ARCHIVED -  Transcript of Proceeding

TRANSCRIPT OF PROCEEDINGS BEFORE

THE CANADIAN RADIO TELEVISION AND

TELECOMMUNICATIONS COMMISSION

SUBJECT:

Canadian broadcasting in new media

HELD AT:

Conference Centre

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

February 25, 2009

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.

Canadian Radio television and

Telecommunications Commission

Transcript

Canadian broadcasting in new media

BEFORE:

Konrad von Finckenstein   Chairperson

Michel Arpin   Commissioner

Len Katz   Commissioner

Rita Cugini   Commissioner

Michel Morin   Commissioner

Timothy Denton   Commissioner

Louise Poirier   Commissioner

Stephen Simpson   Commissioner

ALSO PRESENT:

Cindy Ventura   Secretary

Chris Seidl   Hearing Managers

Steven Harroun   

Regan Morris   Legal Counsel

HELD AT:

Conference Centre

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

February 25, 2009

- iv -

TABLE OF CONTENTS

   PAGE / PARA

PRESENTATION BY:

Canadian Wireless Telecommunications Association   940 / 5149

Digital Media Association   1003 / 5466

National Film Board of Canada   1040 / 5690

Canadian Interactive Alliance   1083 / 5943

Alliance numérique   1125 / 6170

Gatineau, Quebec

--- Upon resuming on Wednesday, February 25, 2009 at 0900

5146   THE SECRETARY: Good morning to all. For the record, we would like to inform you that CTVGlobemedia has been added to the list of appearing parties for this hearing. They will be appearing as the last presenters on Tuesday, March 10th.

5147   Now, Mr. Chairman, we will proceed with item 24 on the agenda, which is a presentation by the Canadian Wireless Telecommunications Association, the CWTA.

5148   Appearing for the CWTA is Mr. Bernard Lord. Mr. Lord, you have 15 minutes for your presentation.

PRESENTATION

5149   HON. BERNARD LORD: Thank you very much. Merci beaucoup.

5150   Monsieur le Président, mesdames et messieurs membres du Conseil, bonjour.

5151   Je suis Bernard Lord, le président et chef de la direction de l'Association canadienne des télécommunications sans fil, aussi connue comme l'ACTS.

5152   Je suis venu ici aujourd'hui dans le but de m'entretenir avec vous de la convergence du sans-fil, de l'Internet et du contenu, et de la façon dont des décisions gouvernementales remontant à plus de 20 ans ont permis à l'industrie du sans-fil d'expérimenter, de créer et de perfectionner des produits et services novateurs comme le téléphone intelligent, l'Internet mobile et les services de transmission donnés telle la télé mobile.

5153   Je suis aussi venu vous exhorter à continuer dans cette voie afin que l'industrie puisse continuer de proposer de nouveaux services aux Canadiens et aux Canadiennes.

5154   Il y a deux ans ce mois-ci, le Conseil faisait paraître l'avis public de radiodiffusion CRTC 2007-13 -- l'ordonnance d'exemption de la télédiffusion mobile -- par lequel il soustrayait les entreprises de télédiffusion mobile en direct aux exigences d'attribution de licence et aux règlements connexes. Au moment de rendre cette ordonnance, le Conseil a déclaré être convaincu que ces services mobiles « ne risqu[aient] pas d'avoir une très grande incidence sur les radiodiffuseurs traditionnels » ni de les empêcher d'atteindre les objectifs de la Loi sur la radiodiffusion.

5155   L'ACTS croit que cela demeure le cas encore aujourd'hui.

5156   Wireless Service Providers and subscribers are exploiting the growing capabilities of mobile handsets and the faster speeds of wireless networks to access a variety of multimedia applications generally known as mobile content.

5157   Subscribers use mobile content to personalize their handsets with ringtones, screensavers and wallpapers to change the handsets to express their tastes and their own individuality.

5158   Subscribers also use mobile content for entertainment. These users access games, music and video in a variety of forms. This content includes services that are broadcasting and some that are not.

5159   Video content can be sideloaded, downloaded in clips or streamed to a compatible handset. This means that a subscriber can download a video clip and watch it at his or her leisure, or watch an ongoing stream that has been formatted appropriately.

5160   Where these services are defined as broadcasting and are delivered and accessed over the internet, the New Media Exemption would apply. The Commission issued the Mobile Broadcasting Exemption Order specifically to capture mobile services that use alternatives to the internet for either delivery or access. The Commission chose to do this because these mobile services -- and I quote:

5161   Depuis la parution de l'ordonnance d'exemption de la télédiffusion mobile, il y a deux ans, ces services sont demeurés des applications d'utilisation restreinte, et rien ne permet de croire qu'ils nuisent aux radiodiffuseurs traditionnels.

5162   Mobile Broadcasting remains a service in its developmental stages, and service providers continue to develop business models and adapt the service to consumer desires. Despite the fact that handsets are constantly adding features, there is still only a subset of handsets capable of using the mobile broadcasting services.

5163   Mobile broadcasting services have not yet reached a broad acceptance level among Canadians. For example, when Canadian wireless subscribers were asked in the summer of 2008 to name the three most important activities conducted over a cell phone, mobile broadcasting or video services didn't even register in the responses. This is consistent with international findings, where roughly half of wireless subscribers do not even know if their service provider offers mobile video services.

5164   These findings are consistent with the conclusion reached by Commission staff who reported in the May 2008 document "Perspectives on Canadian Broadcasting in New Media" that -- and I quote:

5165   This observation was reinforced by a survey reported in the July 2008 CRTC Communications Monitoring Report which found that despite a 65 percent mobile phone penetration rate, only 2 percent of respondents had viewed video using their cell phones, and that less than 1 percent of respondents had watched actual television programming on their handsets.

5166   Contributing to this slow adoption could be the technical limitations inherent with mobile broadcasting technologies which impact the user experience. Screen size and frame rates, audio quality, battery life, and processing power are all constraints when formatting and viewing video for mobile devices.

5167   At the network level spectrum and capacity limits constrain the ability to provide real-time video services to substantial numbers of users simultaneously.

5168   Je ne dis pas cela pour amoindrir les possibilités que représentent ces services vidéo mobiles. Ces possibilités sont énormes. Cependant, à l'heure actuelle, on ne peut tout simplement pas déterminer le rythme auquel évoluera ce marché et l'orientation qu'il prendra. À notre avis, il est primordial que le Conseil maintienne l'ordonnance d'exemption de la télédiffusion mobile pour laisser le marché et la demande des consommateurs modeler l'offre de services.

5169   It is important to emphasize that mobile broadcasting services are only possible because of the significant ongoing investments made by wireless service providers. The introduction and successful adoption of new, more powerful handsets is only possible because their purchase is heavily subsidized by the wireless service providers.

5170   More significantly, ongoing upgrades and enhancements to wireless networks continue to be required so that network speeds and capacity can attempt to keep pace with the evolution of handset capabilities and the introduction of bandwidth-intensive applications, including, among others, mobile broadcasting. To give you a sense of the magnitude of this investment, from 2005 to 2007, Wireless Carriers invested nearly $5 billion in capital expenditures. But additional investments are needed.

5171   Most people are familiar with the Advanced Wireless Services, or AWS, Spectrum Auction last summer and the fact that roughly $4.3 billion was transferred from the industry to government. What often gets lost is the fact that this expenditure was simply to acquire the licences for the privilege of using the spectrum.

5172   In order to put that spectrum to use, wireless carriers will require further investments to build out networks and deploy new radio equipment. Hundreds of millions of dollars have been committed already and the expectation is that billions more will be required in the next few years.

5173   These investments are being made in response to demonstrated consumer demand for wireless services of all sorts, including the high-speed data capabilities that support the delivery of mobile content, including mobile broadcasting services.

5174   Le gouvernement et le Conseil devraient faire ce qu'ils peuvent pour encourager ces investissements. Or, la réglementation de la télédiffusion mobile aurait l'effet contraire : elle les entraverait.

5175   Le Conseil a reconnu explicitement devoir tenir compte des rapports existant entre les obligations qu'il impose et la situation économique actuelle, notamment, le 13 février lorsqu'il a annoncé la portée des audiences de renouvellement des licences de télévision traditionnelle.

5176   Cette même situation économique touche aussi les services naissants, qui n'ont pas encore dépassé le stade la mise au point, comme la télédiffusion mobile. Il est à peu près certain que réglementer ces services leur ferait plus de tort que de bien, car cela restreindrait l'innovation et entraverait les investissements.

5177   One of the key questions in this hearing is whether to impose a levy on wireless service providers to support new media content creation. To this we would respond: Absolutely not!

5178   The argument presented in support of the need for such a levy seems to be that because wireless service providers generate fractional revenue from mobile broadcasting services relative to voice or data, they should be required to make direct financial contributions to the production of Canadian content. This argument ignores two important realities.

5179   First, the revenue streams attributable to mobile broadcasting are extremely modest given the huge investments that mobile providers have made in handsets and networks to make such content even possible.

5180   Second, the argument ignores the significant contribution that mobile broadcasting is already making to the Canadian broadcasting system. Far from having a negative impact, we submit that the introduction of mobile broadcasting services is a potential success story for Canadian broadcasting. Although the penetration rate of such services is still very low, there is a significant amount of Canadian content and Canadian services available via mobile broadcasting. Imposing a contribution tax on wireless service providers would amount to penalizing success.

5181   Moreover, in proposing a contribution tax calculated as a flat percentage of overall gross revenues, the levy amounts to little more than a cash grab from revenues wholly unrelated to broadcasting.

5182   We echo the view of the Competition Bureau that:

5183   We submit that this is equally true for a contribution regime applied to the wireless industry.

5184   La contribution proposée est doublement déraisonnable dans le climat économique actuel.

5185   Le Conseil devrait considérer le risque que la réglementation fasse plus de tort que de bien. La réglementation est susceptible de désavantager les sociétés canadiennes face à leurs concurrentes étrangères, de réfréner l'innovation, de restreindre l'investissement, de décourager la vente de certains types de combinés et d'accroître le fardeau administratif des fournisseurs de services sans fil.

5186   Il est inutile d'exposer l'industrie à ces risques, parce que rien ne dit que la télédiffusion mobile sera jamais un marché viable. Rien ne démontre non plus que ces services ont eu ou auront vraisemblablement une incidence négative notable sur les radiodiffuseurs traditionnels. De même, rien n'indique que le sans-fil n'a pas permis de concrétiser les objectifs de la politique des télécommunications ou de celle de la radiodiffusion. C'est plutôt le contraire, à notre avis.

5187   Lorsque le Conseil a exempté la télédiffusion mobile, il a décrit « l'incidence limitée » de ces services sur le marché, et, comme je l'ai mentionné plus tôt, il a jugé que ceux-ci étaient peu susceptibles « d'avoir une très grande incidence sur les radiodiffuseurs traditionnels » ou « de nuire à [leur] capacité [...]de remplir leurs obligations en vertu de la Loi. »

5188   We should remember that this finding was only two years ago. There is no evidence that this situation has changed, and in fact, there is evidence that this situation remains. Everything indicates that new media generally is ancillary or complementary to traditional broadcasting.

5189   Mobile broadcasting services continue to have a limited impact on traditional broadcasting services. In fact, traditional broadcasters are exploiting these services to promote and enhance their existing services. Any impact is clearly positive. Certainly, it is clear the broadcasters favour maintaining the exemption orders.

5190   We submit that mobile services are an example of the success of the market meeting the needs of Canadians in terms of access to Canadian content. The Commission found in 2006 that the wireless carriers provided predominantly Canadian channels and the Perspectives report found that nearly half of the mobile TV channels offered by wireless carriers were Canadian.

5191   If mobile broadcasting in the absence of regulation is providing benefits to traditional broadcasters and is, in fact, contributing to the achievement of the objectives of the Act, then there is simply no regulatory action required. There is no reason to withdraw the exemption orders for mobile broadcasting or add new regulations and every reason to maintain the existing order.

5192   The mobile wireless industry is one of the most dynamic segments of the Canadian economy, producing high levels of growth as well as the rapid deployment of new technology and innovations.

5193   The industry was born in competition and validates the long-held government policy designed to allow market forces to operate to the benefit of wireless consumers. Since the earliest days of cellular service, consumer demand, not regulatory fiat, has guided the decisions of the wireless operators. This approach has allowed the development of the huge variety of services available to consumers today.

5194   Comme je l'ai indiqué, les services de télédiffusion mobile procurent aux radiodiffuseurs traditionnels un moyen de compléter et de valoriser leur offre actuelle, et le contenu canadien véhiculé est considérable. Cela démontre que le Conseil a eu raison de prononcer l'ordonnance d'exemption de la télédiffusion mobile et que le marché fonctionne comme il se doit et à l'avantage du système canadien de radiodiffusion.

5195   Nous vous exhortons à maintenir cette tradition d'abstention à l'égard du sans-fil et à continuer d'opter pour des politiques gouvernementales mettant l'accent sur la croissance, l'innovation et la concurrence pour répondre à la demande des consommateurs.

5196   C'est cette approche, et non l'établissement de nouvelles règles ou de nouveaux impôts ou de nouvelles taxes sur des activités sans rapport, qui permettra le mieux d'assurer que l'on continue d'atteindre les objectifs de la Loi sur la radiodiffusion.

5197   Dans le cadre de la présente instance, cela signifie ne rien changer aux ordonnances d'exemption existantes.

5198   Merci beaucoup. Thank you very much for your attention.

5199   THE CHAIRPERSON: Thank you very much for your presentation.

5200   On top of page 4 you make this very surprising statement for me:

5201   THE CHAIRPERSON: Can you explain that to me? It seems to me at first blush totally contrary to everything I see. I see people investing in millions, billions and getting spectrums so that they can deliver broadcasts. I see handset manufacturers making more and more smart devices so I can basically use that little handheld thing as a mobile TV and, yet, here is president of the association it's never going -- there is a big doubt this will ever be a viable market.

5202   Are all these people wrong? Are they all missing the boat?

5203   HON. BERNARD LORD: I think everybody hopes that it will be a viable market and that's why they are making the investments.

5204   THE CHAIRPERSON: Yeah.

5205   HON. BERNARD LORD: This is one small component of the overall industry. Of course, just last year the industry made a significant investment in buying additional spectrum, $4.3 billion additional investment.

5206   So of course there is a belief that there is a future for mobile services and there is a demand for mobile services. But when it comes to in terms of mobile broadcasting no one has been able to make any significant amount of money from that.

5207   It is a nascent industry. It is still at its infancy stages. It's still being developed and it's unclear what course it will take. Now, there are some people making investments as part of that as well but a lot of the investments are made to upgrade handsets, to upgrade networks, to increase speed and increase capacity. But all of the investments still are required today.

5208   THE CHAIRPERSON: But all that capacity is because you are trying to -- you need to deliver video over the wireless and, you know, the auction which is coming up for the -- all of this is so that you can get better reception and broader reception of video. If you are just talking data, et cetera you don't need all that spectrum.

5209   So I mean surely this is the game that everybody is about, trying to explore this nascent market and be the first there.

5210   HON. BERNARD LORD: Well, there is a significant investment, you are right. And those investments are made and of course the industry wants to improve the services that are provided to consumers and the options that are provided to consumers.

5211   And of course, the industry is working to build and design better handsets that will be able to do more. There is no doubt about that; the same way the industry is investing in more spectrum to be able to have a wider reach, to have faster speeds and to increase the capacity.

5212   But at this stage today, if you consider the conclusions in the past of the Commission, nothing has changed significantly in the last two years to change that conclusion.

5213   And perhaps it could have been worded differently in the sense of at this point no one has been able to successfully transform this business. But there is no doubt there are significant investments being made for the future but not only for the video broadcasting, for all aspects of being able to provide services to our consumers.

5214   THE CHAIRPERSON: In all of these industries they have seen -- especially in the mobile industry we have seen a phenomenal fast uptake rate and new features or new things come on the market which suddenly take off at an explosive rate. Part of our job as regulators is to make sure that we are not behind the eight ball, what we anticipate is there.

5215   Now, the levy proposal that you -- however, let's assume for argument sake, to give some structure to it, we were talking about the Peter Grant proposal. It is based on the revenue that providers would gain from broadcasting. You are telling me that's extremely modest which is right. I don't dispute that. So the levy would be extremely modest too. I mean it is a percentage of that.

5216   However, if as in other instances it suddenly explosively takes off, then it would allow the wireless providers to make their appropriate contribution to the broadcasters. And if it takes off then wireless really becomes another form of distributing broadcast content. They are basically a BDU. And so therefore that's the logic behind it.

5217   So I don't know why you are so opposed to it because it depends on the success. If there is no success you don't make revenue from distributing broadcasting. There is no levy to be paid.

5218   HON. BERNARD LORD: Well, there is a principle involved as well, Mr. Chairman, and I believe that principle is also important. The fact is depending is if there is a levy, on what portion of the revenues the levy would be collected. If it's on general revenues or the gross revenues or wireless providers then it's clearly the wrong approach.

5219   And the reason why it's the wrong approach because I can take, for example, members of my own family or people I know that have mobile devices that may go and surf on the internet, may go seek some data, may use text messaging, make some calls. They may never download a video.

5220   And so far in Canada there has been very little uptake. As I mentioned in my presentation, very few Canadians use their mobile devices at this stage for broadcasts. In fact, some studies suggest it's less than 2 percent have used their mobile devices for that. So applying a levy or tax on the gross revenues would be attacking a whole industry to try to get at a very specific point.

5221   So the question could be how do you define what is a BDU? And in that sense we feel that a definition that would include the carriers is too broad, simply that it does not define precisely who is doing the broadcasting undertaking.

5222   THE CHAIRPERSON: And one could narrow it to the base of, in effect, the revenue gained from their broadcast activities. Then we are in a totally different ballpark, aren't we?

5223   HON. BERNARD LORD: Well, perhaps -- and we would be willing to provide more information to the Commission on this or more advice, but to have a definition that is precise if there is a need for one -- we feel at this point there is no need for that.

5224   We feel at this point that the exemption should be maintained, that this is such an early stage in this industry that adding any fee at all is sending the wrong signal; that just because it's not a big amount of money is not a reason to do it. And at this stage we find that the contribution that is made overall is positive. This is adding -- the content that is being viewed for those who want to view content, a lot of it is Canadian because it's relevant to Canadians, and that's what Canadian consumers want.

5225   And I think it shows the success and the strength of the Canadian content when consumers will decide to view it voluntarily because they want it, because they need it, not because it's regulated or not because it's taxed or subsidized. I think that in itself is a success story.

5226   But if there is a need to define I would respectfully submit that the definition should be very precise to make sure that we talk about a BDU undertaking that includes the purchasing, the production, the packaging, the selling of broadcasting and, therefore, not simply tax a wireless provider because they are providing access to the internet.

5227   And that's our position.

5228   THE CHAIRPERSON: Okay, thank you.

5229   Maybe, Len, I believe you had some questions?

5230   COMMISSIONER KATZ: Thank you, Mr. Chairman. I think you have covered off on several of my questions as well.

5231   Good morning, Mr. Lord.

5232   HON. BERNARD LORD: Good morning.

5233   COMMISSIONER KATZ: I am going to pickup on the last statement you made just to clarify it.

5234   You said just because the industry is in very early stages is not a reason to put a levy on it if in fact we can define what it is we are trying to put a levy on.

5235   The converse holds as well. If we are here five years later and the industry is generating 50 percent of its revenue coming from professional video, my guess is you would be sitting there saying it's too late to do it now; the horse is out of the barn. The cost to put any sort of contribution on this thing is so high -- hasn't been considered -- that you should have thought of this five years ago, Commission.

5236   HON. BERNARD LORD: The point that I was making earlier, and perhaps I wasn't clear and I will try to make clear, it's not because the tax is perceived to be a small amount that that is sufficient reason to say, well, let's tag it on.

5237   I submit that that would not be proper public policy to simply put a tax because it doesn't amount to a lot of money. Because this is a nascent, infant new industry we have to make sure that we don't put any barriers at all to reduce its capacity to innovate, to create, to evolve.

5238   And, frankly, so far it's been working very well. The decisions of the Commission, I would submit, were right. They were right. The decisions were the right ones. The Commission was right in 1999. It was right two years ago when it kept the exemption for mobile devices and broadcasts. So in that sense, we submit, that situation should remain.

5239   If anything, it's working well. Give it a chance to evolve before you start taxing it. My submission would be there may be no need to tax it at all.

5240   COMMISSIONER KATZ: You comment on page 4, just the paragraph right after the one -- the sentence right after the one the Chairman quoted about:

5241   COMMISSIONER KATZ: I raised this same issue with a number of the creators and producers in the last several days with regard to whether this is a substitute or a complement as well. And what I heard from them was irrespective of whether there is any erosion at all, the fact is that there is a contribution that should be carried forth simply because there is by definition, from their perspective, broadcasting taking place over the ISP market industry, as they put it. But I will put it to you as over the WSP backbone network as well.

5242   Are you saying that if there is to be a contribution that it should only be looked upon from the perspective of substituting what is being eroded from traditional broadcasting and moving into this environment, as opposed to the broader definition that the industry seems to be trying to convince the CRTC to pursue, and that is it doesn't matter whether it's a substitute or a complement, it comes under the broadcasting definition.

5243   HON. BERNARD LORD: Well, our view is that the current situation meets the requirement of the Act. And when you look at how this industry has been evolving it's been a complement. It's been a supplement. If anything it's providing new venues for traditional broadcasters to create brand loyalty, to provide additional content but in a different way.

5244   And we have not seen in Canada so far and, frankly, I don't think we have seen anywhere around the world, a substitution for the traditional broadcasting methods for these new mobile devices. The technology is not there. That's not how people want to consume but they may want to consume supporting products.

5245   For instance, a small pod cast of a show that you see on TV may be available on your mobile devices. So when you are commuting in the morning and not driving and you want to see this then you can see a five or six-minute clip or a two-minute clip compared to watching the full hour show that you would have done the night before, you will do the night after.

5246   So this is a way to complement and supplement but not to replace in any way.

5247   COMMISSIONER KATZ: So you are saying as long as it's complementary then the Commission shouldn't be looking at whether it is or is not broadcasting because it's not impacting the support mechanism that's there today.

5248   HON. BERNARD LORD: What we are suggesting is there is no evidence and, frankly, I don't believe that it is impacting. The objectives that are set out in the Act are being met.

5249   We simply view this as there is no need to tax it. There is no need to put an extra barrier. There is no need to put an extra obstacle. Let's not put Canadian industry behind the rest of the world by adding another tax or another levy.

5250   COMMISSIONER KATZ: Okay.

5251   You referenced the fact that the auction raised 4.3 or whatever billion dollars and I know there has been previous auctions as well. What I'm not familiar with is what the conditions associated with gaining that spectrum when your members purchase -- if I can call it that -- the spectrum?

5252   Are there fine points in the conditions of licence that either say there can or there cannot be additional levies or impositions imposed upon the use of that spectrum by other regulatory bodies or other agencies of government?

5253   HON. BERNARD LORD: I have to confess I don't have that information with me, but I would be happy to provide it to the Commission.

5254   COMMISSIONER KATZ: I would appreciate that.

5255   I want to move on to the different types of use that is being put to the mobile broadcasting, if I can call it that. And we heard a lot about this notion of an open platform versus a closed platform. From your perspective is there a distinction in the way your members provide access to open and closed platforms?

5256   HON. BERNARD LORD: Well, there is an evolution. Even though this is a very small part of the industry and it's still a new industry, there is an evolution.

5257   And we see that with the advancement in terms of speed, in capacity and better technology in the handset that we are moving towards an open platform in the sense that you will be able to use your handset, if you wish, as you use the open internet from a desktop or anywhere else. So in that sense it's open. It's not just a series of menus where you can just select certain things.

5258   Even though those services exist the trend seems to be -- and I say seems to be because it seems too early to identify but seems to be toward a more open market and more open free decisions of the consumer.

5259   COMMISSIONER KATZ: But currently there is -- we are in this situation where there is both. It's bifurcated access. There are closed systems and there are open systems.

5260   And I would imagine to the extent that there are closed systems the service providers have the freedom to decide what actually is going to be accessed on that closed system by their customers.

5261   HON. BERNARD LORD: There is currently -- there are currently services that you can purchase, that consumers can purchase that provide a list of channels that you can see from your mobile device, but the trend is moving away from that. And the reason the trend is moving away from that is because the industry is making significant -- the billion dollars investments we have been talking about is to add speed.

5262   What consumers seem to want is -- they want access to the internet. They want access to the open internet. They want to be able to make their own decisions. They want to be able to decide where they go, what they see and when they see it. And the industry wants to be able to meet the needs of the consumers as best as it can. So it's moving in that direction.

