with these expectations, along with others, and unfortunately our plans to deal with this have very much been based on F2.

2411 But in terms of moving ahead, we are prepared to offer on a compilation basis on channel 298 the SRC local and regional newscasts which would be available to subscribers in the area in which they live at the time at which they were broadcast from all regions where we do not currently carry SRC.

2412 We believe this is totally consistent with the recommendations set out by the Standing Committee on Heritage which I quoted this morning.

2413 We also believe that in terms of moving with this kind of an approach, that we can't just use brute force. We are dealing with very sophisticated technologies and very valuable spectrum. In a competitive environment it really does fall on us to make sure that we make the best use of the spectrum and putting up all of the signals and consuming scarce and expensive spectrum for duplicate programs serves neither the consumer nor the broadcasting system.

2414 The Broadcasting Act says the CBC should be distributed across Canada using the most appropriate or efficient means as resources become available. The CBC's proposed use of spectrum does not fit with this objective.

2415 Regarding the small market unaffiliated broadcasters, which is the second issue, the CRTC decision requires that we uplink 13 new small market broadcasters as proposed by December 31st, although subject to our amendment.

2416 Now, in terms of dealing with this, we have put up four right away and then of the remaining list, we already carry one. That leaves eight.

2417 As indicated this morning, we have four available channels to carry and we would propose that we would use all of these channels, which represent the total sum of our spare capacity, now to lift up those signals. In doing that, we will uplink another TQS service from the list to help deal with their issue with respect to equitable carriage.

2418 The further responses to the equitable carriage issue must await F2. We think that we are close on equitable carriage and we believe that we can achieve that.

2419 So we believe that what we are dealing with is a short-term issue and, using the spare channels that we have, that we can use them effectively in a way that I have proposed.

2420 With respect to the longer term, we believe that with the launch of F2 our obligations of the small market broadcasters and any adjustments necessary to achieve equitable carriage will be able to be met.

2421 In the future, of course, any issues with respect to equitable carriage can be dealt with at any time by the CRTC.

2422 We would also note that the CRTC's local signal decision is only in place until 2006. So obviously these issues will all be addressed shortly.

2423 In terms of the licence renewal, the seven-year term is essential as per the points that we put forward this morning.

2424 We believe that we have delivered on our obligations. We do agree that we have issues in the short term, but we feel that we have put forward a reasonable plan and that with F2 all remaining issues will be dealt with.

2425 Finally, we would be pleased to report to the Commission on the implementation of our commitment on a timing and schedule as set out by the Commission.

2426 I would just also like to refer to the issue of audit rights because we did not address that this morning and some had raised it.

2427 We support the principle of a right to audit for programmers. We have no issue with that principle. We do believe that the identity of an independent auditor should be mutually agreed upon, and we do believe that all other specific details should be negotiated.

2428 We believe that one size does not fit all and with the dozens of services that we carry, that we have to arrange those in a time and a place that meets our mutual needs.

2429 In a sense it's interesting because for years we have accommodated programmer audits, as well as providing subscriber information on request and we do believe that we can continue to develop appropriate procedures for audits and that we can move forward to do that so that the programmers and ourselves can reach mutual agreements on this issue.

2430 Thank you for your time. That completes our rebuttal. We would be interested in dealing with any questions you may have.

2431 THE CHAIRPERSON: Thank you.

2432 I have a few, Mr. Stein. I am not sure you responded to my request for what you would do if the Commission did not grant your amendment.

2433 MR. STEIN: If the Commission did not do this, then we would essentially have to look at what services we could take down. There is no real other alternative that would be economic.

2434 THE CHAIRPERSON: I am not asking for any more detail than you are prepared to give, but if that is your answer --

2435 MR. STEIN: Yes.

2436 THE CHAIRPERSON: I don't know whether you have a copy of the Commission's 2003-258 decision.

--- Pause

2437 THE CHAIRPERSON: I am trying to check off what you feel you have already accomplished and what remains to be accomplished and get some clear understanding of where you intend to go.

2438 I am looking at the schedule to that decision. Compliance with all the measures in that schedule is, of course, the condition for the suspension of the previous conditions of licence. So perhaps you could take me through, particularly 1(a), (b), 2 and 6.

2439 MR. STEIN: Well, 1(a), we have done that with LLoydminster and Terrace and Dawson Creek.

2440 In terms of (b), that is the subject of our request for an amendment, although, as we have suggested, we would use our four available channels to deal with that issue in a partial way over the short term.