5263   Limitations of speed, limitation of the technology of the handsets in the past made it so that some of the offerings were limited but the trend is clearly going in the other direction. And there has been very little uptake of those services in the past.

5264   COMMISSIONER KATZ: The trend may be going in the other direction, but I guess I can speak from the BDU side. We were here a year ago talking about the converged industry and the concern on the cable side that the creators and the broadcasters brought up that obviously the BDUs have got the ability to decide what they are going to put on and how they are going to put it on, to the extent that many of your members are converged as well and own their own content or own their own rights to content whether its sports or anything else. They have 100 percent of the ability to influence what they put on that closed system.

5265   And I'm just wondering whether that's something that the Commission should seriously be looking at in that environment because it is a converged industry in a lot of cases. A lot of your members are in the entire food chain basically.

5266   HON. BERNARD LORD: Some of our members are and some of our members are not and perhaps you may want to refer those questions specifically to the members so they can provide you more precise answers.

5267   What I can offer to the Commission today is the fact that what we see in terms of trends for consumers is the desire of the consumer to have an open access. Usually, when the consumer trend goes in a direction those who want to succeed in the industry will offer what the consumers require. And that's why we see in Canada and when we look outside Canada we see the trend clearly going in that direction.

5268   As I mentioned earlier, the uptake of the limited services has been limited at best, and even in those cases some of the walled garden, if I can use the expression, the walls are crumbling and there is gates in the gardens and there is a way to get out because clearly that's all that consumers want.

5269   So the trend -- because of the higher speeds and because of the better handsets is going in the direction where you would have open access to the --

5270   COMMISSIONER KATZ: I mean, clearly, the consumer is going to be in control but there is still a role to be played by the distributors, if I can call them that. Whether it's the cable distributors or the WSP distributors or the ISP distributors they play a role no different than channel line-ups. You can sit there and say in a digital age channel 421 is no different than channel 5 but for some reason everyone wants to be on the lower end of the band as well, and that's controlled by the BDUs.

5271   And so the question is whether there is some value-add from a business economics perspective to having some degree of control of what gets distributed and how it gets distributed.

5272   HON. BERNARD LORD: Part of the question surrounding that point is defining, if the Commission decides to define what is a BDU in the wireless world, and is it the -- is it the carrier or is it the body, the entity that purchases, that packages and that sells the content? And they may not be -- in many cases are not the same people.

5273   The carriers just tend to want to carry the information and allow consumers to connect and consumers can purchase additional services. But that uptake has been very limited, as I mentioned. I don't want to be repetitive but it's clearly moving in the other direction.

5274   COMMISSIONER KATZ: Yeah, but you do recognize that in a walled garden environment, as you called it, and with convergence there is the ability for certain parties to have the ability to deliver -- I won't call it discriminatory services but services that are unique to them at the expense of other players out there as well?

5275   HON. BERNARD LORD: I will certainly agree with the Commission that it is possible. What I'm suggesting, and what I'm stating very clearly, is the walls of the garden are crumbling.

5276   COMMISSIONER KATZ: Right, okay.

5277   My last question and you mentioned as well, that the industry is moving towards and environment of faster speeds, and the reason they are moving towards faster speeds is because there is a demand for multimedia video and everything else as well.

5278   So this industry is going to be growing. And although you did say that it's still in its infancy and we are not sure when it will turn to a viable industry, it is a result of the growth of the multimedia environment on the wireless side?

5279   HON. BERNARD LORD: The desire of consumers to have access to more is what's driving the industry to invest. But whether this will lead to an industry where people sit with their handset in their hand to view traditional broadcasting content that remains to be seen.

5280   What people mostly want is the ability to have access to the internet on the move. And the same way that they can access at home they want broadband, they want high speed. But this is not only for video or content. It's for everything. It's to be able to do more quickly.

5281   And in the situation of the economic environment that we find ourselves in, the fact that the wireless industry of Canada is investing significantly while other industries are seeking bailouts and loans and grants and guarantees from governments, this industry is providing more funding to government, providing more investments to create better networks, to ensure that the Canadian economy is more competitive, more innovative, more creative and therefore creates more jobs and better economic growth.

5282   All those things when you look at them clearly states that this industry wants to invest to create a better environment and this is not the time to add any new barrier, any new obstacle, any new tax to slow it down to prevent it from innovating when we need this innovation more than ever before.

5283   And when you consider that this is such a small part of the revenues and no one clearly knows where this will go, the conclusions that the Commission made two years ago should stand and still stand in fact today.

5284   COMMISSIONER KATZ: Those are my questions. Thank you.

5285   THE CHAIRPERSON: Thank you.

5286   Michel?

5287   CONSEILLER ARPIN : Merci, Monsieur le Président.

5288   Monsieur Lord, à la page 4 de votre présentation, puis, je pourrais dire que même à plusieurs endroits dans votre présentation, vous aimez utiliser des mots forts, et je prends comme exemple quand vous parlez à la page 4, l'avant-dernier paragraphe :

5289   En anglais, vous avez utilisé... cette phrase-là, vous l'avez dite en français, mais en anglais, je vois que vous avez utilisé le mot « substantial », qui paraît un petit peu moins fort que le mot « considérable. »

5290   Mais depuis cinq jours, on entend plusieurs intervenants qui nous disent qu'un des problèmes de la téléphonie mobile, c'est que l'offre de services canadiens est très limitée. Ça fait que l'offre réelle est une offre essentiellement américaine, avec un certain nombre de services canadiens relativement limités.

5291   Comment pouvez-vous dire que c'est considérable dans cette perspective-là?

5292   HON. BERNARD LORD : La raison est les mots que nous utilisons sont des mots qu'on utilise pour représenter la situation comme elle est, le fait que les Canadiens vont demander un contenu canadien parce qu'il est pertinent pour eux.

5293   Lorsqu'on parle, par exemple, de services précis qui peuvent être accédés à travers la téléphonie mobile, par exemple, des services d'information, les Canadiens veulent... si on prend la météo, par exemple, ils vont vouloir la météo locale et non la météo de San Francisco ou de New York ou de la Floride.

5294   Donc, lorsqu'on regarde, comme je l'ai mentionné dans la présentation, je crois que près de 50 pour cent des postes, lorsqu'il y a des menus, sont des postes canadiens. Mais la tendance est vers une ouverture plus grande qui va permettre aux Canadiens et aux Canadiennes de choisir exactement ce qu'ils veulent et ce qu'elles veulent voir.

5295   Dans ce contexte-là, les services qui sont offerts par la téléphonie mobile deviennent un outil additionnel pour les télédiffuseurs traditionnels. Donc, c'est un outil qui leur permet d'étendre leurs services et d'aller rejoindre plus de Canadiens.

5296   De cette façon, nous proposons et nous vous disons que jusqu'à date, l'industrie est un atout et non un obstacle, que nous aidons le contenu canadien et nous voulons continuer à le faire. Comme la Commission l'a conclu, il y a deux ans, je crois que les faits qui étaient là v'là deux ans sont sensiblement les mêmes aujourd'hui.

5297   CONSEILLER ARPIN : Maintenant, les francophones qui ont comparu devant nous ont essentiellement dit qu'il n'y a aucun contenu francophone et que, pour l'instant, c'est essentiellement des contenus, comme j'ai dit, américains, évidemment, qui sont de langue anglaise, et des contenus canadiens qui sont aussi de langue anglaise.

5298   Quelles sont les vues de l'Association sur cette question?

5299   HON. BERNARD LORD : Ça me ferait plaisir de parler des vues de l'Association. Je peux aussi vous parler, si c'est utile, du travail que j'ai fait dans le passé comme conseiller spécial du gouvernement du Canada sur les langues officielles.

5300   Il y a du contenu sur le... tout comme sur l'Internet, il y a du contenu dans toutes les langues, y compris le français. S'il y a un besoin d'aider les groupes de langues minoritaires au Canada, il y a d'autres mécanismes pour le faire que de le faire en ajoutant une taxe au système téléphonique.

5301   CONSEILLER ARPIN : Les Québécois ne se prennent pas pour des minoritaires.

5302   HON. BERNARD LORD : Puis ils ne le sont pas chez eux, sans aucun doute.

5303   CONSEILLER ARPIN : Et c'est les Québécois qui nous disent qu'il n'y a pas de services en français sur la téléphonie mobile.

5304   HON. BERNARD LORD : Moi, je vous dirais qu'il y a des services en français. On peut avoir accès, entre autres, à RDI. On peut avoir accès à d'autres... Je nomme RDI parce que l'autre jour, j'étais à l'aéroport, puis je regardais RDI sur un téléphone mobile juste pour voir, pour tester le système. Donc, il y a des services qui existent, tout comme il y a des services en français qui existent sur l'Internet ouvert.

5305   Donc, les services sont disponibles avec la venue de plus de compétiteurs, dont certains compétiteurs dans le marché qui proviennent précisément du Québec.

5306   CONSEILLER ARPIN : Oui.

5307   HON. BERNARD LORD : Alors, je crois qu'on serait en mesure de s'attendre qu'ils soient en mesure d'offrir les services que les Québécois et les Québécoises veulent aussi.

5308   CONSEILLER ARPIN : À venir?

5309   HON. BERNARD LORD : Bien, ils s'en viennent très bientôt. Ils ont dépensé des sommes importantes.

5310   CONSEILLER ARPIN : Oui, oui. Pour offrir leurs services. Ils ont quand même une réputation qui les précède. Donc, au niveau de la convergence, ils ont leur propre philosophie. On verra dans le temps.

5311   Mais, en fait, tout ça, c'est toute la question qui est finalement sous-jacente, c'est le rôle de contrôleur, de gatekeeper que joue l'opérateur de téléphonie mobile, et c'est ce qui nous amène à voir chez l'opérateur de téléphonie mobile un rôle identique à celui du distributeur qui choisit les services qui vont être offerts, qui les positionne, comme monsieur Katz disait un peu plus tôt, aux canaux de son choix. C'est la même, même fonction.

5312   HON. BERNARD LORD : Sur ce point-là, et je suis content que vous me re-posez la question parce que je crois que c'est un point important à faire.

5313   C'est le fait que, premièrement, la tendance n'est pas dans cette direction-là. La tendance est clairement dans l'autre direction. Les consommateurs demandent, exigent d'avoir un accès. Ce qu'ils veulent, sensiblement, de leur téléphone mobile, c'est ce qu'ils ont ailleurs et ce qu'ils veulent maintenir, c'est un accès ouvert à l'Internet, et de cette façon-là, ça devient ouvert.

5314   Il est possible... comme je l'ai mentionné tantôt au commissaire Katz, il est possible pour certains de se procurer des services additionnels à un coût additionnel, et dans ces services-là, où il y a eu très peu d'abonnements au Canada jusqu'à date, c'est vrai qu'il y a des menus, mais ce n'est pas la tendance, et il y a très peu de gens qui achètent ces menus-là.

5315   Si on parle... puis je reviens sur ce point-là parce que si la Commission... et notre proposition, c'est qu'il n'a pas besoin de le faire. Vu que vous me posez la question, il faut bien définir -- puis, je n'ai pas le terme français, malheureusement, et je m'en excuse -- un BDU...

5316   CONSEILLER ARPIN : EDR en français.

5317   HON. BERNARD LORD : EDR.

5318   CONSEILLER ARPIN : Une entreprise de diffusion de radiodiffusion.

5319   HON. BERNARD LORD : Je vais le noter, puis je vais m'en souvenir.

5320   CONSEILLER ARPIN : Mais dans le quotidien, on les appelle des BDU.

--- Laughter

5321   HON. BERNARD LORD : Je suis content de savoir que je ne suis pas le seul qui le fait.

5322   Mais si on veut définir qu'est-ce qui est un EDR, il faut bien s'assurer de le définir, et les compagnies qui offrent le service du sans-fil, à plusieurs égards ne sont pas des EDR, parce qu'ils ne font pas l'achat, le packaging et la revente de services. C'est quelqu'un d'autre qui le fait et qui utilise leur système pour le faire, et c'est pour ça que bien définir devient important.

5323   Nous proposons qu'à ce stade-ci, de toute façon, ces définitions ne sont peut-être pas nécessaires simplement parce que l'exemption qui est en place devrait être maintenue.

5324   Mais si la Commission décide, que ce soit aujourd'hui ou dans l'avenir, je crois que de bien définir ça devient important parce que plusieurs des compagnies, et entre autres certaines des nouvelles compagnies qui ont acheté du spectrum, n'ont pas l'intention de produire, de packager, de revendre et d'acheter de la production. Peut-être que d'autres vont utiliser leur système.

5325   Si on prend l'exemple de Telesat, qui n'est pas considéré comme un EDR, mais qui va offrir certains services qui sont de quelqu'un d'autre, une autre entreprise est EDR, et à plusieurs égards, les compagnies de téléphonie sans fil sont pareilles. Ce n'est pas eux qui font le packaging. Ils font la vente ou la revente.

5326   CONSEILLER ARPIN : Merci, Monsieur le Président.

5327   Merci, Monsieur Lord.

5328   THE CHAIRPERSON: Okay. Rita?

5329   COMMISSIONER CUGINI: Thank you. Good morning, Mr. Lord.

5330   Economics 101 always says supply and demand, that is what controls the market.

5331   What are the customers of wireless services asking for from their wireless providers? Is there a pent-up demand for more mobile video services?

5332   HON. BERNARD LORD: At this point it's -- as I stated in my comments earlier, there's a lot of investments being made by wireless providers and the wireless industry to grow the network, to improve the network, and those investments are significant.

5333   The objective is to be able to provide better coverage, faster speeds and more capacity and this will enable -- we propose to be able to have broadband coverage through mobile wireless devices across Canada. That's the objective.

5334   Now, what consumers will do with that remains to be seen. How they will use it, will they use it exactly the same way they use the internet at home? I don't think at this point that you will see a lot of Canadians leaving their living rooms, going outside, holding their handset to watch "Corner Gas." I may not be an expert, I don't think that will happen. But I think they will use it to access different types of services.

5335   I think when we allow innovation to take place, when we allow creativity to take place without adding barriers, without adding obstacles, we may end up with something that no one's thinking about yet. The market will take it in the direction that it should go.

5336   I think at this point our submission is things are working well, this is not the time to add any barriers, to add any obstacles. Let consumers and providers do what they do best.

5337   COMMISSIONER CUGINI: But couldn't they download "Corner Gas" and then plug it into their TV in the living room and therefore bypass traditional broadcasting?

5338   HON. BERNARD LORD: Well, technically I guess that could be possible but I think it's unlikely. I think what would more likely happen would be they may watch it on their TV, they may -- I don't know if "Corner Gas" but others may want to provide an iPod segment to complement their show, to build their brand, to build viewer loyalty.

5339   So when people are commuting, as I said earlier, while they're not driving -- I want to make that point very clear --

--- Laughter

5340   HON. BERNARD LORD: -- they may watch a two-minute podcast of the show they saw the night before or the upcoming episode. That's why I think if we allow Canadians to innovate, and Canadians are good innovators and we're very creative, let's not create barriers that prevent this creativity. Allow Canadians to innovate. Allow Canadians to compete. Allow Canadians to decide. In the end I think we'll get the best result.

5341   COMMISSIONER CUGINI: You are very emphatic on that point.

5342   HON. BERNARD LORD: Yes, I am.

5343   COMMISSIONER CUGINI: I appreciate that.

5344   Just one more question. You spoke about financial viability and I just want to understand.

5345   Is it cost-prohibitive for the mobile providers to supply video programming or is it cost-prohibitive on the consumer side? Because I'm assuming you're paying for the airtime to download these mobile services onto your cell phone and that can be cost-prohibitive.

5346   HON. BERNARD LORD: I would suggest that some of our members would be in a better position to provide you with the details.

5347   But obviously, in some cases, as you consume more space and you consume more, then you tend to pay more, so depending on the packages you buy and the packages that are offered, and it varies from provider and carrier and there's different packages.

5348   I would suggest that some of our members would be in a better position than myself to give you some specific details on that.

5349   COMMISSIONER CUGINI: Fair enough. Thank you very much.

5350   THE CHAIRPERSON: Okay. Michel?

5351   CONSEILLER MORIN : Oui. Bonjour.

5352   Pour l'instant, c'est peut-être très dispendieux que de faire du streaming avec votre appareil mobile, mais il y a des nouvelles générations qui s'en viennent, et peut-être qu'éventuellement... là, c'est très dispendieux, mais le consommateur, éventuellement, va vouloir regarder sur son BlackBerry la dernière émission, soit sous forme de podcast ou autrement.

5353   Actuellement, la limite d'usage maximum au Canada pour les entreprises sans fil, c'est quoi? Le bit cap là, c'est combien? Est-ce que c'est 1 gigabyte? Parce que Vidéotron, Rogers, c'est entre 20 et 60 à peu près.

5354   HON. BERNARD LORD : C'est qu'il y a différentes technologies qui sont offertes par différents de nos membres qui augmentent la capacité, et donc, la capacité de download puis d'upload augmente.

5355   Il y a certaines technologies qui existent maintenant pour le sans-fil, mais qui ne sont pas nécessairement adaptées encore pour des... ça devient sans fil, mais qui s'adaptent plus avec des ordinateurs qu'avec des appareils de téléphonie mobile. Donc, il y a différentes technologies sans fil qui sont plus ou moins mobiles.

5356   Donc, ça dépend si on parle d'un ordinateur qui est mobile, où on peut mettre... je vais prendre l'exemple de Rogers, un Rocket Stick qui peut avoir, si je me souviens, c'est 7...

5357   CONSEILLER MORIN : Pour le chargement?

5358   HON. BERNARD LORD : Oui. Il me semble c'est 7 pour le chargement.

5359   CONSEILLER MORIN : Oui.

5360   HON. BERNARD LORD : Mais sur les appareils mobiles, on n'a pas encore atteint la même vitesse.

5361   CONSEILLER MORIN : Mais là où je veux en venir, c'est que j'aimerais savoir un petit peu, on parle de l'Internet comme un grand réseau de tuyaux...

5362   HON. BERNARD LORD : Oui.

5363   CONSEILLER MORIN : ...à travers le monde, mais on se rend compte que dans ces tuyaux-là, il se passe pas mal de choses et que ce n'est pas vrai que les entreprises ne touchent pas aux tuyaux. Il y a beaucoup de choses qui se passent, et je voudrais que vous parliez de la technique Deep Packet Inspection, l'ordonnance par packet.

5364   Est-ce que cette technique-là, qui est utilisée par les entreprises de câble et qui risque de l'être de plus en plus, est-ce que vous autres, vous avez des mécanismes semblables, des techniques semblables, que vous pourriez éventuellement utiliser?

5365   Parce que quand on parle de programmation, si on utilise cette technique-là, ça commence à ressembler à une sorte de programmation, et je voudrais savoir, vous autres, où est-ce que vous en êtes?

5366   HON. BERNARD LORD : Lorsqu'on examine cette question-là... et puis encore, j'aimerais vous référer à certains de nos membres qui ont plus la connaissance technique de leur propre réseau que moi, comme président de l'Association.

5367   Mais il y a différents aspects qu'il faut considérer. Lorsque les gens... si on compare un tuyau, lorsque le tuyau vient dans une certaine région, il peut y avoir une gestion pour assurer que tout le monde ait accès au tuyau, qui est différent que de gérer le contenu de ce qui est vu.

5368   CONSEILLER MORIN : Je parle en terme de priorisation.

5369   HON. BERNARD LORD : Oui, c'est ça, pour assurer, entre autres... Donc, il y a différents aspects, et il y a une gestion parfois de tuyaux qui se fait pour assurer que tous les utilisateurs puissent avoir accès à leur tuyau ou une partie du tuyau pour qu'ils puissent l'utiliser.

5370   Si on transfère le tuyau puis on mettait de l'eau, par exemple, on ne voudrait pas qu'il y ait seulement une maison dans le voisinage qui ait toute l'eau du voisinage. Donc, il y a une gestion qui est faite pour assurer que toutes les maisons puissent avoir accès à l'eau.

5371   Donc, au niveau de l'information, il faut s'assurer que tout le monde puisse avoir accès. Les consommateurs peuvent... dans certains cas, il peut y avoir certains services qui sont offerts qui leur permettent d'assigner une partie du tuyau juste à eux. Donc, il y a différentes façons de gérer cette situation-là.

5372   L'autre question que vous posez, c'est par rapport à la gestion du contenu, qui est une autre question, et sur cette question-là, moi, je crois que ça serait mieux... nos membres seraient en meilleure position de vous répondre sur cette question-là que moi.

5373   CONSEILLER MORIN : Je vais vous poser une question générale.

5374   Actuellement, moi, sur mon BlackBerry -- je suis un pauvre commissaire -- je reçois des fils RSS de différentes entreprises, mais je compte sur mon Zune pour avoir des podcast de NBC, de CBC, de Radio-Canada, de Fox, de CNN.

5375   Pour l'instant, je branche ça à mon ordinateur, mais avec ce qui s'en vient, quand est-ce que je vais prendre mon Zune, puis le brancher sur mon téléphone?

5376   HON. BERNARD LORD : Il y a différentes technologies, puis ça dépend comment la technologie évolue, mais encore, beaucoup d'utilisateurs qui vont voir des vidéos sur leur appareil mobile, c'est fait par un transfert. Excusez mon anglais, mais ils vont le downloader à la maison, puis ils vont le transférer à leur appareil mobile pour le voir où ils sont.

5377   CONSEILLER MORIN : Mais ce n'est pas ce qu'on...

5378   HON. BERNARD LORD : Ce n'est pas l'idéal.

5379   CONSEILLER MORIN : Non.

5380   HON. BERNARD LORD : L'objectif, c'est de créer des réseaux qui vont permettre de le faire directement. Que ça soit ou toute sorte d'information, l'objectif, c'est d'avoir des réseaux qui sont plus rapides, puis puissants, qui ont une plus grande capacité, qui ont une plus grande étendue, et c'est pour ça que l'industrie investit des sommes énormes pour le faire.

5381   Comme je l'ai mentionné tantôt dans l'autre langue officielle -- et j'ai toujours crû que c'est un avantage de vivre au Canada, on peut répéter les mêmes choses deux fois -- je crois que c'est important d'assurer que, à ce moment-ci, on ne met pas d'autres obstacles, d'autres barrières, d'autres problèmes qui vont nuire à l'innovation.

5382   Les investissements qui sont faits sont énormes. Les décisions qui ont été prises par la Commission dans le passé étaient les bonnes, et maintenir l'exemption, seulement deux ans après, je crois que c'est encore la bonne décision à faire.

5383   L'objectif, c'est d'augmenter la capacité, mais personne ne peut prédire à ce moment-ci comment cette capacité-là sera utilisée, et à plusieurs égards, ce que les consommateurs souhaitent voir, c'est d'avoir la capacité d'avoir un Internet ouvert sur leur appareil mobile, de la même façon qu'ils ont un Internet ouvert à la maison.

5384   CONSEILLER MORIN : Mais pour l'instant, entre vous et les EDR, il y a tout un monde?

5385   HON. BERNARD LORD : Oui.

5386   CONSEILLER MORIN : Vous n'offrez pas du tout le même service. Vous êtes vraiment deux bêtes différentes.

5387   HON. BERNARD LORD : Il y a une différence, oui. La différence, c'est que nous, on est le tuyau, pour utiliser votre exemple, et il peut y avoir des services avec des EDR, qui, eux, vont offrir certains groupes de programmation, un certain nombre de réseaux avec la programmation et des choix. Mais le consommateur doit prendre la décision de s'abonner à ce service-là additionnel.

5388   CONSEILLER MORIN : Merci.

5389   THE CHAIRPERSON : Louise?

5390   CONSEILLÈRE POIRIER : Merci, Monsieur le Président.

5391   Je vois que vous avez bien assimilé le mot « EDR » maintenant.

5392   HON. BERNARD LORD : Oui.

5393   CONSEILLÈRE POIRIER : Je vais donc continuer dans ce sujet-là.

5394   On a eu une présentation de l'Union des consommateurs du Québec, qui nous disait dans son mémoire que la téléphonie mobile offrait maintenant un service qui était très similaire à de la vidéo sur demande, et donc, qu'il faudrait soumettre la téléphonie mobile à la même réglementation que la vidéo sur demande.

5395   Alors, j'aimerais donc ça que vous m'expliquiez quelle est la différence entre de la vidéo sur demande pour une EDR et de la vidéo sur demande sur un mobile.

5396   HON. BERNARD LORD : La différence, ça dépend de la définition, évidemment, de qu'est-ce qu'un EDR, qu'est-ce qu'un EDR mobile, et je crois que la Commission est en train d'examiner cette question-là.

5397   Pour l'instant, ça serait bien pour nous de savoir quel est l'objectif de la Commission dans...

5398   CONSEILLÈRE POIRIER : Mais une vidéo qu'on regarde, ça reste la même vidéo. Alors, je commande une vidéo, je l'obtiens par EDR ou je l'obtiens par mobile, c'est la même vidéo.

5399   HON. BERNARD LORD : Mais la différence devient à savoir si vous voulez définir ça pour savoir... et je souhaite que ça ne soit pas pour ça, mais si c'est pour décider qui vous voulez taxer et à qui vous voulez mettre une barrière, à qui on va créer un obstacle, ça devient important.

5400   Parce que si vous décidez de mettre une taxe simplement sur ceux qui fournissent le tuyau, pour utiliser l'expression du Commissaire Morin, bien là, vous êtes en train de taxer des gens qui possiblement n'offrent pas ou n'utilisent pas les services précis d'EDR.

5401   Je crois qu'il y a une différence entre avoir accès à de la vidéo... si je suis ici à Ottawa, puis mon fils veut m'envoyer la vidéo de sa pratique de scrim, puis qu'il veut le faire à partir de son iPod pour que je puisse le voir sur mon BlackBerry, bien ça, on a besoin d'une capacité, d'un tuyau qui est rapide, qui a une capacité, mais ça ne veut pas dire que ça devient un EDR dans le sens qu'il devrait être défini puis attaqué ou taxé par la Commission.

5402   CONSEILLÈRE POIRIER : M'hmm.

5403   HON. BERNARD LORD : Donc, l'utilisation qui est faite de la capacité, de la vitesse, est différente selon les utilisateurs, et c'est pour ça que ces définitions-là deviennent importantes. Et la définition, si on devait en avoir une, si c'est nécessaire, devrait viser... un EDR devrait être définie comme une entité qui achète et qui vend et qui package...

5404   CONSEILLÈRE POIRIER : On vous comprend.

5405   HON. BERNARD LORD : Je vais écouter la traduction tantôt, puis je prendrai le mot qu'ils vont sortir là.

5406   CONSEILLÈRE POIRIER : Oui. Faire un bouquet, oui, mettre en bouquet.

5407   HON. BERNARD LORD : Oui, en bouquet. O.K.

5408   CONSEILLÈRE POIRIER : Oui. Mais, par exemple, je pense à TFO aussi, qui est venue nous voir, qui nous a dit, maintenant, de négocier avec tous les services de téléphonie mobile pour pouvoir présenter leurs émissions. Donc, ça veut dire qu'ils ont -- et là, je vais dire -- des terms of trade qui sont établis aussi avec les services de téléphonie mobile.

5409   HON. BERNARD LORD : C'est que les services de téléphonie mobile, pour la majorité des consommateurs, l'accès qu'ils auront et qu'ils veulent avoir, c'est un accès direct à l'Internet. Donc, si vous prenez l'exemple de TFO, le consommateur pourra avoir accès à TFO de la même façon qu'il pourra avoir accès à TFO à travers l'Internet à la maison, sauf que présentement, la capacité n'est pas encore là.

5410   Il faut quand même voir entre ce qu'on parle et la réalité. La réalité est la même, pratiquement la même qu'elle l'était v'là deux ans lorsque la Commission a fait l'exemption, et cette réalité persiste encore aujourd'hui. Si on parle de souhait, c'est possible, mais si TFO décide de faire une entente avec un EDR, bien, à ce moment-là, ça, ça devient différent.

5411   L'EDR n'est pas la compagnie qui va vous fournir le service sans fil. Ce sont deux entités là, et ça, c'est une distinction qui est importante à faire. Les gens qui vont vous offrir la capacité d'avoir un téléphone sans fil pour faire les choses traditionnelles, et même avoir accès à l'Internet, ne sont pas... selon la définition courante, ne sont pas des EDR, parce que ce ne sont pas des compagnies ou des entités qui achètent, revendent et qui mettent en bouquet...

5412   CONSEILLÈRE POIRIER : Oui.

5413   HON. BERNARD LORD : ...l'offre.

5414   CONSEILLÈRE POIRIER : M'hmm.

5415   HON. BERNARD LORD : Ce sont d'autres entités qui le font, et on peut s'abonner à ces entités-là pour avoir accès à leurs services à travers les fournisseurs de téléphonie sans fil.

5416   CONSEILLÈRE POIRIER : M'hmm.

5417   HON. BERNARD LORD : Mais les carriers, comme on dit si bien en anglais, ne sont pas, selon cette définition, des EDR.

5418   CONSEILLÈRE POIRIER : M'hmm. Une dernière question, Monsieur le Président.

5419   Parce que vous savez, quand on aborde ces sujets-là, c'est une question d'équité.

5420   HON. BERNARD LORD : Oui.

5421   CONSEILLÈRE POIRIER : Ça reste ça. Vous êtes un bon Canadien par les fonctions que vous avez déjà occupées. Donc, je vais aborder le sujet du contenu canadien.

5422   Vous savez que s'il n'y avait pas de réglementation sur les EDR, il y aurait très peu possiblement de contenu canadien. Même cette année, les chiffres que le CRTC a publiés nous démontrent que graduellement, quand on n'est pas là pour mettre peut-être un peu le point sur la table, les EDR et les radiodiffuseurs, en général, achètent de plus en plus de contenus américains.

5423   Les gens nous disent qu'on offre très peu, comme disait monsieur Arpin, de contenu canadien actuellement sur les téléphones mobiles. Si on ne les réglemente pas dès le début, est-ce qu'il n'y a pas un danger que, justement, on se retrouve avec une excellente technologie canadienne, mais offrant des produits américains?

5424   HON. BERNARD LORD : Moi, je ne suis pas de cet avis-là. La raison, c'est que jusqu'à date, contrairement à ce que d'autres ont pu vous dire, moi, j'avance qu'il y a beaucoup de contenu canadien qui est disponible et que lorsqu'on regarde la situation de l'Internet sans fil sur les appareils mobiles et le contenu, les gens ont accès au contenu auquel ils veulent bien avoir accès. L'objectif, c'est d'avoir accès à un Internet qui est ouvert.

5425   Si on parle des EDR, mais ça, c'est quand même une autre entité, et la raison que je fais la distinction, parce que la crainte, c'est que si la Commission veut définir les EDR pour y mettre une taxe, je crois que c'est très important de le définir correctement pour ne pas englober des gens qui ne sont pas des EDR et qui n'offrent pas ces services-là, et donc, on créerait une taxe sur des consommateurs qui n'utilisent pas ces services-là.

5426   Lorsqu'on parle d'équité, comme vous le mentionnez, c'est pour ça que j'en parle avec autant de passion, parce que l'équité pour les consommateurs qui n'utilisent pas ces services-là, eux ne devraient pas être taxés.

5427   Je veux aussi vous parler de l'équité entre l'industrie canadienne et le reste du monde. Dans le monde du sans-fil, à ma connaissance -- corrigez-moi si j'ai tort -- ce genre de taxation n'existe pas ailleurs, et nous ne voudrions surtout pas mettre l'industrie canadienne, qui est encore en croissance, qui est encore à ses débuts, qui est encore en pleine évolution... de créer des barrières et des obstacles qui nuisent à son innovation, qui nuisent à sa créativité, et qui, en bout de ligne, finiraient par nuire au contenu canadien.

5428   Peut-être que certains croient qu'à court terme, ça serait utile. Moi, je suis convaincu qu'à long terme, ça va nuire.

5429   La réalité, c'est que le contenu canadien qui est disponible, que ce soit sur l'Internet ou l'Internet sans fil ou les appareils mobiles, les Canadiens veulent les choses qui sont pertinentes pour eux et pour elles, et il y a beaucoup de services qui sont offerts qui sont pertinents, qui sont canadiens. Les gens vont aller voir les nouvelles locales, la météo locale, le sport local, sur leur appareil sans fil, mais c'est seulement une petite partie.

5430   C'est pour ça lorsque je vous ai mentionné tantôt, il y a 2 pour cent des abonnés qui ont confirmé qu'ils ont vu des vidéos sur leur appareil. Deux pour cent, donc, ce n'est pas une grande quantité, puis qu'ils l'ont fait très peu souvent.

5431   Dans le monde du sans-fil, c'est une infime partie de l'entreprise actuelle, et les investissements qui sont faits, certainement, vont faire avancer le système. Mais j'aimerais réitérer le point principal. Ce n'est pas le temps de changer. La situation de fait qui existait v'là deux ans est pratiquement encore la même aujourd'hui.

5432   THE CHAIRPERSON: We got the point. You made it several times. Like a good politician you stay on message. It's received.

--- Laughter

5433   HON. BERNARD LORD: It's a critical point.

5434   THE CHAIRPERSON: Steve, you are the clean-up man, you are between us and coffee.

5435   COMMISSIONER SIMPSON: I will be very brief.

5436   HON. BERNARD LORD: That means I'm between you and coffee as well.

--- Laughter

5437   COMMISSIONER SIMPSON: I will be very brief.

5438   Mr. Lord, I had the opportunity to attend the IIC conference in November and at that time David Neil from TELUS was asked a question regarding his particular network's ability to keep pace with what they saw as the demand of the consumer. Obviously, higher bandwidth issues were at the source of the question and he answered, you know, very bluntly that the network is not ready for that.

5439   So I'm trying to get a scale of when you say that the demand right now appears to be nascent, do you have any idea at all of when you think networks in Canada are going to be at capacity?

5440   HON. BERNARD LORD: I think our members would be in a better position to provide you that information. Of course, some of our members are making significant investments because they want to be able to meet some of that demand. There will still be some difference between the capacity on a wireless network compared to a non-wireless network for some time. So currently the capacity is not there.

5441   If you look at the coverage in Canada, about 98 percent of the Canadian population is covered by some form of wireless phone service. About two-thirds of those are covered by some form of broadband wireless. We would use this opportunity to convey the importance of expanding that, and the industry plan to do that but it will require significant investments.

5442   And I want to reiterate the point, without offending the Commissioner of the present, that the -- this is a different point, however.

5443   The industry invested $4.5 billion just to buy spectrum. This hasn't improved the network. This does not add capacity. This does not reach one additional person. This is just money that is transferred to the government to say now we have the permission to use the spectrum. Following that they will have to add other billions of dollars to be able to add capacity to build that network.

5444   And what Canadians clearly indicate that they want is they want access to improved wireless networks. We have one of the best networks in Canada already, in the world already, and we want to maintain that leadership position. Adding more taxes, more levies; more barriers will not help Canada achieve that goal.

5445   COMMISSIONER SIMPSON: One final question -- understood and heard, to paraphrase our Chair.

5446   You probably deferred to the wisdom of your members in this question but I have to ask it anyway. The FCC recently approved the 700 MHz band for use with WiFi. That has the potential, I think both of us recognize, as being a major game changer.

5447   Does this represent a threat or an opportunity to take some of the pressure off of the existing wireless networks?

5448   HON. BERNARD LORD: First of all, the new spectrum that will be available in a general sense I believe will be an opportunity; but at what cost? And that remains to be seen. There is only so many billions of dollars the industry can invest just to acquire spectrum.

5449   And there is -- the economic situation in Canada and the world has changed dramatically since the last spectrum option of last year. If it was this year -- and this is just my own view. I'm not convinced that the industry would be in a position to put the same amount of money on the table.

5450   So what will it mean in the future, what will it mean? Some of our members could give you more detailed answers in terms of the technical side. But I think generally in the industry we view it as an opportunity to be able to provide better service and more service but at a significant investment.

5451   COMMISSIONER SIMPSON: But every wireless company in this country is using smart phones as the prime tool for marketing their subscription base. That's like playing with matches in your gasoline.

5452   HON. BERNARD LORD: Well, I'm not sure what you are referring to but I can tell you as the father of two teenagers they want smart phones. They have smart phones.

5453   COMMISSIONER SIMPSON: And smart phones are at the point where they move -- right now they move effortlessly between WiFi and wireless. Just in the white space coalition in the States; Nokia, Google, Phillips, Dell are all saying they are going to have the next generation of this type of phone in the market in 18 months and they are going to be not cell phones anymore. They are going to be computers.

5454   HON. BERNARD LORD: The evolution is constant. And when you mention the WiFi networks, I can tell you when I spend time with my son, and he always his mobile device in his hand, he will tell me when we are entering a free WiFi zone, and I'm glad that he is looking for that.

5455   That being said is simply that there is -- and I think that question is so important because it relates to the central point that this is evolution. This is an evolving industry and how it will evolve, in what direction, remains to be seen. And I will refrain from making my central point that you all know.

--- Laughter

5456   THE CHAIRPERSON: Okay, thank you very much.

5457   COMMISSIONER SIMPSON: Thank you very much.

5458   THE CHAIRPERSON: We appreciate your presentation. As you can see, the whole panel has a lot of interest in what you have presented. We will be discussing it more.

5459   Thank you very much.

5460   HON. BERNARD LORD: Thank you.

5461   We will take a 10-minute break.

--- Upon recessing at 1013

--- Upon resuming at 1024

5462   LE PRÉSIDENT : Madame la Secrétaire, nous sommes prêts.

5463   LA SECRÉTAIRE : Merci.

5464   We will now proceed with a presentation by Digital Media Association.

5465   Mr. Knife is here to make a presentation. You may begin.

PRESENTATION

5466   MR. KNIFE: Good morning.

5467   My name is Lee Knife and I am here on behalf of the Digital Media Association. On behalf of our members, I thank the Commission for allowing us an opportunity to appear at this hearing and to share our views as you consider important issues regarding new media.

5468   The Digital Media Association is a Washington, D.C. based association of companies that provide or support new media services.

5469   Our member companies include providers of pre-programmed Internet and mobile radio service, such as Live365, providers of listener-influenced Internet and mobile radio services such as Pandora and Slacker, providers of advertise-supported and subscription-based music and media-on-demand services, including Rhapsody and Napster, and Internet-based retailers of digital music and video, including Amazon.com and Apple iTunes.

5470   DMA member companies play an important role in making sure that Canadian content is available to consumers in Canada and globally. The cheapest and easiest way to access content online is through websites that do not pay royalties and are not worried about providing Canadian content.

5471   In contrast, our member companies pay royalties to all artists, including Canadian artists, and our companies' packaging, promotion and pricing ingenuity help make Canadian content more accessible, more compelling and more valuable to consumers.

5472   DMA believes that the current new media exemption is working effectively, despite the lack of regulation and perhaps because of it Canadian content is flourishing on the web.

5473   By its very nature, Canadian new media is created because the lack of regulation allows Canadians who would not have access to traditional broadcast and media to be seen and heard.

5474   Our member companies already provide a substantial amount of Canadian content without being regulated. For example, Apple provides Canadian content through its iTunes store service. When a Canadian customer opens the iTunes store, it is the Canadian iTunes store which has been tailored for Canadian consumers.

5475   The Canadian iTunes store prominently offers, among other Canadian content, television episodes from multiple local Canadian networks and studios, including CBC, CTV, Fashion Network, Treehouse and YTV.

5476   Apple also promotes this Canadian content internationally. Whenever possible, Apple has obtained a licence for a Canadian song, television episode or movie, not just for Canada, but also for Apple's other international iTunes stores.

5477   Thus, not only does the Canadian consumer have access to Canadian content, but iTunes users in 21 countries, including the U.S. and the United Kingdom can purchase Canadian content.

5478   This provides Canadian content creators with the opportunity for such additional overseas revenue streams and certainly serves to incentivise further creation of Canadian content.

5479   Our member company YouTube reported that in the first 10 months of 2008 alone tens of thousands of videos were uploaded from Canada each week. I understand that even if CBC, CTV and CanWest Global increased their broadcast Canadian content beyond current levels to 24 hours per day, YouTube would still have more Canadian content available than those three television networks combined.

5480   Additionally, most of our member companies provide search engines that are customizable so that Canadian customers can easily access specific Canadian content if they choose to.

5481   Beyond the fact that our member companies are already providing substantial amounts of Canadian content without regulation, there are other reasons to uphold the exemption order.

5482   Regulations on this industry would be difficult to comply with. For example, if a media website's goal is to make available all known content but the service is required to stock a minimum proportion of Canadian content, the only plausible way to accomplish that would be to remove from the stock non-Canadian content which would undermine the company's mission and would serve to reduce the total selection of media available to the Canadian citizens.

5483   Similarly, services that permit creators to upload their own content would be forced to stop accepting non-Canadian content uploads in order to maintain compliance.

5484   This seems that it would be harmful to Canadian consumers who would not have access to international content that would be available elsewhere.

5485   There are also questions of how to comply with minimum quotas of content performed, which is most analogous to current broadcast regulation.

5486   How would a company like YouTube enforce a performance quota when its content is performed pursuant to consumer demand and not decided by YouTube editorial decisions.

5487   Any decision to impose a tax on Canadian new media services would ultimately harm the consumer and Canadian producers.

5488   Imposing levies on new media services in order to fund development of local content will likely distort the development of DMA members' Canadian offerings to the detriment of Canadian consumers and creators.

5489   Any levy will, of course, be passed through to Canadian consumers. As a result, Canadian consumers will know their prices are higher than elsewhere and will most assuredly work hard to circumvent those controls that are intended to enforce the locality of national markets and may even reject lawful media outright and make the easy transition to pirate services.

5490   If such a levy is combined with other content regulations and restrictions, new media providers might choose to stop investing in their Canadian services which would clearly harm both Canadian creators and consumers.

5491   Furthermore, if other governments viewed the levy as unfairly beneficial to Canadian creators, they might offset it by enacting their own local levies to promote their own local content.

5492   The result would be that the intended competitive advantage of such a subsidy to creators would be, in fact, reduced or eliminated.

5493   It would seem that the best way to promote the continued and increasing production, promotion and distribution of Canadian content would be to allow the continued, unregulated and unlevied expansion of the new media market on the Internet.

5494   As services and ISPs continue to invest in the development of networks and applications that foster the creation, delivery and promotion of new media in general, these services naturally provide the benefits of that expanding market to Canadian content in particular.

5495   Finally, there were some concerns raised by other parties that DMA would like to respond to.

5496   Some commenters have suggested that regulation is needed to help develop the Canadian new media industry, but new media is clearly developing at a rapid pace on its own and unregulated.

5497   The reason new media has become so popular with consumers is largely because new media is unregulated and because any person anywhere can upload content and have that content enjoyed all over the world.

5498   Imposing regulations on new media would actually be harmful to Canadian creators because they would be competing with a wealth of otherwise unregulated international content.

5499   It is the lack of regulation that has allowed the current new media industry to grow and evolve. Regulations would be a barrier to entry and hurt entrepreneurs and growth.

5500   Regulating new media in the same manner as broadcasters is not feasible in any event. Many broadcasters that are required to air a certain amount of Canadian content have established programming agreements with content providers with whom they have close and direct relationships.

5501   Many new media companies lack direct relationships with content creators and often that is why new content find its way to new media and this creates competition and generates creative energy.

5502   Regulation that assumes that new media outlets have relationships with large creators of content or which demands that those relationships are initiated would impose enormous burdens on start-ups that are, in fact, trying to compete with traditional distribution.

5503   Lastly, the absence of regulation allows programmers to easily tailor and adapt their offerings as demand from consumers constantly changes.

5504   Some commenters suggest that regulation is needed because market forces will not ensure availability of Canadian content.

5505   New media is not constrained by traditional limitations on availability and band width. Our companies need only to buy a few more servers in order to make all Canadian content available that creators wish to make available.

5506   This distinction alone justifies maintaining new media's regulatory exemption, by offering a remarkably diverse repertoire of content in a searchable, scalable format and by using collaborative filtering software to offer consumers products and programming that is often unknown to them but is relevant based on interests they have expressed.

5507   DMA services provide content that historically has not been available to or even known by the average media consumer.

5508   New media services promote and market themselves as offering diversity that appeals to small audiences which are then either aggregated into single network for purposes of advertiser-based revenue generation or charged a modest subscription fee or a download fee that pays the creators.

5509   Though operations may be global, many of our member companies localize and, in some instances, personalize their promotions because it makes good business sense.

5510   As a result, market forces ensure that our member companies license and will make available the widest possible variety of Canadian content in Canada as well as elsewhere.

5511   Once again, let me say thank you to the Commission for allowing DMA to present our views on this matter.

5512   I'm available for your questions.

5513   THE CHAIRPERSON: Thank you very much, Mr. Knife.

5514   Did you follow our proceedings yesterday by any chance?

5515   MR. KNIFE: Some of them, sir.

5516   THE CHAIRPERSON: Did you see the presentation by the Songwriters Association of Canada, I believe they were called.

5517   MR. KNIFE: I did hear some of it. I didn't see it, I was listening to it.

5518   THE CHAIRPERSON: I think the Songwriters Association of Canada. In a nut shell they said, you know, downloading is here to stay, it's a wonderful thing, it actually allows songs to be distributed throughout the whole world, but we as songwriters have a problem with it because it means that if it's done without royalty payment, in effect, we lose our income.

5519   And rather than fighting over restriction, they suggested there be established essentially a right to put things on the Internet and allow it downloaded, et cetera, in return for which they would get a small percentage -- they didn't specify how much -- of the subscription fee that any Internet user has to pay to his Internet service provider so that there would be, in effect, a minimal income stream to them and, on the other hand, a power of the Internet to distribute and reach everybody, but be used positively rather than trying to restrict it or fight it which has been done with limited success.

5520   What is your association's position on that? I mean, obviously to make it work you would have to do it internationally, it would have to be done on a reciprocal basis, presumably at some point in time you will need changes to copyright legislation and the international treaty on it.

5521   But is this something where you see this industry is heading? Is this a pipe dream or is this a kernel of a solution towards this wide spread issue of piracy which is clearing bothering the music industry as a first in line, but it probably hits at book publishing, we have e-books in the same way?

5522   MR. KNIFE: Right. I think in general -- first let me point out that our member companies are all royalty paying entities and, indeed, you know, what you're talking about on a large scale there is a business model that has been implemented by several of our companies on an individual business-by-business basis, which is you simply pay a subscription fee and you can access an entire catalogue of whatever music they have available.

5523   The idea of applying that type of a tariff or a levy across a broad network I think has several problems.

5524   Off the top of my head I can think, you know, one of the problems is it would be very, very difficult to apply and enforce. I think it would be difficult to apply and enforce on both the collection side and also the payment side.

5525   When we talk about what media is going to be generating that levy or be allowed to access it, is it -- are we talking about simply static graphical content like photographs or pictures, are we talking about traditional audio/visual media in terms of like regular television programming, are we talking about music-type audio/visual, like a music video, are we talking about just music, or all of these things?

5526   And if you're talking about all of them, it gets into the problems of how much should each use get paid for how much it's getting paid and who polices that, how do they police it, and then again on the other end you have the problems of the content creators and owners arguing about what is the value of their particular content within that network.

5527   I think also applying that type of a broad-based tax or levy would have at least initially the negative effect of chilling the investment and innovation in the area.

5528   I think the reason some of my member companies are engaged in the businesses that they're engaged in is because not only are they passionate about the media business and the music business, but that they believe that somehow they are going to, you know, create the killer application and provide the service and provide the content to users in the way that they want it, as they want it, at the price that they want it.

5529   And I think taking away that ability for people to actually invest and innovate and come up with ideas and try to strike that bond with the consuming public is probably not a good idea.

5530   Finally, I just personally happen to think it commoditizes media and it creates a scenario where media is treated more like a utility and less like an art form.

5531   But that's just me personally.

5532   THE CHAIRPERSON: Okay. Thank you very much.

5533   Louise, I believe you have some questions.

5534   COMMISSIONER POIRIER: Yes. Thank you very much for driving or flying to Canada from Washington.

5535   MR. KNIFE: Thank you.

5536   COMMISSIONER POIRIER: How many members have you got in DMA?

5537   MR. KNIFE: Right now somewhere around 20 or 25 actual individual members, companies.

5538   COMMISSIONER POIRIER: Okay. Probably you have seen there is now an economic model that emerged from the new media industry and this model certainly relies on some data.

5539   What measurement are currently reported to advertisers with respect to engagement with the click tos, numbers of ads serve and so on?

5540   MR. KNIFE: I'm sorry, I didn't understand the last portion of the question.

5541   COMMISSIONER POIRIER: What measurements are currently reported to advertisers?

5542   MR. KNIFE: I don't know specifically. That would be a question that my member companies would know, you know, on an individual basis, but I believe they can collect information as granular as the ISP of a particular user, how long they are on a site, what exact pages they look at, what icons or buttons they may click and, indeed, I think they can also track what URL or other ISP address they came from and what ISP address they may go to afterwards, but I'm not entirely certain.

5543   COMMISSIONER POIRIER: Okay. We will ask them if they come.

5544   How should the Commission monitor revenue associated with broadcasting in new media? Is it feasible?

5545   MR. KNIFE: I'm not sure it's feasible, as I said in my answer to the Chairman. I think it's very difficult to look at new media as, you know, as a totality as it moves across the Internet or through the Internet and to ascribe a particular value to either any particular motion or any particular media.