2441 THE CHAIRPERSON: Right. Just so that we are clear, the four stations in 1(a) have been uplifted.

2442 Now, you mentioned a fifth.

2443 MR. JOHNSTON: Mr. Chairman, there is one channel from Appendix A, one station that had already been lifted.

2444 MR. STEIN: CHOT.

2445 THE CHAIRPERSON: You had already done that.

2446 MR. JOHNSTON: Yes.

2447 THE CHAIRPERSON: So which other one have you now uplifted from Appendix A?

2448 MR. STEIN: That is the only one we have lifted. What we would do is go through that set of signals there and decide which other ones we would be able to lift at this point.

2449 THE CHAIRPERSON: I see. So the four mentioned in 1(a) have been uplifted plus which other one?

2450 MR. STEIN: CHOT-TV in Gatineau.

2451 THE CHAIRPERSON: CHOT-TV in Gatineau. So there are five then and so you have to uplift how many more?

2452 MR. JOHNSTON: Mr. Chairman, if you look at --

2453 THE CHAIRPERSON: Right more, I guess.

2454 MR. JOHNSTON: That's right.

2455 THE CHAIRPERSON: Eight more.

2456 MR. JOHNSTON: You have to take two from each of the groups and the single.

2457 THE CHAIRPERSON: Right.

2458 MR. JOHNSTON: That totals nine in Appendix A and one of them is already up.

2459 THE CHAIRPERSON: One is already up, and so you have eight to go.

2460 Now, you are suggesting that you will --

2461 MR. JOHNSTON: Put up four.

2462 THE CHAIRPERSON: I thought that of the four one was going to be the TQS signal.

2463 MR. STEIN: There is a TQS in the list.

2464 THE CHAIRPERSON: Which one?

2465 MR. STEIN: Well, CFGS, as I understand it, is CFGS in Gatineau.

2466 THE CHAIRPERSON: Radio-Nord TQS stations.

2467 MR. STEIN: Right, and CFTF in Rivière-du-Loup.

2468 THE CHAIRPERSON: Those would be the TQS.

--- Pause

2469 THE CHAIRPERSON: And then on equitable distribution what is your current position?

2470 MR. STEIN: By lifting TQS, we would now move that up to three, and so we would be getting close -- that is probably not what they would judge -- and then in August of next year we would then add more TQS signals to get us to an equitable arrangement.

2471 THE CHAIRPERSON: I think I understand that.

2472 Do you have any comments to make on the presentation by Telesat and their comments on available capacity and traffic removal of transponders they have on E2R?

2473 MR. STEIN: I listened to them carefully. I think that they described accurately the situation and the availability of it. I think the one thing I took from that is that they are also faced with the economic realities of transponders and how they can be leased out and in terms of what rates they could be made available to us on an interim basis, that there are other considerations that they have to take in account in terms of the market for the transponders.

2474 THE CHAIRPERSON: Looking at the sixth condition, Mr. Stein, I guess you haven't used up to a maximum of two transponders, for reasons we have discussed, I guess that would be fair to say.

2475 MR. STEIN: We would have used one with the four and the four, so we would be there but, of course, with F2 we would be totally there.

2476 THE CHAIRPERSON: Thank you. Those are my questions.

2477 Madame Wylie?

2478 COMMISSIONER WYLIE: So that if there were requirements related to CBC/SRC, do you see those as falling within those transponders?

2479 MR. STEIN: No. Our proposal for SRC --

2480 COMMISSIONER WYLIE: That's your proposal.

2481 MR. STEIN: Yes. The Star Choice's proposal for SRC would be to use the compilation.

2482 COMMISSIONER WYLIE: Yes.

2483 MR. STEIN: Quite frankly, I think in terms of efficient use of technology that we would want to explore much more carefully the integration of a signal with a satellite receiver in those particular areas. That is the approach we would take with SRC.

2484 THE CHAIRPERSON: Counsel.

2485 MR. WILSON: Just a couple of brief questions and these are both going to relate to the proposal that you have put forward here at the reply stage.

2486 Dealing with the issue of using. I think you said four available channels to lift up more of the small market signals, within what timeframe would you be able to do that?

2487 MR. STEIN: End of January for compilation and February for the four signals because of the various uplinking and backhaul arrangements that would have to be made.

2488 MR. WILSON: And just to touch then again on this compilation channel, so just so I am clear in terms of the mechanics of how this would work, would you compile the various local content or would you enter into an arrangement with the CBC to compile that?

2489 How would you sort of mechanically get that feed for the compilation channel?

2490 MR. STEIN: I am not an expert on that. We were having quite a debate today on exactly how this would be done, but people feel confident with that. Of course, we would need the cooperation of SRC to be able to do that effectively, but essentially what it would be is taking those signals from Montreal and uplinking them from Montreal onto our channel 298 and making it available across the country.