5546   In addition to some of the questions that I was positing earlier about the various types of media, static graphical media, audio/visual in the traditional broadcast sense, audio/visual in the traditional music video sense, just audio.

5547   There are also questions regarding what is the type of use, whether or not I am simply receiving a performance or whether or not I am actually receiving an entire copy that I can store on a hard drive or other device and later use at my will.

5548   So, I think there are a lot of problems trying to figure out exactly what those uses are, what the media is, how it's being used and how it's moving. I think it's very, very difficult to meter that and monitor it.

5549   COMMISSIONER POIRIER: In your presentation today you mention at the bottom of, I think it's page -- it's difficult to see -- page 4, you say:

"If such a levy is combined with other content regulations and restrictions, new media providers might choose to stop investing in their Canadian services." (As read)

5550   MR. KNIFE: M'hmm.

5551   COMMISSIONER POIRIER: My question is, are you suggesting that Canadian content quotas would be so onerous on your members that they would rather stop marketing themselves to Canadians altogether than comply?

5552   MR. KNIFE: I'm not saying that specifically. What I was suggesting is that if there was a confluence of all of these types of regulations and it became very, very difficult for my member companies to engage in their businesses here in Canada as a result of a multiplicity of those types of regulatory and tariff situations, then that obviously as a business decision would be something that they would consider.

5553   And, so, my comment was more as a foreboding of, we should be careful about what we're going to do here, if anything.

5554   COMMISSIONER POIRIER: Okay.

5555   So, in your December report that I have read you clearly state that:

"New media has benefitted Canadian content, therefore, CRTC should maintain its exemption order and that levies on Canadian new media services would harm Canadian consumers and ultimately would not benefit Canadian producers." (As read)

5556   COMMISSIONER POIRIER: Can you explain, how has the exemption order contributed to the development of Canadian new media broadcasting?

5557   MR. KNIFE: Well, I think in general the Internet is a very -- it's a very dynamic, very fluent, obviously very, very expansive and I think that in general the lack of regulation on the Internet in Canada and in the United States as well has only contributed to that -- to the ability for it to grow.

5558   And what we're seeing is that it tends to grow in a way that allows it to be kind of a new grass roots level type of promotional tool.

5559   Historically with traditional broadcasters you had what we refer to as broadcasting, right, which is a single entity sending a signal to multiple recipients.

5560   The Internet provides what we refer to as narrow casting, or one-to-one type casting, right.

5561   COMMISSIONER POIRIER: M'hmm.

5562   MR. KNIFE: Where everybody can -- there can be many, many, many sources of content that are delivered to many, many individuals.

5563   And I think that that kind of spread of the content provider position, right, the ability to not have to go to a unique group of broadcasters and the ability to broadcast yourself, or to get onto any number of smaller broadcasters helps promote the production of all content, Canadian and otherwise.

5564   COMMISSIONER POIRIER: Yes. Well, in the traditional media I would say it is almost the opposite, regulating broadcasting and imposing Canadian content has been a plus for Canadians, for creators and consumers.

5565   MR. KNIFE: Right.

5566   COMMISSIONER POIRIER: Mostly in the radio industry, and you are in the business of music.

5567   So, could you explain what has worked for decades for traditional media cannot be applied to new media?

5568   MR. KNIFE: Well, yes. Forgive me, but I was trying to explain that.

5569   I think there is a fundamental difference in the technology and that fundamental difference in technology has actually been reflected in the culture and, if you will, the roll-out of the internet.

5570   The things that may be working in Canada with regard to traditional broadcast are uniquely applicable to the broadcast model where you have a single or small group of broadcasters that provide a signal to many, many consumers. That is not the technological landscape of the internet.

5571   What the internet does is essentially democratizes the ability to provide content to anyone who wants to see it.

5572   So I don't think that you can move the model from a one-to-many broadcast paradigm into the model of a many-to-many, anybody can broadcast to anyone at any time anywhere paradigm. I think that that's a fundamental difference, that on the internet anyone can broadcast at any time to anyone.

5573   So there is not necessarily that need to regulate and make sure that Canadian content is being supported appropriately, because Canadian content is being supported by the desire for Canadian content, because now it's accessible.

5574   COMMISSIONER POIRIER: Mostly what I can see is any person seeking Canadian content can find it and once these individuals see Canadian content it is inevitable that a new media service will personalize that persons front page and high-level shelf space to feature similar content.

5575   Usually when you own a business you want not only to serve your usual clients, but you want also to increase their number. So how can you offer Canadian content to those who don't necessarily seek for it?

5576   MR. KNIFE: You were talking about some very, very specific tools, right, where my companies tend to customize the actual front page for their customers and their clients.

5577   COMMISSIONER POIRIER: Yes.

5578   MR. KNIFE: But there are other tools that are available as well.

5579   Again, you know, the internet provides again a large democratization and the ability for social networking and the ability for users of the network to communicate with each other about tastes and about what their desires are, both culturally and geographically and in terms of media and created content.

5580   So I think that there are many tools that are available aside from just customizing of a home page or a first page. You can create tools that allow people to find specific content based on their tastes as expressed in media and those are tools that don't necessarily result in the front page but they may result in feeding particular content to the user.

5581   Indeed, then users have the ability to engage in networking with other users and they can be enlightened as to there may be other media out there that they wouldn't have known existed except for the fact that they are engaged in these small clusters of like-minded people who then share information with each other.

5582   COMMISSIONER POIRIER: So your members, they may choose not to prominently feature Canadian content because sometimes they feel that foreign content is a bigger draw?

5583   MR. KNIFE: I certainly think that that's possible, yes.

5584   COMMISSIONER POIRIER: Okay.

5585   I have maybe another question, Mr. Chair.

5586   Is it fair that a music provider from a traditional media, for example a radio station, contributes with dollars to Canadian content and not a music provider from the new media?

5587   MR. KNIFE: I'm sorry, I'm not sure understand the question.

5588   COMMISSIONER POIRIER: Yes. Well, here in Canada when you have a radio station

--- Laughter

5589   MR. KNIFE: Right...?

5590   COMMISSIONER POIRIER: -- you put some money into the development of Canadian content music. Okay?

5591   MR. KNIFE: Understood, yes.

5592   COMMISSIONER POIRIER: I'm wondering why the new media wouldn't do the same thing.

5593   MR. KNIFE: Again, it has to do with the fact that -- well, there are a number of things.

5594   First, this is a very, very nascent industry. I don't think it's prudent to regulate it or to tax it while it's continuing to develop.

5595   The second thing is, as we have seen it develop it seems to provide a different user experience than the traditional broadcast media, whether it be television or radio, again where you have a single broadcaster providing a signal to many, many users. That broadcaster has a unique control over what those listeners are going to hear or not hear and it may be appropriate to regulate them.

5596   But even if it is appropriate to regulate them in that regard, I don't think it's appropriate to regulate or to demand a specific tariff from providers of content who are simply responding to user demand, whatever that user demand is.

5597   Our companies are in a very, very neutral position, they don't specifically program content in the traditional sense, they simply provide as much content as possible to as many users as possible and so they are not in that traditional kind of editorial position and so I'm not sure it's appropriate to ask them to specifically subsidize any particular content.

5598   COMMISSIONER POIRIER: Okay. So my last question, you assert in your report you presented last December, and I quote:

"DMA member services compete perhaps most significantly against piracy." (As read)

5599   You know, one of the arguments of those opposing CRTC regulating broadcasting in the new media relies on that argument.

5600   Further, in the text you say also, and I quote again:

"Any inhibition of new media services interest in the Canadian market will help pirate services which is contrary to creator." (As read)

5601   Can you explain how the exemption order in force can contribute to fight against piracy?

5602   MR. KNIFE: Well again, my companies spend an awful lot of money and inject an awful lot of ingenuity into a marketplace and they do that specifically in an environment where so far the margins have been rather narrow.

5603   You know, there has not been a wholesale shift of advertising investment to the internet that we would have liked to have seen so far and so the concern there is any additional tax or weight that's put on the development of these networks, and particularly my member company services, is going to make it more and more difficult for them to provide those services given that the margins are as narrow as they are. That will simply allow piracy to flourish.

5604   What we are trying to do at DMA is provide as many legitimate royalty paying services as possible and to foster an environment where legitimate royalty paying services can actually grow, can innovate, can bring in investment and continue to draw market to them so that we have a royalty paying market, so that we have fair users, legal users on one side and paid content providers on the other.

5605   To the extent that we do anything to not incentivize that development, I think only incentivizes illegitimate networks, illegitimate service providers and pirates.

5606   COMMISSIONER POIRIER: Thank you, Mr. Knife.

5607   THE CHAIRPERSON: Thank you.

5608   Len, you had a question?

5609   COMMISSIONER KATZ: Yes. Thank you, Mr. Chairman.

5610   Good morning, Mr. Knife.

5611   I want to take you to the a statement you made on the second to last page of your submission, about five lines down, and it reads as follows:

"Regulation that assumes new media outlets have relationships with large creators of content or which demands that those relationships are initiated would impose enormous burdens on start-ups that are in fact trying to compete with traditional distribution." (As read)

5612   I'm not sure how familiar you are with the Canadian landscape, but in Canada we have strong vertical integration whereby the same corporation holds a wireless licence, a wireline licence, a BDU licence, an ISP licence, there are broadcasters radio and for television.

5613   Isn't it for that reason that perhaps some degree of oversight would be necessary or these start-ups would fail?

5614   MR. KNIFE: That may be true, sir, and I apologize for my lack of insight into the Canadian regulatory scheme or the ownership principles there.

5615   My understanding is that -- I don't believe any of my companies are subject to any of those regulations directly. I believe they are all U.S. companies that aren't under the jurisdiction here, so I'm not sure how that regulatory scheme would apply to them.

5616   COMMISSIONER KATZ: It's just that the statement sort of talks about trying to protect start-ups and I'm sort of saying I'm not suggesting regulation is necessary, all I'm saying is some degree of oversight may be required or start-ups may just get consumed by large corporations that are vertically integrated who have the relationships, as you are saying here, with content providers.

5617   MR. KNIFE: Well, my first response that comes to mind is sometimes they want to be acquired by larger companies, but I don't think that that's necessarily going to happen.

5618   COMMISSIONER KATZ: Okay. Thank you.

5619   THE CHAIRPERSON: Tim...?

5620   COMMISSIONER DENTON: Yes.

5621   Good morning, Mr. Knife.

5622   I would like to create a very brief scenario for you that has two conditions.

5623   First, anyone can upload anything to the internet from anywhere and, as a subset of that, any Canadian can upload anything to an American or other website, condition one.

5624   Condition two, those who seek subsidies for new media from the Canadian government must satisfy the conditions of the Canadian government.

5625   In that scenario, complete freedom to upload but if you seek money from the Canadian government -- are any of the interests of your companies affected by such a condition?

5626   MR. KNIFE: I'm sorry, but I'm not sure I understand the second condition.

5627   COMMISSIONER DENTON: If you seek money from the Canadian government --

5628   MR. KNIFE: Right...?

5629   COMMISSIONER DENTON: -- you must satisfy the conditions of the Canadian government.

5630   MR. KNIFE: Okay.

5631   I am not entirely sure, but I don't think so. I don't think any of our member companies would specifically fall under that scenario.

5632   COMMISSIONER DENTON: Thank you.

5633   Second question: You mentioned our margins have been rather narrow and I remember seeing something like that in the book "The Long Tale".

5634   I would like it if you could just explain to us a bit more about profit margins on the net, because I think there is a general conception that there is a vast amount of money to be made out there and those involved in it find rather narrow margins.

5635   MR. KNIFE: Right.

5636   Again I apologize, but I would defer questions about specific, you know, profits and P&Ls to my individual member companies, but what I can say is despite -- there is a difference between market capitalization and what we see as public market valuation of these companies and actual operating profit margins. It is my distinct understanding that the profit margins, the actual operating profit margins for most of my member companies are rather narrow.

5637   Again, this is 10-or-some odd years on, this is still a very, very nascent industry and, like I said, advertising, which is a predominant revenue model has not fully embraced the internet on a level that has, say, broadcast radio or broadcast television.

5638   Likewise subscription, which is another primary revenue generation model, simply doesn't seem to be taking hold in the way that many of my member companies would have liked.

5639   I'm not sure if that answers your question, but, like I said, I think there is a distinction between headlines about market capitalization and actual operating budgets and P&Ls.

5640   COMMISSIONER DENTON: Thank you very much.

5641   Those are my questions.

5642   THE CHAIRPERSON: Steve...? You are the cleanup man as usual.

--- Laughter

5643   COMMISSIONER SIMPSON: Good morning, Mr. Knife. Thank you very much again for coming all this way. We really appreciate it.

5644   With respect to the membership of your organization, I'm doing some probing with respect to not just the question of is there broadcasting on the internet, but if there is broadcasting on the internet who are the broadcasters.

5645   Your organizations include Apple, Muzak, Nokia, you know, just a real hodgepodge of organizations who are in the device market, they are in the software business, you know, they are in the entertainment business with MTV and AOL.

5646   Would you call them aggregators? Would you call them -- would they consider themselves broadcasters?

5647   MR. KNIFE: You raise a good point, my organization does in fact serve a lot of different interests.

5648   I tend to, in my mind, kind of put them in various groups. You know, there are a number of our member companies that are primarily broadcasters -- we refer to them as webcasters for obvious reasons -- where what they are doing is providing radio-like content over the web.

5649   There is another group of our member companies I would refer to as kind of online retailers and in that category you would put Apple's iTunes Store, RealNetworks, Napster, those types of companies.

5650   Then there are the companies that kind of float around that are doing different types of things. Some of them do in fact aggregate these types of services. Either they aggregate smaller independent artist music for either download or broadcast or they aggregate small broadcasters to allow them to access the benefits of having aggregated their time for things like ad sales or bandwidth and stuff like that.

5651   COMMISSIONER SIMPSON: Great. Thank you.

5652   In programming terms, broadcasters study a marketplace, try and figure out what that market wants to watch or hear and adjusts their programming accordingly.

5653   In the retail world a retailer does much the same thing, it puts on the shelf what people want to buy. Let's call that merchandising.

5654   Now, in the online world it seems that with the exception of the nuance of streaming versus having something available on a server to be pulled down by a consumer, let's pretend that there is no nuance there. It seems that if an aggregator goes about putting content on the internet for a commercial purpose and it has a back end arrangement with the content producer, is this in the new world a form of programming?

5655   Are retailers the broadcaster?

5656   MR. KNIFE: I don't think so.

5657   I think what most of my companies are trying to do -- again, I would defer to them, or a view of each of them, because one of the things that makes my organization interesting and one of the things that makes the internet and new media so dynamic is the fact that they all have various business models and different schemes.

5658   But I think in general they are not trying to be programmers, what they are trying to do is, to use your words, I think they are trying to offer everything on the shelf all at once and allowing the programming to take place at the user level and even in small groups of users, so that, you know, if you and I hook up on the internet by comparing playlists and we decide that we have the same types of taste, maybe you know of five different artists that I don't know of and you will tell me about them.

5659   But I think in general -- and this is again subject to the fact that some of my companies have various business models about whether or not they want to engage in -- take an editorial position, in general I think the concept is to not be an editor and to not be a programmer and to simply provide access to everything available and to allow the user and that user's social group to become its own programmer.

5660   COMMISSIONER SIMPSON: Thanks for the segue because my next question was going to be: I'm fascinated with your notion that storage is cheap and getting cheaper, hopefully bandwidth will go the same direction.

5661   You had made a statement earlier that I'm really intrigued about and that's the concept of given an infinite amount of service storage space, if we contemplated that all Canadian content was online -- and let's pretend that that's happened -- give me an insight as to the appetite of the organizations that are the type of members that you have, their appetite to help those artists, composers, writers, promote their work.

5662   Would Apple, who already has a .ca site, become even more engaged if there was an infinite amount of Canadian content to help promote Canadian content on the web?

5663   MR. KNIFE: Again I think that the answer is yes, subject to, you know, various business models and various companies desires to position themselves at any point between them and the user in an editorial capacity.

5664   I think again the general goal is to have all the content available that they could possibly have available, and while the use of bandwidth and the establishment and population of servers is a cost, and it's a real cost of my companies face on a day-to-day basis, my understanding is that that's a cost that they are willing to incur for the benefit of being a service that provides access to all the media.

5665   Again, I think it's of primary -- it's the premium in the marketplace to be able to say all the content is available here, can be provided to you.

5666   COMMISSIONER SIMPSON: Last question. Last question, Mr. Chair.

5667   This country has a goal and the mandate to promote Canadian content and our culture and it's a big world out there and given the scenario that we want to continue doing that as a goal, not knowing how we are going to do that with respect to the internet, assuming there would be a need for some type of funding to help Canadian content and Canadian culture migrate to the net, and that subsidy involved some type of a levy, who, off the top of your mind, should be a contributor to that?

5668   MR. KNIFE: Well, I would start by saying I'm not sure that the goals that are announced, as admirable as they are, would necessarily be furthered by the imposition of a levy.

5669   But if the question posits that the levy is going to be imposed in general, I think one of the things that I would say to the Commission is you should be very cautious about the definitions and who you apply those levies to. And the idea of applying a levy either to a broad-based service or an ISP provider or one of my member companies that simply provides content and doesn't editorialize between Canadian content or any other content would probably be a mistake.

5670   If anything, if any levy is going to be applied, maybe you could apply it to the narrowest form of traditional like broadcasting on the internet, in other words, if somebody is going to create a site that is going to look exactly like a Canadian broadcaster but simply on the internet, to make sure that the parallels that we have been talking about and the lack of those parallels is not something that is ignored.

5671   COMMISSIONER SIMPSON: That was artful.

5672   MR. KNIFE: No.

--- Laughter

5673   COMMISSIONER SIMPSON: But if there is commerce involved surely to goodness there would be an opportunity within that transaction to take a slice of it to put back into investment for the artist.

5674   MR. KNIFE: Again, at this point I think it's difficult to say that internet service providers, and my companies, media content companies, media content provision companies, should be taxed in any way.

5675   Again, they are providing a vastly increased access to Canadian content and by doing that by definition are providing for the continued production and the continued financing of the production of Canadian content.

5676   I don't think that applying a levy on that at this time would further the goal. I think actually letting the internet continue to expand, letting the base of media that's available, including Canadian content that's available, expand in the way that it has been doing so far unregulated and organically is probably the -- is the best approach.

5677   COMMISSIONER SIMPSON: If everything that was offered by your members was free I would agree with that.

5678   Thank you.

5679   THE CHAIRPERSON: Okay, I think we exhausted that point.

5680   Thanks, Mr. Knife, for your presentation.

5681   MR. KNIFE: Thank you.

5682   THE CHAIRPERSON: We are now going to the NFB, if I understand correctly.

5683   Is Mr. Perlmutter here? I don't see him.

5684   So let's take a 5-minute break before he comes.

--- Upon recessing at 1107

--- Upon resuming at 1117

5685   THE CHAIRPERSON: Okay, madam Secretary.

5686   LA SECRÉTAIRE : Merci.

5687   We will now proceed with the presentation by the National Film Board.

5688   Appearing for the National Film Board is Mr. Tom Perlmutter.

5689   Please introduce your colleagues and then proceed with you 15-minute presentation.

PRESENTATION

5690   M. PERLMUTTER : Bonjour. Je suis très heureux de m'adresser à vous au nom de l'Office national du film du Canada.

5691   Je suis commissaire du gouvernement à la cinématographie et président de l'Office national du film.

5692   Je suis accompagné aujourd'hui de Claude Joli-Coeur, commissaire adjoint et directeur, planification stratégique et relations gouvernementales, et de Deborah Drisdell, directrice, accessibilité et entreprises numériques.

5693   Je commencerai par vous donner un aperçu du contexte, aperçu que le président et d'autres personnes ont possiblement déjà entendu à l'occasion du discours que j'ai tenu vendredi dernier.

5694   Soyez sans crainte. Je ne répéterai pas le même discours. Je serai donc bref, mais il est important.

5695   The issues you are exploring are among the most critical for our times.

5696   The digital revolution, by which I refer to the entire network of ways in which we interconnect through digital media, including the Web and mobile platforms, will have enormous long-term consequences for Canada in all areas -- political, social, economical and cultural.

5697   The depth of its impact will mirror that of the industrial revolution of the late 18th and 19th centuries.

5698   Worldwide, over one billion users are now connected to the Internet -- nearly 20 per cent of the planet. And every day the numbers grow.

5699   The emerging and future generations will have no notion of what it is like not to have instantaneous connection -- to information, to shops, to programming and, most of all, to their social networks.

5700   Consider this: Barack Obama is President of the United States because of the Internet generation.

5701   He raised a phenomenal 750 million dollars for his presidential campaign, created an enormously powerful online community and changed politics forever.

5702   These hearings are trying to separate out one part of a very complex, intertwined communications ecology that is in constant evolution -- the part concerning the production of professionally-produced programming and rendering it available.

5703   The danger is that we may be tempted to define new rules of the game within the frames of reference of traditional broadcasting at the very time when the notion of traditional media is being challenged.

5704   No public policy should restrict the range of possibility.

5705   On the contrary, it should focus on fostering the development of the fullest possible range of Canadian innovation and content within the fast-changing environment.

5706   The CRTC's own research has shown that the top websites in Canada are American-owned.

5707   They include such names as Microsoft, Google, Time Warner, News Corp and Disney.

5708   Borderless virtual realms do not mean realms without context.

5709   If MySpace and YouTube allow anyone to upload to or to partake of the audiovisual realm, it is within a particular kind of context driven by certain sets of values and conditions.

5710   And, of course, commercial interests are quick to figure out ways to appropriate the sites that emerge and become hits.

5711   Flickr, the popular photo-sharing site, was established in 2004 in British Columbia. A year later, Yahoo snapped it up and all content was migrated to servers in the U.S.

5712   Club Penguin, a social-networking site for children, also a B.C.-based start-up, proved so successful that, within two years of its founding in 2005, Disney picked it up.

5713   I think whoever controls the context at the end of the day controls both the message and the profits.

5714   According to the Interactive Bureau of Canada, the Canadian online ad market was worth well over 1.2 billion dollars in 2007, a 38 per cent increase over the previous year.

5715   Online advertising is dominated by search engines. Currently, Google controls almost 82 per cent of the search market.

5716   Now it has been noted that this ad market is quite different from the one that funds traditional media and doesn't compete.

5717   However, the argument here is that American companies are profiting from access to the Canadian market, including the new media broadcast market.

5718   For example, in an effort to increase the traffic and visibility of the NFB's own online offering, we contracted with Google to purchase ad words that would optimize the search engine results for our destination.

5719   Given Google's dominance of the search market, there are few options.

5720   As well, the NFB makes use of Google's YouTube as part of its strategy to reach Canadian audiences. And we generate a substantial number of views.

5721   Animation shorts like Danish Poet, Hungu and Ryan have been viewed close to or more than 500,000 times over a period of several months.

5722   However, YouTube will never provide the breadth of Canadian programming that a viewer has by connecting to NFB.ca.

5723   YouTube also offers channels for professional broadcasters, like the BBC, Fox, Warner and CBS.

5724   These developments, which favour the distribution of popular foreign content, may well put pressure on the availability and visibility of Canadian productions online.

5725   The same is true of services not currently available in Canada, but that may yet find their way here.

5726   On its site, the much touted Hulu notes:

"For now, Hulu is a U.S. service only, but the Hulu team is committed to making great programming available across the globe." (As read)

5727   La Commission a demandé des commentaires pour savoir si les ordonnances d'exemption relatives aux entreprises de diffusion de nouveaux médias et aux entreprises de télédiffusion mobile émises en 1999 et en 2007, respectivement, sont toujours pertinentes ou dans quelle mesure elles devaient être révisées.

5728   Dans le cadre de ce processus, certains ont fait valoir que les ordonnances d'exemption devraient être levées et que le CRTC devrait envisager de réglementer le milieu de la radiodiffusion par les nouveaux médias.

5729   Il est incertain que nous possédons les connaissances requises pour mettre en place des mesures de réglementation semblables à celles qui s'appliquent à la radiodiffusion traditionnelle.

5730   Cela ne semble pas réalisable.

5731   En effet, la radiodiffusion traditionnelle était un milieu où les ressources -- les ondes publiques -- étaient rares.

5732   Il était essentiel de mettre en place des mesures réglementaires afin que ces ressources servent les intérêts du public canadien.

5733   Scarcity is not the issue in digital media. The issue is ensuring the availability of strong Canadian content, using Canadian talent and meeting Canadian needs.

5734   It seems to us that the situation we face with regard to the digital environment is more analogous to the situation faced by the Massey Commission in the early fifties: a dominance of foreign work, a lack of adequate support for Canadian talent (in the digital space), and difficulty for Canadian talent and creations to break through.

5735   The solution then was to create an institution to nurture innovation, talent and content creation.

5736   The Canada Council has been one of the most potent instruments we have had to support Canadian artistic creation, and we all know and experience the results of that.

5737   That massive investment in the arts has given us world-class luminaries in art, dance, experimental film and literature.

5738   As the various new media begin to increasingly define our public, cultural and economic life, we need to fully occupy those virtual spaces in all our own diversity and richness and complexity. We cannot afford to wait until the dust settles, until the business models are fully developed, until we see who controls what.

5739   We need to move forward quickly, with strong support for Canadian digital content.

5740   Support should focus on the following areas: 1) Broadcast-based content; 2) Original digital content; 3) Digitization of heritage collections; 4) Promotion of digital media; 5) Training; 6) Research and development in the area of innovative platforms and storage and accessibility of archived digital content.

5741   In all those areas, we have to be particularly cognizant of the need to sustain a strong Francophone presence in the digital world, as well as the importance of ensuring vibrant online content from First Nations and diverse creators.

5742   Broadcast-based content.

5743   Producers and broadcasters need support and encouragement to develop content based on and extending existing broadcast properties.

5744   We need to see webisodes, mobisodes, interactive content, games that involve and create affinities among audiences and their favourite programs.

5745   Areas that need specific support include children's programming, documentaries and drama.

5746   Original digital content.

5747   We also need to support content that is not tied to existing broadcast properties and may never have a broadcast component.

5748   This is perhaps the riskiest and most difficult content to develop and, in some ways, the most important.

5749   It is here that the language, aesthetics and dynamics of new media programming will be developed.

5750   We are only at the very beginning of the emergence of new art forms and new modes of popular entertainment.

5751   Three, Digitization of heritage collections.

5752   We need to support the digitization of these collections, whether from the public or the private sector, and make them accessible. This is a massive problem.

5753   The NFB alone is the caretaker of a remarkable Canadian audiovisual heritage of 13,000 titles, 500,000 still images and an extensive library.

5754   Until now, these have been a resource for historians and film buffs.

5755   We have looked after the collection well. In fact, in some areas, we are world leaders in conservation techniques.

5756   But, for the most part, this heritage has been a buried treasure, lost from view, inert, not building anything, not creating opportunities, not opening doors.

5757   When we launched our online Screening Room last month, we released some of that latent energy of those works by putting this heritage in the hands of Canadians.

5758   Imagine what can happen when you release such treasure hoards into the world to encourage new thoughts, provoke new reflections, inspire new work and create new economic opportunities.

5759   I can give you an idea because we had a tremendous response from ordinary Canadians on the blogosphere.

5760   I am just going to read you a couple of them.

"Upon reading this, my first thought is that Christmas has come early for all Canadians this year as we can watch at our leisure some of the greatest films, documentaries and animated films ever produced. Three cheers for the NFB, our true Canadian treasure, and thanks for the memories, now just a click away." (As read)

5761   Another person:

5762   Another one:

5763   In my discussions across the country, this response was uniform from St. John's through to Vancouver, across Quebec, across the prairies, east coast and west coast.

5764   What about all the other work created across the country, most of it funded to one degree or other by public money, that is still gathering dust on shelves, that is the heritage of all Canadians?

5765   To give you an idea of the magnitude of the problem, we believe that digitizing our collection, alone, would cost something in the area of $30 million to $40 million, well beyond our own means.

5766   Other jurisdictions have recognized and responded to this problem. Britain has granted the British Film Institute ,50 million for just such an endeavour.

5767   Last year, Holland pledged 175 million Euros over seven years to digitize major national collections.

5768   France has given the INA millions of Euros to support their digitization efforts, and to make it available to French citizens.

5769   Promotion of digital media: We need to put a great deal more research and thought into the development of marketing strategies and strong digital brands that will break through and capture the imagination of our audiences.

5770   Training: We need training. We need it desperately. Production models, budgeting, work flows are very different in the non-linear world of digital programming.

5771   Research and development: We need to support innovation. YouTube, MySpace, Facebook and Flickr are all relative newcomers, platforms developed within the past five years. The possibilities for new platforms, new approaches, and new ideas remain wide open.

5772   Canadians have proven that they can compete with the best in this arena. We need to provide the support that will make Canada a world centre for digital innovation. That, too, will then help drive the creation of Canadian content.

5773   The continuity of digital creations is also a pressing and critical issue. How do we ensure that works created for new media platforms will be part of our children's and grandchildren's cultural heritage in the same way that other art forms are?

5774   Can we imagine a Canada without the Group of Seven, or Anne of Green Gables, or Mon Oncle Antoine?

5775   How do we manage the endeavours of our new generation of creators? How will we store their work and render it accessible as technologies evolve and change?

5776   To resolve these issues, we need to invest in research and development. The solutions we come up with can become exportable intellectual property.

5777   The Role of the Public Sector: I think we have to look at a special role for the public sector in the changing media environment, and reaffirm its role in an online environment. We have the express duty to provide the range and depth of specialized programming that may not be provided by commercial interests, like non-commercial children's programming, serious documentary programming and regional programming.

5778   The online world has a unique ability in that it can be tailored to reflect regional realities in ways that are difficult elsewhere. We have to recognize that, to achieve this public mission, public institutions will need funding.

5779   I will talk a bit about the role of the NFB.

5780   In some ways, with last month's launch of our online Screening Room, we have become a broadcaster. We currently have over 700 titles available for streaming, free on our site, and we will keep adding titles.

5781   In the near future, we will make downloading available, as well as availability for mobile platforms. We will increase interactivity and the ability to create online communities.

5782   What is unique to the NFB site is that it is not simply an archive. With the click of a button, we connect to the pulse of Canadian life and creativity across the years.

5783   This is the virtual equivalent of our famed travelling projectionists. It is the virtual church basement or school auditorium where Canadians of all generations can share their experiences, exchange points of view, and together build the Canada that we all know as one of the most remarkable countries in the world.

5784   The NFB is a creative laboratory, where we can test the future today. Without the burden of traditional broadcasting infrastructure, we can push further and deeper into areas that are too risky even for public broadcasters.

5785   We can and will increasingly be focusing on delivering unique content on digital platforms. In fact, we have been taking the lead in this area for some time.

5786   With our partners, Bravo!Fact and MarbleMedia, we were the first in Canada to create original productions for mobile phones, with creators like Guy Maddin and Denis Villeneuve.

5787   We were the first in North America to produce an interactive feature film, which we did in conjunction with our partners at the Canadian Film Centre media lab.

5788   We were the first to create an e-cinema network in Canada, launching a pilot project in five francophone communities in Acadia, providing a rich collection of otherwise unavailable documentaries, animation and features in French.

5789   And we are leading the way in using the web as a creative documentary medium in and of itself. Our Filmmaker-In-Residence project re-defined engaged documentary making for the digital world, swept major new media awards nationally and internationally -- we were the only Canadian institution to win a Webby last year for this project -- and flooded us with invitations to present this project at many international venues.

5790   Our content is 100 percent Canadian. It reflects this country's diversity. It gives a powerful voice to Aboriginal creators and those from our diverse ethnic communities. It is available in French and in English, and crosses all our geographic boundaries.

5791   As well -- and this is important in the online world, where brand means a lot -- our brand is recognized internationally, applauded internationally, and I would say, at some points, revered.

5792   We are part of the solution, but we, too, are under tremendous financial pressure.

5793   The question has come up, in terms of funding: Who should pay?

5794   The NFB strongly supports the creation of a new dedicated Media Fund. The fund should be seen as an innovation fund that will lead to the creation of world-leading new media content, as described above.

5795   For this reason, we do not believe that such a fund should be managed by or tied directly to traditional broadcast interests. However, broadcasters should have a level playing field access to such a fund.

5796   We are not sure what the best means of establishing such a fund might be. It may be a mix of levies, tax incentives and direct government investment. This warrants further study, but a decision should be made quickly.

5797   Finally, and perhaps most crucial, however important the work being done in these hearings -- and I believe it is very important -- it is only part of the job, and cannot be done in isolation, nor in the absence of an overriding national policy.

5798   Other institutions are grappling with these issues: the CBC/SRC is active, Telefilm has articulated an approach to a digital future, and the National Library and Archives has been pushing ahead with issues of digitization and conservation.

5799   We at the NFB, as I mentioned, are very focused on these issues. What we need to do is to bring all the parts together. This country needs a national digital strategy, one that will ensure that we are building for the future of this industry and this country.

5800   Many other jurisdictions understand that there needs to be a comprehensive approach that does not isolate the broadcast sector from the larger cultural, economic and social considerations, that they all interlaced.

5801   We need to ensure that the infrastructure meets the needs of today and tomorrow, which means advanced digital networks, broadband and wireless.

5802   We need to cross digital divides between the digital haves and have-nots.

5803   We need to ensure broad-based digital literacy.

5804   We need rich Canadian content that is both multi-platform and cross-platform, and unique creations for specific platforms.

5805   We need training for new modes of production.

5806   We need to evolve our business and financing models.

5807   We need to figure out how to create international digital co-production partnerships.

5808   We need to work at building strong digital brands that will capture the imagination of our audiences.

5809   Most of all, we need a vision.

5810   I strongly urge the forming of a national digital panel, one that will bring together leading players from all sectors to begin to think through the long-term issues related to the development of a strong digital Canada.

5811   Thank you.

5812   THE CHAIRPERSON: Thank you very much for your very impassioned presentation. As you said, you said the same thing at the Prime Time of the CFPTA, and I was just as impressed then as I was today about (a) your passion, and (b) the verity of what you are saying. I think that a national digital strategy is clearly what is needed, and I hope that your impassioned plea will be heard by the decision-makers.

5813   It is not our task, unfortunately, to evolve such a thing. We are very limited to broadcasting, but I am not blind at all. I sympathize and I agree and fully support your call for a national digital strategy.

5814   Returning to what we are about, which is regulating broadcasting, you say on page 1:

5815   I agree absolutely. But, then, the only solution that I see here is the establishment of a New Media Fund, which is very much the traditional way of dealing with these issues.

5816   Have you thought about other ways of going about it; for instance, the whole idea of an IPTV, à la BBC, which you are doing now on your NFB basis, but doing it nationally, et cetera?

5817   Or, alternatively, another idea that has been floated around is somehow tying this whole thing into the issue of net neutrality, and providing special access for Canadian broadcasters, Canadian websites.

5818   Or, if you don't provide a special broadcaster, at least provide that you can throttle them. You all manage to throttle certain traffic, but you can't throttle traffic that comes from -- if it has a "ca" behind it, or something like that -- a new media solution to the issue, rather than a traditional media solution.

5819   MR. PERLMUTTER: You are absolutely right, and we have thought about that, but I have started from an assumption, and part of it was implicit here.

5820   For example, when talking about net neutrality, the issue comes up because what has happened in this country is that our whole infrastructure development has fallen far behind.

5821   When you get places like -- I think it's in Japan, where they will say, "We are moving to 1 gigabyte per second infrastructure," as opposed to -- what is the norm here -- maybe 3 megabytes, and you are getting speeds 300 times faster that are available.

5822   We have an interim problem, I would say, in terms of net neutrality, and there is an interim solution, I think, in terms of thinking how you actually create that sort of regulation around that.

5823   I think the more fundamental issue, in terms of what you are saying there, really has to do with: How do we look at this? What are the incentives? What are the ways in which that infrastructure is going to come up to speed, both literally and figuratively, both in terms of what is happening in the broadband world, as well as in the wireless world?

5824   How long did it take us to get to 3 megabytes, when other countries were there way ahead?

5825   And because that infrastructure is there, you can start to experiment and develop and provide a range of offerings, which we can't do at the moment.

5826   If we focused on the fund -- when you look at the BBC, or when you look at what Channel 4 has done with the various screen agencies, they put up a ,50 million fund.

5827   Fund shouldn't be confused -- just because we use the word "fund", that does mean it is traditional. It is how you conceive of it, how you structure it, how you think about it in terms of what are the objectives.

5828   What I didn't get a chance to talk about is, really, how do you start to think about structuring objectives for these things, so that it actually incentivizes innovation?

5829   I pointed to the notion of platform creation, for example. That is fundamental in terms of being able to drive a whole new approach to this.

5830   I think that the word "fund" just covers a lot of -- in a broad way, things that need to be explored deeply.

5831   THE CHAIRPERSON: Just so I am clear, when you talk about "fund", you don't talk about it like everybody else. In fact, it is for the creation of content.

5832   That's the way the term "fund" has been used for the last week and a half. You are thinking in a much broader concept.

5833   MR. PERLMUTTER: It is a broader concept in terms of saying how are we going to -- I think because what happens here -- I mean it is traditional because what happens, I was going to say, while we want to create content and I think what gets anchored there often is the notion of the traditional notion, we will go to a producer, they will produce something, we will put it on the net.

5834   Well, that's wrong, because what you have to start with, and what I haven't been able to kind of articulate fully here, what are the aims? What is it you want to actually achieve? What are the goals. Where do we want to see ourselves in a year, two years, three years?

5835   Well, in terms of our experience at the Film Board, what we are doing for example, with our own -- when we look at where we are going and think here is where we are taking our money, it's allocated. You know, we have a history of doing traditional kinds of work, we now are moving and saying we are going to kind of take this and create, as it were, ways of thinking differently about creation.

5836   So when we did something like film -- I will give you a very concrete example of how difficult it is to kind of conceive of something in traditional forms.

5837   We did a project which I launched, this Filmmaker in Residence project. We worked with St. Michael's Hospital, which I had come across the Director of Research and discovered that this is a world leader in delivering health care into the inner city, admired around the world, and so on.

5838   We sent a researcher in who came back with a 50-page report saying, here, you can do these five different documentaries, traditional documentaries. It could be an hour or feature length, and so on.

5839   At that point I said I have no interest in doing any of these documentaries whatsoever and this is completely the wrong approach. We need to engage in this in a completely different way and we are going to engage in a way that deals with process rather than defining an end product. And that led to ground-breaking new media work.

5840   But where can you go in the current environment and say: Well, here is my process, here is what's going to happen, here is how I think things will evolved, it's going to take two to three years. I cannot tell you, CBC or Global CTV that this is going to be a one-hour documentary. I cannot define that a priori.

5841   That's the kind of risk-taking that I'm talking about, trying to conceive of how you kind of manage that level of risk-taking in terms of creating something that is going to be radical.

5842   Right now we have the world knocking at our door because of this, literally. You know, around the world people are saying wow, how did this happen?

5843   THE CHAIRPERSON: Thank you.

5844   Michel, did you have some questions?

5845   COMMISSIONER ARPIN: Thank you.

5846   Well, just as a matter of follow-up on funding, when I read your submission and I listened to you this morning I'm asking: Where will that money come from? You are talking sometimes about the government should be contributing to an international fund, but who shall be the other paying members to that fund -- contributing members?

5847   M. PERLMUTTER : C'est une bonne question, et vraiment, je n'ai pas toutes les réponses à ça en ce moment, parce que, écoute, je sais que devant la Commission maintenant, la question, c'est toujours cette fameuse question de levy on ISPs and that's what you are all struggling with and saying "Ah".

5848   Frankly, I don't have the competence to kind of really respond to that particular thing.

5849   The issue here, this is where it's hard to kind of -- and again, why this fund, to go back to the President's comment, gets locked in some thinking, because you are trying to take a piece of this puzzle in terms of this when it actually involves the whole length. Because what are the economic benefits? What are the kinds of sense of how you kind of look at this?

5850   In Britain they put together funding from the Screen Agency and Channel 4, Britain, or BBC has made it their own decision out of their own licence fee to generate millions and millions of pounds of investment.

5851   It's hard to kind of say right now, without bringing all the parties together and being able to say here we are. Because we can go after some easy targets, say, as the ISP. I'm not sure, we have to look at what are the tax incentives possible in relationship to this in terms of whether it's tax credits. We have to look.

5852   One of the fundamental issues, we look at advertising for example on line. You are not going to be able to kind of protect in the way you have done with traditional broadcasting with simultaneous broadcasts and ensuring ad revenues stay in Canada to Canadian companies that then benefit. You can kind of drive benefits in terms of Canadian creations.

5853   When we are kind of paying Google, there is no necessity for that ad revenue to stay in Canada, or any portion of that, so you have to say are there tax incentives around that that make some kind of sense to ensure that it benefits Canadians.

5854   That is certainly what happened in relationship to the magazine industry in the past, for example.

5855   COMMISSIONER ARPIN: In your written submission you are referring to the European solution that is called "Europeana". I have been on their site. You triggered my interest for their site and I have been through it. Now I could see that all the European countries, or the major players at least in the European countries for the time being have already started to initiate some contributions.

5856   How are they financing that, through the various governments or through la Commission européenne?

5857   MR. PERLMUTTER: Again, I don't have the details right at my fingertips, but I think certainly in France for example, I know that INA, when they went through their process, they started again with their own resources and what happened was that at a certain point the government understood the importance of it and then they contributed up to about a third out of government funding.

5858   That was for very specific task of digitization, it didn't respond to the whole question of creating kind of a new digital strategy with tranches, it just started with numérique, la stratégie numérique 2009 ou quelque chose comme ça.

5859   I don't know, Deborah, do you have some specifics on that?

5860   I don't have the specifics, I'm sorry, with me.

5861   COMMISSIONER ARPIN: Well, if you could find it --

5862   MR. PERLMUTTER: We will send it to you. Yes, we have it in our --

5863   COMMISSIONER ARPIN: Okay. Because you can send comments up and until March 23rd to complete the record or make comments on the various issues that have been discussed.

5864   Now, when you are talking about your national strategy, the need for a national strategy, and when you are making a description of what is needed, the six categories that are needed to be developed, are they part of the national strategy or are you talking something else?

5865   MR. PERLMUTTER: Okay. What I was trying to separate out were two things.

5866   One, we need a national strategy. I think what you are trying to deal with is a piece of the puzzle. We can't wait for the national strategy so the notion is: How do you construct something here today in terms of responding to the immediate pressing needs that will actually serve as a foundation that will actually let us build into the future.

5867   When I was talking about these six things, it's really as a first step in terms of saying: Here, let's start the foundation, let's start working, because if we wait the two years or the 18 months that it may take to pull together all the different parties and put together kind of a collective thinking, we have lost ground and we can't afford to wait for that.

5868   So this is really an interim solution for me, a way of saying: Let's seize the territory, let's move ahead and take it from there.

5869   COMMISSIONER ARPIN: Essentially what you are telling us is that we are really lagging behind other countries.

5870   MR. PERLMUTTER: We are.

5871   COMMISSIONER ARPIN: We are.

5872   MR. PERLMUTTER: We are. There is no doubt about it.

5873   COMMISSIONER ARPIN: You gave us some examples, particularly talking about the U.K.

5874   MR. PERLMUTTER: Yes.

5875   COMMISSION ARPIN: Through Europeana we could see that --

5876   MR. PERLMUTTER: Through Europe I can tell you, you know, if you look at New Zealand, really similar digital national at the ministerial level, high ministerial level, in August of last year, a report called "Digital 2.0", which was a national digital strategy; France with their stratégie numérique, and so on; Asia, they are pushing ahead because it is seen in that holistic-like understanding.

5877   In Britain the Digital Report summarized it in the sense of saying, well, this is about the whole future economy and they are talking about a $52 billion kind of value economically, which also -- and they all emphasize that notion of public/private and they also emphasize the notion and the necessity comes up very clearly in all these reports of ensuring local or national content.

5878   COMMISSIONER ARPIN: You launched a month ago -- and I have also been on your site -- something I was unable to find up until yesterday, is the speech that you gave on Friday. I have checked every day since. Over the weekend I checked again up until yesterday and your speech to the CFTPA was not yet on your website.

5879   I apologize, I wasn't there Friday morning, but my Chairman told me immediately when he came back how interesting that speech was. So I wanted to go through it in order to prepare myself, but I'm only telling you that this portion...

5880   But other than that, I think the site is very entertaining and contains, as you said, up to 700 components. You gave us, through your oral presentation the reaction of Canadians.

5881   But today is it used really?

5882   MR. PERLMUTTER: Deborah has been tracking it and we have some nice results to report.

5883   MS DRISDELL: Yes. We only have a month of data so obviously it's very preliminary and there was a blip. The response was extremely strong.

5884   But yes, we are tracking quite a few views and actually well beyond industry standards in how long people -- you know, there are certain metrics to measure these things and we do it in two different ways. So we are seeing that people are coming on it quite a bit.

5885   And also the behaviour is moving. As most web traffic, we saw historically our web traffic was fairly during the work day, you know the 9:00 to 5:00 and fairly short time. We were quite standard with the industry at a minute and a half to a couple of minutes of time. We are now seeing our traffic migrating to some extent and a large increase in the evening and weekends and people are staying on for an average of sometimes closer to eight minutes. So people are coming, screening.

5886   We also have a conversion rate. We consider a film completed at 75 percent of viewing whereas a lot of other sites go a bit lower, but that is what we track, and we are between 30 and 45 percent of people watching films and they are seeing -- generally researching close to 16 films.

5887   So the response has been very, very strong from across the country and people are screening it and the growth is just slowly growing. We are already at over 200 percent increase in the traffic and it's just growing daily. We can see the word of mouth is working.

5888   Again, on the site, which you may have seen, there is a lot of embedding and there is a huge network that is being developed that we see every day is just growing on the network with bloggers, with Canadians on people's Facebooks, social pages. So the embedding is also increasing daily.

5889   COMMISSIONER ARPIN: Are you getting some viewers coming from outside Canada, or is it mainly Canadians that are making use of your service?

5890   MS DRISDELL: It's predominantly Canadian but we do also have a strong viewership that we are tracking from primarily the States and also in Europe.

5891   We haven't done any promotion of the site outside of Canada, we really focus that this was for Canadians.

5892   COMMISSIONER ARPIN: But word of mouth...?

5893   MS DRISDELL: But the word of mouth is going through. As our techies would say, we were Boing Boinged, which is one of the major blogs in the sphere, and that helped our numbers internationally go up right away because they are international blogs. So we have quite a few very good blog references that have an international following so we are seeing it. But we haven't done any promotion, but we are seeing the international reach also.

5894   COMMISSIONER ARPIN: Talking a bit about production, new media productions, are they all done in-house or are you doing them under contract with independent producers?

5895   How does the Board work, generally speaking?

5896   MR. PERLMUTTER: Well, in new media productions what we have done is it's a range of things, some in-house, some working in collaboration with new media companies.

5897   But we are producers, so if we work with a new media company, we work in a collaboration.

5898   What has happened particularly in new media and which is different from traditional media, just very briefly, in traditional, even when we have done, say, a documentary, you work with a filmmaker -- and the filmmakers are independent, we don't have in-house filmmakers -- they are the creators that are driving it.

5899   With our filmmaker in residence, we engaged a filmmaker who was our filmmaker engaged there, but we also then hired subject matter based in B.C. to help us develop what became the main kind of product, as it were, of this thing, which was the online component of this thing, and we worked with them, but they were working with us, they weren't kind of coming to us with an original idea and saying: here is what we want to do.

5900   On the other hand, we have been -- I mean, and again, internationally, we have been involved at MIP, for example, which is the world's largest television market over the last four years. On the media portion they have done a tremendous job into trying to kind of penetrate in the multi platform new media mark and we have been one of the first involved there with something called "Content 360", creating ways of trying to experiment how do we create global partnerships around new media creation.

5901   And so, we have been driving that in terms of trying to kind of develop partnerships with both Canadian independent and international independents.

5902   And we did that also with, while it still existed, Film Australia, where we again -- again, part of what we see as our duty is to kind of prototype and experiment and we developed an international partnership with Film Australia, probably -- perhaps one of the first to create original content for mobile platforms and we released a series of ten short films out of that.

5903   COMMISSIONER ARPIN: I know that we could talk about it for hours, but my colleagues also want to ask questions to you, so I will return to the Chairman.

5904   THE PRESIDENT: Thank you. Michel Morin?

5905   CONSEILLER MORIN: Oui. Bonjour. Je pense que c'est sur la rue St-Denis à Montréal que vous avez...

5906   M. PERLMUTTER: On a un petit, oui...

5907   CONSEILLER MORIN: Oui.

5908   M. PERLMUTTER: ... oui, bureau avec... avec le Ciné-Robothèque pour assurer une présence, mais notre quartier général, c'est sur Côte-de-Liesse.

5909   CONSEILLER MORIN: Alors, je comprends que le film sur Sainte-Justine-de-Dorchester qui avait été fait par Roch Carrier est disponible? Je l'ai vu mi-même et c'est une initiative très intéressante, mais je me demande si dans un avenir plus ou moins lointain, j'aurai le même accès aussi rapide à votre site pour voir ce film-là. Et ma question est relative à...