2491 Then also we were having another debate about how far we can go in terms of the software and how we can plug that into the IPG, the program guide.

2492 So those are the things that we would do. The objective that we would have there is it would be, quite frankly, also in our interest to do the best job possible in making sure that our consumers knew that it was available in that particular way. So I think on our part we would want to put a large effort into making sure it works in a way that is consumer friendly.

2493 MR. WILSON: Just to follow up this, and you may have already given me the answer to this question in your answers to the Chair about the impact if we were to deny your amendment.

2494 In a similar vein, if the Commission were to decide that rather than your compilation proposal to instead impose a condition of licence that required you to uplink all eight of those SRC-based stations, what would the impact be on Star Choice?

2495 MR. STEIN: Well, the difficulty would be that that would take a transponder and I would think that the reaction we would have is that would have a significant -- I presume what you are talking about is imposing that in terms of F2, not immediately.

2496 MR. WILSON: Well, actually potentially, I guess, under either scenario what would be the impact if the Commission were to impose it immediately, and what would be the impact if the Commission were to impose that in a post-F2 operational sort of timeframe?

2497 MR. STEIN: I am not sure that we would even know how to deal with it in the short term, quite frankly, and I think in terms of F2, I am starting to see Telesat starting to think about F3.

2498 My response just is that we think it's ineffective use of spectrum. We don't think it's consistent with the objectives set out in broadcasting in terms of efficient delivery because there would be so much duplication across those eight services that I don't think that that would be effective use of the spectrum.

2499 MR. WILSON: Thank you.

2500 Just one final question, Mr. Chairman, and this goes back to your compilation proposal, and I realize that you are still sort of sorting out mechanically how it would all work, but do you contemplate that if the Commission were to approve this compilation proposal, that you would require a condition of licence sort of exempting you from the application of section 7 of the BDU regs with respect to that particular channel?

2501 MR. JOHNSTON: I think the simple answer to that is yes.

2502 MR. WILSON: I have no further questions, Mr. Chairman.

2503 THE CHAIRPERSON: Madame Wylie.

2504 COMMISSIONER WYLIE: One more. Would you explain to me to what extent the duplication among the base stations of SRC is compared to the duplication on the TVA that you are carrying? Is it any worse? In what way does it differ? When you say it's an ineffective use of the spectrum and you carry five TVA plus one affiliate, if I recall, what is the difference when you use duplication as a reason for not giving parity.

2505 MR. STEIN: The short answer to that is that our marketing people wanted the six TVA signals.

2506 COMMISSIONER WYLIE: That's not my question. My question is: When you give duplication and, therefore, ineffective use of the spectrum to carry the corporation's signals but you carry more TVA, explain to me what is the difference in having less duplication or more duplication or equal, or whatever.

2507 To what extent is this an argument that holds water, that it's inefficient, but it's not inefficient to carry five TVA plus one affiliate, if I recall Ms Rathwell.

2508 MR. JOHNSTON: Madame Wylie, we are not in a position to answer that. What we would have to do is --

2509 COMMISSIONER WYLIE: But you are in a position to make that statement though.

2510 MR. JOHNSTON: No, but you want a comparison of duplication, network duplications between TVA and CBC and we can do that, but we can't do it right now.

2511 COMMISSIONER WYLIE: No, no. It's an argument that has been made over and over. I am not asking you by hour or program by program, but is there now that you are in a room where people are aware of what the networks look like, is it your view, Mr. Stein, that there is far more duplication on SRC than on TVA signals?

2512 MR. STEIN: Well, I guess the reasons I want to be cautious about this is that we have looked at the CBC situation because it's something new that we are dealing with, whereas with TVA when we became involved in it it was already there. And so part of the problem is that if you start taking signals down, if you say, "Look, I have too much duplication and I am going to take signals down", you run into a different set of issues.

2513 The second thing is that with respect to the SRC situation, we are dealing with a situation where the CBC's interest in programming and how they carry it across the country is different than TVA. So we would have to look at that.

2514 The only thing we have looked at at the moment in terms of the CBC issue has been the actual CBC programming. I have not done a comparison strictly with TVA, but we can certainly undertake to do that.

2515 COMMISSIONER WYLIE: It's not necessary.

2516 THE CHAIRPERSON: Well, it has been a long day. Thank you very much. We will adjourn until 9:30 tomorrow morning.

2517 Nous reprendrons à 9 h 30 demain matin.

--- Whereupon the hearing adjourned at 2053, to

resume on Tuesday, October 21, 2003

at 0930 / L'audience est ajournée à 2053 pour

reprendre le mardi 21 octobre 2003 à 9 h 30

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