5910   M. PERLMUTTER: Mais on a l'accès maintenant en ligne pour voir peut-être.

5911   CONSEILLER MORIN: Oui, absolument. Mais ce que je me demande, c'est les réseaux vont peut-être devenir congestionnés éventuellement et peut-être que le serveur, le fournisseur de service internet ne me permettra pas dans un avenir plus ou moins lointain d'avoir un accès aussi rapide.

5912   Et ma question... je voudrais rapidement aborder cette question-là, je ne sais pas si vous avez pris connaissance d'un document qui a été déposé, mais dont l'auteur n'apparaît pas dans le cadre de la présente audience, il s'agit de monsieur Robert Ester de Osgoode Hall Law School de Toronto, qui a produit un document qui, dans sa dernière version que j'ai obtenue ce matin, parce qu'au départ c'était seulement une dizaine de pages, fait maintenant 26 pages et qui est intitulé: "New Media Deep Packet Inspection and Canadian Content."

5913   Vous n'avez pas pris connaissance?

5914   M. PERLMUTTER: Non, mais je connais un peu les termes de référence.

5915   CONSEILLER MORIN: Bon. Alors, écoutez, bien, moi, ma question c'est que... peut-être que dans le cadre de cette audience, vous n'êtes pas en mesure aujourd'hui de commenter, mais j'aimerais avoir vos commentaires relativement à ce document, à la fin de l'audience, à la fin du processus.

5916   J'aimerais avoir qu'est-ce que vous en pensez parce que l'auteur, évidemment, avec cette technique-là, ça nous permet d'identifier ce qui circule dans les fameux tuyaux et de privilégier, peut-être, certains contenus canadiens par opposition à d'autres contenus qui seraient de l'extérieur?

5917   Et la deuxième question que j'aimerais vous poser, éventuellement, dans des commentaires écrits, c'est en ce qui concerne la limite d'usage.

5918   Est-ce que les BID CAP actuellement, par exemple, pour Rogers c'est 60 octo... giga octe, giga bites; pour Videotron, c'est 20; pour Shaw, je pense que c'est 60 aussi, est-ce que, pour vous, par exemple, qui est deux limites d'usage: une pour le contenu canadien et une pour le contenu étranger, est-ce que ça ferait du sens?

5919   Est-ce que ça pourrait éventuellement être un instrument qui, pour le CRTC dans de nouvelles règles éventuelles, aurait un sens pour privilégier le contenu canadien parce que c'est un peu ce que nous demande la Loi?

5920   M. PERLMUTTER: C'est un peu la question qui a été posée au début par le président. C'est la même question et c'est vrai que maintenant on a un problème.

5921   On a un problème parce qu'on a une infrastructure qui n'est pas à la hauteur des autres pays. Alors, là, on est pris avec ça et dès qu'on a vraiment à traiter avec la rareté, là c'était toujours la tradition. Ce n'est pas simplement une tradition, mais c'est une obligation de vraiment gérer la rareté pour le bénéfice des Canadiennes et Canadiens, absolument.

5922   Alors, on est complètement d'accord avec une approche qui regarde tout ça. Mais est-ce que... mais avec la diffusion, la radiodiffusion traditionnelle c'était toujours l'idée? Mais la rareté, c'est permanent. Les ondes appartiennent aux Canadiennes et Canadiens et on gère ça comme gardien pour les citoyennes et citoyens.

5923   Là, c'est la question... okay, on va mettre en place quelque chose immédiatement et on va trouver, okay, possible les règles. On va privilégier les contenus canadiens que, je pense que c'est essentiel, mais est-ce que ça va durer? Est-ce que c'est quelque chose qui est un problème temporaire ou est-ce que c'est vraiment quelque chose de permanent?

5924   Est-ce que...

5925   Et c'est à ce point-là de dire, okay. peut-être que ce n'est pas quelque chose dans ce domaine qu'on peut mettre en place des règlements pour sept ans et attendre sept ans pour re-visiter des choses si la situation change?

5926   Et encore une fois, ce qui m'intéresse, j'ai cité la Commission Massie parce que c'était vraiment un peu le même problème. Si on regarde leur rapport, c'est intéressant de parcourir un peu le même langage qu'on entend aujourd'hui. C'était le Canadien est complètement noyé dans des produits britanniques ou américains ou de la France; aucune façon de privilégier les créateurs canadiens et tout ça.

5927   Et, là, c'était vraiment ce qu'on peut dire a supply side equation. C'était ça la réponse à ça à l'époque et je pense qu'on voit que c'était vraiment efficace comme réponse.

5928   Dès qu'on peut fournir des contenus d'une façon de... et promouvoir, c'est tellement important, c'est l'autre chose que si je peux vraiment insister un peu parce que, comme monsieur Arpin a parlé de ces chiffres-là, on a lancé.

5929   Quand on lance quelque chose, c'est bien parce qu'on a toute une publicité -- moi, j'ai fait à travers deux trois jours plus que 40 entrevues des médias à travers le pays, ça donne un boost -- mais comment on peut soutenir cet effort-là? Comment on peut assurer la continuité? Comment on peut promouvoir longtemps?

5930   C'est aussi vraiment fondamental et important parce que, là, si on reste, on va trouver qu'il y a... mais répondre à ta question immédiatement, oui, je dirais, parce qu'on a un problème à court terme.

5931   CONSEILLER MORIN: En tout cas, j'aimerais avoir des commentaires écrits si c'était possible dans la...

5932   M. PERLMUTTER: Oui, oui. On va faire parvenir des commentaires.

5933   CONSEILLER MORIN: Merci beaucoup.

5934   THE PRESIDENT: Okay. You are right on time, I think, sir. Thank you very much, Mr. Perlmutter. May I mention that I can only repeat, I fully support your call for a national safe digital strategy. Hopefully your call will not fall on deaf ears. Thank you very much.

5935   M. PERLMUTTER: Merci.

5936   LE PRÉSIDENT: Madame la secrétaire, quand est-ce qu'on va résumer?

5937   THE SECRETARY: We will resume at 1330.

5938   LE PRÉSIDENT: Okay. Parfait. Thank you.

--- Upon recessing at 1208

--- Upon resuming at 1333

5939   THE CHAIRPERSON: Madam la secrétaire, nous commençons.

5940   THE SECRETARY: Merci, monsieur le président.

5941   I would now invite the Canadian Interactive Alliance/l'Alliance interactive canadienne to make its presentation.

5942   Appearing for the Canadian Interactive Alliance is Mr. Kelso. Please introduce your colleague and after which you will have 15 minutes for your presentation.

PRESENTATION

5943   MR. KELSO: Thank you. Ladies and gentlemen, respected Commissioners, Chair and Vice-Chair, thank you very much for the opportunity to appear here today.

5944   My name is Ian Kelso and I'm the President of the Canadian Interactive Alliance/ l'Alliance interactive canadienne, and seated to my left here is James Lewis and he is our Executive Director.

5945   A bit about us and why we are here:

5946   The CIAIC is a not-for-profit association and the authoritative voice for Canada's interactive digital media industry on the national stage. Its members are seven provincial interactive media associations which include Alliance numerique, Digital Alberta, the Interactive Media Alliance of Prince Edward Island, Interactive Ontario, the Manitoba Interactive Digital Media Association, New Media BC and SaskInteractive.

5947   In total the CIAIC's membership represents nearly 1,000 companies working in interactive media in Canada including large Triple A game studios, virtual world developers, online video portals and mobile product and service developers as well as many producers and broadcasters that work across multiple platforms, in both the new and the traditional media spaces.

5948   Most of those companies are media creators but a substantial number of them are also what we call media enablers. The unique nature of most of our companies is that they mix creative enterprise with technological innovation.

5949   The Canadian Interactive Alliance's efforts on behalf of the industry include advocacy in government relations, research endeavours such as our Canadian interactive industry profile, which we are just completing our second iteration of, and assistance and facilitation for Canadian firms to engage in international trade activities.

5950   Canada's interactive media producers have often been recognized as international leaders in creativity and innovation. Projects like the Zimmer Twins by Zinc Roe Media and the Fallen Alternate Reality Game by Zenophile Media have garnered international and primetime Emmy Awards, respectively.

5951   Yet, more than ever, Canada's interactive media producers face massive competition while contending with uncertain revenue streams, unproven business models and severe difficulties raising capital.

5952   The Canadian Interactive Alliance shares the sentiments of nearly every intervenor that has preceded us in these public hearings. Net new investment is needed in this space.

5953   We need better strategies to increase capacity and better capitalize our companies, especially if we want them to be able to retain their own intellectual property as well as effectively access international markets.

5954   It goes without saying that much has changed in the past decade since the issuance of the new media broadcast exemption order. The exponential increase in the average data transfer rates to Canadian homes has radically altered the types of products and services that can be efficiently delivered over the internet. There can be no doubt that the internet has very quickly evolved into the world's most powerful medium for intellectual, cultural and commercial exchange. And the pace of change shows no sign of relenting.

5955   Average broadband speeds in Asia have quickly outpaced those in Canada by significant amounts.

5956   Japan currently offers a 100 megabit per second service at a comparable price to Canada's 5 to 7 megabit per second service.

5957   The South Korean government has recently mandated a 1 gigabit per second service to citizens in major cities by 2012.

5958   It is indeed difficult for us to imagine or predict the pace of change over the next 10 years and what ramifications it may have on the kinds of products and services that are carried over this network.

5959   The Canadian Interactive Alliance believes the following passage from the submission by Dr. David Ellis of the NetGen Research Mob. He puts the matter most succinctly:

"One of the fundamental issues raised by the Commission's framing of this hearing is the assumption that the wellbeing of conventional broadcasting constitutes the appropriate starting point for the possible re-regulation of Canadian new media. Broadcasting and new media are neither mutual substitutes nor competitors in a meaningful sense." (As read)

5960   MR. KELSO: We contend that, respectfully, for this reason and others, it is important to maintain the exemption order with certain provisos and encourage Parliament to review the Broadcasting Act of 1991 to work towards the creation of a comprehensive digital media policy framework that can succinctly deal with the current market and technological realities.

5961   And I turn it over to Mr. Lewis.

5962   MR. LEWIS: Thank you, Ian.

5963   The Broadcasting Act originally enacted in 1969, and last amended in 1991, was created to safeguard the Canadian voice and our culture's dominant medium at the time where it faced powerful competition for shelf space from foreign language -- sorry, foreign same language, products and services.

5964   Although the Broadcasting Act of 1991 attempted to adopt a technologically-neutral stance we feel that it did not and could not have anticipated the massive shifts in both the dynamics and the economics of new media.

5965   The Broadcasting Act and its ensuing regulations have been constructed to provide and promote fair access to and distribution of content in a limited network where large expenditures were required for essential infrastructure and where that infrastructure was essentially related to the packaging, programming and distribution of content.

5966   As an open standards-based low-cost high bandwidth global network, the internet in fact poses a very different challenge today to our cultural and economic priorities. We can all agree that more Canadian content is desirable in the online space but simply porting old models to new media networks won't necessarily achieve that end and, in fact, may have unintended negative consequences.

5967   We agree with our colleagues at the National Film Board who spoke earlier this morning who warn in their submission that the CRTC should take care not to simply transpose traditional approaches to the digital world and that an approach aligned to broadcasting is too narrow to meet the challenges and opportunities provided by digital media.

5968   A key distinction between the closed system of television and the open system of the internet is that television and its regulatory regime was based on the use of public airwaves in the case of over-the-air broadcasting or near monopoly networks such as those operated by the cable and satellite companies. In either instance the limited number of channels created a hard technical ceiling on how much programming could be carried. This meant that one party or a small number of parties had to act as gatekeeper, first to decide which channels got carriage and then which programs would appear on those channels. This is of course fundamentally untrue in the case of the internet where abundant open access and common carriage have allowed new ideas, technologies and creators to thrive.

5969   Obviously, many creators of audiovisual works are struggling with the transition from an almost entirely closed wall garden environment to an open and global marketplace of expression and creativity. Others are grappling with the need to innovate and develop new technologies alongside and inside the creative production of their works.

5970   The economic fundamentals of these new platforms are still very much in flux. Business models often must be as creative and adaptable as the product or service itself.

5971   To compete and thrive in a new digital and interactive marketplace, companies that create interactive media products and services must develop a unique mix of creative, technological and entrepreneurial skill sets.

5972   Our capacity to grow companies that possess this mix of skills is integral to our ability to uphold the core intentions of the Broadcasting Act as well as to succeed on the new global stage, and I will turn it back over to Ian now.

5973   MR. KELSO: Thank you.

5974   As stated earlier, we agree with many of our counterpoints -- our counterparts, excuse me -- in the traditional media that to succeed we desperately need more access to funds and capital. A national digital media strategy, as the CIAIC initially called for and as Telefilm and others also support, is key to ensuring the viability of this sector.

5975   The federal government can provide additional measures such as tax credits to help grow solid and stable companies. Until which time that we can create a strategy, the best way to achieve the intentions of the Broadcasting Act is through the creation of incentives that spur innovation, investment, skills training, talent retention, visibility and new forms of production to build on our successes and drive a globally competitive industry in Canada.

5976   Enhanced access to funding is paramount but, as Telefilm Canada notes in its initial submission, we should fund content, not platforms. Telefilm notes that the vast majority, about 90 percent of content projects submitted to the Canada new media fund fall outside traditional TV online convergence.

5977   The convergent media niche is already well served by the Bell Broadcast and New Media Fund as well as the planned CTF new media fund. Both are children of broadcasting regulation and both are very limited in the type of projects their respective mandates will allow them to support. To suggest that more resources should be put towards funding interactive media that is derivative of traditional broadcasting may be short sighted.

5978   Similar strategic plans introduced in other jurisdictions, such as the United Kingdom's Digital Britain and France's France Numerique 2012, have wisely stressed support and incentivization over regulation.

5979   As well, the role of public service agents such as the CBC and the National Film Board is very important. The CIAIC believes that these publicly-funded entities are uniquely positioned to take the kinds of risks with their media that other profit-dependent organizations may shy away from.

5980   Although the CIAIC supports the renewal of the new media exemption order, it encourages the Commission to consider two conditions to this exemption. It is essential that the open nature of the internet be preserved to allow for fair access and transport of independently-produced Canadian interactive products and services that network access providers, which are namely ISPs and WSPs; that they do not grant undue preference to certain types of content products, services, channels or brands and maintain network neutrality.

5981   It is also essential that in the case where multiple platforms are negotiated that broadcasters that are regulated under the Act do not exert undue influence by the powers granted to them as licensees. The CIAIC strongly encourages the Commission to monitor this and strongly encourage fair pricing for the purchase of rights to works that are unregulated or exempt categories.

5982   The new audiovisual economy is an awesome thing. It has the potential to create many new opportunities for Canadians. Canada is already one of the world's leading centres of videogame development. Again, policies that will allow Canadian interactive media firms to retain their own intellectual property are the key to building strong companies and creating stable jobs.

5983   This is only possible with access to capital for growth. Success stories such as Flicker, Bioware, Club Penguin became American success stories because venture capital for these types of innovative firms could only be found in the United States.

5984   New knowledge economy jobs are the future. We need to be highly creative, innovative and competitive to establish our Canadian brand and ensure we attract and keep the key creative, technological and entrepreneurial talent in Canada.

5985   Thank you very much and we look forward to your questions.

5986   THE CHAIRPERSON: Well, thank you for your presentation. You, like the NFB before you, basically advocate a national digital strategy.

5987   MR. KELSO: Yes.

5988   THE CHAIRPERSON: And who can argue with that? It's not our domain. Our domain is regulating broadcasts.

5989   We originally established the exemption order for two reasons. We found it had no impact on existing broadcasting and that the contributions it had made to the Canadian broadcasting system were minimal at that point in time. We are now 10 years later. We can't do anything but broadcasting.

5990   You are basically saying stay out of it, don't do anything; leave the exemption order in place and -- if I understand you correctly -- bring a wholesale policy approach to develop a national strategy, et cetera.

5991   Is there nothing we should be doing in the interim? Is it not obvious that new media does have an impact on the broadcasting system and is the impact so negligible or so positive that we don't have to do anything? What is your position there? I mean we don't have a national strategy. I am not aware that the government has even embarked on obtaining one. So in the interim what are you suggesting we do?

5992   MR. KELSO: I think one of the problems potentially is that looking at the new economy around audiovisual media that is created by the internet platform is that taking -- potentially taking a narrow approach to regulating one part of it without considering the whole may end up having unintended consequences.

5993   We are not saying necessarily that you should do nothing. Obviously, your ability to promote and create visibility for new media content is integral to the growth of the system and new media broadcasting. Although we find it very difficult to arrive at a definition of new media broadcasting, we see a lot of gradients of grey and from what might be construed as definitely broadcasting into a lot of other dynamics that include high quality video content but that transcend into more interactive types of interplay with audience.

5994   You know, as long as we are talking about promotion of that content then you know we are --

5995   THE CHAIRPERSON: So I'm a pragmatic person. Talk to me; what do you mean by we should promote new media? What do you think the CRTC should do?

5996   MR. KELSO: Did you want to take it?

5997   MR. LEWIS: Yeah.

5998   Perhaps I will just backup for one second, Mr. Chair. I believe it is the CRTC's own research that shows that while internet consumption has increased to about 10 hours per week in 2006 or 2007, television viewing has remained relatively static.

5999   I believe there was -- given that the focus of this hearing to date has been largely on video-based content, I think there is an argument there that that is co-viewing or a supplementary experience or a relationship between the online content and linear broadcast content rather than a competitive one. So I'm sure you will hear that the internet has had an impact on broadcasters' businesses but those figures, at least, may seem to dictate that there is more at play there.

6000   In terms of incentivization and --

6001   THE CHAIRPERSON: Your colleague used the word "promotion". You say incentivization. Fine, I understand that. I just thought in your view, in your mental picture is there a role for us and if so what is that role?

6002   MR. LEWIS: I think perhaps promotion, and we will stick with a common term, is -- it's a business arrangement or a business relationship that may be best served by negotiations between the party desiring the promoting and the party that has asked to do the promoting.

6003   There are elements of the Broadcasting Act that govern how Canadian content on television is meant to be promoted and those are constantly the subject of debate as to whether or not they are achieving the ends that they were designed to. So in keeping with a sentiment you voiced earlier, Mr. Chair, letting the market forces dictate the pace is perhaps the best approach than letting individuals negotiate their own.

6004   MR. KELSO: And I can pick up on that.

6005   And by promotion I did mean both the incentivization and funding as well as the assistance in marketing and international promotion of content.

6006   THE CHAIRPERSON: Okay, thank you.

6007   Steve, you had some questions?

6008   COMMISSIONER SIMPSON: Thank you very much.

6009   The membership of your organization I'm not familiar with. I'm from Vancouver.

6010   I'm very familiar with the BC Media Group. And in looking into the hood at the structure of that group it's apparent to me that they are all pretty much private industry players from the gaming industry, from telecom, from conventional production, "Rainmaker" for example, Warren Franklin, and these organizations have learned to make a living in environments that for the most part are regulated. This is what I find really interesting. You know, whether it's Bell or Rainmaker doing a production for television or the gaming industry in particular which has traditionally found its work distributed on proprietary platforms.

6011   So I'm very curious as to why that same group -- and again, I'm not asking you to speak on their behalf but try and work with me here why these same groups find the idea of a totally open platform, open system, new frontier model so intriguing when they have been obviously doing well in a more closed environment.

6012   MR. KELSO: I guess, certainly we have benefited and our members in Ontario -- my fulltime job is running Interactive Ontario and I'm the president of the umbrella organization. I know my colleagues in New Media BC very well. And I think both in British Columbia and Ontario we have similarly had fairly strong broadcast production sectors that have underpinned the growth of a lot of new media companies. And so certainly that system has been of great benefit.

6013   In no way, I think, are we trying to say that the broadcast system as has been setup is in any way wrong. You know, I think, you know we set it up for a certain reason and then we have been quite successful at achieving the ends that we had set out to achieve.

6014   On the other hand, the internet poses a number of new -- both opportunities and challenges in terms of our abilities to get to market and the new markets that it opens up. What it does do and what it has been to date as a very -- a completely open system -- is take away a number of the -- take away the walled garden, if you will -- if you call it that -- take away some of the advantages of that system and force us to kind of rethink as content creators, as you know technological innovators and entrepreneurs; how we create our business enterprise and how we create content in this country.

6015   MR. LEWIS: I think -- yeah, Commissioner Simpson, I think you are correct in that it was a very static and stable model, perhaps, looking at the gaming industry for quite a while. You had a developer, a publisher and that's sort of the way it went.

6016   But the internet too is having transformative effects on that industry. We now have all the X-Box live arcade and the systems linked to these consoles that allow content producers or media producers to bypass this traditional relationship. It's disruptive and it's transformative. The consumer can now deal directly with the videogame developer and essentially through micro-payment, or what have you, buy the content direct. So it's not just broadcasting. The whole world has been changed by this.

6017   COMMISSIONER SIMPSON: Again, thank you very much for that. That's exactly where I would like to go next.

6018   Obviously, you have been looking at economic models or trying to find an economic model. The gaming industry is interesting because I'm seeing a very subtle shift from a proprietary publishing model to a broadcast distribution model where it's a server app and you know you are able to get into a server-based environment and play the game with -- you know for a micro payment. And then there is actually what seems to be emerging now in the handheld market, which are downloadable apps that are almost freeware.

6019   So could you tell us a bit about where you think the economic model is going, thinking about you being a game developer or a writer or a music producer or a composer and then how you catch the long tail?

6020   MR. KELSO: I think the undeniable truth is that, you know, the business models for games are going everywhere. They are exploding. The traditional console game, you know, had a very traditional retail play obviously and, you know, we have to remember that games in that model too were very niche in terms of the audience that they approached, a very hard core, very dependable audience but very small.

6021   As we have seen, you know what we conceptualize as games -- and I sort of make an analogy to that to, you know, broadcasting -- is you know what we thought about as games has exploded completely both in form and content and in the way that we monetize it.

6022   So now, you know, there are a number of very highly innovative models like free to play, the one that you mentioned, that you know puts the game out there. It doesn't cost anything to play initially. Then, when you get to the second, third or fourth level of the game and you are, you know, kind of addicted to it, you know, then "Oh, got to pay a couple of bucks here to get to the, you know, next couple of levels".

6023   So as I stated earlier, you know, this is the first time where we have had to be, you know, playing with so many variables as content creators that we are not just approaching it from, you know, a creative perspective and saying we are tackling a creative challenge but we are also often solving very highly complex technological problems as well as, you know, understanding then how does that approach the marketplace. What are the attraction points with our consumer audiences?

6024   So games especially have been very market oriented all the way through their evolution and most of the games companies in Canada. And Canada today is the, I think, third-largest developer of videogames in the world right now. You know, we are very highly successful with our talent. We are very highly successful at creating the content and the titles. Unfortunately, we don't own the big players here like Electronic Arts and Ubisoft and we don't have that intellectual property.

6025   You know, we are seeing a number of small independent companies, games, now on the iPhone or games now that are being created for online distribution or even virtual worlds now. There are open source and almost free tools that can be used to create these games and, you know, it's the guy in his basement that -- and we have an example of that. Actually, Jonathan Mack of Queezy Games out of Toronto who spent about eight months designing a game, end to end, programmed artwork, music and everything in his basement, won the top award at the big game developers conference in San Francisco a year and a half ago and is now being distributed by Sony Online.

6026   So we have never seen that kind of opportunity for the complete amateur to become, you know, the complete professional in an almost overnight scenario.

6027   COMMISSIONER SIMPSON: The gaming community and, to a certain extent, the production community has made huge efforts and huge strides at getting into the digital space. And I think it's teaching me that this is probably why they are much more willing to control their own destiny because, you know, they are in that space and they would rather figure things out for themselves.

6028   But to certain parts of the production community who aren't in that space, do you think that part of the funding model, if there is one, should be to help, let's say -- let's call them analog artists and producers of content to get digital as well as to help them produce digital work?

6029   MR. KELSO: Yes, I think, you know, we've always in our membership in Ontario I know had a large number of people that were mostly playing in the traditional media or analog space who were trying to figure out how to make that transformation within their company, within their sort of creative endeavours and, you know, we've broadly supported that.

6030   I think, you know, some of the most interesting companies have kind of made that jump, like Decode Entertainment or Break Through in Ontario, where, you know, they got to understand the right paradigms and found the right talent and are now, you know, highly regarded production companies across the platforms.

6031   COMMISSIONER SIMPSON: And that would be a major plank, if there was a digital strategy, for example, that would be a major plank?

6032   MR. KELSO: Absolutely.

6033   COMMISSIONER SIMPSON: Okay. Let's talk about existing funds. I'm sure many of your membership have dipped into them from time to time.

6034   There's two funds out there right now, the New Media Fund and the Digital Media Fund from the CTF and they are really designed to support two different kinds of content.

6035   MR. KELSO: M'hmm.

6036   COMMISSIONER SIMPSON: Now, could you talk to me about the strengths and weaknesses of each, keeping in mind that you have made a point of saying that new media content is not old media content, you know, the two are completely different.

6037   Does that mean that what the CTF is doing is the right approach and what the New Media Fund is doing is not quite up to par for you?

6038   MR. KELSO: I can start that, maybe James, you might want to add on top of it.

6039   There's actually three funds --

6040   COMMISSIONER SIMPSON: Okay.

6041   MR. KELSO: -- if you count the Canada New Media Fund which, by the last federal budget, has made a recovery.

6042   COMMISSIONER SIMPSON: Yes.

6043   MR. KELSO: It's not back on line yet.

6044   So, each of the Canada New Media Fund, the Bell Broadcasting Media Fund and the CTF Fund are quite different in terms of their approach.

6045   The Canada New Media Fund, as was mentioned earlier in our verbal presentation, has taken a very broad-based approach. It's obviously a creature of Heritage Canada and TeleFilm Canada and has -- you know, one could say, you know, done a lot with very little and yet, you know, at the same point is over subscribed by I think about a thousand percent. I think in the last round there were 10 times as many proposals put into it as there were awards to be given out.

6046   The Canada New Media Fund has tended to migrate a little bit more towards games, sort of casual and online games, multi-player games and it's really focused more heavily on the interactive elements and has, in fact, shut out things that were too linear.

6047   But I think overall its track record in terms of sort of nursing innovation in companies and does apply to a lot of traditional media companies who have gone into that fund to, you know, create their own projects, some based on television and some not, have been forced to think, you know, more radically about, you know, what audio/visual works are when they are, you know, truly interactive between the end user and the content.

6048   The Bell Broadcasting New Media Fund has been I think an incredibly important fund. I think it was a very wise decision of this Commission to allow for Bell Xpressview to dedicate that discretionary one percent into something that, you know, really isn't a television fund, you know, in the way that it's formed, but yet is certainly a television fund in the way that it's funded.

6049   I think it's probably -- you know, it's been behind things like, you know, Xenofile, projects -- actually Xenofile Media has won both an international and a prime time Emmy for different alternate reality games that they've created.

6050   You know, it's also created strong partnerships between the players, the producers of interactive content and the sort of analog television producers and it's created, you know, partnerships sort of within and without companies, it's created new companies in a way.

6051   The CTF Fund is fairly new and I don't think we've seen any results of that fund yet, so it's a bit harder to comment on.

6052   It seemed a little bit more narrow in its approach. It seems like it may be more helpful from a promotional standpoint for companies to create webisodes or things a little bit more light and, you know, the made and the marketing of the television project.

6053   COMMISSIONER SIMPSON: If you had to create a fund of funds and there was only one, what would it look like and who would pay for it? How would we fund the funds for that?

6054   MR. KELSO: If I had to create a fund of funds. It's like, you know, you can only pick one of your children.

6055   COMMISSIONER SIMPSON: It's like a mutual fund direction. They're not doing so well lately, so perhaps a bad example.

6056   MR. KELSO: Yeah. I think we need a fund that takes into consideration all of the, you know, dynamics of an emerging industry and figures out how we underwrite, you know, its progress.

6057   I think we as a country need to understand, you know, the global marketplace and where it's going. Canadians are, you know, consumers of that global marketplace. You know, Canadians love, you know, great Canadian content, but Canadians will consume, you know, whatever they think is great. You know, I think we are as good or better than, you know, anybody else out there.

6058   So, to me, you know, at the end of the day it all comes down to, you know, if we can create -- if we can take the skills and the talents that we have, and that crosses again those three categories, the creative, the technological and the entrepreneurial, and we can help to make sure that we have companies that are well capitalized enough that can develop and retain their own intellectual property then, you know, we've got something to grow on.

6059   That's really the basis of growth in this country is our intellectual property. And that, you know, if we neglect I think to, you know -- if we neglect to invest in our country, in our companies that -- and we take a too narrow approach and we just try to fund little pieces of this economy then, you know, it won't take long that we'll be lost in terms of, you know, the competition is fierce out there.

6060   So, you know, we know there's something that we're really good at, you know, we train students very well. You know, we know in the video game industry, you know, companies are closing all over Britain and France and they're opening up in Montreal and Vancouver and we hope one day in Toronto as well, but...

6061   COMMISSIONER SIMPSON: Because some of them moving to Montreal or Vancouver.

6062   MR. KELSO: Yeah. It's amazing. I mean, Ubisoft has 2,000 employees in one studio in Montreal.

6063   COMMISSIONER SIMPSON: Yeah.

6064   MR. KELSO: And, you know, Ea has more than that in Vancouver.

6065   COMMISSIONER SIMPSON: So, the other half of my question, Mr. Kelso, is: we like funds in Canada.

6066   MR. KELSO: M'hmm.

6067   COMMISSIONER SIMPSON: We think they're pretty good too because they accomplish a lot in terms of helping us meet our mandate, but if your membership likes those funds as much as they seem to because they access them, where does the money come from?

6068   MR. KELSO: Great question. I think the end goal of funds should be, you know, that they are invested and that when we're investing in companies we truly believe these companies are going to one day stand on their own and that they, you know, won't necessarily need funds for especially the things that don't involve high risk.

6069   You know, we're still funding innovation, you know, in large corporations here because, you know, we believe that those types of investments will create more jobs and will create more investment in the future and that the spinoff effects of those investments, you know, are definitely, you know, well returned in terms of the ROI.

6070   Where the money comes from? I think ultimately it comes from the taxpayer. You know, I think the taxpayer should understand or should, you know, believe in the fact that, you know, we're heading into a knowledge-based economy, that we have clearly left a manufacturing economy and, you know, these last nine months or so should leave little doubt in people's minds that there's little of it left in terms of what we once knew as stable jobs.

6071   But the knowledge economy offers, you know, huge opportunities and all the jobs that my members offer, you know, tend to be fairly well paid jobs. You know, the games industry at its worst doesn't pay that bad at all.

6072   COMMISSIONER SIMPSON: Just to clarify what you have said. You are saying that it should come out of the taxpayer, not out of a levy; is that right?

6073   MR. KELSO: Well, I don't want to -- we don't really want to be prescriptive and, you know, our membership is very diverse.

6074   COMMISSIONER SIMPSON: I'm all ears, Mr. Kelso.

6075   MR. KELSO: Yeah. I think at the end of the day, you know, you're either choosing between, you know, the users or you're investing as a country into something that you believe is going to return on the investment.

6076   COMMISSIONER SIMPSON: So, you are talking about the CBC model then? You are talking about a public broadcaster model?

6077   I'm not trying to put words in your mouth, but that's --

6078   MR. LEWIS: If I may just interject.

6079   COMMISSIONER SIMPSON: It's the only place I can go.

6080   MR. LEWIS: If you talk to any American about the recent stimulus package that was introduced and you ask them how they feel about $2-billion for broad band being cut from that package.

6081   COMMISSIONER SIMPSON: M'hmm.

6082   MR. LEWIS: They'll tell you it's incredibly short sighted.

6083   I think that's the kind of mentality that we would like to foster more of in Canada, to see that investing now is not just a good idea because a cultural policy says it's a good idea, it makes sense and dollars down the road.

6084   COMMISSIONER SIMPSON: Yes. But that's a stimulus package, that's not an ongoing program.

6085   MR. LEWIS: That's true, but it might as well be.

6086   MR. KELSO: But things like incentives like tax credits, you know, can be ongoing and can provide the right types of incentives for leveraging other investment.

6087   COMMISSIONER SIMPSON: Yes.

6088   MR. KELSO: There's nothing wrong with the CBC and the CBC can be a much bigger player in this arena.

6089   COMMISSIONER SIMPSON: Yes.

6090   MR. KELSO: Now, I've heard them say that they don't feel they have the statutory mandate to play that heavily.

6091   We look at the BBC in the U.K. and, you know, they are driving industry there and they are also employing a lot of independent companies.

6092   They've been given the mandate to work with, you know, a large degree of independent companies in the interactive media space.

6093   COMMISSIONER SIMPSON: What I'm hearing you say -- I'm not going to come back with the CBC thing -- but is that really this is the kind of question that is best answered as part of a digital strategy, it has to be looked at more fully as to whether it is part of a tax regime to the taxpayer or a levy to the user.

6094   Is that what you're saying?

6095   MR. KELSO: Yeah, very much I think. It all has a rippling effect.

6096   COMMISSIONER SIMPSON: Okay.

6097   MR. KELSO: And, like I said, you know, there are so many shades of grey that it's hard to make definition.

6098   COMMISSIONER SIMPSON: No kidding.

6099   I have another question for you.

6100   You had said in your submission that the Commission should use all the tools it has in its tool kit to provide incentives for creation and distribution of Canadian interactive media content and services.

6101   But you are also saying at the same time, we should keep our mitts off the Internet.

6102   So, what kind of tools are you talking about that we don't know about?

6103   MR. KELSO: I don't think we're necessarily saying keep your mitts off the Internet in terms of -- I think what we're saying is, you know, any kind of heavy regulation is likely to be, you know, unhelpful in terms of the growth of the industry.

6104   You know, we don't have a broad obviously digital media strategy and the Broadcasting Act and the Telecom Act are the two acts that we have that, you know, can provide the sort of interim solution or the interim path towards creating an on-the-ground strategy now.

6105   So, I think we should, you know, use the tools that are in those tool kits.

6106   I think the Bell Broadcasting New Media Fund is a great example of a tool in that tool kit that was very creative in the way that it was set up, in that, you know, it recognized the transformation was coming and it, you know, took what is -- you know, would have been money put into independent production for television and allowed a little bit of it to go towards, you know, what's next.

6107   And it's not necessarily just video, it is, you know, audio/visual and interactive.

6108   COMMISSIONER SIMPSON: Last question for me.

6109   On item No. 11 of your oral submission today you had said that broadcasting and new media are neither mutual substitutes or competitors in any meaningful sense.

6110   That statement to me says that you believe that broadcasting as we know it today will continue to exist in the future and that there will be an interrelationship between broadcasting in its present state and whatever happens in new media.

6111   Is that fair to say, or do you see broadcasting moving over to the new media and essentially taking over its rightful space.

6112   MR. LEWIS: Did you want to handle that one or do you want me to handle it?

6113   MR. KELSO: I happy to start.

6114   I think it's inevitable that broadcasting will, you know, exist in the new media networks.

6115   You know, I think it would be folly to think otherwise that as we, you know, look at -- when I said the South Koreans getting a one gigabyte network, that's 300 times what the average speed is in Canada and more.

6116   You know, one would have to anticipate that, you know, we're going to see a transition onto those networks of all kinds of video content and distribution.

6117   So, they aren't competitors, they are in some ways one in the same, in some ways completely different. So, it is -- you know, it is a conundrum.

6118   COMMISSIONER SIMPSON: Help me here.

6119   MR. LEWIS: At Next Media, which is an annual interactive media event that happens out in Banff, it comes right before the Banff World Television Festival, there was a teen from Nokia there that presented a -- forget what it was called -- it wasn't lonely hearts, but it was essentially interactive television.

6120   Using Nokia handsets people could send real time instructions almost to the actors and the producers of the show and have them change the outcome of -- and the story line as it evolved.

6121   Is that television, interactive content?

6122   I think that we'll probably see more of that and less of, it's somewhat trite, but people say lean back versus lean forward. I think there will be more engagement in the viewing experience and I think there may be a fusing, I guess, of TV and interactive content, but I think the interactivity is key.

6123   COMMISSIONER SIMPSON: Well, I'm going to leave you with a thought for the week.

6124   Kenton Low who is the President of New Media B.C. said something that I don't understand but I'll throw it out anyway because it seems to sum up that we want our cake and eat it too.

6125   He said, never pay full price for the things you like to do or the place you do business.

6126   And it sounds to me that as long as he's collecting the money that's fine, but if he has to pay the money that's not good and that seems to be, you know, the divide where we're at right now.

6127   Thank you very much. I'm finished.

6128   THE CHAIRPERSON: Tim, you have a question.

6129   COMMISSIONER DENTON: Gentlemen, good afternoon.

6130   You know, many people have appeared before us and we all sort of make judgments about whether they get it or not, and manifestly as far as where I'm coming from, you guys deeply get it and, therefore, it seems to me that you may be the first people that are actually questioning the relevance of the Broadcasting Act persisting into the future.

6131   You speak of accomplishing the goals of the Broadcasting Act, but you don't necessarily speak of using its tools, et cetera.

6132   Can you expand upon this in the sense of giving me your thoughts as to, is the Broadcasting Act -- is it sort of the solution to the problem in the future or is the solution that it brings to problems of declining importance relative to the stuff you're doing?

6133   MR. KELSO: I can at least start.

6134   I think, you know, from the end of the telescope that we see the Broadcasting Act from, you know, we deal both with the Broadcasting Act and the Telecom Act in terms of how it affects the players in our value chain.

6135   But yet, you know, I can't help every time I've read over and over through the Broadcasting Act, you know, as well as parts of the Telecom Act, to think that, you know, it really isn't talking about the system that most of our members are, you know, existing in.

6136   That, you know, where we see broadly the audio/visual media sectors going over the next five, 10, 15 years that it's -- the semantics that are there in the Act, you know, are kind of being stretched and stretched to try to fit over something that doesn't really exist any more.

6137   You know, essential to that I think are the economics of the industry itself and, you know, when the Broadcasting Act was written it seems to have anticipated that there would always be the gate keeper that would be responsible for selecting content for limited shelf space.

6138   You know, that seems, at least to me, to underlie a lot of the logic in the Act. And the other dynamic being that there is limited spectrum that -- and there's a use of public spectrum and that the Act is there as a kind of quid pro quo relationship for funding in return for licensing and use of public good.

6139   Again, those dynamics, you know, don't really exist in sort of the Internet world.

6140   So, I think what we're advocating for really is, you know, probably a convergence of, you know, telecom policy, broadcast policy and, you know, a higher level, you know, thinking around audio/visual policy in this country and, you know, looking at the new market economic dynamics of the industries that are emerging and trying to come up with, you know, a framework that at least tries to anticipate, you know, the next 10 years.

6141   You know, it is a moving target and unfortunately that, you know, creates a lot of complexity and, you know, a lot of difficulty when you're trying to...

6142   When you're regulating something you need to pin it down in a way, and then when it moves then, you know, that creates all kinds of problems, you know, so it...

6143   MR. LEWIS: I guess if you look too at one thing that's been predominant throughout this hearing and that is network neutrality. That is not a term that one associates with the Broadcasting Act. There are provisions that -- the undue preference language in the Broadcasting Act accomplishes the same effect, it has the same spirit there that there should be no --

6144   COMMISSIONER DENTON: No undue preference, no undue discrimination.

6145   MR. LEWIS: No undue preference, couldn't be put any better than that, yeah.

6146   And likewise we have common carrier policy in the Telecom Act. These two things are complimentary and really both apply to the environment we're talking about, but because of this division in the Act it's a little hard to understand under which lens we would be viewing content.

6147   If you look at Europe, for example, they've changed the name of their Television Without Frontiers Directive to the European Audio/Visual Services Directive, recognizing that increasingly you need one tool to satisfy all these needs.

6148   COMMISSIONER DENTON: I'm going to switch topics on you slightly.

6149   In some of the previous submissions some people whom we thought, you know, were living your environment or in an environment closely related to your own took a different view than you did.

6150   They said -- you had written:

"To suggest that more resources should be put towards funding interactive media that is derivative of traditional broadcasting would be short sighted." (As read)

6151   COMMISSIONER DENTON: And some of the people who have appeared before us are basically seeing that, know the Internet is a platform for the kind of programming that is currently produced in television, it's a new means of delivering it. They appear to have some sense in their view.

6152   Would you care to comment upon -- are you guys talking about something really quite different than what they were talking about in terms of long-form programming, for example?

6153   MR. LEWIS: Well, I think it goes back to Commissioner Simpson's comment about what would the fund of funds look like.

6154   I think the -- what was really meant to be said in that passage is that through the Bell Broadcasting New Media Fund and the CTF New Media Fund, both of which have pretty restrictive terms and conditions in that they require interactive projects to be somehow associated with a broadcast licence, that TV/Internet convergence is already being well serviced by the existing funding programs.

6155   What we would like to see is something that is a little bit more, as Ian said, an innovation fund rather than a platform-specific fund where an idea that in some form would advance the objectives that we would all like to see here, access to the system, reflection of Canadians in the content could be achieved quite readily and without the...

6156   So, it would be video game, Mobisodes, things associated with television convergence. It could be anything, and that isn't --

6157   COMMISSIONER DENTON: What you seem to be talking about is stuff that is detached from any association with licensed broadcasters really.

6158   What you're talking about is stuff that is just out there on the net in various ways but is not associated, associated necessarily with the broadcasting industry. Is that correct?

6159   MR. LEWIS: It could be both. I think to limit it to one or the other is problematic.

6160   COMMISSIONER DENTON: Yes.

6161   MR. LEWIS: Because you're shutting off a large chunk of the audience and the innovation by putting -- drawing lines around it.

6162   COMMISSIONER DENTON: Okay. Thank you very much.

6163   THE CHAIRPERSON: Well, thank you very much. Those were our questions for you.

6164   We'll take a 10-minute break before we hear the next presentation.

6165   MR. KELSO: Thank you.

6166   MR. LEWIS: Thank you.

--- Upon recessing at 1425

--- Upon resuming at 1437

6167   LA SECRÉTAIRE : Nous allons maintenant procéder avec la présentation de l'Alliance numérique.

6168   Monsieur Olivier Champion comparaît pour l'Alliance numérique.

6169   Vous pouvez procéder avec votre présentation.

PRESENTATION

6170   M. CHAMPION : Merci.

6171   Monsieur le Président, Monsieur les vice-présidents, Mesdames et Messieurs les Conseillers, bonjour.

6172   Je m'appelle Olivier Champion et suis le directeur des communications d'Alliance numérique, réseau de l'industrie numérique du Québec.

6173   Je tiens tout d'abord à vous remercier de donner à Alliance numérique l'occasion de vous donner son point de vue concernant la radiodiffusion canadienne par les nouveaux médias.

6174   Je rappellerais tout d'abord brièvement que, créée en 2001, Alliance numérique, qui est un organisme sans but lucratif, compte près de 130 membres issus des secteurs du jeu vidéo, du « eLearning » et des services et applications Internet.

6175   LE PRÉSIDENT : Est-ce que vous pouvez approcher le micro de votre bouche ?

6176   M. CHAMPION : Un peu plus près ?

6177   Les membres d'Alliance numérique considèrent que ces audiences sont de la plus haute importance pour l'avenir de la production de médias interactifs d'origine canadienne pour l'ensemble des nouvelles plateformes de diffusion qui représentent un pan important de notre économie, de l'expression de notre créativité et de notre culture.

6178   Je vais maintenant essayer de répondre aux points retenus par le Conseil pour ces audiences.

6179   Comme le Conseil le souligne justement, il est difficile d'établir des outils de mesure pour contrôler et définir le contenu canadien dans l'environnement des nouveaux médias.

6180   D'ailleurs, concernant cette expression « nouveaux médias », qui « désigne une gamme diversifiée de produits et de services de communication », il semble pour Alliance numérique que l'expression « médias numériques interactifs », ou « médias interactifs » tout simplement, serait plus appropriée.

6181   Alliance numérique ne souhaite pas forcément la mise en place d'une nouvelle réglementation, difficile à gérer, à définir et à financer, pour un média sans frontières comme l'Internet.

6182   La solution réside peut être dans la création d'un observatoire des médias interactifs comme le proposait l'Association des producteurs de films et de télévision du Québec dans son intervention.

6183   L'environnement des nouveaux médias a considérablement évolué depuis la publication, en 1999, de l'ordonnance d'exemption des nouveaux médias.

6184   Alors imaginez un instant l'évolution si l'on remonte à la Loi sur la radiodiffusion de 1991.

6185   Comme le souligne le Conseil, la radiodiffusion par les nouveaux médias crée à la fois des défis, mais aussi de nouvelles possibilités.

6186   L'arrivée d'Internet, le développement des nouvelles technologies et plateformes qui en découlent, et leur adoption rapide par la population, notamment les plus jeunes, ont engendré des changements majeurs dans les comportements de consommation des individus, dans leur manière de communiquer, mais aussi d'appréhender et de « consommer » les médias interactifs.

6187   Ces derniers proposent aux utilisateurs et aux producteurs une véritable nouvelle frontière des modes, méthodes et outils de communication.

6188   Aujourd'hui, Internet à haut débit se retrouve dans plus de 70 pour cent des foyers canadiens, et le Canada compte plus de 20 millions d'abonnés au téléphone sans fil, au point que de plus en plus renoncent à une ligne fixe.

6189   Un grand nombre de foyers à non seulement accès à des contenus audiovisuels et sonores, interactifs ou non, mais peut très facilement en créer et diffuser de nouveaux et tout cela gratuitement ou presque.

6190   Il est possible désormais d'écouter un grand nombre de radios et d'émissions de télévision en ligne.

6191   Un récent sondage soulignait d'ailleurs qu'Internet est aujourd'hui le deuxième média d'information des internautes québécois.

6192   Dans ce contexte, la question qui demeure est : Faut-il ou non réglementer désormais la radiodiffusion canadienne de contenus interactifs ?

6193   Autre enjeu sous-jacent de ce débat : Comment faire pour promouvoir et défendre notre langue et notre culture dans un média sans frontières comme Internet ?

6194   Comme le soulignait le CIAIC dans une précédente présentation, le Canada n'est pas le seul pays au monde à essayer de trouver une ou des solutions à cette réalité.

6195   L'une des solutions pourrait donc être d'observer, voire imiter, ce que font les autres pays -- et notamment la France et l'Angleterre, deux pays, qui plus est, très proches historiquement du Canada.

6196   Le Conseil se demande comment les différentes parties prenantes de l'industrie devraient contribuer à la radiodiffusion dans le contexte des nouveaux médias interactifs.

6197   Que faire pour que l'industrie des contenus numériques interactifs du Canada en général, et du Québec en particulier, ait voix au chapitre, soit prolifique, solide, et pour qu'au final règne la diversité ?

6198   Doit-il exister des mesures incitatives pour favoriser la création de contenu canadien ?

6199   Se poser la question c'est y répondre.

6200   Le gouvernement canadien, en tant que protecteur de la culture, a le devoir et l'obligation d'encourager, de soutenir et de diffuser cette culture. Sans être exhaustives, ces mesures pourraient prendre la forme suivante : aide à la diffusion; accroître le financement disponible pour la création de contenu original; crédits d'impôt ciblés; fonds consacrés à la culture.

6201   Comme nous l'avons signalé plus tôt, Alliance numérique ne souhaite pas forcément davantage de réglementation.

6202   Cependant, laisser le marché à lui-même n'est sans doute pas non plus la solution. La crise économique et financière actuelle nous le rappelle chaque jour.

6203   De plus, si l'absence de réglementation a ses vertus, elle a aussi ses limites, car un monde sans règle est souvent un monde ou les plus puissants imposent les leurs.

6204   Alliance numérique ne souhaitent pas non plus voir les grand réseaux et les grandes entreprises dominer ce marché, car comme plusieurs l'ont déjà souligné lors des audiences, elles ne défendent pas l'intérêt général, mais, et c'est compréhensible, leurs intérêt commerciaux particuliers et favorisent le plus souvent la diffusion d'émissions moins coûteuses, moins créatives.

6205   Si nous considérons la situation de nos membres et plus largement des entreprises du Québec oeuvrant dans le secteur des médias interactifs, il est important de savoir qu'aujourd'hui ces entreprises sont peu nombreuses au Québec, généralement de petites tailles et connaissent, pour la majorité d'entre elles, une situation financière difficile, voire précaire.

6206   Néanmoins, elles sont les principaux acteurs de création de contenu interactif original de qualité, leur savoir-faire est un atout majeur pour l'évolution de la radiodiffusion canadienne et québécoise en particulier.

6207   Ces entreprises disposent d'une réelle expertise, d'un savoir-faire, d'une créativité.

6208   Malheureusement les conditions industrielles et économiques ne leur permettent que difficilement de croître, de se développer.

6209   Si dans un avenir rapproché aucune politique n'est mise en place pour appuyer ces acteurs, ce type de contenu canadien se raréfiera et ne sera plus en mesure de rivaliser avec le contenu étranger.

6210   Cette situation mettrait donc en péril l'existence du contenu interactif canadien non issu des grands groupes.

6211   Hors, ce que nous souhaitons, c'est une industrie forte, autonome, dynamique, diversifiée, car ces atouts sont à la base de la richesse culturelle d'un pays.

6212   Encouragée et soutenue, cette industrie serait -- et c'est loin d'être négligeable -- également génératrice d'emplois pour peu que nous puissions mettre en place certaines conditions indispensables à sa réussite et à son développement.

6213   Comme nombre d'autres organismes, Alliance numérique croit donc fermement à la nécessité d'un soutien et à la mise en place de mesures incitatives favorisant la création de contenus canadiens interactifs, et notamment francophones, afin d'assurer une présence canadienne visible dans l'environnement mondial de la radiodiffusion par les nouveaux médias.

6214   En raison des caractéristiques de l'environnement (espace ouvert, contenus de sources diverses, pérennité des contenus, part importante de contenus continuellement renouvelés) qui rendent difficile, voire impossible, l'application de quotas de contenus, Alliance numérique estime qu'un soutien financier est préférable aux subventions réglementaires ou à la réglementation traditionnelle qui impose des obligations de programmation lors de l'attribution de licences.

6215   Alliance numérique plaide donc en faveur d'un financement gouvernemental (fédéral et provincial) plus important pour la création de contenus canadiens interactifs.

6216   Elle revendique également une plus grande stabilité du financement et un apport de fonds plus substantiel au Fonds des nouveaux médias du Canada de Téléfilm Canada.

6217   En outre, Alliance numérique opte, sans s'y restreindre, pour la mise en place d'un régime de contributions obligatoires des fournisseurs de services Internet et des fournisseurs de services de téléphonie mobile semblable à celui visant les entreprises de distribution de radiodiffusion exploitées dans le système traditionnel de radiodiffusion.

6218   Ce Fonds pourrait, par exemple, prendre la forme d'un fonds pour la création de contenu pour les médias interactifs.

6219   Une fois encore, le financement de projets de qualité soumis à des critères précis, comme cela fonctionne déjà pour le cinéma dans le cadre des programmes que gère Téléfilm Canada au niveau fédéral et la SODEQ au Québec, serait garant de la pluralité et de la qualité des contenus interactifs.

6220   Dans une perspective de diversification des voix Alliance Numérique ajoute qu'une portion significative et graduelle du contenu disponible sur les portails des radiodiffuseurs et des fournisseurs d'accès internet devrait être composée de contenu canadien original qui exploite l'interactivité afin d'assurer une place réelle et significative au contenu interactif francophone sur un réseau, l'internet, et les plate-formes qui en découlent et qui sont, à ce jour, outrageusement dominés jusqu'ici par les contenus anglophones.

6221   De plus, un pourcentage qui pourra être progressif de ce contenu original devrait être produit et réalisé par des producteurs indépendants canadiens. Le caractère canadien de ces contenus devrait être défini selon les règles qui prévalent pour les plate-formes traditionnelles.

6222   Tout en comprenant les inquiétudes des fournisseurs de service internet face à la capacité de leur réseau à répondre aux besoins croissants de trafic de ce nouvel environnement et leur volonté de faire appel à des techniques de gestion du trafic pour assurer une gestion efficace de leur réseau, Alliance Numérique s'inquiète du fait que l'accès de contenu canadien puisse être restreint ou que certains fournisseurs de contenu soient privilégiés.

6223   Selon elle, des mesures devraient être envisagées par le Conseil pour favoriser des investissements dans la capacité des réseaux à assurer une gestion efficace du système.

6224   Alliance numérique croit qu'une telle politique est nécessaire pour assurer la diversité des voix et faire en sorte d'éviter qu'il y ait une trop grande concentration des entreprises.

6225   Les radiodiffuseurs publics ont un rôle particulier à jouer dans l'environnement de la radiodiffusion par les nouveaux médias. Leur présence devrait favoriser l'atteinte des objectifs prévus dans la Loi sur la radiodiffusion.

6226   Les radiodiffuseurs communautaires ont également un rôle particulier à jouer dans l'environnement de la radiodiffusion par les nouveaux médias. Une partie du fonds généré par les redevances des fournisseurs de service internet ou des services mobiles devrait leur être attribuée afin d'assurer leur présence et leur contribution au système canadien de radiodiffusion.

6227   Pour avoir pris le temps de lire quelques-uns des mémoires des entreprises qui nous ont précédés, nous comprenons qu'il sera difficile d'obtenir une voix unique. Alliance Numérique considère que les ordonnances d'exemption relatives aux entreprises de radiodiffusion par les nouveaux médias et aux entreprises de télévision mobile sont toujours pertinentes.

6228   Toutefois, celles-ci devraient être assorties de conditions permettant la création d'un fonds spécifique à la création et à la diffusion de contenu canadien interactif de qualité, afin de permettre la fourniture des outils et des moyens aux acteurs de moindre envergure de l'économie numérique pour leur permettre de se développer et de devenir des acteurs importants et rentables.

6229   Le Conseil devrait également s'assurer que l'ensemble des Canadiens puisse avoir accès à un service haute vitesse minimale. Il pourrait également veiller à repenser la gestion et la protection des droits d'auteur dans le monde numérique.

6230   Toutes ces actions permettraient sans doute, comme monsieur Finckenstein le soulignait récemment dans une allocution, d'assurer la prépondérance du contenu canadien, l'accès de tous les Canadiens au système à la fois comme participant et comme membre de l'auditoire, le reflet du caractère bilingue de notre pays et de notre diversité tout à fait unique.

6231   Merci beaucoup de m'avoir écouté. Bon après-midi et je vais me faire un plaisir de répondre à vos questions. Et je voudrais tout d'abord souligner que je remplace mon collègue au pied levé qui a eu un empêchement.

6232   Je ne suis pas l'auteur du rapport que vous avez reçu il y a déjà quelques semaines, mais je me ferai un plaisir de répondre à vos questions dans la mesure de mes connaissance.

6233   LE PRÉSIDENT: Bon. Merci pour votre présentation.

6234   Dans la page 2, vous parlez de la création d'un observatoire des médias interactifs, comme proposé par l'Alliance des producteurs de films et de la télévision de Québec.

6235   Quels sont les types de données que vous croyez que nous devons collectionner si on adopte votre idée de créer ou non un observatoire? Quelles sont les données que nous n'avons pas à ce moment-là, qui seront utiles pour vous pour l'industrie pour tout le Canada?

6236   M. CHAMPION: En fait, l'idée de l'observatoire venait... nous est venue quand on a lu le Rapport de l'APFTQ. Ça nous a semblé peut-être être une bonne idée. Est-ce que c'est une bonne idée? Sans doute.

6237   De quelle mesure devrait-on surveiller? C'est difficile d'appliquer des mesures que l'on a, comme m'ont signalé mes collègues précédemment, des mesures qu'on applique aux médias traditionnels, à l'internet qui, par mesure, n'a pas de limite.

6238   Mais le fait d'avoir peut-être une situation provisoire avec une sorte de moratoire nous permettrait à l'observatoire de définir quelle position vous devriez prendre dans quelques mois ou dans quelques années.

6239   LE PRÉSIDENT: Oui, je comprends ça, mais il me semble que la création d'un observatoire implique qu'on a besoin de données qu'on n'a pas maintenant pour faire une nouvelle politique et j'aimerais... quelles sortes de données est-ce que vous croyez qu'on doit obtenir que nous n'avons pas maintenant?

6240   M. CHAMPION: Par exemple, si on met des mesures financières ou des mesures d'aide qui ne sont pas financières pour différents programmes, de savoir si elles sont efficaces ou pas, si elles répondent aux besoins de l'industrie ou pas.

6241   LE PRÉSIDENT: O.k. Merci. Michel, tu as des questions?

6242   CONSEILLER MORIN: Merci, monsieur le président.

6243   Vous, en page 2 de votre présentation orale aujourd'hui, vous insistez sur le fait qu'on devrait plutôt désormais parler de... au lieu de parler de nouveaux médias, de parler plutôt de médias numériques interactifs; c'est-à-dire votre définition de ce dont on parle dans la présente audience, le mot « parapluie » devrait être davantage média numérique interactif.

6244   Est-ce que vous pensez que l'interactivité sera de plus en plus déterminante pour déterminer en quelque sorte ou pour qualifier les nouveaux médias, ce dont on appelle les « nouveaux médias »?

6245   M. CHAMPION: Il y a deux questions en fait. Nouveaux médias, c'est parce qu'on parle de nouveaux depuis des années.

6246   CONSEILLER MORIN: Oui.

6247   M. CHAMPION: On ne peut pas... on ne peut pas parler de nouveaux médias éternellement parce que, à un moment, c'est certain que ce sont peut-être les plus récents. Est-ce qu'ils vont être nouveaux encore longtemps, c'est une bonne question.

6248   L'autre chose est que l'interactivité est aujourd'hui omniprésente dans beaucoup de nos médias. Si on parle, par exemple, de tout ce qui se passe sur internet, on parle énormément aujourd'hui du Web 2.0 qui fait qu'on n'a plus simplement des médias sur un site internet où on va chercher de l'information, on y répond. On la commente. On produit notre propre information. On produit notre propre vidéo.

6249   On parlait tout à l'heure de site comme Flicker, on met nos photos en ligne, on peut les commenter, les autres peuvent les commenter. Donc, cet aspect d'interactivité propre à l'internet est vraiment, je dirais, pas la révolution mais la nouvelle méthode aujourd'hui de fonctionner cette interactivité, la création de communauté par le Facebook, mais il y en a d'autres, Shorcut, I-Five, et caetera, qui sont des réseaux qui permettent aux gens de communiquer entre eux, sans l'intermédiaire de... j'allais dire de personnes, mis à part de la technologie.

6250   Donc, l'idée de parler de nouveaux médias tout comme il y a un certain temps on a parlé d'un nouveau gouvernement, au bout d'un an on a arrêté de dire « nouveau ». Je pense que pour les nouveaux médias, on pourrait peut-être parler de médias interactifs. Je pense que c'est plus révélateur qu'autre chose.

6251   CONSEILLER MORIN: Alors, si je...

6252   M. CHAMPION. Excusez; je veux juste compléter, par exemple. Je pense qu'aujourd'hui vous avez... Alliance numérique est un réseau au Québec, son équivalent en Ontario s'appelait "New Media Ontario Business", quelque chose comme ça, je crois. Ils ont changé il y a deux ans maintenant pour s'appeler "Interactive Ontario" parce que je pense qu'ils pensaient, comme on le pense, que c'était sans doute plus révélateur et plus... plus significatif de leur mission.

6253   CONSEILLER MORIN: Vous avez fait allusion enfin à des programmes qui existent ailleurs dans le monde, notamment en Angleterre, en France, aux États-Unis. Est-ce que les contenus interactifs, si on les prend comme ça, comment vous comparez actuellement l'offre canadienne de contenus interactifs avec ce qui se passe ailleurs?

6254   Est-ce que... parce qu'on a des expériences où les gens qui sont venus ici précédemment ont parlé de B-Soft, par exemple. C'est un leader mondial. Il est à Montréal. Bon.

6255   Est-ce qu'à ce niveau des médias puisque je retiens votre définition de nouveaux médias pour la définition que vous proposez de médias interactifs, est-ce qu'au niveau des contenus interactifs le Canada, actuellement, fait bonne figure ou...

6256   M. CHAMPION: Comme le précisait tout à l'heure les gens du CIAIC avec qui on travaille, évidemment, Alliance numérique a sorti au mois de novembre, pendant le Sommet international du jeu de Montréal, qui est le plus gros événement qu'organise Alliance numérique, une étude de positionnement benchmarking, qui stipule, qui souligne que Montréal est aujourd'hui une des places mondiales dans le monde comme un centre important du jeu vidéo.

6257   Le slogan du Sommet est d'ailleurs « Le jeu commence ici » parce que Montréal a toute une tradition de création de logiciel, de soft image, et caetera, qui fait que le Sommet aujourd'hui, par exemple, en est à sa cinquième édition, a accueilli 1 500 personnes venant du monde entier.

6258   Aujourd'hui, donc l'étude de positionnement précise que Montréal... enfin, le Québec, pardon, accueille 6 200 personnes environ qui travaillent dans l'industrie du jeu vidéo.

6259   Lorsque le Sommet a été créé en 2004 et donc, suite à une étude faite en 2003, il y avait 1 000 personnes qui travaillaient à cette époque.

6260   Donc, dans le jeu vidéo, on peut dire que Montréal, le Québec, mais la Colombie-Britannique et aussi Vancouver, notamment, est aussi un pôle important, sont des pôles centraux, mondiaux, importants dans le domaine du jeu vidéo.

6261   Mais il n'y a pas que le jeu vidéo. Dans le domaine de l'interactivité, on est sans doute en retard au Canada dans bien des domaines et même si on peut connaître des succès, je pense par exemple en tête aux « Têtes à claque » qui sont un phénomène qui s'est créé tout à l'heure, comme on le disait, dans un garage, par deux personnes et qui ont connu un grands succès d'abord grâce au mode viral sur internet puis qui sont allés sur la télé puis qui sont allés en France sur la télé puis sur DVD.

6262   Donc, ils ont découlé petit à petit grâce à leur succès. Je ne pense pas, à ma connaissance, sauf erreur, qu'ils aient eu d'aide particulière, qui ont connu un succès international. Ils doivent être même bientôt, j'allais dire, traduits ou tout au moins adaptées dans d'autres langues.

6263   Il n'empêche que ça reste une exception et que, comme le précisait mes collègues du CIAIC, c'est sûr qu'aider au financement d'une entreprise au démarrage va aider à l'entrepreneur.

6264   Je pense qu'on fête le 25ième anniversaire du Cirque du Soleil parce qu'il y a 25 ans, il y a quelqu'un qui a mis un peu d'argent dans le projet. Aujourd'hui, ça génère énormément d'emplois, de retombées, d'images de marque bonnes pour le Canada et le Québec.

6265   Il serait peut-être bon qu'on fasse la même chose pour certains produits interactifs, qu'on donne un coup de main à des entreprises. L'essentiel de nos membres dont on avait cité tout à l'heure, le B-Soft c'est l'un de nos membres, c'est le plus connu avec Électronicas, Benox qui sont par conséquent les plus connus de nos membres. La majorité de nos membres ne sont pas connus, sont des petites compagnies, mais qui ont beaucoup de succès ou beaucoup de renommée, mais qui ne sont pas connus.

6266   Le fait de peut-être travailler à la promotion de leurs produits, de leurs réalisations peut aussi assurer demain leur pérennité et créer un développement économique générateur d'emploi.

6267   CONSEILLER MORIN: Mais quand on parle de promotion des produits interactifs, vous, vous parlez de contribution obligatoire, donc d'un fonds, de contribution obligatoire que le consommateur finalement devrait probablement payer.

6268   Mais depuis le début de l'audience, on voit qu'il y a peut-être d'autres mesures qui ont été avancées. Par exemple, S-VOX, au début de la semaine, a dit pour les dépenses en programmation canadienne, peut-être que le CRTC devrait permettre que dix pour cent de l'ensemble des dépenses en programmation soit alloué et susceptible d'être dépensé dans les médias interactifs.

6269   Compte tenu des chiffres qu'on a, ça vaut... c'est 88 millions de dollars. Ce n'est pas... c'est des choses importantes.

6270   Par exemple, on parle des fonds. Il y a le Fond expérimental du Fonds canadien; il y a le Fonds de Bell; il y a le Fonds de Téléfilm; il y a le Fonds de Québécor. Juste là, on a un autre 30 millions. Il y a des mesures, on peut en parler.

6271   Les mesures, par exemple, de Deep Packet Inspection pour la gestion si vous voulez, c'est des choses qui peuvent aider les médias interactifs dans la mesure où l'ordonnance des paquets vont favoriser ça.

6272   Je pense aux limites d'usage qui pourraient être différentes aussi en ce qui concerne l'accès ou enfin le téléchargement pour les différents clients.

6273   Écoutez; il y a plein de choses et ce que je me demande, par exemple, on a dit aussi la négociation des droits de suite. C'est le cinquième élément que je vous donne.

6274   Si on arrivait à une entente sur les droits de suite, bien peut-être que ça multiplierait par dix le contenu... les contenus sur les nouvelles plate-formes.

6275   Alors, ma question est: est-ce qu'avant d'aller justement dans l'autoroute des contributions obligatoires, le CRTC quand même donne l'exemple. On a 400 millions actuellement, avec le 60 millions qui vient d'être ajouté, on est rendu à 400 millions qui est transféré par les entreprises de distribution aux entreprises de programmation. Ce n'est pas de la tarte.

6276   Et je ne sais pas si ailleurs dans le monde il y a eu un tel transfert pour de la programmation ciblée, et caetera, programmation prioritaire, et caetera.

6277   Alors, ma question, compte tenu de l'évolution très rapide, compte tenu de l'offre qu'on a actuellement, est-ce qu'avant d'imposer une « taxe », est-ce qu'il n'y a pas plein de mesures qui pourraient justement aider les petites entreprises ajouter à la diversité des voix?

6278   M. CHAMPION: Comme vous le citiez tout à l'heure, il y a plein de mesures. On parle d'un fonds, mais on ne parle pas tout simplement d'un fonds. C'est vrai que l'aide peut être autre que financière, comme l'ont dit James et Ian du CIAIC. Comme je vous l'ai dit tout à l'heure, je ne suis pas un spécialiste des fonds, mais effectivement, souvent nos membres sont des PME.

6279   On travaille, par exemple, à mettre en place des missions à l'étranger pour les aider parce que, par exemple, B-Soft, s'il veut aller au Japon, aux États-Unis en mission exploratoire, n'a pas besoin de nous. Ce n'est pas le cas des PME qui sont l'essentiel de nos membres.

6280   Donc, on les aide, nous, grâce à des programmes gouvernementaux d'ailleurs, à les aider à se faire voir dans des missions, que ce soit The Game Show à la Game Developers Conference qui aura lieu à la fin du mois, et caetera, et à présenter leurs produits.

6281   Donc, c'est une... ce n'est pas une aide financière ou c'est une aide financière indirecte, mais c'est l'idée de les aider à se promouvoir et à se montrer parce que, effectivement, comme vous disiez tout à l'heure, c'est comme dans une caisse à outils, plus vous avez d'outils et, je dirais, le meilleure bricoleur vous serez.

6282   Donc, le fait qu'il y ait plein d'outils, tant mieux. La question de base puis j'ai lu pas mal de propositions, j'ai assisté ce matin aux présentations précédentes, je pense que ce qu'on veut tous, c'est qu'il y ait du contenu original canadien qui les voit au chapitre, qu'ils aient les moyens d'avoir droit au chapitre, qu'on leur donne les moyens d'exister pour que la diversité culturelle subsiste.

6283   Si on donne juste la voix aux gros, on n'aura pas forcément de la qualité et on n'aura pas forcément de la diversité. La richesse vient de là et il faut encourager la richesse. Je pense qu'on est tous d'accord là-dessus.

6284   Après, de quelle manière? C'est vrai que ça peut être financier, ça peut être d'autres outils. L'essentiel, c'est qu'on donne la voix aux petits producteurs parce que souvent les produits... je parlais tout à l'heure du Cirque du Soleil, si on ne l'avait pas aidé il y a 25 ans, peut-être que ça serait aujourd'hui un petit cirque qu'on verrait à Montréal, à Québec ou à Chibougamau, mais qui ne serait pas une multinationale qui génère des emplois et de l'argent et des retombées économiques au Québec.

6285   Ça peut être la même chose pour des petits producteurs en produits interactifs. Donnons-leur un coup de main aujourd'hui et demain ça va leur permettre de grandir et l'ensemble du Canada et de... j'allais dire, de la culture, profitera de ces retombées, de cette diversité et de cette richesse.

6286   CONSEILLER MORIN: Une dernière question. En page 5, la visibilité, la promotion, vous reconnaissez que la gestion du trafic, ça peut être une chose assez importante et qu'il faut assurer une gestion efficace du réseau, nonobstant la neutralité dont on parle.

6287   Est-ce que vous avez lu, parce que vous n'êtes pas le premier à qui je pose la question, est-ce que vous avez lu le mémoire qui a été déposé dans le cadre de cette audience, mais la personne en question n'apparaît pas, n'a pas demandé de comparaître, de monsieur Robert Ester?

6288   M. CHAMPION: Ah! oui.

6289   CONSEILLER MORIN: New Media... vous avez lu?

6290   M. CHAMPION: Non, mais j'ai entendu que vous en parliez ce matin.

6291   CONSEILLER MORIN: Bon. Alors, écoutez, je vais vous demander la même chose que j'ai demandée à d'autres intervenants. J'aimerais que vous preniez connaissance de ce rapport-là et j'apprécierais, en tout cas et je pense que mes collègues aussi, nous apprécierions que vous fassiez certains commentaires écrits relativement à ça et, évidemment, il est question de contenu canadien et donc, de contenu qu'on pourrait privilégier, les contenus interactifs fabriqués et développés ici.

6292   M. CHAMPION: Avec plaisir.

6293   CONSEILLER MORIN: Merci beaucoup.

6294   M. CHAMPION: Je vous en prie.

6295   LE PRÉSIDENT: Michel?

6296   CONSEILLER ARPIN: Merci, monsieur le président. Mais c'est sur purement de l'information.

6297   Hier, nous avons entendu le Regroupement des producteurs Multimédia et aujourd'hui vous êtes à l'Alliance numérique et...

6298   M. CHAMPION: Oui, on travaille ensemble.

6299   CONSEILLER ARPIN: Hein?

6300   M. CHAMPION: On se côtoie.

6301   CONSEILLER ARPIN: Donc, bon ce que je voulais savoir, est-ce que, effectivement, il y a des entreprises qui sont membres des deux associations?

6302   M. CHAMPION: Oui, bien sûr.

6303   CONSEILLER ARPIN: Bon, bon.

6304   M. CHAMPION: Je pense à Tribal Nova, par exemple.

6305   CONSEILLER ARPIN: Donc, la première question est répondue.

6306   La deuxième question, c'est juste aussi, vous parlez de crédit d'impôt ciblé. Est-ce que, actuellement, les producteurs de médias interactifs, on bénéficie de crédit d'impôt?

6307   M. CHAMPION: Je ne suis pas certain. Je sais tout à l'heure, on a parlé avec monsieur Morin il y avait un fonds expérimental Multimédia qui n'existe plus. Est-ce qu'ils ont le droit à des crédits d'impôt, je crois que dans le domaine du jeu vidéo il y a des crédits d'impôt.

6308   Vous dire s'ils sont... si d'autres catégories peuvent en bénéficier, je ne suis pas certain. Je préfère me taire que de vous dire des bêtises.

6309   CONSEILLER ARPIN: Écoutez; si vous avez une réponse d'ici le 23 mars, ça serait grandement apprécié parce que, effectivement, et l'Office national du film et le CIAIC, on fait état effectivement de besoin de crédit d'impôt, mais parce que dans le secteur de la production télévisuelle, les producteurs indépendants bénéficient de crédit d'impôt tant au fédéral qu'au provincial, donc... et c'est une partie importante de leur structure de financement.

6310   Il serait bon de savoir si les producteurs interactifs ont aussi un bénéfice similaire ou il y a...

6311   M. CHAMPION: Mais pour les jeux vidéo, comme je vous dis, ça existe, c'est certain. Il y a même eu une polémique l'année dernière parce que l'Angleterre a « protesté » en disant que c'était... je ne vais pas dire « odieux », mais non concurrentiel que certains pays en aient.

6312   CONSEILLER ARPIN: Comme les règles du commerce international?

6313   M. CHAMPION: Exactement. Donc, ça a protesté puis, en fait, on n'en parle plus parce que de nombreux pays, même en Europe, la France, le Portugal ont des crédits d'impôt qui peuvent varier avec différents critères, mais le principe du crédit d'impôt existe dans le domaine du jeu vidéo. Donc, qui est un produit interactif puisque le jeu vidéo s'il existe sur console, se développe de plus en plus en ligne, sur internet donc.

6314   CONSEILLER ARPIN: D'accord. C'était mes questions, monsieur le président.

6315   LE PRÉSIDENT: O.k. Merci beaucoup. C'était très intéressant.

6316   M. CHAMPION: Merci beaucoup.

6317   LE PRÉSIDENT: Je crois que nous avons terminé pour aujourd'hui.

6318   M. CHAMPION: Merci beaucoup. Bon après-midi.

6319   LE PRÉSIDENT: Demain matin, quelle est l'heure qu'on recommence?

6320   LA SECRÉTAIRE: Nous allons reprendre demain matin à 0900.

--- Whereupon the hearing adjourned at 1505, to resume on Thursday, February 26, 2009 at 0900

   REPORTERS

____________________      ____________________

Johanne Morin         Monique Mahoney

____________________      ____________________

Jean Desaulniers         Madeleine Matte

Date modified:

2009-02-26